FINXpress FEBRUARY 22, 2015 | A FINNICHE INITIATIVE
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In Focus
Opinion
Wholesale Price index Deflation | 2
Expectation from BJP Budget 2015| 4
Personality Dilip Shanghvi |11
Term of Week Special Drawing Rights | 6
Tech World Motorola Android Watch|12
February, 22 | 2015 | Volume 35
IMT saw its seniors performing for the last time at Crescendo 2015 and the distribution of awards
for IMT Oscars. In the Global Market oil prices continue to fall with US government reporting record high crude oil inventory as a result of which India tried to lower down its fiscal deficit. With the Budget around the corner, the corporate world is eyeing closely on the steps that will be taken by Wholesale Price Index (WPI)
government to boost the Indian Economy.
Deflation
Club FinNiche releases its weekly magazine FinXpress, with the In Focus talking about the ‘Wholesale Price Index (WPI) Deflation’. The Opinion gives an overview of ‘Expectations from BJP Expectations from BJP
Budget—2015’.
Budget - 2015
The term of the week describes ‘SDR—Special Drawing Rights’, which are international reserve asset created by IMF in order to increase the reserves of its member countries. Do have a look at Special Drawing Rights (SDR)
the market section, Tech world which brings to you about ‘Motorola Moto 360’ and Personality of the week, Dilip Shanghvi. Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas.
Happy Reading! Dilip Shanghvi
Regards
The Editorial Team Motorola Android Watch
Club FinNiche
Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.
- By J.Sindhuja
Whole sale price index (WPI) Deflation
WPI which is used as one of the measure of inflation It can be observed that main reason behind the in India slipped into negative zone
due to deflation is due to negative fuel price deflation and
continuous decrease in fuel prices. WPI measures world deflation is
showing its impact on India.
the changes in prices of goods that are bought and Consumers don’t seem to be too excited with it as sold in whole sale market and is considered primary articles and food articles show an increase important as it tracks dynamic movement of prices. in their prices due to low monsoon and the reason It was used by RBI to control inflation till 2014,but for the deflation is mainly due to international factors recently RBI has shifted to CPI
to make
its which are not under control rather than domestic.
decisions on changing rates. Government uses WPI India would be vulnerable again as soon as fuel to design fiscal, trade and other economic policies prices rise and deflation may not persist for long whereas businessman
track it know changes in time . Manufacturing products inflation is very less
prices of raw materials, machinery and other production costs. WPI is usually preferred than CPI as it gives weekly report of change in prices and has broader coverage which is classified into three categories i.e. primary articles (20.12%), fuel and power(14.91%)
and
manufacturing
products
(64.97%) as compared to CPI. Deflation, which is an indicator that overall prices have decreased
also indicates that it would not
favor Indian economy as whole. WPI
in January
slipped to –0.39% as compared to 0.11% in December which is recorded as second fall in last three months. If the categories of considered, we can see that
WPI
are
fuel and power
inflation has declined to –10.69% from –7.8% in December
whereas primary articles inflation which is a factor of concern as this would reduce
increased from 2.17% to 3.27% ,manufactured pricing power of
manufacturers leading to lesser
products inflation came down to 1.05% from 1.57% incentives to manufactured goods and this may also and food articles inflation increased from 5.20% to pull down CPI inflation to a level which is less than 8%.
what RBI aims at.
Deflation may be due to decreased spending which surprises in union budget. can
be
government,
individual
or
investment
spending or due to reduced supply of money. Indian It is government’s responsibility to revive growth and industry wants to fully utilize the low pricing situation must let RBI to act in its way. with help of RBI .They exhorted RBI to reduce the interest rates so that investment cycles would be Following are the steps to be taken by Jaitley: revived thereby boosting up the demand, but RBI
Public investment should be made in a modest
has kept its rates unchanged waiting for the first full
way in
year budget to be released.
1,00,000 crore in this year and twice the
infrastructure in 2015-16 i.e. 50,000–
amount in the next year Apart from the Indian industry, WPI deflation has its own implications on budget 2015 which is yet to be
CPI and WPI must be rightly analyzed.
released. Even though it doesn’t mean that
WPI) reflects inefficiency of Indian economy. As
deflation would persist for long time, it clearly
WPI reflects producer’s prices and CPI reflects
represents that underlying potential of inflation is
consumers prices, there is huge loss in value
dying as core inflation (non-food manufacturing)
as goods reached from producer to consumer.
dropped from 1.5% in December to 0.9%. It is time
This can be reduced by removing inter-state
to focus on growth rather than inflation. This
market barriers and improving supply chain.
deflation is due to the base effect and is expected to
Though
remain negative for two or more months even
eliminates inefficiencies in supply chain, there
though there is a rise in food and fuel prices as
should be a national market for all goods and
base effect lasts till august. CPI inflation rose to
services
Difference of 5.5%(5.11% CPI and –0.39%
Goods
and
service
tax (GST)
5.11% from 4.28% in December. As RBI started considering CPI as measure of inflation to make Thus India should concentrate on growth as WPI decisions on monetary policy there would be no deflation is showing weak signs of growth. change in interest rates unless there are some
- By Priti Sureka
The Finance Minister will announce the Budget on construction, manufacturing, financial services etc. February 28th which will clear all the doubts and via domestic or international investors. Attracting
questions of people from the Modi Government and FDI is the first priority. India needs FDI to boost the which will unfold what the new government has for economy. Modi Government’s first full fledged budget
its people in its store. But before that let us see what the budget should contain and address to expedite the growth procedure.
India is the second fastest growing service sector. Some initiatives should be undertaken to enhance India’s ability of service exports. India ranks 10th in
Initiatives should be taken to
The government has already taken few measures to service exports worldwide. Government can look
meet
of
put fresh life into the economy which include into service tax structure in this regard. Most
common people from the “Modi
reallocation of coal mines, increasing limit of FDI in importantly, the finance minister must give the
Wave”
some critical sectors, making land acquisition easier surety of implementation of GST from April 1, 2016
the
expectations
etc.
onwards as decided yet, which is in a debatable
Firstly, with the introduction of ‘ Swachh Bharat Abhiyan’ , the government should invest in rural
situation since past few years. If not surety, then at least clarity regarding implementation should be
infrastructure in the form of regular pure water supply, harvesting of rainwater and making that potable, more number of toilets etc. Efforts should also be made to ensure the actual implementation and sustainability of those. Only announcement would do nothing. This will help in attracting tourism which will increase revenue from invisible exports for the Indian economy. Secondly, with the launch of Make in India campaign which aims at promoting domestic
manufacturing
sector,
the
upcoming
budget should show some facts and timelines for completion of some manufacturing projects. Along with that, Special Economic Zones should be revived as MAT is imposed at a very higher rate which will restrict the improvement of manufacturing industry. Therefore, MAT should be reduced to a feasible extent. The next step should be to induce investments in
there so that investors can plan accordingly. In our country, installing a Wi-Fi network takes hardly two days, then why execution of policies which are for the overall benefit takes some years or some decades. The GST implementation will completely change the face of the economy. Tax is the largest source of revenue of the government. There will be uniformity in tax imposition across all the states and will also ensure less tax evasion.
Banking sector in India has witnessed many reforms Government must introduce some laws to exercise starting
from
interest
rate
classification,
reduction
requirements,
making
deregulation,
in
statutory
provisions
asset minimum control on the e-commerce sector. Here reserve RBI can take care of regulation and registration of
etc.
Now, different
payment
gateways,
foreign
exchange
government should think of how to help banks in matters etc. While, for the government imposition of
reducing the quantum of non performing assets certain percentage of sales tax is recommended. rather than just indicating them to do so. Here government can raise the disclosure standards, allow foreign equity participation in securitization or initiate recapitalization of banks. Taking
the
government
financial needs
inclusion to
redefine
Another factor which government can look is spread of information of schemes. There are plenty of schemes for the benefit of people, but the problem is that many are not aware of the same and they seem
a
step this
ahead, to be complicated. Therefore, a separate body for strategy. promoting such schemes to every person should be
Financial awareness should be promoted among set up. Apart from just introducing new schemes, rural people before opening bank accounts for them. The other thing which people will surely look for is Healthcare. India spends only 1.5% of GDP in Healthcare. Government must-
schemes function well. Also some schemes can be
consolidated for convenience. Government must encourage start-ups. Capital must be made accessible and affordable at the same time.
Invest in medical infrastructure heavily
Improve doctor to patient ratio
Invest in medical colleges to have universal
Some tax exemption can be granted for the promotion of start-ups.
access to innovation and technology
government must take initiative to make the existing
Decline in domestic savings is a challenge. Saving rate of the country needs to go up in order to boost
Encourage NGOs
the GDP growth. Here tax incentives can play an
Education sector needs to be strategized. Expensive
important role to restore domestic savings.
education programs should be modified if there is To foster investment in infrastructure development, less job creation. After completing higher studies, deduction amount to invest in Infrastructure Bonds people tend to move out of India, therefore they can be increased. Also, exemption on payment of should
be
adequately
incentivized
by
the interest on home loan can be increased to stimulate
government. On the other hand, private investments home loans. in
education
and
healthcare
sector
can
be
encouraged to reduce the load of the government and to ensure efficiency. Aadhaar card should be used constructively which can fetch maximum results.
It is a big chance for the BJP Government to play a major role by addressing requirements of corporate, MNCs, Salaried individual and every common person living in India.
- By Shubra Sasmit
SDR: Special Drawing Rights The SDRs are an international reserve asset members interest on the SDR holdings according to created by IMF (International Monetary Fund) in their portion of quota subscription. 1969 in order to increase the reserves of its member Reserve asset created by IMF in
order
to
increase
the
reserves of member countries.
countries. SDRs value is calculated on the basis of The IMF allocates the SDR to member countries on the four key international currencies namely the US the basis of their quotas in IMF. SDRs are self dollar, pound sterling, Japanese yen and the Euro. financing as it charges on allocation that are then SDRs can be exchanged for freely used currencies used to pay the interest of the SDR, in other words if of the global integrated financial world.
you don’t use your share of SDR holdings, the charges to pay will equal the interest received, but
SDRs were a product of the Bretton Woods system in some cases if the member holdings of SDR rise which collapsed as there was shortage of two key above a certain threshold then it gets interest on the assets gold and US dollar to keep the exchange excess share of its respective holdings, and if you rates fixed, and the world shifted to a floating regime are low than your allocated holdings you pay of exchange rate. The value of SDR = 0.888671 charges for the shortfall. grams of fine gold during the Bretton Woods system, which incidentally was the value of the US The SDR were particularly useful in the aftermath of dollar too at that time. In 1973 when the Bretton the global financial crisis, as it generated liquidity Woods system collapsed, the SDR was then and supplied that liquidity in the global markets to reformed and was calculated on the basis of the the tune of $182.7 billion. The members often need four major used currencies of the world.
to buy or sell SDRs in order to either make up for the shortfall in their respective holding, in that case
The value of SDR in relations to the US dollar is the IMF acts as a go to link or an intermediary of the calculated on a daily basis and posted on the IMF entire process. SDRs are basically a voluntary
website. The basket of currencies against which the trading, under these conditions the parties gets SDRs are calculated are reviewed every 5 years by involved in the buying or selling of SDRs in their the executive board of IMF, so lately it has become respective limits. a sort of status symbol in the financial world to be referenced as the currency against which the SDR The SDR are often also seen as a bet against the will be calculated.
hegemony of dollars by various countries. The IMF reforms of 2010 pointed to the increase use of
SDR interest rate are interest charged to members SDRs and to incorporate more of the emerging on the regular IMF loans, the IMF also pays the market stable currencies significantly the Remnibi.
INDIAN MARKETS India’s national Stock Exchange’s NIFTY falls by 0.69 percent and Bombay Stock Exchange’s SENSEX ends 0.78% lower, snapping a seven-day winning streak, weighed down by a 3.2 percent fall in shares of Reliance Industries and as sentiment for blue-chips was hit after foreign in-
vestors sold index derivatives for which the reason being sentiment for blue chips was hit. Fund allocations in India's Idea Cellular Ltd and Yes Bank Ltd to increase after their inclusion
Open
High
Low
Close
SENSEX
29,170.77
29,522.86
29,083.40
29,231.41
NIFTY
8,741.50
8,822.10
8,729.65
8,805.50
in India's NSE index, analysts say
Stocks to replace DLF Ltd and
BSE SENSEX
Jindal Steel and Power Ltd, NSE says in a statement
CNX NIFTY
COMMODITIES
Yes Bank and Idea may have
Commodity
Unit
Rs / Unit
% Change
Gold
10 grams
26311.00
-1.83
Silver
1 kg
36404.00
-1.67
Crude Oil
1 bbl
3215.00
-1.38
weights of 0.74 pct and 0.6 pct in the NSE index respectively
EXCHANGE RATES INR/ 1 USD
62.13
INR /1 EURO
70.74
INR/ 100 JAPAN YEN
0.52
INR / 1 POUND STERLING
95.67
INTERNATIONAL MARKETS
Open
High
Low
Close
NYSE Comp
11,042.78
11,111.41
10,976.26
11,108.86
NASDAQ
4,889.99
4,957.02
4,880.64
4,955.97
S&P 500
2,096.47
2,110.61
2,085.44
2,110.30
FTSE 100
6,873.50
6,921.30
6,819.80
6,915.20
CAC
4,757.52
4,841.69
4,683.19
4,830.90
DAX
10,946.88
11,081.81
10,765.02
11,050.64
NIKKEI 225
18,024.01
18,360.92
17,901.26
18,322.30
SSE 50
2,427.17
2,464.52
2,413.60
2,445.26
Hang Seng
24,717.49
24,871.79
24,653.88
24,832.08
Exclusive - Subsidy cuts in budget may disappoint investors India may slash its food and fuel subsidy bill by about $8 billion in next week's budget, two sources said, but despite the impressive headline, the cut is not as radical as free market champions had hoped for in Prime Minister Narendra Modi's first full budget. Most of the 20 percent cut in the budget for
subsidies results from lower global oil prices rather than structural changes, with the government's appetite for reform tempered by a heavy local election defeat in New Delhi this month. "The total subsidy bill could come down to around 2 trillion rupees ($32 billion)," a senior government official, who has direct knowledge of the matter, told Reuters. That calculation was echoed by another source privy to budget discussions. Fuel subsidies are expected to drop by around two-thirds to 220230 billion rupees in the fiscal year that starts on April 1, thanks above all to a halving of international oil prices to around $60 a barrel. The sources said Finance Minister Arun Jaitley was likely to set the total budget for subsidies at about $32 billion, down from $40 billion in the current financial year. It will be the first full budget presented since Modi's Bharatiya Janata Party swept to power in India last May. It produced an interim budget in July that was largely designed by the outgoing Congress party
government.
Indian IT firms eye robotics, driverless cars for next round of growth After decades of low-margin work like server maintenance, India's information technology services firms are moving upscale in search of lucrative contracts for driverless cars and other advanced projects as online innovation changes clients' needs. Companies from Tata Consultancy Services Ltd to Wipro Ltd are all joining Infosys Ltd in investing in new, high-end technology, industry watchers say. Earlier this week Infosys bought U.S. automation specialist Panaya Inc for $200 million. Triggering change is a wave of invention allowing machines to talk to each other online, dubbed 'the Internet of things'. Customers are ramping up: from about 5 percent now, strategy advisor Offshore Insights estimates automation and artificial intelligence work will grow to 25 to 30 percent of an IT outsourcing market seen by the national industry association as worth $300 billion by 2020.
Long wait for Airbus to bag replacement contract for IAF's Avros The wait is getting longer for Airbus, the European defence and aerospace aircraft major, to bag the over Rs 10,000 crore contract from Indian Air Force (IAF) for supply of 56 transport aircraft, which is a
replacement for the ageing fleet of Avro transport aircraft. Airbus along with Tata Advanced Systems
Limited (TASL) was the sole bidder for this contract. The government is in a dilemma over awarding the contract to Airbus as no other bidder had shown interest. The IAF intends to replace its ageing Hawker Siddeley 748 Avro aircraft fleet, with many of them in use for over four decades. The manufacturing of Avro had ceased in 1988. The European major Airbus Defence and Space has pitched its C-295, the twin-turboprop tactical military transport aircraft, priced around $30 million per piece. It is currently
manufactured by Airbus Defence and Space in Spain. The Ministry of Defence had asked eight global vendors to submit Request for Proposals (RFP). The vendors include Boeing, Ilyushin of Russia, Antonov of Ukraine, Franco-German consortium EADS (now rechristened Airbus), Embraer of Brazil and Alenia Aeromacchi of Italy.
Kavin Mittal wants to do in the mobile Internet space what his dad, Sunil Mittal, did in telecom Mittal Jr too adds thousands of subscribers every day - for his messaging app, Hike. And he feels he has embarked on a journey that will transform lives. In Delhi's business circles, few know Mittal well because he moved to London immediately after school. Somebody who saw him at a discussion forum
recently was impressed with his articulation and confidence: Mittal had come in denims. In January, Mittal acquired Zip Phone of the US (the deal was wrapped in less than a month), which has enabled him to offer free voice-calling service on Hike. In the next few months, he hopes to deliver services like cricket updates through voice packs. "There are 14 to 15 features that we are working on right now, which we will roll out over the next few months," says Mittal. Many wonder if Mittal will be able to open revenue streams for Hike, which is a free app. Some even say that he will scale it up to a size and then cash out of it. Mittal insists he is not interested in flipping the company, and revenue streams will open up soon. At the moment, Hike offers free stickers, coupons and games. For higher versions, there could be charges. Mittal feels it's possible to offer news feed and e-commerce on Hike. These offer more monetisation possibilities. Eventually, he sees messaging services as a tool for content discovery, some kind of a browser for apps. Still, Mittal realises that his venture is risky, and there are people around who don't find his business plans convincing.
No formal proposal from post office to set up bank: Raghuram Rajan Reserve Bank of India Governor Raghuram Rajan said on Friday the central bank had not received an application from India Post to set up a bank in the country. The country's postal office had been speculated to be interested in setting up banks across India. Earlier this month, it was among 41 applicants to run a new category of banks planned to bring basic banking services within the reach of millions. The Reserve Bank of India last year granted its first new banking licenses in India in a decade
and has said it would consider applications on a rolling basis.
Managing Director of Sun Pharma Advanced Research
Company
and
Shantilal
Shanghvi
Foundation.
October 01, 1955 Amreli, Gujarat
In 1997, he acquired Caraco Pharma, a loss making American company, with the aim of expanding Sun's reach in the United States and
University of Calcutta
turned them around in no time. The deal paid off; the US now accounts for 60% of Sun's revenue. He also acquired Israel's Taro Pharma in 2007. He
2010: E&Y Entrepreneur Of
is also credited with steering Sun Pharma to fifth
The Year 2011:
place in the global generic drugs market. Business
India
Businessman of the Year
Education
2011: CNN-IBN Indian of the
Shanghvi earned a Bachelor of Commerce degree
Year (Business)
from the University of Calcutta. He is an alumnus of J. J. Ajmera High School and Bhawanipur Dilip S. Shanghvi is a graduate in commerce from
Education Society College, from where he did his
Calcutta University. He is the Chairman and
schooling and graduation, respectively.
Managing
Director
of
Sun
Pharmaceutical
Industries Limited and holds extensive experience
In News
in the pharmaceutical industry.
On 19 Feb'15, he surpassed Mukesh Ambani as
the richest person of India, if one goes by the Mr.
Shanghvi
started
Pharmaceutical
promoter holdings in the listed companies of the
Industries with capital of Rs 10,000 in 1982 at
two groups. By virtue of his over 63% holding in
Vapi. He founded Sun Pharmaceuticals in 1983
three group companies — Sun Pharma, Sun
with five psychiatry products. Today, it is India's
Pharma Advanced Research and Ranbaxy Labs,
largest
drug
Shanghvi’s worth was about Rs 1.46 lakh crore
company. Appreciation of Sun's stock led to a 50%
($23.42 billion at an exchange rate of 62.34 to the
surge in his personal wealth, amounting to USD
dollar). In comparison, Ambani, through his 45%
4.7 billion. He has been named in the list of Asia’s
holdings in two group companies — RIL and
top ten wealthiest self-made billionaires, according
Reliance Industrial Infrastructure, was worth Rs
to Wealth-X. Shanghvi is also the Chairman and
1.32 lakh crore ($21.2 billion)
drugmaker
and
Sun
most
valuable
- Shashwat Shekhar
Motorola Android Watch
Near about Rs. 12,000
Motorola recently launched it’s android wear watch.
Motorola has used 1 GHZ single core Texas
Though it took time for the watch to hit the retail
instruments OMAP-3. The other brands generally
stores, the interesting design probably makes up
use
for it.
company uses a 320
Qualcomm
Snapdragon
400
SoC.
The
MAH batteries. The watch
has 4GB of storage space for music and apps. It The round look of Moto 360 distinguishes it from
has a 512 MB RAM. The battery life is of 16-18
the boxy designs of Samsung and LG android
hours but reduces significantly if one uses “ambient
watches. There is a black bar which hosts the LCD
light” mode. Moto 360 is priced at Rs 17,999 in
drivers and ambient light sensors. The display is
India. From the point of view of smart watches
edgeless and made up of corning gorilla glass
Moto 360 is a step in the right direction but still a lot
3.The watch comes with two types of straps–
is desired.
leather and steel. It weighs only 49 grams despite
it’s size. There is a heart rate monitor at the back.
Pros:
The bottom of the watch is covered in a shell. It is
for protection from water and dust. The screen size is 1.56 inches with backlit LCD and a resolution of 320*390 pixels. The density comes out to be 205ppi. The display is not dense but the colour calibration and brightness makes up for it. The watch doesn’t have an always on mode. There is a feature of ambient mode which shows outline of contents.
The circular design is stylish and looks futuristic.
The price is affordable.
Provision of wireless charging.
Cons:
The processor is inefficient.
The battery life is on the lower side.
Unstable Bluetooth connection with the phone.