December 6th, 2015 | A FinNiche Initiative
EDITORIAL I S S U E
1 0
D E C E M B E R
0 6 ,
2 0 1 5
Kudos to Placement Committee for a successful Final Placement Week !!! This past week has been anything but ordinary. The campus has been abuzz with Companies
CONTENT
looking for prospective suitors and students trying to land their dream jobs. With 400+ of our
India’s GDP
batch-mates already placed by the end of this years’ final placement week Club FinNiche would
accelerates in Sept Quarter | 2
like to extend a round of applause to the Junior Placecommers for the dedication and hard
Rupee hits 67 to the dollar: Why is it sliding? | 4
work they’ve put in. It’s not an easy task to perform but they have pulled it off effortlessly. We congratulate all those who got placed this week and extend our warm wishes to those still in the process. May the odds ever be in your favor.
Paris attacks cause more trouble for Eurozone economy| 5
Just as the campus was buzzing with placements so was the world buzzing with tons of issues
In the Goldilocks Zone - Japan ! | 6
hit a two-year low or the curious case of India’s GDP that accelerated to the tune of 7.4%. for
ranging from business to societal. This issue of Finxpress covers a plethora of such events that took place this week like the issue of Indian rupee that depreciated further against dollar and the quarter ended September as opposed to 7%. last year for the same period.
TRENDING NEWS | 9
We invite you to hop on, for the journey through the National and International happenings and do remember to save a glance for the markets and for our finance geeks the topic of
MARKET | 11
discussion this fortnight is ‘Poison pills’ under our Finword section and our personality section
FIN-WORD | 12
covers Mallika Srinivasan aka ‘The Tractor Queen of India’ who is not only a successful
PERSONALITY | 13
entrepreneur but the first lady to ever to assume the role of the President of the Madras
STARTUP TRACKER | 14
Chamber of Commerce and Industry.
SPONSORS | 15
Feel free to write to us and share your ideas.
And as always, we welcome any comments, suggestions or criticism regarding the magazine.
Happy Reading!
Regards The Editorial Team Club FinNiche
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1
NATIONAL B Y
J A N A
India’s GDP accelerates in Sept Quarter
SNIPPETS
A R N A B
Latest Growth rate stands at 7.4% Q-to-Q
The Central Statistical Office or CSO on
transport and communication and
Highlights
30 November 2015 announced that India’s
services related to broadcasting,
Gross Domestic Product (GDP) grew by
financial, insurance, real estate and
International
7.4
quarter
professional
(July-September) of 2015-16 financial year
manufacturing.
outlook
RBI policy
GST
percent
in
the
second
compared to the same period during 2014-
Area wise growth: Agriculture, forestry and fishing (2.2), mining
GDP grew at a rate of 7%.
and quarrying (3.2), electricity, gas,
The high growth rate of the economy has
water supply and other utility
been primarily attributed to a 10.6 percent
services (6.7), construction (2.6)
growth registered by Trade, hotels and
and public administration, defense
Transport and communication and services
and other services (4.7).
Gross Fixed Capital Formation
The manufacturing sector also showed a
(GFCF): In terms of GDP, the rates
spike of 9.3 percent compared to 7.9
of GFCF at current and constant
percent in Q2 of FY 2014-15.
(2011-2012) prices during Q2 of
Highlights
2015-16 are estimated at 28.3 per
Real GDP or GDP at constant
cent and 30.1 per cent, respectively,
(2011-12) prices in Q2 of 2015-16
as against the corresponding rates
is estimated at 27.57 lakh crore, as
of 28.9 per cent and 30.3 per cent,
against 25.66 lakh crore in Q2 of
respectively in Q2 of 2014-15.
2014-15, showing a growth rate of
Registering a 7.4 percent growth, India
7.4 percent.
continues be the fastest growing large
The which
other
economic
activities
economy in the world in 2015. In early
registered growth of over
2015, India had overtaken China as the
7.0 percent are trade, hotels and
2
and
15. In the last quarter ended July’15 the
related to broadcasting sectors.
PAGE
services
fastest
fastest growing major economy in the
to accelerate economic growth was on
January-March quarter, growing 7.5 per
the right track.
cent against China’s 7 per cent. India
Reserve Bank of India (RBI) governor
furthered it’s the growth momentum in
Raghuram Rajan kept the key repurchase
the April-June quarter with 7 percent.
rate unchanged at 6.75% in the year’s last
As
PAGE
3
per
a
recent
forecast
of
the
monetary policy review on 1 December.
International Monetary Fund (IMF), India
This will keep under check any sense of
will remain as the fastest growing major
exubernence; and also shows that the
economy during 2015. It will grow at 7.5
economy is still on the way of recovery.
per cent in 2015 as against China’s 6.8
A key reform in the waiting, the goods
per cent and 3.3 per cent of developed
and services tax (GST), which is aimed at
nations during the same period.
dismantling inter-state barriers to trade
Volatility in China’s stock markets in
in goods and services and economically
recent times coupled with its dwindling
unify India, has been held up by political
economic activities especially in the
wrangling between the government and
manufacturing sector are expected to
the opposition. According to some
result in India’s predominance over China
economists, it would boost India’s GDP
in terms of growth rates.
growth by 1-2 percentage points.
The accelerated GDP growth rate also
One would expect the logjam to break
provides evidence that the government’s
this winter session of the parliament, to
strategy of kick-starting stalled projects
give way to a comprehensive tax regime
and reinforcing India’s manufacturing base
in the country.
NATIONAL B Y
A B H I N E E T
A U G U S T I N E
Rupee hits 67 to the dollar: Why is it sliding? SNIPPETS
Rupee-euro carry trade
While a slide in the dollar following a
The euro has around 58 per cent weight in
less-than-expected
the
the dollar index, while the Japanese yen has
European Central Bank (ECB) spelt some
about 14 per cent weight. The dollar index
stimulus
by
relief to Asian currencies, the rupee hit a
tracks the movement of the dollar against a
RBI's liquidity
fresh two-year low and hit the 67 mark on
basket of six major world currencies A
infusion
Friday.
weakness in these economies can push the dollar index higher, which can in turn
Impending Fed The domestic currency hit a low of 67.01
rate hike
influence
emerging
market
currencies.
against the greenback on Friday, the lowest since September 4, before recouping some
The index, which was at around 70 level in
of the lost ground. The domestic currency
March 2008, was hovering at around 80
though recouped some losses and settled
level in June 2014. It recently breached the
at 66.70, down 4 paise over previous close
100 mark and is now ruling at the 98 level.
of 66.66. Analysts said there might have been Rupee-euro carry trade
winding up of carry trade between the
The ECB played spoilsport on Thursday by
rupee and the euro, which may have been
announcing a less-than-expected stimulus
weighing on the domestic currency.
for the slowing economy of the region.
PAGE
4
The move triggered selling across equity
RBI's liquidity infusion
markets globally. However, the euro and
The Reserve Bank of India will conduct
different Asian currencies, barring the ru-
bond purchases of up to Rs 10,000 crore
pee, were trading firm against the US dol-
via open market operations (OMO) on
lar on hope that a rise in the euro will put
Monday. The central bank will also conduct
a halt to the dollar rally, at least for the
a 28-day variable term repo for Rs 25,000
time being.
crore to inject funds into the banking
The ECB on Thursday cut deposit rate by
system. Rating agency India Ratings in a
0.10 per cent to minus 0.30 per cent (from
note said, "RBI's decision to infuse liquidity
minus 0.20 per cent) and said it would
via both term repo and open market
extend its 60 billion euro, or $63.5 billion a
operations (OMO) routes will have a
month, bond-buying scheme to at least
salutary and sentiment impact on money
March 2017.
market rates as well as bond yields."
"Theoretically, RBI's intention to open
quickly. It is most likely that the US fed
the OMO window to infuse rupee
will raise interest rates in December
liquidity may be negative for the rupee.
15-16 policy.
However, losses in the rupee may be contained to a large extent by exporters'
Some experts believe Fed rate hikes
dollar sales and positional unwinding of
would be gradual. "I think there has
the dollar as we near the December
always been two ways to look at the Fed
15-16 FOMC meeting," the rating agency
increase. It is very clear that even if there
added.
is an increase, the pace of rate hikes is going
PAGE
5
to
be
quite
calibrated
and
Impending Fed rate hike:
measured and slow and slower than it
The real culprit behind the recent slide in
was the last time the US raised interest
the rupee and other currencies globally is
rates. The second thing is a liftoff means
the impending Fed rate hike. Fed chair
two things - one is that yes, capital costs
Janet Yellen on Thursday warned that
are going to be higher but, two, its
waiting too long to wind up the
growth is now stabilizing and even
near-zero interest rate regime could
firming up, which should be good news
propel the central bank to tighten too
for most emerging markets.
INTERNATIONAL B Y
B H A G I R A D H
S I S T A
In the Goldilocks Zone - Japan !
Japan
Japan’s infra exports got a fresh fillip in March
strengthens its
2013 when Prime Minister Shinzo Abe held a
financing arms and India seems
meeting with his key planners. Since then, 21
just right to benefit from it
Human Resources Department, Prevention of Disasters and country/region specific themes.
The Japanese
Needless to say, India is invariably there on
economic engine. The question is why Japan
government targeted ¥30
this body’s agenda. The reasons are not too
didn't look on other South Asian allies as its
hard to find.
option.?
trillion worth exports by 2020.
Since 2003, Japan has begun to look at
True, Japan did look to Vietnam and other
India as its long term strategic view point for
South Asian allies. But they are too small for
business development. By 2007, then then
its appetite. The market potential of those
PMs of Japan and India - Abe and Manmohan
countries is too small to rely with. India
Singh
landmark
seems just right - often called as the
What’s in the
document for setting up the Dedicated
Goldilocks condition. India was extremely
store for India!?
Freight Corridor (DFC) and Delhi Mumbai
large
Industrial Corridor.
infrastructure
The financial arms of Japan Explained
meetings have been held discussing Railways,
respectively,
signed
the
6
terms
of
spending,
its
appetite
for
technology
and
The xenophobic riots in China against
growth. Its economic policies had moved
Japanese establishments made many believe
unerringly towards greater liberalization. It
that China was not too safe destination to
had tasted excellent rates of return from its
invest. This became a fruitful opportunity to
investments in India’s automobile sector. And
India as Japan began to look towards India.
it was also aware how, over the years, Maruti
Also, there were disputes on sharing of sea
-Suzuki had become a bigger contributor to
routes between China and Japan made India
Suzuki’s bottom line than other Suzuki
as a right choice as a business partner. Japan
investments worldwide.
currently has two barriers for the growth of
PAGE
in
Hitherto, most of the investments were
its economy. Its exports to the US and the
done
by
JICA
EU and rest of the developed world is
Cooperation Agency). In 2013-14 alone,
flagging. Second barrier is that the population
Japan’s
is rapidly ageing. Japan strongly needed a base
Assistance) loans commitment to India had
which could finance the growth of its own
exceeded ¥312 billion ~ R156 billion.
ODA
(Japan
(Overseas
International Development
This has made India the largest recipient
project is expected to start in Jan 2016 and
countries
could
for
OFDA
from
Japan.
7
completed
ongoing
Treatment Plant (STP), an intermediate
projects amounted to 66. ODA loans come
pumping station, a centralised SCADA for
at concessional rates of interest, normally of
STP, a main/sub branch sewers, community
1-2
toilet facility, public participation, institutional
percent.
At
number
other
of
end
of
the
include
a
2023.
billion
total
will
Mar
The
and
project
by
Disbursement for the year stood at ¥1456
Sewerage
spectrum JICA also offers grant aid (which
capacity
need not be repaid), technical cooperation
management, along with consulting services.
and citizen participation. Grants accounted
Financial Arms
for ¥1.49 billion, technical cooperation ¥348
Japan has financing arms such as JICA, JBIC
billion. 234 Indians visited Japan in 2013-14,
(Japan Bank for International Cooperation),
while 659 Japanese experts came to train the
NEXI
people and oversee the projects. India was
Insurance),
other
9th largest recipient of this type of aid under
commercial
borrowings
this category. But, the older modes of
Mizuho,
financing required a relook especially after
Infrastructure Investment Corporation for
the March 2013 meeting. As against ¥10
Transport and Urban Development).
development and environmental
(Nippon
and
Export
and
Japanese
JOIN
Investment banks
for
like
Sumitomo,
(Japan
Overseas
trillion of infrastructure related exports from
JOIN is the latest entrant to this team,
Japan to the world in 2010, and about ¥16
established in October 2014. It’s the 1st and
trillion in 2013 (figures for 2014 will be ready
only government-private sponsored fund in
only by mid-2016 and for 2015 a year after
Japan that specialises in overseas infra
that), the government worked out a target of
investment.
¥30 trillion worth infra exports by 2020.
countries with safe and reliable infra through
Once again it’s possible that India will play a
PPP projects. This also takes up the equity
major part in such exports.
investment and focuses on HR development.
What’s in Store !?
The variety of projects in India include
One of the latest recipients if JICA assistance
trans-harbour link between Sewree and
is the Pune Sewerage project, which involves
Panvel in Maharashtra, High Speed Metro and
11 sites with a combined capacity of 396mld
projects on skill development is already
(million litres daily). The total cost is ¥22
underway in Chennai.
billion and the loan amount is ¥19 billion. The
PAGE
get
It
supports
many
recipient
INTERNATIONAL B Y
A L A N K R I T A
Cameron - Modi Meet Amid all the current controversies surrounding second largest investor in the UK. There are
SNIPPETS
the prime minister and its party in the foreign significant historical, linguistic and cultural ties
Highlights of
media after the electoral defeat in Bihar and that remain untapped. Indian students are the
Modi's UK trip was the
increasing chorus revolving around religious second-largest
group
in
Britain.
fundamentalism comes the most refreshing education, health, culture,
much-touted rupee-
UK - India meet.
denominated 'masala bonds' that will raise
From
infrastructure,
science and high-technology to areas such as policing and intelligence, Britain is still a global
This is also of significance as the doubts leader. Modi would surely like increased
capital in London for India's
regarding the seriousness of India towards the investment in his Make in India initiative. UK has started originating in the UK media. In Delhi needs to be more receptive as Britain is
modernization of railways,
spite of Cameron efforts in his First term, he keen to share its expertise at this point of
housing, green energy etc.
one of the reason why in his second term China
was snubbed by then UPA government. This is time. has got the pride of place.
Outcome of the meet Maximum
out
£40 billion worth of contracts, including for the b e t w e e n
a
of
the
complementarity
services-dominated
project to build a nuclear power station in British economy and a consumption-oriented Britain were signed in the last month successful and manufacturing-embarked Indian economy visit by Chinese President Xi Jinping's to the have been extracted by Prime ministers UK . In one of the most significant shifts in Cameron and Modi. British foreign policy in decades, the UK is trying to position itself as a key partner of China in Win—Win deal occurred in the field of Europe. Therefore, PM’s diplomacy comes at the Information Technology, where TCS will train right time. Brand India got reestablished when
1,000 British university graduates in business Modi and commercial skills and UK will help
declared with self-confidence at Guild Hall in establish a new institution to train one million London that, "at this point of time it is wiser to Indian be in India" than anywhere else.
cyber-security
Coordination
professionals.
between Indian and British
forces in the Indian Ocean and the Asia
PAGE
8
Investments
Pacific were declared , symbolizing a changed
Numbers shows that UK is the largest
historical reality . Overall this visit came as a
European investor in India, and India is the
slap on Modi denouncers.
TRENDING NEWS I S S U E
COMMODITIES GOLD 25715 INR/10 G SILVER 35198 INR/ KG
1 0
0 6
2 0 1 5
Japan’s Economy Recovering Slowly
Free-trade agreement talks between
Economic Minister Akira Amari hopes that
India-EU to resume
discussions between public and private
Talks on India and European Union
sector would encourage more corporate
free-trade
capital
January,
spending
and
help
sustain
a
agreement raising
hopes
will of
resume a
in
speedy
moderate economic recovery inspite of
completion to the long drawn process. EU
weaknesses seen in the economy.
is one of the largest sources of overseas investment
CRUDE OIL 2684 INR/BARREL
D E C
in
India
and
with
the
Govt. to push for GST and Real
recommencement of free-trade talks, value
Estate bills next week
added exports of products like gems,
Hard as the week is for the government,
textiles, pharmaceuticals , etc. would get a
EXCHANGE RATES
still it has proposed heavy business in both
boost.
66.65 INR/ 1 USD
six bills in Lok Sabha and seven in Rajya
Q2 FY16 saw a dip in private sector
Sabha. However the main focus would be
firms’ PAT: RBI
on passage of
According to the data based on the
the houses next week. It has plans to pass
72.54 INR/ 1 EURO 0.54 INR/ 1YEN
the key GST Bill in Lok
Sabha.
100.72 INR/ 1 STERLING
abridged financial results of 2,711 listed non-government non-financial companies,
Indian Eco. can grow at 9% for a
country’s private sector firms’ have seen a
decade: Prof. Summers
depression in PAT as compared to 25.6%
Eminent Harvard University
Professor
growth rate in the year ago period, RBI
Lawrence Summers is very optimistic
data showed. Expenditure contracted at a
about the potential of India to grow at 9%
higher rate than sales . However, IT sector
for a decade and at 8% in subsequent years
showed an improvement in both EBITDA
if it takes bold reform measures and
and Net Profit Margins.
maximizes its potential. Summers also believes that India should not follow blindly
Gold Monetization Policy Voluntary
the Tiger’s economic growth model and
The finance Ministry has today clarified
should give more stress to developing
that the decision to monetize idle gold is
services sector and taking speedier and
purely voluntary. The main objective of the
predictable decisions.
scheme is to promote financial savings. A good part of monetized gold can be used
PAGE
9
to meet domestic requirement and hence
banks, SBI would adopt an aggressive
can help in reducing gold imports and
strategy by ramping up the business
saving foreign exchange thereby solving
correspondents model by offering a wide
problem of current account deficit.
variety of digital products. SBI however did not require any capital immediately
Green light for Fed Reserve rate
to meet Basel III norms.
hike US employment rose exponentially in a
US
show of the economy’s resilience which
revised higher but weaker
most likely paves the way for Fed
Nonfarm productivity in US grew at a
Reserve to raise interest rates for the
faster pace than previously thought in the
first time since a decade. The clear
third quarter, though at a weaker trend.
message from the labor market to the
The economy grew at a rate of 2.1% rate
Fed is “Just Do It”.
in July-September period. This was in line with
10
quarter
economists’
productivity
expectations
and
SBI: Aggressive rather than Passive
reflected upward adjustments to third
As the country goes from being under
quarter
banked to properly banked, competition
estimate last week.
will increase due to a host of several
PAGE
third
Gross
Domestic
Product
MARKETS The BSE index ended up with 0.8 percent decrease, while the NSE index closed 0.88 percent lower. Both indexes ended the week largely flat. For the month, the BSE index lost 3.10 percent,
NSE NIFTY
while the NSE index lost 3.30 percent as losses in Metals, FMCG and Public Sector Undertakings sectors led the lower.
TOP GAINERS SUNPHARMA CAIRN BHARTIARTL
Open
High
Low
Close
SENSEX
25868.49
26235.2
25628.44
25638.11
NIFTY
7851.6
7970.7
7779.2
7781.9
BSE SENSEX
SBIN TATASTEEL
TOP LOSERS ZEEL TATAPOWER POWERGRID M&M HDFC
PAGE
11
CNX NIFTY
FIN-WORD B Y
R I S H A V
S I D D H A R T H
Poison Pills Poison Pills is the most effective defense tactics used by most of the companies to discourage hostile takeovers. A poison pill makes the transaction being pursued by a hostile bidder totally
unattractive
from
an
economic
perspective, compelling the bidder to negotiate with the target’s board of directors. This is achieved by making the target company’s stock
Ownership Flip-in: The company buys a
more expensive. The goal is to force the bidder
number of smaller companies using a
to negotiate with target’s board and not
stock swap,
directly with the shareholders.
target's stock.
There are several methods of implementing a
diluting the value of the
Creating an employee stock option plan
poison pill.
which vests only if the company is
One strategy is to give shares to the
acquired in a takeover. This makes it
existing shareholders at a discounted
more
price. This increases the number of
employees
shares the acquirer has to buy. Another
difficult
to
retain
the
key
One non stock related method is to
variant of this is to provide highly
create key management incentive plan
advantageous
called
preferred shares that is
“golden
parachutes”
which
convertible to common shares, should
provides for expensive compensation
the
payments
company
be
acquired.
This
immediately dilutes the percentage of
if
acquired
by
another
company and fire all the key executives.
the target owned by the acquirer, and
PAGE
12
makes it more expensive to acquire 50%
Poison pills are often controversial as they
of the target’s stock.
increase cost of the company if the poison pills
Flip-over: the target takes on large debts
are implemented. Also, they interfere with
to make the debt load to be too high to
market efficiencies that encourage takeovers
be attractive.
when there are favorable economic conditions.
PERSONALITY B Y
A L A N K R I T A
The Tractor Queen SNIPPETS
By betting on farm mechanism, Mallika Srinivasan is linking tractor
The well known entrepreneur of India , pride
joined the group as the General manager, at
of
rooted, Strong
that time the turnover of the company was
headed , the eldest daughter of industrialist A
Rs 85 crore. She grew up learning by her
Sivasailam,
CEO
fathers passion for a larger passion—both in
TAFE - Tractors and Farm Equipment
life and in business. Under the expert
of
her parents, deeply present
chairman
Limited, Mallika Srinivasan
and
was born on
November 19, 1959
guidance of her father and the whole hearted support of the team, She transformed the
maker Tafe’s future to farmer
business to become a hi technology-oriented
prosperity and India’s food
company, the initial choice of the farmers.
company It has now become a Rs 9300 crore Today this unlisted company with a market
security
share of 24 percent is the second largest tractor maker in the country, selling 1.5 lakh units. Mahindra and Mahindra is market leader with 42 percent share. Tafe is also the third largest tractor maker in the world in volume terms after Mahindra & Mahindra and John Deere. Always brilliant in academics , she did her MA (econometrics)
from
Madras
University.
The Company, which has witnessed many ups
Thereafter, She did her MBA from the
and
Wharton
of
determination of this courageous woman that
Pennsylvania. Married to Venu Srinivasan, the
slowly and steadily made the firm climb the
CMD of TVS Motor, she is living happily with
ladders of success. She is the first lady to have
their two children.
assumed the role of a president of the Madras
School
of
the
University
downs.
But,
it
was
the
strong
Chamber of Commerce and Industry. She is
PAGE
13
In 1986 , proud Mallika Srinivasan returned to
also a prominent member of the governing
India with business management degree from
board of the Indian School of Business,
Wharton for joining her fathers business. She
Hyderabad.
START-UP TRACKER B Y
H E R S H
B H A N U
1concern one concern believe that this system can effectively predict how buildings will react to Revolutionizing Emergency Management
the shock waves.
About: Oneconcern.inc is a disaster solutions
The focus is to improve the efficiency of
company that provides rapid damage estimates
disaster management or save
across all natural disasters using artificial
alternatively build cumulative data to go on to
intelligence on natural phenomena sciences. It
serve analytics in the Insurance sector.
lives. And
aims to optimize the chaos ridden disaster reaction
routine
information
for
by
providing
resource
actionable
allocation
and
response recommendation. For
instance
to
track
Personnel: One Concern based in Palo Alto, California is a team of three Stanford founders all of whom have a common mission of making
earthquakes,
homes and cities safer by helping the city and
oneconcern’s founders believe that algorithms
the disaster relief leaders make more informed
can use seismic data and structural knowledge
decisions rapidly during any incident.
of buildings to judge which parts of a city will be
The team has been toiling for the past 4
most at risk and prioritize rescue efforts. They
months, coding the idea.
have developed an algorithm, loaded it with
PAGE
14
public data including the age, type and
Investors: Include affluent investors who
construction materials of individual buildings in
entered at seed stage in case of Dropbox and
a town. It was then trained to understand the
zoosk.
ways
damage
Pejman Mar Ventures, Knight Foundation,
buildings. By combining this knowledge with
Urban. Us, Deep Fork Capital, Sandy Kory,
seismic data following a quake, developers of
Crunch Fund, and 5 others.
in
which
earthquakes
can
Namely
Pejman
Nozad,
Haystack,
OUR SPONSORS
PAGE
15