Finly March 2017 by FINLY

From the Editor’s Desk

FINLY| March 2017 | Finstreet | SIMSR

Dear Readers, This being the last edition of the season, our Cover Story on “Financial Year Round up 2016-17”summarizes the various financial events that took place in the financial year affecting economies all over the world. Next in line is our economics section which covers the problem of current account deficit in India and future predictions based on it. In the section “Sector Analysis” the authors present the overall scenario of aviation sector and thorough analysis of the major companies in this sector. The alumni section by our alumnus Ms. Anshumala Sinha tells us about her terrific experience of being a part of SIMSR and how the college has helped her to bring out the best in herself. The Finly Team members pen down their thoughts of working for the magazine and share their wonderful experience in the section “Finly Diaries”. I would like to appreciate each and every member of the team who have put great amount of time and effort in making every publication of Finly a success. I would like to acknowledge all our readers, faculty members and seniors for their tremendous support. It gives me immense pleasure to announce Aditya Khanna from IIM Ahemedabad as the winner and Om Duseja from Sydenham Mumbai as the Runner Up. Congratulations and wish you all the best !! -Shreya Gupta PGDM-FS 2015-17 KJ SIMSR

Team FINLY

FINLY| March 2017 | Finstreet | SIMSR

Table of Contents

FINLY| March 2017 | Finstreet | SIMSR

Cover Story

Brexit: UK votes for leaving EU Britain voted to leave EU (European Union) in a referendum held on 23rd June 2016, popularly known as 'Brexit'. Every citizen of voting age has a right to take a part in this referendum. The total referendum turnout was 30 million i.e. 71.8% of total voters. 'Leave camp' won by 51.9% to 48.1% vote share. Considering breakdown across the UK, England and Wales voted for Leave with a huge margin; while Scotland and Northern Ireland baked staying in the EU.

Below are the arguments made by Leave and Remain camps to support their stand: Leave Camp: The 'Leave camp' is led by the Justice Minister Mr. Michael Gove, and Mr. Boris Johnson, the former mayor of London. Almost half the Conservative party members in Parliament, the U.K. Independence Party and its leader Nigel Farage favor leaving. The Leave camp focused on immigration and sovereignty.

Cover Story

FINLY| March 2017 | Finstreet | SIMSR

The issues highlighted were inflow of migrants from other countries to Britain, unequal benefits received from EU, burden of weak economies in Europe, decades with regards to the reach of bureaucracy and diminishing British sovereignty. Remain Camp: The 'Remain camp' was led by Prime Minister David Cameron. Behind him were most of the Conservative government members, Liberal Democrats, the Labor Party and most of the independent economists and business personnel. The Remain camp focused on the need of medium-size island to stay in a larger bloc of like-minded countries. Britain's economy is highly integrated with EU. Hence, being a member of EU is important to have real influence and security in the world. Impact: The Brexit will have significant short term and long term impacts. The extent of impact will be dependent on what settlement was negotiated regarding Britain's access to the single market for free trade, financial services, transfer of resources etc.

Brexit will have considerable impact on immigration. CEP analysis of Labor Force Survey says that immigrants in the UK are more educated than UK-born citizens on an average. Citizens in the UK have concerns about jobs being taken over by immigrants. Even though immigrants are highly educated and helping the economy, anti-immigrant sentiment seems to be on rise and Brexit vote is likely to favor the same trend. Banking sector seems to be concerned about Brexit vote as Regular Inspections are being taken up by Banking institutions, both internally and by central bank. Giants like HSBC have already hinted of transferring the business to other subsidiaries in EU. HSBC has planned to shift a 1/5th of their workforce from London to Paris. Most of the economists opine that exit from EU would cut growth, weaken the pound w.r.t. other currencies and hurt the City of London, one of the global financial centers. Even economists who support Brexit also opine growth to be affected in the short term and medium term. However, they also expect Britain to better off by 2030.

Cover Story

FINLY| March 2017 | Finstreet | SIMSR

China's debt pile The Bank for International Settlements (BIS) warned China over growing debt pile in September 2016. China's total debt load (public and private) has now reached 255% of GDP. More serious concern is the speed of the increase of debt pile as it has grown from 147% of GDP in last seven years. Corporate China bears a debt worth $18 trillion which is equivalent to approx.170% of its GDP. It is evident that huge amounts has been lent to Chinese firms without enough cash flows to meet the interest payments. As per International Monetary Fund (IMF), it now takes three units of credit to produce every additional unit of GDP. A report released by National Development and Reform Commission (NDRC) reveals that high level of debt has created operating difficulties for few Chinese firms as financial and debt risk is continuously increasing. As per a report released by Fitch, nonperforming loans (NPLs) as a proportion of overall pool of loans could be as high as 15-21 percent. The report says NPL ratio to rise over the medium term leading to increase in frequency of write-offs. Addressing this problem would result in a capital shortfall of $ 1.1-2.1 trillion, equivalent to 11-20% of GDP. However, a Lehman-style collapse is unlikely to happen as all banks are owned by the state itself.

In October 2016, Govt. of China released guidelines control rising corporate debt levels. The government plans to take a multi-pronged program to cut company debts. It includes encouraging mergers and acquisitions, debt-to-equity swaps, debt securitization, bankruptcies etc. as per the guidelines issued by State Council. Even though implementation of this program looks challenging, economists hope it to moderate the situation as weakening of world's 2nd largest e c o n o my w o u l d i m p a c t o t h e r economies too in future. Corporate governance issues in TATA and Infosys: With the concerns for IT industry have risen due to election of Mr. Donald Trump as the President of U.S., Indian IT sector faced another complication in form of corporate governance issues at TATA Group and Infosys. On 24th October 2016, after market closed, The Tata Group released a media statement saying that TATA Sons Board has replaced Mr. Cyrus Mistry as chairman and previous Chairman Mr. Ratan Tata will take over as the Interim Chairman. Succeeding weeks followed various statements and press releases from both the side, accusing each other faulty strategic moves. By February 2017, EGMs were conducted for independent companies in TATA Group and Mr. Mistry was removed as Chairman. Subsequently, Mr. N Chardrasekharan was appointed as new Chairman of TATA Sons.

Cover Story

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TATA Sons simply gave trust deficit and repeated departures from TATA culture and ethos as the reasons for removal of Mr. Mistry. It was also being reported that the TATA Trust was unhappy about the performance of TATA Sons due to increasing dependence on Tata Consultancy Services (TCS) and Jaguar Land Rover (JLR) for profit making. Moreover, TATA companies had to face a setback in Epic Systems case in US, dispute with DoCoMo etc. Corporate world was stunned due to this dispute as TATA Group has a long legacy and popularly known for its values and ethos. Another Indian IT giant, Infosys was under the scanner for corporate governance issues. Earlier this February, Infosys' founders raised concerns over the pay of CEO Mr. Vishal Sikka, severance payouts to former Chief Finance Officer Mr. Rajiv Bansal and former Chief Compliance Officer Mr. David Kennedy, disclosure norms and company's revenue targets. Mr. Sikka termed these talks as 'distracting' and emphasized over his good relations with company founders and improved performance of company. The board also backed Mr. Sikka and brushed aside concerns saying that those were old issues and a complete disclosure has been made. Demonetization of bank notes by the Indian government. One of the major events that dominated the economic landscape in India was the demonetization drive by the Indian government. On November

FINLY| August 2016 | Finstreet | SIMSR

8, 2016, Prime Minister Narendra Modi declared the use of all Rs.500 and Rs.1000 banknotes would be invalid post midnight and announced the issue of a new Rs.500 and Rs.2000 banknote which could be exchanged for the existing currency. The bold move by the government was a major crackdown on the shadow economy, counterfeit currency, terrorism and funding of any illegal activity in the country. The BSE SENSEX and NIFTY fell over 6% in the days following the demonetization. The country faced severe cash crunches and banks and post offices witnessed long queues of people seeking to exchange their notes. It was said that while the proponents of demonetization might have had good intentions, the public and bankers were greatly inconvenienced which led to huge debates in the Indian parliament and criticism by the opposition party triggering protests against the government in several places in India. Demonetization also had its supporters. Industrialists and corporate chiefs favoured the move as a bold and a visionary step towards a cleaner and more efficient economy but what was always key was how the implementation process would unfold and it proved to be far from perfect. Why were the Rs.500 and Rs.1000 notes demonetized? The aim of the entire demonetization was to curb the black money in the financial system which was holding back the economy from its full potential. According to RBI, the 500 and 1000

Cover Story

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currency notes formed 86.4% of the total share of all the currencies in circulation in India and also accounted for the highest proportion of counterfeit notes in circulation.

The fall in economic activity would likely be seen for two to three quarters post demonetization after which the Indian economy is expected to grow stronger.

Impact of Demonetization on the Indian economy

The demonetization is also said to have a negative impact on inflation. Activity in the real estate sector which includes a lot of cash and undocumented transactions has slowed down significantly. There has a drop in real estate prices by up to 30% in metropolitan and Tier 1 cities. Due to the decrease in the supply and demand for food items, there has been a downward movement of inflation

The most immediate impact of the demonetization was on the consumption activity in India. People stopped spending other than on necessary items like daily food, medicines etc. The service sector which involved a sizeable chunk of cash transactions was hit the hardest.

Cover Story

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which is measured by the CPI (Consumer Price Index).The CPI is constantly monitored by the RBI and CPI growth targets are adhered to while deciding the monetary policy stance. It will determine future rate cuts by the RBI which will impact interest rate sensitive sectors and industries like financials, automobiles and the technology sector. Impact on the Repo Rate:

The repo rate or repurchase option rate is the key monetary policy rate for the RBI and it is the rate at which RBI lends to commercial banks. Others rates lie reverse repo rate are fixed against this repo rate. The repo rate impacts the movement of the rupee which in turn impacts the revenue of exporters and technology companies. Demonetization has led to increased deposits in banks which is likely to decrease inflation. This will cause increase in consumption and will put the economy back on an upward growth.

GST The Goods and Services Tax bill has been approved by the President of India and ratified by more than 50% of the state legislatures in India. The GST bill will be a game changer in the Indian economy as it will replace all the indirect taxes levied on goods and services by the Centre and State governments.

Interstate procurement would be viable and would also open opportunities for consolidation of suppliers and vendors. Changes in the tax system could warrant changes in both procurement and distribution arrangements. Tax saving resulting from the GST structure would result in the re-pricing of many products. Removal of the excise duty on manufacturing would result in an improved cash flow and inventory costs as GST would be required to be paid at the time of the sale or supply of goods and not at the time of manufacture or removal of goods from the inventory. The Goods and Services Tax Council has

Cover Story

FINLY| March 2017 | Finstreet | SIMSR

approved two of the five bills and the rollout for GST is likely to be on July 1st.GST is expected to boost the economic growth by 2 percentage points. Companies would have to overhaul their accounting systems and there would be some chaos when the GST comes into effect and as the government systems get updated and running. The Logistics sector is expected to gain the most from the GST and change the business landscape in India.

Separate Pay Matrices have been developed for Civilians, Defence Personnel and for Military Nursing Service. The minimum pay has been increased from Rs.7000 to Rs.18000 per month. There is a compression ratio of 1:3.12 which indicates that the salary of a Class I Officer on direct recruitment will be 3.12 times the salary of an entrant at the lowest level. There are a lot of decisions which impact the Defense and Combined Armed Police Forces (CAPF).

Seventh Pay Commission

The gratuity ceiling for them has been enhanced from Rs.10 lakh to Rs.20 lakh. Rates of Military Service Pay has been revised from Rs.1000,2000,4200 and 6000 to Rs.3600,5200,10800 and 15,500. Hospital leave, Special Disability Leave and Sick Leave has been combined into a new category called “Work Related Illness and Injury Leave” ( WRIIL) and the employees would be granted full pay and allowances during their entire period of hospitalization under WRIIL.

The Union Cabinet approved the recommendations of the Seventh Pay Commission on June 2016. Approximately 47 lakh central government employees and 52 lakh pensioners benefitted from the implementation of the Seventh Pay Commission. According to analysts, the seventh pay commission would boost the salaries of government employees by up to 40% thus increasing the disposable income of the middle class in India boosting consumption. Due to the income boost in the middle class, the real estate market was boosted especially in Tier 2 and Tier 3 cities. In the recently announced Union Budget, a total of Rs. 70,000 crore has been allotted for the implementation of the Seventh Pay Commission and this implementation is reportedly going to cost the government a sum of Rs.1.02 lakh crore. The present system of Pay bands and Grade Pay has been done away with and a new pay matrix has been approved by the Commission.

Donald Trump Wins the 2016 Election In one of the most shocking U.S. elections in recent political history, Donald Trump defeated Hillary Clinton. Trump's victory was one which he had been predicting for months and compared to the Brexit vote in England. This was something that very few experts could predict with the majority predicting a comfortable Hillary win.“It was Donald Trump versus almost all the experts … it looks like Donald Trump was right,” Jake Tapper said on CNN.

Cover Story

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Trump, tweaked every rule in the book to clinch his victory. He outwitted 15 candidates in the Republican primary, most of whom were governors and senators. Trumps victory was not a cakewalk .He was outspent in promotions by Clinton by 3 to 1, and he had a small, disorganized ground game up against the Clinton election machine. TIME had written two separate cover stories about the meltdowns and disarray happening in the Trump campaign. Not to mention the various controversies that includes twitter fights with Gold Star families and former beauty pageant contestants. But throughout his campaign, Trump got his success in tapping into a populist vein in the country that no other candidates had been able to effectively access. “This is a movement,” Trump would explain to his followers. Many supported him from their anger and frustration that the country needs a big change. As president, Trump has claimed he will build a wall along the border with Mexico using their fund, suspend the Syrian refugee resettlement program, repeal and

replace the Affordable Care Act and renegotiate NAFTA to get more in their favour. President Donald Trump has now been in office for two weeks. and look at w h a t , c o n c r e t e l y, t h e Tr u m p administration has done so far. Trump has already made changes to US policy — some major, and some minor. The most important and sweeping changes of Trump's first days in office occurred in two areas. First bullet was fired on immigration, Trump made a series of hugely consequential policy changes that will block refugee admissions for months and increase deportations of unauthorized immigrants. Second, Trump blocked federal funding for any global health organizations that provide or even discussed about abortion which was a harsh move as exclaimed by many. The official abandonment of the Trans-Pacific Partnership trade deal was a milestone Trump froze government hires and regulations. He also announced his desire in erecting the wall on the USMexico border and in abolishing Obamacare.

Cover Story

FINLY| March 2017 | Finstreet | SIMSR

Italy referendum explained: What was the vote about and could the result destroy the EU?

Mr. Renzi's reform intended to vest more powers towards the Chamber of Deputies (Italy's House of Commons).Even though the Senate would have retained its veto on constitutional matters, the house would have had the final say on everyday bills. Both chambers voted in favor of the changes, but the measures did not reach the required majority to force the legislation through, resulting in a referendum.

Italian Prime Minister Matteo Renzi has called a referendum on constitutional reform. The result was to reject the reform with 59.4 per cent to 40.6 per cent for Yes. He said: “My experience in government ends here… I did all I could to bring this to victory. If you fight for an idea, you cannot lose.” Post defeat he submit his resignation to President Sergio Mattarella as he had announced that he would quit if the referendum would not pass.

What happens next? After Mr Renzi hands in his resignation papers, the President will appoint a caretaker government to lead Italy until the 2018 general election. and would be tasked with passing an electoral reform known as Italicum. Italicum will give any party that wins 40 per cent in the next general election a guaranteed parliamentary majority.

What was the Italy referendum about? Mr. Renzi wanted to bring new reforms to t h e co u nt r y ' s i n co m p e te nt government .“Italy has a “perfect” bicameral system meaning its two chambers have exactly the same powers as each other, which often results in political gridlock .The proposed reforms would have reduced the Senate's powers and transformed it from a chamber of 315 directly elected politicians and six lifetime appointees to smaller “Senate of Regions”. The new chamber would have had just 100 seats – 74 regional councilors, 21 mayors and five presidential nominees”.

Will Italy leave the EU? Ms5 has vowed to hold a referendum on Italyexit should they get into power, but has stopped short of calling for a vote on EU membership. Were an EU vote to be called, Italy would likely opt to remain. The Pew Research Centre found in June that 58 per cent of Italians viewed the EU as favorable, although an overwhelming majority criticized Brussels' handling of the economy and the migrant crisis. OPEC cuts Oil Production OPEC shocked people worldwide and sent crude oil prices gushing by agreeing to its first production cuts in eight years.The deal, designed to

Cover Story

FINLY| March 2017 | Finstreet | SIMSR

reduce record global oil inventories, increased trust between the group's three largest producers Saudi Arabia, Iran and Iraq. It ended the free market policy that started in 2014.It extended beyond OPEC and it concluded that Russia agreed to unprecedented cuts to its own output. The impact on the energy world was immediate: benchmark oil prices gained as much as 10 percent in New York and the share prices of energy companies around the globe alongside the currencies of large exporters which lead to new found optimism. Whether that's sustained or not will depend on how discipline the Organization of Petroleum Exporting Countries behave, something that has never happened in the past. OPEC will reduce output by about 1.2 million barrels a day by January, the group said,In the U.S. shale patch, the OPEC cut triggered a huge equity rally with company rallying between 12-

32%Saudi Arabia, which had increase oil production to a record this year, will reduce output by 486,000 barrels a day to 10.058 million a day, an OPEC document shows. Iraq, OPEC's secondlargest producer, agreed to cut by 210,000 barrels a day from October levels. Any indiscipline in the market could once again see prices come under pressure. The last two years have been painful for OPEC with earnings from export coming down to $341 billion, a c co rd i n g to t h e U. S . E n e rg y Information Administration. While in 2014 it was $753 and a record $920 billion in 2012.

Article of the Month - Winner

India is a consumption-driven economy â&#x20AC;&#x201C;just about 60% of our GDP is constituted of private consumption. Large NPAs within the system, risk averseness among private corporations & banks and a small corporate debt market have led to the stagnation of private investment (see pie charts). Further, net exports have generally been negative. All of this means that the growth or lack of growth that India sees in its oft-cited GDP numbers is in essence a reflection of the private consumption levels.

The Demonetization Effect From the 7.6% GDP growth rate that was achieved in 2015-16, it was estimated to re d u c e i n m a g n i t u d e f ro m a l l quarters(1% by HSBC; 6% growth in second half of fiscal predicted by IMF).This implied that consumption had fallen. A FICCI report showed substantial negative effects on automobile and related industries, FMCG companies, agricultural products, and construction industry.

Article of the Month - Winner

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Flowchart â&#x20AC;&#x201C; The Macroeconomic Effects of Demonetization A fall in consumption directly means a fall in income, and that too disproportionately that of those people who would become immediately unemployed or would be unable to sell their produce due to the consumption contraction. Budget 2017-18 The budget had a few major steps with immediate and direct consequences for consumption increase and some minor steps which will have a more long-term and indirect effect on consumption. Major Steps Agriculture and Rural focus: Rural growth fell to less than 5% from over 10% in 2014-15, majorly owing to bad monsoons. This year, there was an increase of 24% in total investment in rural and related industries. Agriculture credit target was increased to Rs. 10 Lakh crore to promote efficient and ample production. Further, there wa s a 6 0 - d ay i n te re st wa i ve r (announced on 31st December, 2016). Both of these moves are likely to boost relatively cheap credit. At a time when the number of farm workers is decreasing, this means an accelerated increase in credit available per farmer. Further, due to the crop insurance scheme, many small farmers who shy

away from high-risk-high-yield crops will be able to take greater risks with crop types and cycles. They will have funds to maintain a minimum consumption level at any cost. All of the above steps, coupled with a good monsoon, will lead to an increase in agricultural income, including for workers allied to farming. Eventually, a sector which employs over 48% of Indian workers will have greater income. This will boost rural demand for farming equipment, tractors, scooters, and other FMCGs. There is also a trickle-down effect of a healthy agricultural market: lower inflation in ediblesdirectly affects the consumption capacity of the lowermiddle class people of the country in real terms. Benefits to Small Businesses and SMEs: At 96%, SMEs form a large proportion of Indian companies. The government announced that income tax for companies having annual turnover less than Rs. 50 crore will pay a tax of 25% rather than 30%. This will directly affect over 6.5 lakh companies. As per CSO data (for 2012-13), SMEs provide 37.54% of Indian GDP and employment to over 80 crore people, whose incomes are likely to rise.

Article of the Month - Winner

FINLY| March 2017 | Finstreet | SIMSR

Income Tax Reduction for Those under the Tax Bracket of 50 L; More Tax for the Ultra-Rich: For individuals with income ranging from 2.5 to 5 lakh rupees, the rate of taxation was reduced to 5% from the erstwhile 10%. On the other hand, a surcharge of 10% and 15% will be levied on those with an income ranging from 50L to 1 crore and over 1 crore respectively. This shall ensure the balancing of the loss and gain through the tax cut. There is a direct effect of this on every person earning less than Rs. 50 L of up to Rs. 12,500. This is a big boost to consumption: those falling into the 2.5L to 5L bracket are about 85 lakh. A back of the envelope calculation shows that the total addition to consumption will be to the tune of Rs. 85 billion. Industries affected by these will be FMCGs, cosmetics and small consumer durables. Housing Sector Expansion: Affordable housing has been given the status of infrastructure, in line with the vision to provide housing for all by 2022. This will lead to easier and cheaper credit along with simpler clearance processes. In addition to this, National Housing Bank will refinance housing loans worth 20K crore rupees in this fiscal.

This will boost the demand for the construction sector (L&T, GMR, Hindustan Construction etc) and allied industries such as paint (Asian paints etc) , construction material (Kajaria, Havellsetc), Cement (Ultra tech, ACC etc). As another trickle-down effect, construction workers (10.6% of India's total workforce, according to a CII study) will get jobs and they will in turn generate more consumption. Secondary Factors boosting consumption Infrastructure development: Allocation of 2.4L crore to transportation development shall aid urbanization. The proliferation of highspeed broadband (optical fibres to 150,000 gram panchayats) will revolutionize consumption through ecommerce in large parts of the country (long run). A higher allocation to the Rural Electrification Programme will provide a major impetus to the c o n s u m p t i o n o f Aluminium(electrification constitutes over 40% of primary aluminium consumption).

Article of the Month - Winner

FINLY| March 2017 | Finstreet | SIMSR

Focus on Education and Rural Entrepreneurship: Innovation funds for secondary education, SANKALP, Skill India mission, P r a d h a n M a n t r i K a u s h a l Yo j a n a (increased funding to all totalling 22 billion rupees), and Pradhaan Mantri Mudra Yojana (lending target doubled from 1.22 L crores) are all aimed at the short and long-run employability and self-sustainability of India's population. While this budget was more or less subdued in terms of high profile announcements, it has shifted the focus on steady growth in consumption, especially in the rural sector, complimented by low inflation. This will provide a much-needed revival, especially to the ailing rural economy post demonetization.

Article of the Month - Runner Up

We know in general the term “Buy Back” means buying back anything which belongs to the person but has been given to others for certain purpose. Similarly an organization issue shares in the market to raise capital and can buy back them in future due to several reasons. For most of the companies it is more convenient way to return money to their shareholders rather than paying dividends because in buyback company will invest in themselves as they will reduce the ownership of others in the company. Reasons and consequences of share Buy Back for MNC's ŸNo potential growth opportunities

As company issue shares to raise capital, the shareholders demand returns in the form of dividends on their investments. Now if a company is not having potential growth opportunities in their plans, the company still has to hold the capital and share ownership for capital lying idle.

ŸTo take advantage of Undervaluation

A company's stock can be undervalued due to several reasons and companies buyback the shares at this undervalued price from the market, hence paying a lower price for buyback. And then after introduction of some new line of business or by enhancing the sales of business the company improves the share price and then reissues the same number of shares at higher price, hence increasing their equity without increasing the ownership.

ŸTo enhance Return on Equity(ROE)

When a company calls for share buyback it changes its capital structure by reducing the equity share capital and this increases the company's return on equity as the profits generated now are distributed among less amount of equity.

Article of the Month - Runner Up

FINLY| March 2017 | Finstreet | SIMSR

ŸExcess Cash

ŸTax Gains

When a company has excess cash in their balance sheet then in that case as well the company can buy back shares because management feels that the cash re-invested in the business will earn a better return than investing in alternative investments.

Since the dividends are taxed at higher rate than the long term capital gains, hence the companies prefer to buy back their shares instead of paying cash dividends to their shareholders

ŸIncreased Earnings Per share

As share buyback reduces the equity share capital and number of share in the market but will not have any effect on the earnings of the company, the EPS of the company will enhance as the same earnings will now be distributed among less number of shares. The improved EPS will have a positive impact on the stock prices and market sentiment.

ŸIncrease per share ratios

As share buyback reduces the number of shares in the market, hence the per share ratios like PE ratio, Return on Assets, Book value per share also increases. With an increase in these ratios the company fundamentals improves and hence attracts investors for investment. ŸCan divert the funds

A company while buying back shares can divert the cash from the productive investments; hence a company should properly forecast the future requirement of funds required for any kind of capital expenditure or expansion and after analyzing all the situations should take the decision of share buyback. ŸTo achieve its desired capital

structure Share buybacks could enable a firm to quickly restructure their capital structure as per their requirement and can reduce the equity part and increase the debt part in their capital structure. Share buyback also give firms the flexibility to change their dividend policy as well. ŸTo gain an edge over competitor

Sometimes companies try to make their business look more attractive by

Article of the Month - Runner Up

Finly | July 2016 | Finstreet | SIMSR

going for buyback as it will help the c o m p a ny to o u t p e r fo r m t h e i r competitors. Recently a buyback of TCS suddenly put pressure on its rival Infosys to think of a buyback plan. Ĺ¸Option for Exit

Due to certain volatility in the political scenario of the country in which the company is doing business, the company can look for exit option from the country or a company can opt for close of business, hence in that case as well company looks for share buyback. Hence above given are some of the reasons and consequences for the company going for share buyback but an investor should analyze the company by considering all aspects as company may try to put the rosier financials by calling share buyback.

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Final Call As said above there are a several reasons for which a company can opt for share buyback and there are various consequences as well for the share buyback. This can improve the fundamental strength and profitability of the company to look as a better place to invest, but the investor should not get away with only this or any other single move of the company. Rather an investor should look at the model of the business, sustainability of the business and other aspects before taking a call on investing in the company.

With share buyback going at buzz, many blue chip companies are trying to buy backshares as it enhances the financial ratios and shows the strong position of the company. Recent example of buyback of shares is of TCS ( Ta t a C o n s u l t a n c y s e r v i c e s ) , announcing buyback of 5.61 Crore shares at â&#x201A;š 2,850 per share. The major reason they went for buyback is that the TCS was sitting on large pile of cash and as IT sector has faced a high volatility due to Trump administration, the profitability of the company was decreasing and hence buyback plans amid rising concerns of company struggling to invest in new good ideas in a tough business environment.

ECO Section 21

What exactly is CAD? In an open economy, the country imports and exports goods and services, engages in sales and purchases of financial assets and products or any other transactions which result in a flow of money in and out of the county. For these processes, money transactions are required. Balance of payments (BOP) refers to this recording of the all the economic transactions of the residents of the country with the rest of the world. Thus, it acts as a measure for quantitively determining the monetary aspects of a country's international trade.

exports and imports in goods and services and transfer payments. The balance of exports and imports of goods is called as the trade balance. Further adding trade in services and net transfers to the trade balance, we get the current account balance. Transfer payments are defined as the receipts which the residents of a country receive for free which means that without having to make any present or future payments in return. They consist of remittances, gifts and grants which could be official or private. In short, current account consists of: 1. Balance of trade 2. Earning form investment 3. Cash transfers

The balance of payment is thus like a balance sheet, wherein ever y transaction would have a credit entry and a debit entry. Hence, it always balances. There are two main accounts in a balance of payments- first is the current account which records the

Second is the capital account which records all the transactions relating to the sale and purchase of money, stocks, bonds etc. Thirdly it consists of the official reserves settlement balance. This is the surplus

ECO Section

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provided usually in the form of gold to balance the deficit existing from the sum of the current and capital accounts. A deficit occurs when the country's imports are greater than the country's exports. This means the balance of payments is negative. How is it calculated? The basic formula is: Balance of payments (BoP)= Current account + Capital account + Reserves=0

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2. Economic Growth If there is an increase in national income, people will have more disposable income to consume goods and if domestic producers in the country cannot meet the domestic demand so consumers will have to import goods from abroad. India is a fastest developing nation and its requirements and consumption of technology and other innovative goods and services new technology is ever increasing. If there is fast economic growth there tends to be a significant increase in the quantity of imports.

The following table shows the contents of balance of payments:

There are various factors which could cause a current account deficit: 1. Fixed Exchange Rate If the currency is very strong, imports will be cheaper and therefore there will be a higher levels of imports. Exports will become uncompetitive and therefore there will be a lower levels of exports.

3. Decline in Competitiveness. In India many of the goods and services are imported from other countries since we lack expertise to produce them ourselves. This has led to deficit in the balance of trade. 4. Higher inflation This makes exports less attractive and imports more attractive. However this factor may be offset by a decline in the value of Rupee.

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ECO Section

5. Recession in other countries. If India's main trading partners experience negative economic growth then they will buy less of our exports, worsening the current account.

6. Borrowing money If countries are borrowing money to invest e.g third world countries India's History of CAD

What happens if there is a current account deficit?

A current account deficit means that the country owes money to the parties outside. It basically means that there is more outflow of money than inflow. Depending on foreign resources can be detrimental to the economy which could cause an economic crisis. In order to counteract the debt, the country has to attract foreign investments in the form of plants by foreign companies or increase the exports and reduce the imports.

Let us now look at the current account deficit of India:

FINLY| September 2016 | Finstreet | SIMSR

India recorded a Current Account deficit of 1.1 percent of the country's Gross Domestic Product in 2015 and 0.9% of the country's Gross Domestic Product in 2016. Current Account to GDP in India averaged -1.43 percent from 1980 until 2015, reaching an all time high of 2.28 percent in 2003 and a record low of 4.82 percent in 2012. 2008-2012 The following graph shows the current account deficit over the period of 2008 to 2012. As can be seen in the graph the deficit was highest in the year 2012, which is 22.3 billion dollars. It was about 4.2 per cent of the GDP during this period (2011-12). It was the highest in both the absolute terms and as a percentage of the GDP. This can be attributed to the increase of the crude oil and gold during that time. Also, the GDP growth rate during that period fell form 8.4 per cent to 6.5 per cent. The demand of consumption items and fixed investments also fell. The implication was that the rupee weakened by more than 3 per cent against the dollar during this time.

ECO Section

FINLY| September 2016 | Finstreet | SIMSR

2012-2013 CAD during 2012-13 saw an increase owing to the large trade deficit. According to the data by RBI, trade deficit was $ 195.7 billion due to the decline in merchandise exports by 1.1 per cent and rise in imports by 0.5 per cent on a year on year basis. There was a decline in the manufactured goods like textiles, gems, engineering products etc. 2013-2014 India's current account deficit lowered during this period to about 1.7 per cent of the GDP. This is attributed to declined merchandise imports which was 83.7 billion for the fourth quarter of 2013-2014, as against an increase of 5.9 per cent in the fourth quarter of 2012-13, according to the data by RBI. There was also a steep drop of gold imports which was $ 5.30 billion as compared to the $ 15.80 billion in the fourth quarter of 2012-13.

2015 and onwards

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If we check the past data, The CAD that is the difference between the inflow and outflow of foreign exchange, was 1.7 per cent of GDP (USD 32.4 billion) in 2013-14. In the first half of the 2014-15 fiscal, CAD raised to 1.9 per cent of the GDP (USD 18 billion). Mainly due to India's merchandise export growth weakening since July 2014 and entered into contraction from January through April 2015. Exports of goods dropped to $266.4 billion last fiscal from $316.5 billion in 2014-15, while imports saw a drop to $396.4 billion from $461.5 billion during the same period. Drop in exports was greater than drop in imports. In the quarter ended March 2016 net foreign direct investment (FDI) declined to $8.8 billion from $9.3 billion in March 2015.

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ECO Section

Current account deficit (CAD) had shrunk to $300 million in the fourth quarter of 2015-16, down from $700 million a year earlier and sharply lower from $7.1 billion recorded in the p r e v i o u s q u a r t e r. This has been the lowest deficit since a $4.74 billion surplus was reported in March 2009 which was a one time event. The contraction in CAD was primarily on account of a lower trade deficit ($24.8 billion) than in Q4 of last year ($31.6 billion) and $34 billion in the preceding quarter. According to RBI, Trade deficit narrowed as both exports and imports of goods fell. The current account deficit for the full fiscal year narrowed to 1.1% of GDP down from 1.8% of GDP in 2014-15. This was mainly due to drop in oil prices which has helped in reducing current account deficit. At the same time India had a stable currency. Net services receipts declined consistently on year on year basis largely due to fall in exports of financial services and telecommunication, computer and information technology services. However, on a fiscal year basis net (FDI) inflows rose sharply by 15.3% to $36 billion in 2015-16.Trade deficit narrowed to $130.1 billion in 2015-16 from $144.9 billion in 2014-15, mainly as imports mostly of oil and other co m m o d i t i e s d ro p p e d s h a r p l y.

Private transfer receipts representing remittances by overseas Indians, continued to decline, totaling to $15.2 billion in the June quarter, from $15.7 billion in the preceding quarter. In the short run, the biggest challenge for

current account deficit will be redemption of $25 billion in foreign currency non-resident (FCNR) deposits that were raised in 2013 to protect the falling rupee and stabilize the rupee. About four-fifths of these are unlikely to be rolled over, which could result in $20 billion in outflows in the SeptemberNovember period. India's CAD narrowed to 1.3% of the gross domestic product (GDP) in the fiscal third quarter from 1.5% in the last year's period, as the country's trade deficit contracted. Data released by the Reserve Bank of India (RBI) showed trade deficit in the October-December quarter dropped to $34 billion from $38.6 billion in the same period in 201415.CAD mirrors the difference between domestic savings and domestic investment, and conveys the extent of this gap that needs to be bridged by foreign savings. CAD narrowed to 1.4% of GDP in the nine months ended 31 December from 1.7% in the corresponding period of 2014-15. Global concerns over China's economic growth and normalization of the monetary policy in the US may affect global financial flows, with policy reform initiatives and a strong macroeconomic outcome, the deficit in the current account is likely to be more than fully financed through stable flows, and the volatility in global financial markets may affect the exchange rate which makes the situation even more dicey.

ECO Section

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Future predictions Recent past though was easy but future seems little bleak. India's import basket has a major component of oil followed by gold. Rice of both these quantities fluctuate based on the world economics. It's expected that price of oil and gold will increase going forward which will impact India's import value considerably. India's current account deficit is expected to increase by $10 billion to $30 billion in the 2017-18 fiscal year due to higher oil and gold imports. ICRA predicts a rise in the prices and import volumes of crude oil and gold to widen the Indian current account deficit to around $30 billion in 2018 from around $20 billion in 2017. Even though merchandise exports may rise by 5-6 per cent in 2018, led by the higher value of commodity-intensive exports, global trends do not support well for a significant improvement in the services trade surplus and remittances in 2018.

of the current account deficit. The ICRA also expects imports of fertilizers to go up marginally to $5.4 billion and that of coal coming down to $13.6 billion next fiscal. The outlook for exports remains grim, given the global political landscape, especially the upcoming elections in European countries, Brexit negotiations and the US trade policy. Such uncertainty may curtail the opportunity of India's merchandise exports in the coming quarters, despite the rise in the value of commodity-intensive exports. The rating agency also said the trade deficit-difference between imports and exports- to increase to around $125 billion from around $114 billion in 2017. According to ICRA, resumption of NRI deposit inflows, along with sustained healthy FDI flows, would reduce the pressure related to the financing of a larger current account deficit in 2018.

Since 2014, a combination of lower crude oil and/or gold imports has helped limit India's current account deficit, absorbing the impact of declining merchandise exports, services trade surplus or remittances in some of these years. This cushion would not be available in 2018. The ICRA expects average crude oil price to go up to $55/barrel in 2018 from around $48/barrel in 2017. Accordingly, net oil imports are expected to expand by 24 per cent to $67 billion in 2018 from $54 billion in 2017, proving as the main driver of the anticipated widening

Alumni Section 27

I believe the right place to advise is always in the retrospective. Common understanding is that life is 'sorted' after getting placed in the campus. But the 'good life' that one aspires for is a little more work. About a year ago, I became a part of the active workforce and I am doing just fine. Do I enjoy my work? Presently, yes. Is it challenging enough? I would say it is interesting. Am I appreciated enough? I guess. There is no straight forward answer to these questions. Yet if you asked me whether I could better prepare myself for the corporate, there is no two way about it. Like every industry setting, corporate has its own mechanism of operation and movement. These are not written clauses but unspoken practices that can probably help you adjust to the workplace better. So, I will jot down all the things that helped me develop a greater sense of observation and adaptability. You might as well try few of these things in the college itself and benefit manifolds.

1.Network & Network More: College is the best place to form long term, trustworthy, professional network. Over time, you will find many of your college mates working in related industries. Keeping good terms with them will open doors to many a new ideas and opportunities that is beyond any calculation. A closely integrated network of business professionals is one of the biggest perks of spending 2 years in a B school. So never undermine that. In the least, having friends never did any harm. 2.Reach Out To The Faculty: Believe me or not, a lot of faculty are open to talk on subjects far removed from their own course material. Once you are able to put aside your embarrassment of recent assignment score, step into their cabin and do not only ask about expected questions in the upcoming exams. I was very fortunate to find few of the most supportive professors at SIMSR. Talk to them about your hobbies, aspirations,

Alumni Section

placements, family and career goals. You will be amazed at the treasure chest of genuine interest, wisdom, knowledge and help you will receive from them. 3.Upgrade& Sell: At the end of the day we all are selling ourselves as capable human resource in the market. So, roll up your sleeves and do your own SWOT analysis. Try to create a unique set of skills in yourself and then put in the hours to excel in it. There are plenty of resources and softwares freely available in the college library that can come handy. Take your time to explore them because if you will want to learn them later, you will have to pay a significant amount of subscription money. Also, you will run into many other people in your office who already know those resources in and out.

SIMSR alumni across all industries. Connect with them and they would be more eager to genuinely help you in every roadblock. Remember that they have been there, done that. A mere acknowledgement goes a long, long way. Personally, I trust my seniors for most authentic information on any profile or company.

The two years spent at SIMSR was a memorable time I still fondly reminisce about. I hope the same for you. Wish you all the best in your future endeavours!

4.Read Business Books: While there will be absolutely no dearth of people telling you to read more, reading anything is not as useful as reading the right materials. Newspapers are good but all too often we ignore the Business Books written by some of the most brilliant and seasoned minds in the corporate. Reading these books is like hitting a goldmine. It would spark your imagination, refine your thinking process and enable you to scrutiny better. 5 . A c k n o w l e d g e Yo u r A l u m n i : Wherever you work in future, chances are that you have a SIMSR alumnus working there already. There is a huge network of industrious and illustrious

Article by FInacue

Introduction to Green Finance Green Finance is any market-based financial investment for sustainable development projects. It includes investment in environmental products and policies and it comprises financing of green investment be it preparatory cost or capital cost. Green Investment includes investment for climate change mitigation, elimination of green house gas emission, sanitation, pollution control, investment in renewable energies and energy efficiency. Investments in renewable resources like solar energy, wind energy, tidal energy have long term benefits but are expensive. As per statistics by International Energy Agency, world need to invest 13.5 trillion dollars of funds in low carbon energy solutions by 2035 to reduce emissions. An interest on investment is provided by investing into Green bond. This is

considered a stepping stone to overall fund required by the green economy. Around 5 billion dollars of Green bonds have been issued by World Bank and other multilateral lenders. These funds need to offer significant returns to motivate investors to purchase green bond. Tumbling price of solar and wind energy suggests that might be a reality soon. There are many start-ups and social entrepreneurs who are trying to tap the market of green finance. There are even heavy weights like General electric that has invested power generation through wind energy. United Nation Framework convention on climate change UNFCC is anticipating that both the developed and developing countries have different capabilities to fund for the Green economy and sustainable

Article by Finacue

FINLY| March 2017 | Finstreet | SIMSR

development. Hence, the developed country needs to provide financial assistance to the developing countries for implementing the convention. For this a financial mechanism has been built that provides funds to developing countries for sustainable development. Also, Green Climate Fund (GCF) has been assigned as an operating entity of the financial mechanism as mentioned above. This mechanism helps in deciding the ways to allocate funds for policies concerning climate change, sustainable development and technologies for low carbon emissions. Lots of countries and companies see it as an opportunity and want to tap it before any other does. China as a hub for Green Finance: China is considered one of the fastest growing countries with around 7%-8% of growth rate for last few decades. Industry pollution has become the major challenge that the country. The government of China puts pressures to revamp its strategy and focus more on sustainable development. Recently China has issued official rules for the use of 'Green Bond 'that seems to help the country to acquire required capital in its effort to become green economy. India's efforts for green finance : The global emphasis on Green and clean environment encompasses MSMEs also. The increasing concern on environmental degradation, lack of information about availability of alternative clean technologies, lack of awareness of advantages of investing in such technologies and low skill sets of

existing workforce to adapt to new technologies are few reasons for MSMEs lagging behind in up gradation and modernization of their facilities. Now Reduce (waste), Reuse and Recycle are emerging as thrust areas of various activities. Developing a green bond market to create green finance: Green bonds have existed for a decade but regulation and investment in them is still minuscule compared to the total market for debt mainly on account of lack of green bond standards, low credit rating of potential issuers and higher cost of issuance. There has been huge subsidies in fossil fuels like subsidized diesel, kerosene and gas and have and have contributed to environmental degradation and global warming. It is apt that clean energy initiatives get equitable treatment. For the purpose to develop a green bond market, the government essentially needs to increase the funds available for investment in green projects, by providing for specific tax incentives and development of longterm finance markets in general. Certain steps can change Insurance Regulatory and Development Authority norms for increasing size of investment for insurance companies, creating mandates for provident funds to invest in infrastructure and environmentally sustainable projects, increasing the priority sector lending limit for bank loans under solar energy from a meager Rs.15 crore and standardizing the

Article by FInacue

FINLY| March 2017 | Finstreet | SIMSR

definition of green to be able to target government efforts in the direction and mobilizing retail savings by way of tax exemption on the lines of Section 80CCF. Though the market is nascent, broad guidelines are coming to the fore. As the market matures, investors require information about green bond issuers who report on status of deployment and environmental outcomes of the investments. For the green bond market to have long-term credibility, investors and governments will need evidence that the projects funded have delivered the intended environmental benefits. The Indian government can lead the global push towards green by taking three steps to reduce our races' carbon footprint like standardize â&#x20AC;&#x153;greenâ&#x20AC;? bonds as a way to finance environmentally sustainable projects, provide incentives to investing in projects funded by a carbon tax on polluting sources of energy and lastly, increase funds channeled towards investing in environmentally sustainable projects. SIDBI's Financing Scheme for Energy Saving The Japan International Cooperation Agency (JICA) has extended a Line of Credit to SIDBI for financing Energy Saving Projects in MSMEs. In this scheme, financial assistance is provided to MSMEs through SIDBI as well as through refinance to banks/ SFCs (State Financial Corporations) and NBFCs (Non Banking Finance Companies) to

encourage MSME units to undertake energy saving investments in plant & machinery/ production process to reduce energy consumption, enhance energy efficiency, reduce carbondioxide emissions and improve profitability in the long run. The interest rates are attractive. IDBI Bank's Environmental Services IDBI Bank has created a group working on climate change and more on carbon credits advisory services to the clients to deal with Clean Development Mechanism (CDM) / Carbon Credits of Kyoto Protocol and Voluntary Emission Reductions (VERs) authorities. This group has devised a structured product for providing upfront finance against the carbon credit receivables. The product is well accepted by the Indian project developers. The carbon credit group is closely associated with the World Bank in providing an end to end solution for the chiller users of India in switching over from a high carbon chiller to energy efficient low carbon chiller. It's a strategic opportunity for the whole world, be it countries or companies or even an individual. This is an opportunity to overcome the climate challenges and invest in sustainable development and green economy.

Sector Analysis

Did you ever give a thought to the magnificence of the aviation industry while sipping from a cup of coffee sitting and waiting for your flight at a lounge in the airport? You might have admired the architecture of Chattrapati Shivaji International (Mumbai) Airport many a times but you might not be aware of the fact that this airport won the Architizer A+ Award for the â&#x20AC;&#x153;Best Architectural Structures in the Worldâ&#x20AC;? in the Transportation-Airports category, 2015.IGI International Airport, Delhi was the Best Airport in Central Asia Region in the year 2015, according to Skytrax (UK based Airport and Airlines Rating Consultancy Firm). This industry has got much beyond than it looks. Indian aviation sector is expected to become the 3rd largest in the world by 2020 and largest by 2030, says FICCI-KPMG 'India Aviation Report 2016'. Today, through this column, we bring to you a detailed analysis of the Aviation Sector in India.

According to the International Air Transport Association (IATA), India is the fastest-growing aviation market. As per IBEF report, India is the 9th largest civil aviation market in the world, In FY17, civil aviation sector witnessed a growth rate of around 20-25 per cent. Investments worth USD 6 billion are expected in the country's airport sector in five years. By 2020, passenger traffic at Indian airports is expected to increase to 421 million from 223.61 million in 2016. There are 6 major airports in the country accounting to the maximum share of International and Domestic traffic among all the airports in the country. There are 6 major airlines in India: Let us take a look at the performance of the stocks for some of the companies in the sector:

Sector Analysis

FINLY| March 2017 | Finstreet | SIMSR

In the table 1, we have selected some of the top listed companies in the airline industry in India. The slump in the oil prices which is one the most significant component of the operating costs of the airlines have resulted in better performance in recent years for many of the operating airlines. Also, coupled by the fact of increased passenger load factor in the industry led by discount offerings during lean season and limited seats availability in the sector due to winding up of some regional airlines have made a positive impact on

the industry. But, the recent new entrants like Vistara and AirAsia have increased the competition in some of the routes for the airlines.These all factors affected the share price of the companies coupled with the returns which they generated over the period of one year which we can see from table1. Let's analyze each of the company one by one:

Sector Analysis

Finly | July June 2016 2016 || Finstreet Finstreet || SIMSR SIMSR

Jet Airways: For Jet Airways, we can see that the share price of the company decreased by 18.53% over a period of 1 year. Also, the company made a net profit of Rs.1989.72 crore for the period ending March 16 and had a PBITmargin of 9.27%. The P/E ratio for the company was 7.22 compared to industry average of 11.99 which indicates that the investors do not expect much growth in earnings from the company compared to the industry. The EPS hence turns out to be 66.09. SpiceJet: For SpiceJet, we can see that the share price of the company increased by 23.15% over a period of 1 year. Also, the company made a net profit of Rs.407.2 crore for the period ending March 16 and had a PBIT margin of 8.71%. The P/E ratio for the company was 10.14 compared to industry average of 11.99 which indicates that

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the investors do not expect much growth in earnings from the company compared to the industry. The EPS hence turns out to be 8.29. Indigo: For Indigo(InterGlobe Aviation), we can see that the share price of the company increased by 5.93% over a period of 1 year. Also, the company made a net profit of Rs.1989.72 crore for the period ending March 16 and had a PBIT margin of 18.36% which shows better margins for the company which can be attributed to better operating cost controls. The P/E ratio for the company was 18.69 compared to industry average of 11.99 which indicates that the investors expect higher growth in earnings from the company compared to the industry and hence are ready to pay higher price for future earnings expectations. The EPS hence turns out to be 49.32.

Sector Analysis

FINLY| March 2017 | Finstreet | SIMSR

From table 2 we can see that the returns of both the index- NSE 50 and BSE Sensex 30 has been 18.37% and 17% respectively which is higher than some of the returns given by the airline industry. But, the future growth drivers for the airline industry looks good as we can see from the above listed reasons: Conclusion This sector surely needs your attention as there is much development towards this sector to cater to the continuously growing travel and tourism demands of International and Domestic market. Increasing airline operators, more FDI, Growth in passenger and freight traffic open newer realms for those who plan to consider this sector into their investment portfolio in the long term.

Finly | July 2016 | Finstreet | SIMSR

Finly Diaries

It was a terrific experience for me to work in FINLY team as I was the designer and editor both. I learnt a lot while writing articles for FINLY and designing the whole magazine made me a refined artist too. Working within deadlines, and releasing the magazine on last day of the month, was quite a challenge for us. We've always made sure that our magazine is utilised by MBA students nationwide and we've been successfully delivering our best. I hope that FINLY touches new heights in coming years. -GEETANJALI RAI PGDM-FS (2015-17)

I had a great time working with FINLY team as an editor. I would rate the experience as excellent on all levels. Writing articles helped me consolidating knowledge and understanding the concepts better. Overall, contributing to the magazine has been quite a learning experience for me. Looking forward to the future editions of FINLY. Best wishes! -ABHIJIT KHADILKAR PGDM-FS (2015-17)

Finly Diaries

FINLY| March 2017 | Finstreet | SIMSR

Being an editor of FINLY was truly an enriching experience. As an editor I had multiple advantages; of an editor and also of a reader. Being a Finance magazine, FINLY really helps in building your Financial Acumen and also keeps you updated with the happenings in the world of Finance. It supplements your classroom learning and the theoretical stuff through its engaging articles. Also, the magazine is very picturesque, which makes it even more fun to read!!Overall, the experience was amazing!!! - RISHI TEKCHANDANI PGDM-FS (2015-17)

An amazing experience indeed to be a part of Finstreet. Writing and editing articles for FINLY was a great learning experience and helped me in improving my financial acumen substantially. We, as a team, always tried to present FINLY in an easily comprehensible and lucid manner to cater to the readers from diverse backgrounds. My best wishes for FINLY and to team Finstreet for achieving greater heights in the coming years. -PREYAS JAIN MMS (2015-17)

News Buzz

FINLY| March 2017 | Finstreet | SIMSR

In a first in Kerala, ESAF Small Finance Bank opens; targets Rs 20,000 cr worth business by 2020 ESAF Small Finance Bank, Kerala's first small finance bank, is targeting businesses worth R20,000 crore by 2020. Kerala chief minister Pinarayi Vijayan on Friday inaugurated the SFB in Thrissur. ESAF Microfinance is among the 10 financial services firms selected by the RBI for setting up small finance banks. The bank, promoted by ESAF Microfinance and Investments (P) Ltd, has announced that it will open 85 branches in the first year of operations. The new bank is offering interest rates of between 5.75% and 9% for term deposits of varying maturities. For savings deposits, the rates vary from 6% to 7%, based on the outstanding balance in the account. Senior citizens will be entitled to an additional .05% for term deposits.

No move to withdraw new ₹2,000 notes: Finance Minister Finance Minister ArunJaitley today said there is no proposal to withdraw the ₹2,000 notes that were introduced post demonetisation. The ₹2,000 banknotes were introduced along with new ₹500 currency following the withdrawal of old ₹500 and ₹1,000 notes from November 9, 2016. “There is no proposal to withdraw the Rs. 2,000 denomination banknote,” the Minister said in a written reply in the Lok Sabha. Jaitley further said the ₹500 and ₹1,000 notes returned to currency chests of the RBI amounted to ₹12.44 lakh crore (as on December 10, 2016). The data obtained in this regard would need to be reconciled with the physical cash balances to eliminate counterfeit notes, accounting errors and possible double counts after which only the final figures will be arrived at, he said. He added that as on March 3, 2017 the currency in circulation was ₹12 lakh crore and as on January 27, it was ₹9.921 lakh crore.

News Buzz

FINLY| March 2017 | Finstreet | SIMSR

Deutsche Bank said to be weighing sale of India retail business

Dubai Chamber applauds Indian government's ease of doing business

Deutsche Bank AG is weighing the sale of its Indian retail businesses as the German lender considers asset disposals to help boost capital levels, two people with knowledge of the matter said. The bank is also considering selling retail operations in European countries including Spain, the people said, asking not to be identified as the plans aren't public. The Frankfurt-based lender declined to comment. Chief executive officer John Cryan earlier this month announced a strategic overhaul that includes offering â&#x201A;Ź8 billion in stock, selling part of the asset management business and raising â&#x201A;Ź2 billion ($2.13 billion) of capital. While asset disposals are part of the strategy, Cryan stressed that they'll play a minor role in the overall aim of boosting capital levels.

The Dubai Chamber of Commerce and Industry on Thursday commended the strengthening of trade and commerce relationship between India and Dubai, crediting this growing relationship to the ease of doing business initiative by the Government at the Centre.

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FIN Tweets

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Trivia

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Wall Street Firsts Wall Street was laid out behind a 12-foot-high wood stockade across lower Manhattan in 1685. The stockade was built to protect the Dutch settlers from British and Native American attacks.

NYSE Firsts The New York Stock Exchange (NYSE) began in 1817 as the brokers formed the New York Stock & Exchange Board (NYS&EB), renting rooms at 40 Wall Street and adopting a constitution.

Money Doesn't Grow on Trees? Before money was made of bills and coins, these items were used as currency: conch shells, ivory, clay, live animals and grain. As long as it was division and scarce, it could be money. In 1932, wooden bills were temporarily made and used Tenino, Washington. Why? There was a major cash shortage at the time and wood was readily available. BSE First The BSE traces its history back to the 1850s, when 4 Gujarati and 1 Parsi stockbroker would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Associationâ&#x20AC;&#x2122;

Measuring Sensex- The beginnings Till the decade of eighties, there was no measure or scale that could precisely measure the various ups and downs in the Indian stock market. BSE, in 1986, came out with a Stock Index-SENSEX- that subsequently became the barometer of the Indian stock market.

Finly | March 2017 | Finstreet | SIMSR

We welcome your valuable feedback www.finstreet.weebly.com Finstreet, Finance Committee of SIMSR finstreet@somaiya.edu