FINLY JULY 2019 by FINLY

FINLY| July 2019 | Finstreet | SIMSR

From the Editor’s Desk

Dear Readers,

We are proud to unveil the July edition of our monthly magazine FINLY for the academic year 2019-20. Our Cover Story is based on the recent developments around the Big 4 audit firms. The Eco Section provides an understanding of Fiscal deficit, it's historical trend and the measures adopted by the government for reducing the deficit.In the Sector & Company Analysis, the authors inspect the Commercial vehicles industry with an in-depth analysis of the market structure, growth drivers and challenges faced by the sector and they also provide an analysis of one of the companies in the sector. This edition of FINLY marks the introduction of a new section called “Intriguing Indeed” which covers any unusual event occuring in India or globally. In this edition we have covered the oil tanker attacks in the Middle East. We express our gratitude to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, PGDM Core, and Faculty Coordinator, Finstreet) for providing the essential mentoring, support and backing to the Finly team. We would also like to thank our Sponsors, White Knight Ventures, for an enriching collaboration. We hope to continue the partnership for a very long time. We thank all our readers and faculty members for their constant love and support. Your reviews and feedback are much appreciated. Each edition of FINLY is the outcome of the tireless efforts and dedication of a group of individuals who call themselves Team Finly. We can't thank them enough for their constant support and initiative. Mohak Shah,

Saurav Jain,

MMS 2018-20

PGDM 2018-20

Team Finly- July 2019 Faculty Incharge

Dr.(Prof) Pankaj Trivedi

Editor-in-Chief

Editor- FINLY

Mohak Shah

Saurav Jain

-Conceptualization & DesignShubham Patel

Indresh Naithani

Adyasha Pratihari

-Content TeamIsha Koolwal

Rohan Thombre

Sakshi Gupta Pinal Shah

Ankit Nimbajiya Sambhabi Chanda

FINLY| JULY 2018 | Finstreet | SIMSR

INDEX

Editorial Team Finly

04 Cover Story 07

Eco Section

Sector & Company Analysis

Intriguing Indeed

Intern Diaries

The Beginning of The End of

Big Four in India Isha Koolwal | PGDM FS | 2018-20 Sambhabi Chanda | PGDM FS | 2018-20

Cover Story

Introduction The fall of IL&FS has pulled down the curtains from not just one business group but, a whole bunch of other businesses and professional financial service providers. The ones under maximum scrutiny after the sudden overnight fall of IL&FS are the Auditing Firms KPMG and Deloitte. It was the faulty auditing of IL&FS and its subsidiaries on one hand and the ignorance of the state shareholders on the other hand that rendered the bonds of this highly complex organization junk overnight. This article attempts to understand the role played by the auditing agencies, the impact that they have on the economy and throws light on the future of Big four in India. What happens when the audits are faulty? Faulty auditing by multinational

auditing firms is not new, not just in India, but, across the world. The latest of these examples is the Big five being reduced to the big four. Arthur Anderson had to give up its license as a result of the Enron Scandal in 2002, just at the time when it was at its peak in the business. Nine years after India's tech major Satyam shamed the country, by manipulating accounts to the tune of Rs 9,000 crore, the market regulator Sebi (Securities and Exchange Board of India) barred the network entities of Price Waterhouse from issuing auditing certificates for the next two years.PWC and two of its former partners were ordered to disgorge over Rs 13 crore . SR Batliboi & Co. is an affiliate firm which is part of the Ernst and Young India. It performs auditing for leading Indian banks such as HDFC Bank Ltd., IndusInd Bank Ltd., Kotak Mahindra Bank Ltd. and Bandhan Bank Ltd. On June 3, the. After

Cover Story

FINLY| July 2019 | Finstreet | SIMSR

having observed lapses in a statutory audit assignment, Reserve Bank of India barred SR Batliboi from doing statutory audits of banks for one year. Hence the firm will not be able to carry out bank audits for a year starting April 1. All banks need the RBI's approval prior to auditor appointments. Due to the RBI sanction, HDFC Bank had to picke another firm â&#x20AC;&#x201D; MSKA & Associates in its place. Prior to this verdict HDFC was set to reappoint SR Batliboi as auditor for three years. Deloitte and KPMG are looking forward to a 5 year ban from auditing in India as a result of their callous auditing of IL&FS which resulted in unpaid barrowings totalling up to Rs. 91,000 crores with no source to pay it back. This is not the first time in India that an ignorance or cover up by an auditing firm has resulted in the massive loss of public money. In 2009, PWC was accused of auditing the manipulated accounts of Satyam Computer Services. As a result of this, the Securities and Exchange Board of India charged penalties and imposed a 2 year ban on the firm in 2018. An important thing to note here is that this kind of faulty auditing not just affects the firm but also affects the other stakeholders. There is a cause and effect relationship that gets established here. Because the audits show the companies in good financial health, the ratings of these companies stay high provoking more and more investors to invest in it along with motivation for those already invested to stay invested for a longer horizon. Since investors keep chipping in and the company â&#x20AC;&#x153;appearsâ&#x20AC;? to be in good shape, the

rating stays positive.This gives the companies incentive to continue this fraud which helps them attract more money from the investors/creditors. What they do not realize in this process is their growing inability to payback with every new penny being chipped in. Fall of big four As mentioned earlier, there have been n u mero u s in sta n ces wh ere t h es e multinational auditing firms have been held responsible for some or the other misconduct. First PWC and now KPMG and Deloitte are at a risk of losing license to operate in India. (Quote examples of other misdeeds by these auditing firms). All these auditing firms will face strong repercussions due to their misconduct. They will end up losing their market share and clientele. The time is ripe for the Indian companies to take up their positions as auditors in the absence of big 4. The downside of this is that Indian auditors lack the quality of foreign auditors. These foreign auditors also help secure foreign investments. In the presence of foreign Indian auditors foreigners might be reluctant to invest huge sums in India. Each of the Big Four has either the second or third largest workforce across their global networks in India. EY alone employs more than 10,000 CAs in India and abroad. The big 4 employ over more than 16000 people. Many a times these auditing firms are forced to do faulty auditing to cover up for the management and not on their own free will. They are made to toe the line by the management. In the wake of these recent penalties levied by RBI, we saw a

Cover Story

FINLY| July 2019 | Finstreet | SIMSR

surge in resignations by auditors to avoid getting tangled in a conflict with the management and from saving themselves from getting embroiled in a controversy. Moreover due to these recent scams and the strict penalties levied over them , the big 4 have been forced to rethink about their clientele. They are planning to restrict their clientele only to MNCs, and reputed companies to avoid getting embroiled in such controversies. The risk-taking ability of the profession will reduce drastically. We need to wait and watch if in the coming years Modi's dream of Desi Big 4 comes true or will the present Big 4 remains invincible in the years to come.

Fiscal Deficit in India

ECO Section

Ankit Nimbajiya | MMS | 2018-20 Pinal Shah | MMS | 2018-20

Fiscal Deficit is a widely used budgetary tool, especially in India, which provides a comprehensive overview of the budgetary imbalances. It is the excess of the government's expenditure over the revenue it generates, excluding borrowing, for a given fiscal year. A fiscal deficit can imply a number of things some of them are- debt trap, inflationary pressure, dependence on foreign for funds, hampered growth due to the increased burden of borrowing. It is prominently expressed as a percentage of country's Gross Domestic

Source: Tradingeconomy.com, Reserve Bank of India

Product so as to give a clearer picture of how the government is contributing to the country's economy in general and measure the impact of expenditure on growth. Government Budget Deficit in India averages to approximately -5.01 percent of GDP (the negative sign indicates a fiscal deficit) from 1970 - 2018. The figure below gives the historic deficit. In 2018, India recorded a deficit equal to 3.42 percent of the country's Gross Domestic Product, Rs. 6.34 lakh crores. In spite of missing tax

ECO Section

FINLY| July 2019 | Finstreet | SIMSR

collections target by over 1 lakh crore, the government managed to hit this target by reducing spending and higher borrowings from small savings funds, according to a government source.

period last year reduced from 21.3 percent to 14.2 percent of the Budget Estimate. And the total expenditure stood at 18.4 percent compared to 19.4 percent earlier in the same period.

The fiscal deficit target for the year 2019-20 has been kept the same as earlier -3.4 percent of GDP, Rs. 7.03 lakh crores in absolute terms. The estimated total capital expenditure has been by less than 1 per cent compared to last year. The Rs 75,000 crore farm income support scheme adds to the big spending coming from agriculture and allied activities. Spending on agriculture is set at Rs 1.5 lakh crore in the fiscal year 2019-20 compared to Rs 86,602 crore in the last year. The government is expecting a significant contribution from the non-tax revenue sources like dividends and divestments.

Now the challenge for the government is to meet this target of 3.4% in the face of expected tax revenue shortfalls, limited room for disinvestment, and higher expenditure commitments.

In the first two months of 2019, the deficit stood at 3.66 lakh crores rupees, or 52 percent of the budgeted target for the year whereas a year ago this figure was 55.3 percent. The fiscal deficit has been kept under a reasonable check in the current year and this has been achieved by keeping the spending in ministries such as Coal, Civil Aviation, P o w e r, R o a d Tr a n s p o r t , R u r a l Development, and Steel at a much lower level than in the same period last year. The Controller General of Accounts (CGA) data showed that the government's revenue receipts during April-May, 2019-20 equalled 7.3 percent of the Budget Estimate (level similar to last year). But the capital expenditure compared to the same

A large fiscal deficit is not healthy for a growing economy. To fill this void, excessive Government borrowing from the market is required which in turn causes a rise in interest rate. Higher interest rate reduces private investment which further reduces the resources available to private sector investment. Also, the extent to which a large fiscal deficit is financed by borrowing from the Reserve Bank of India which issues new currency for the government causes a greater expansion in money supply through the process of money multiplier which generates inflation in the economy. To monitor the rate of inflation, the fiscal deficit could be reduced through both reducing government expenditure and the raising revenue of the government. Measures adopted to improve Fiscal Deficit The following measures could be adopted to reduce public expenditure for reducing the fiscal deficit and thereby check inflation in the context of the Indian economy: Ĺ¸ A huge amount of money is spent by the

ECO Section

FINLY| July 2019 | Finstreet | SIMSR

g o v e r n m e n t o n b o n u s e s , l e av e travelling concessions, leave encashment etc. The government can be determined to cut on public ex p e n d i t u re b y re d u c i n g t h e s e expenses. Ÿ Another way to cut public expenditure

is by reducing interest payments on past debts. Interest payments in India account for about 40 percent of expenditure on revenue account of the central government. Funds raised through disinvestment in the public sector should be used to retire a part of old public debt rather than financing current expenditure. Ÿ Budgetary backing to public sector

enterprises other than infrastructure plans should be significantly abridged and should be asked to raise funds from the banks and market. Ÿ Measures like austerity should be

adopted to curb unnecessary expenditure in all government departments. To reduce the fiscal deficit and check the rise in the inflation rate, apart from reducing government expenditure, government revenue has to be raised using the following measures: Ÿ Mobilising resources to increase public

revenue, the policy of moderate taxes with simplified taxation structure should be followed. This will help to increase public revenue rather than reduce it. High marginal rates of taxes should be avoided as they serve as disincentives to work more, save more and invest more. Also, high marginal

rates of direct taxes cause evasion of taxes. Ÿ Our tax base is narrow for both direct

and indirect taxes as only about 2 percent of the population pays income tax. To increase revenue from taxation, the tax base should be broadened by taxing agricultural incomes and incomes derived from unorganised industrial and services sectors and not just the corporate tax to broaden the tax base and collect more revenue. Ÿ There is a huge amount of black money

in the Indian economy which came into existence due to tax evasion. In the Voluntary Disclosure Income Scheme in 1997-98, more than 10,000 crores of rupees were collected. However, a much bigger amount of black money still exists in the economy. Not only the current black money has to be wiped up but also tax evasion that occurs every year has to be prevented by strict enforcement of the tax laws as the Goods and Service Tax. Mobilise more resources through indirect taxes; more commodities should be brought within the tax net like the duty on gold was increased to 12.5 percent. Ÿ There should be restructuring of public

sector enterprises to make some surpluses at least for their own development so that their dependence on the government's budgetary resources would be distributed. Their pricing policy should be such that it recovers at least user cost.

Commercial Vehicles

Rohan Thombare | PGDM FS | 2018-20 Mohak Shah | MMS | 2018-20

Sector Analysis

Market size, Distribution & Trends The automotive industry produced a total 3,09,15,420 vehicles including Passenger Vehicles, Commercial Ve h i c l e s , T h re e W h e e l e rs , Tw o Wheelers and Quadricycle in AprilMarch 2019 as against 2,90,94,447 in April-March 2017, registering a growth of 6.25% over the same period last year. Domestic sales The overall Commercial Vehicles segment volumes stood at 10,07,319 units, growing by 17.64% in April-March 2019 as compared to the same period last year. This was the first time that the volumes touched 1 million mark. Exports Commercial Vehicle exports increased by 3.20%to 46,29,054 units in AprilMarch 2019 over the same period last year.

Source: www.siamindia.com

Porter's 5 Forces Analysis 1. Threat of New Entrant: Low(from new firms) and Moderate(foreign brands) Ĺ¸ For any new potential entrant achieving

economies of scale and high fixed cost (especially to set up manufacturing units) are major challenges Ĺ¸ Strong Brand Image of the existing

brands and their diversified product portfolios already have a differentiated

Sector Analysis

FINLY| July 2019 | Finstreet | SIMSR

positioning.

4. Threat of Substitutes

Ÿ Established foreign firms are eyeing

Ÿ There are many government initiatives

India as their next stop for manufacturing and a market and with reforms like GST gaining momentum India can be their next potential hub.

to boost public transport with rail and metros. Customers have shown an increased adoption of newer modes of transport such metro-rail as they are faster and timely, negatively influencing the demand for buses.

2. Bargaining Power of Buyers: Low to medium

5. Threat of Existing Rivals Ÿ Indian Buyers are highly price

sensitive, but with rising disposable income they are willing to pay premium for guaranteed performance.

Ÿ This factor can be judged from company

brand, namely foreign, if he/she is dissatisfied by product offered by certain automaker.

to company, but the factors that are to be considered are the market concentration, p r i c i n g s t r a t e g y, s u p p l y c h a i n management, technological advancement and research, and product diversity of the competitors and the industry growth in general.

Ÿ Fuel prices and service cost have been

Growth drivers

Ÿ Customer may switch to another

rising so now customer is more focused on the total cost of ownership instead of just the acquisition cost. Thus, the customer buying decision is increasingly based on the quality of after sales service. 3. Bargaining power of Suppliers: Low

Increased infrastructure development In budget 2019, a record allocation of Rs. 100 lakh crore in the next 5 years to infrastructure sector will help cement and steel sector in coming years which will be converted to improved commercial vehicle demand.

Ÿ The automobile supply business is

somewhat fragmented (as there are many firms). Many suppliers rely on one or two automakers to buy majority of their products. Ÿ If an automaker decides to switch

suppliers, it could be devastating to the previous supplier's business. Hence suppliers are extremely susceptible to the demands and requirements of the automobile manufacturer and hold very little power.

E-commerce The e-commerce market is expected to grow at a compound annual growth rate of 44.77%till 2020. Growth in ecommerce will lead to higher demand for logistics support. Recovery in rural demand Implementation of Goods and Services Tax (GST) led to disruption in distribution

Sector Analysis

FINLY| July 2019 | Finstreet | SIMSR

channel for various consumption related sectors. However, rural demand witnessed gradual recovery on the back of continued government thrust on improving farm income, hike in minimum support price and announcements on farm loan waiver by various states. Automotive Mission Plan 2016-26 AMP is a combined vision of Government of India & the Indian Automotive Industry on where the industry should reach over next decade in terms of size, contribution to India's development, global footprint & technological maturity. Policies considered in AMP to reach the desired goal are given below.

Axle Load Norms Axle norms are standards for load carrying capacity of commercial vehicles.The government had increased the permissible gross vehicle weight (GVW) of over 16-ton heavy vehicles by about 12-25 percent in July 2018.Besides this, the mandatory annual renewal of fitness certificate for freight carriers has been changed to two years. This is one of the major reasons why there has been sluggishness in demand for new trucks, besides other issues such as tightened credit lending norms, increased interest rates, liquidity issues with nonbanking finance companies (NBFCs) and higher diesel prices. End of Life (EOL) Policy

Auto Fuels & Emission Norms Bharat Stage (BS) standards are emission control norms introduced by the Government of India in 2000, based on European emission standards, to keep in check the release of air pollutants from machines using internal combustion engines including vehicles.BS-VI norms have been implemented in Delhi effective from 1 April, 2018 in response to one of the worst smog crises in years. BS-VI standards will be implemented in rest of the country effective from 1 April, 2020.Companies in the automotive industry have to invest in order to upgrade their facilities to adhere to these standards. This increases per unit cost of products which may impact the sales.

AMP 2026 envisages the implementation of an 'End of Life' policy for old automotive vehicles that are not suitable for further use. This policy will be implemented nationwide & there will be provision of ve h i c l e s c ra p p i n g c e nte rs w i t h i n reasonable distance for all vehicle owners. Recently, as per various media reports, the government has given an in-principle approval for compulsory scrappage of over 20 years old CVs from April 1, 2020. COMPANY ANALYSIS â&#x20AC;&#x201C; ASHOK LEYLAND BUSINESS MODEL A s h o k L ey l a n d i s we l l k n ow n fo r man u fact u rin g , ma rketin g , an d distribution of commercial vehicles. It is one of the largest manufacturers of commercial vehicles in India and also a

Sector Analysis

FINLY| July 2019 | Finstreet | SIMSR

global leader in bus & truck manufacturing business. It manufactures light, medium and heavy commercial vehicles. The company offers a range of products which includes buses, trucks, engines, defense, and special vehicles. They have also ventured into manufacturing of electric vehicles. Along with this, they offer various services & spares for the commercial vehicle segment. SWOT ANALYSIS STRENGTH Significant domestic market share: Ashok Leyland has around 16% market share in the commercial vehicle segment and it is growing. This gives them a good brand image and a wide user base. Wide range of products: Ashok Leyland has presence in various segments of light, medium & heavy commercial vehicles which includes buses, trucks, defense vehicles, etc. The company also provides engines for industrial, marine & generator applications. It helps them retain & expand the existing customer base.

Ashok Leyland is highly dependent on the Indian market for a major portion of its revenue. This makes them more susceptible to economic and political changes in the country. The wider geographical revenue base of competitors like Tata Motors puts them in a position of advantage. OPPORTUNITY Expanding product portfolio: Electric vehicles is the future of the commercial vehicle industry. Ashok Leyland has started R&D and developed electric vehicles. Also, advanced telematics solutions give an edge to customers as it is a differentiating factor. Thus, electric vehicles and telematics solutions will create a lot of opportunities for expanding the market share. Exports: Ashok Leyland has the opportunity to increase their share in exports to developed markets and bring stability in revenues. They need to develop manufacturing capabilities to match global product standards. THREAT

Robust manufacturing capabilities: Ashok Leyland has manufacturing facilities all around India and also abroad which includes UK & UAE. This gives them ease of transportation & benefit of economies of scale.

Competition: Ashok Leyland faces fierce competition from companies like Tata Motors, Mahindra & Mahindra, Eicher Motors, Marcopolo, etc. Government has allowed up to 100% FDI in the commercial vehicle industry which makes it more likely to further intensify the competition.

WEAKNESS Dependence on the domestic market:

Environment regulations: The c o m m e rc i a l ve h i c l e i n d u st r y i s

Sector Analysis

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subjected to changes in environmental regulations. The company has to co m p l y w i t h re g u l at i o n s a b o u t emission levels, noise, safety, etc. This increases the costs of the company which can affect its pricing strategy. Volatility in commodity prices: Changes in commodity prices such as steel, aluminum, copper, etc. which are t h e ra w m a t e r i a l s , a f fe c t s t h e profitability of the commercial vehicle companies. Also, changes in crude oil prices affect the demand for commercial vehicles. CORPORATE GOVERNANCE There are 12 board of directors which is a moderate size. The advantage of not having a huge board size is the ease of decision making. Most of the board members are independent which is a good sign because independent

d i re c to rs ca n a s k t h e co m p a ny management tough questions and hold them responsible for their actions. Having more independent directors on the board suggests that there is a fair amount of concern for shareholder interest. Chairman of the board, Mr. Dheeraj Hinduja is also CEO of the firm, but this happened due to the recent resignation of former CEO, Mr. Vinod Dasari. There is search going on for a new CEO who will be appointed in a span of coming few months as stated by Mr. Hinduja. From the share-holding pattern, it can be observed that 51.12% of the shares are held by promoter Hinduja group which has their representative in the board. This shows that the management is kept in check and is less likely to make rash decisions which will put shareholder's interest at risk.

Source: economictimes.com

Sector Analysis

FINLY| July 2019 | Finstreet | SIMSR

Ratio Analysis

DuPont Analysis Return on Equity = (Net Income/Sales) x (Sales/Avg total assets) x (Avg total assets/Average equity)

Sector Analysis

FINLY| July 2019 | Finstreet | SIMSR

Profitability ratios of Ashok Leyland are better than the industry average. The efficiency ratio is less than the industry average which suggests that the c o m p a ny n e e d s t o i m p ro v e i t s efficiency. It can also be seen from DuPont analysis that Asset Utilization Ratio is declining which shows that sales are not increasing in proportion to the assets. Leverage ratios & DuPont analysis suggest that debt is less than the industry average and can be increased to improve ROE. Cost of Capital = 12.66% Return on Capital = 16.08% Return on Capital is greater than the Cost of Capital which shows that Ashok Leyland has been taking good projects that increase the value of the firm. Note: Ratio analysis based on 2017-18 annual report financial data.

FINLY| April 2019 | Finstreet | SIMSR

Tanker War, Again?

Intriguing Indeed!

Sakshi Gupta | PGDM | 2018-20

The Persian Gulf, the world's energy artery, is once again on the verge of conflict. Tensions between the United States and Iran rise after the latter is claimed to attack oil tankers in a region through which one-third of the world's oil is transported by sea. So far, Iran and the United States have used a series of weapons covering three generations of war mines, surface-to-air missiles, and cybernetic weapons. Iran is believed to be behind the two-phase mines that damaged six commercial vessels sailing in the Gulf of Oman. On May 12, four merchant ships were attacked under the flags of the United Arab Emirates, Saudi Arabia, and Norway. In the second attack on June 13, the Japanese tanker Kokuka Courageous and the Norwegian Altair front were targeted, again using the strainer mines.

Why is the Strait of Hormuz important? The Strait of Hormuz is choke-point between the gulf and the ocean. With Iran on the north coast and the United Arab Emirates and an Omani enclave to the south, the strait is 34 km wide at its narrowest point. The strait opens on the Gulf of Oman which is connected to the Arabian Sea. One-third of the crude oil transported by ship passes through the Strait, making it the world's largest oil route. Are these attacks on Strait of Hormuz a threat to the global economy? About 30% of the world's crude goes through the strait. If the waters become dangerous, the supply of the entire western world could be threatened.

Intriguing Indeed!

FINLY| July 2019 | Finstreet | SIMSR

1) Transportation on the strait: The global economy continues to be lubricated with oil, despite increasing u s e o f re n e wa b l e e n e rg y. Transportation systems depend on the constant flow of oil in refineries and shutdown can create shortages in a few months. 2) Price hike: The price of Brent crude rose more than 4% to 62.64 dollars a barrel, reflecting these concerns. Satellite-guided tankers can be redirected to replace paralyzed vessels, but the oil industry has been shaken by the threat to the busiest shipping lane in the Middle East and the crude cargoes that pass through it. 3) Effect on markets: Publicity in addition to rising oil prices, some of the major equity markets in the Middle East have fallen about 1%. This relatively silent response to what appears to be a crisis for the oil industry partly reflects the fact that the oil market has already taken into account Iran's supply and geopolitical risks. What is the impact of a long-term increase in oil prices? In recent months, oil prices have fallen in response to forecasts of lower demand this year. Last October, the price of a barrel of crude oil Brent was about $ 90 before falling to nearly $ 50 in December. From April, when prices went back to $ 72 a barrel, they came back to about $ 60. Oil market analysts still expect prices to remain between $ 60 and $ 70 the rest of the year. They would force them to revise their

forecasts. The global economy is struggling to regain momentum after commissions for commercial charges c o m m i s s i o n e d b y t h e Tr u m p administration. A slowdown in trade over the last 18 months and a contraction in investment spending has led to 2.6% GDP growth this year, after several years of over 3%, the World Bank said in its latest forecast. The fear of slowing demand for oil is one of the main factors behind price suppression. Increased global demand and new attacks with oil tankers in the Gulf will likely lower oil prices to $ 80. "Those who fail to learn from history are doomed to repeat itâ&#x20AC;? This quote by Winston Churchill seems so apt in the present scenario. As the ships are attacked again in the Gulf region, memories of the tanker war are revived. If Iran is indeed at the origin of the recent attacks, it could play a risky game, proving what it can do in the Gulf in case of war. If Iran is not behind the attacks, some other powers are using the Gulf's trade routes to fuel more tension. In any case, arming the Strait of Hormuz is a dangerous game. In the 1980s, the tanker war was essentially a war of economic attrition. In addition, the conflict was between Iran and Iraq, two relatively similar powers. This time, there are other risks. Given existing tensions, new attacks on merchant ships could trigger total war, in addition to the economic costs of such attacks. Second, this time the conflict is between the United States and Iran. The goal of a direct war will be much greater than in the 1980s.

FINLY| April 2019 | Finstreet | SIMSR

Internship Diaries

DIARIES

advisory, and skill development. IRR Advisory offers clients a multidimensional approach to addressing their problems. IRR Advisory adopts a customized, responsive and personal approach to client service and offers a comprehensive ra n g e o f s e r v i c e s a c ro s s va r i o u s industries. The Process

Pundlik Naik MMS Finance | 2018-20 Company Overview IRR Advisory Services is a part of Fitch Group â&#x20AC;&#x201C; a global leader in financial information services. IRR Advisory Services Private Limited is a boutique risk advisory and management consulting firm offering services in strategy formulation, risk advisory, research, analy tics, transaction

The selection process involved CV shortlisting which was followed by a single round of interview. IRR advisory services being a consulting firm, candidates were tested for basic financial knowledge and general awareness. The questions were asked mainly on balance sheet analysis, profit and loss statement analysis, ratio analysis, basic securities and stock exchange. The Experience On the commencement of internship, we were introduced to IRR advisory team. Company's work areas and values were

Internship Diaries

FINLY| July 2019 | Finstreet | SIMSR

explained to us before each one of us were assigned a project to work on. My project at IRR advisory was analysing group structure of Indian conglomerates and industry research on construction materials sector. The key processes in the project involved extracting qualitative and quantitative data from government websites such as Ministry of Corporate affairs and Department of Industrial Policy and Promotion, along with this databases such as AceEquity, CMIE were also used throughout the project. With all the qualitative and quantitative data insight, reports were prepared and presented to the senior management of IRR Advisory services. My Two Cents In all IRR advisory services made me aware about different aspects of management consulting. The internship experience helped me in understanding requisites for role of a consultant; also it helped me in improving my analytical skills right from understanding annual reports to analysing financial statements. To anyone wishing to pursue a career in consulting I would advise them to start tracking current affairs and gaining basic financial knowledge. In a nutshell the key take away was to be aware about the happenings in the industry and know how to interpret and analyse the same.

FINLY| JULY 2019 | Finstreet | SIMSR

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