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JANUARY 11, 2015 | A FINNICHE INITIATIVE
Do write to us at: finniche.imt@gmail.com
Opinion Crude oil decline to $50 a barrel: Will it stay? | 4
Term of Week Capital
In Focus The Demise Of Mahinda Rajapaksa | 2
Budgeting | 6
Tech World
Personality
Phaz Music : P2
Pranav Mistry |11
Headphones |12
January, 11 | 2015 | Volume 29
2015 has brought in sports fever at IMT. With IPL in mind, Cricket, Football and Badminton tournaments are planned for the subsequent weeks. The owners have bought their teams and the auctions for cricket and football players has been completed. The tournament is set to kick start in the upcoming week and all teams are busy planning strategies and practicing hard to emerge as winners. The Demise of Mahinda Rajapaksa
Club FinNiche releases its weekly magazine FinXpress, with the In Focus talking about the ‘The Demise of Mahindra Rajapaksha’. The Opinion gives an overview of ‘Crude oil decline to $50 a barrel: Will it stay?’.
barrel: Will it stay?
The term of the week describes ‘Capital Budgeting’, a process to decide which long term investment to make. Do have a look at the market section, Tech world which brings to you about P2 Headphones and Personality of the week, Pranav Mistry.
Capital Budgeting
Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas.
Crude oil decline to $50 a
Happy Reading!
Pranav Mistry
Regards The Editorial Team Club FinNiche
P2 headphones
Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.
- By J. Sindhuja
Mahinda Rajapaksa, the president
of
South
longest serving
allocated amongst those ministries which are
his
held by the brothers of Rajapaksa. This clearly
Maithripala
signifies the concentration of power with only
Sirisena by winning a whopping 52.1% vote
one family which was bound to meet with
share in the recently concluded Sri Lankan
acute resentment from the public, particularly
general elections. This comes in as a surprise
when it is a democracy.
opposition
team
and
has
know that 70% of the state’s budget is being
been
outmanoeuvred
Asia
outwitted
headed
by
by
particularly when the country has been recording the highest GDP growth rate (>7%) as compared to its South Asian peers for the
past five years and also boasts an comfortable public finances. Let us throw some light over all those factors
which have led to his ouster from the presidential office. The first factor and an important one is the nepotism and favouritism which has been extended by Rajapaksa to his family members. For the record, the ministries of economic development and defence along with other key posts like speaker of parliament and presidential advisor were all allotted to the relatives of the then president. It is startling to
Rajapaksa’s government has also been accused of supporting fringe extremism by using Sinhala Buddhist groups who were primarily targeting the Muslim minority population. The ruling party has actually adopted a reverse polarization strategy by fuelling deadly riots in the country, which was expected to make the majority Sinhala community to rally behind the government and thereby overpowering the increasing dissent amongst the minorities. However, as it was clearly evident that this step has backfired as a significant percentage of Sinhalese votes have been polled against the incumbent government owing to multitude of various other factors. The word ‘Development’ is the major plank of the Rajapaksa's government, which included massive overhaul of the country’s infrastructural facilities and an urbanization drive to provide basic amenities to the needy. However there has been a case of serious misgivings under this agenda, which includes the likes of depriving its citizens the right to criticise and to express their dissent. Things went nearly out of control when Chief Justice of Sri Lanka has been sacked only for questioning the government over the constitutional discrepancies on a financial bill.
To sum up free society and an independent
The incumbent government has also been
judiciary has gone for a toss under his regime
criticized for its flip flop foreign policy
which hadn’t bode well with voters as they
measures with its neighbours and the west.
weren’t really ready to pay such a heavy price
During
for sake of development. Another important
maintained close relations with India which
factor was the government’s miscalculation in
has long been the country’s best ally over the
setting
patriotism
years. However there has been a complete U-
prevailing over the quality of life. An average
turn in this policy as he countervailed India
Sri
facing
by engaging with its adversaries China and
unprecedented increase in the food and
Pakistan for various fronts. Its relationship
essential prices, while his salaries had more or
with China has particularly irked India as
less remained the same which made it very
country
difficult to make his both ends meet. However
maritime security, after a Chinese nuclear
the government instead of tackling these
submarine has been allowed to station in one
up
Lankan
its
priorities
citizen
like
has
been
the
is
war
time,
important
for
Rajapaksa
its
has
geological
of the Sri Lankan ports. The other grave
policy blunder committed by the ruling party was its absolute denial to carry out an independent investigation over the war time crimes by an outside entity as demanded by the western powers, which has isolated the island
nation on various developmental
factors. Lastly the opposition has been successful by uniting the whole of minority population viz; Muslims, Christians and Tamils for voting
against the incumbent government. This was possible with a ‘Maithri’ approach which implied that coming together and staying together and moving ahead to achieve a better society. The country’s stock market has also cheered the result by galloping to a four year issues
have
chose
to
patriotism
chest
highs. However the road ahead for the new
thumping which didn’t go down well with
government isn’t expected to easy as there a
the common man for whom his own well
far too many challenges and very little hope in
being comes above all the other factors.
the offering.
- By Gayatri Pandit
Demand Supply mismatch
Economies relying more on non crude products
Last time the crude prices collapsed was in
with no parallel when the world was similarly
2008-09, that was because of the financial
oversupplied in past (2012). So, the question
collapse. However, this time the reason for
arises here: Saudi Arabia is also contributing
the slump in crude oil prices is different. The
to this supply, so even if they withdrew will
reason being the over supply, economic and
the prices stabilize or will it lead to inflation.
political changes in various parts of the world. However, there are four reasons which
Another reason to the weakening demand of
can say that the price will not be sustainable
oil and petroleum products in Europe and
at $50 per barrel.
developing countries as these economies are trying to reduce their dependence on oil
US oil drillers cut rigs
The main reason behind the drastic decline in
products by using efficient vehicles and
oil prices is the increased production not only
enhanced technologies.
Default by cash-strapped oil-
in United States, but also in Canada, Iraq and
producing countries because of
a handful of other countries. The decrease in
Also, the current prices are expected to be
large dependence on crude oil
price is because oversupply from the United
below the costs. At $60 a barrel, many of US
export
States. As per OPEC, to maintain the market
shale projects do not even meet the threshold
share, none among the UAE, Saudi Arabia
of
and the United States are willing to cut down
companies to cut down their drill contracts.
their production because there is a fear that
Many US oil drillers have cut down drilling
other competitor may gobble up their market
rigs for the 4th week. For example, Helmerich
share if the demand increases. Thus, it can be
& Payne Inc. (HP), the biggest rig operator in
seen that the decline in oil prices is because of
the U.S., received a termination notice for four
increase in US shale production and decrease
contracts. Terminating rig drilling contracts is
in the demand by China, which is the largest
cheaper than drilling $10million wells over
imported
and over again.
of
crude
oil.
According
to
production
cost
which
causes
US
International Energy Agency, the demand and supply imbalance in third and fourth
In addition, the cash-strapped oil-producing
quarter i.e. roughly 500,000 barrels a day is
countries will become more unstable to
same as that of last year. The fluctuation is
declining oil prices. The reason being fear of
observed in the first two quarters because of
supply disruption. For example, Russia is
the economic and political changes taking
largely dependent on oil and gas production
place in various economies. 500,000 barrels of
as the revenue from oil contributes to 45% of
overproduction(0.5% of the total) is equal to
government budget and if oil prices stay at
OPEC overproduction versus its own quota,
$60 a barrel, Russian economy may shrink 4.5
and yet there is plunge in last two quarters
% next year.
Greece ability to stay in Euro
Also, one of the major producers to oil Venezuela is also badly affected by declining oil prices. Because of rampant inflation and declining oil prices, the Venezuelan economy may shrink to 3% this year, resulting the economy may default.
bonds, treasury bills.
Implications on Stock market The S&P 500-stock index declined 1.83%, Tokyo’s Nikkei decreased by 2.5%. The Vix, a measure of market volatility that is known as Wall Street’s fear gauge, leaped about 12 percent. Because of these the investors are turning their investments into mare reliable return giving instruments such as government
Other reasons for stock market decline:
It can be seen from the graph as the market price of crude is declining, investors are losing their confidence in this sector thus switching towards more reliable investments.
zone
Market competition for greater market share
Oversupply is persistent till end of 2015
With the election in Greece in due in the coming year, it is difficult to predict whether Greece will stay in Euro zone or not. Because of this uncertainty, the dollar is continuously up surging against the euro. Consumer benefit Consumers can benefit by decline in oil prices. As the decline in oil prices does not lower the household and vehicle spending on crude products, hence the disposable income increases. They also get additional benefit because of the drop in heating oil and diesel prices.
Source: Reuters
Source: The Bond Buyer
However, it is difficult to say that the decline will stop in the coming months. It will take at least 2015 winters to come to expect stability in oil prices. This is because of the competition for capturing the market share along with that increase in the no. of refineries in Saudi Arabia and the United Arab Emirates which will increase the export of oil and gasoline products to 500,000 barrels a day in coming months. In addition, various countries are planning to function their pipelines which may add 350,000 barrels a day onto it.
- By Shikha Sharma
Capital Budgeting is the process by which the
of the fact that the measure of capital
firm decides which long-term investments to
accessible at any given time for new tasks is
make. Capital budgeting, or investment
restricted, administration needs to utilize
appraisal, is the planning procedure used to
capital planning systems to figure out which
Availability of funds
figure out if an association's long term
activities will yield the most return over an
Structure of capital
investment, for example, new hardware,
appropriate time of time.
Taxation Policy
Government Policy
Lending Policies of
items, and exploration advancement ventures
Management
are justified regardless of the financing of
association's
money through the company's promotion
contending open doors (ventures), which is
structure (obligation, value or held profit). It
one of the principle centers of capital
is the procedure of distributing assets for
planning.
Immediate need of the
significant capital, or venture, expenditures.
concerned with the setting of criteria about
Project
One of the essential objectives of capital
which ventures ought to get speculation
planning
financing to build the estimation of the firm,
Financial Institutions
substitution machinery, new plants, new
Earnings
Capital Return
Economic Value of the Project
speculations
is
to
build
the
estimation of the firm to the shareholders.
must
constrained
Capital
apportion assets
budgeting
is
the
between
likewise
and whether to fund that venture with value or obligation capital. Investment ought to be
Numerous formal systems are utilized as a
made on the premise of value-added to the
part
future of the corporation.
of
capital planning,
including the
strategies, for example,
Working Capital
Accounting rate of return
Capital budgeting activities may incorporate
Accounting Practice
Payback period
a wide assortment of diverse sorts of
Trend of Earning
Net present value
investments,
Profitability index
constrained to, expansion policies, or mergers
Size of Business
Internal rate of return
and acquisitions. At the point when no such
Risk of the business
Modified internal rate of return
esteem can be included through the capital
Equivalent annuity
budgeting methodology and overabundance
Forecast of the market
Real options valuation
money surplus exists and is not required, then
including
however
not
administration is relied upon to pay out some
Political unrest
Ideally, organizations ought to seek after all
or those surplus income as cash dividends or
undertakings and opportunities that improve
to
shareholder esteem. Be that as it may, in light
through an share buyback program.
repurchase
the
organization's
stock
INDIAN MARKETS Gold prices rose as dollar and other equities failed to reach the forecast. Gold also rebounds because of good seasonal demand. The volumes traded in the week were not high. The Benchmark BSE index ended lower at 1.54 percent and NSE index ended at 1.32 percent lower, hitting the expectations of the investors. Indian shares are expected to trade range bound in the week ahead. Healthcare Defensive
stocks
and
Consumer stocks
gain this week
Vibrant superlative
India act
–
Modi’s
likely
to
Open
High
Low
Close
SENSEX
27404.19
27507.67
27119.63
27458.38
NIFTY
8285.45
8303.30
8190.80
8284.50
influence investors
BSE SENSEX
CNX NIFTY
COMMODITIES Commodity
Unit
Rs / Unit
% Change
Gold
10 grams
26800.00
0.26
Silver
1 kg
36833.00
1.65
Crude Oil
1 bbl
2983.00
-12.00
EXCHANGE RATES INR/ 1 USD
62.3953
INR /1 EURO
73.6140
INR/ 100 JAPAN YEN
52.23
INR / 1 POUND STERLING
94.1670
INTERNATIONAL MARKETS
Open
High
Low
Close
NYSE Comp
10811.82
10811.82
10680.53
10711.41
NASDAQ
4744.47
4744.71
4681.24
4704.07
S&P 500
2063.45
2064.43
2038.33
2044.81
FTSE 100
6569.96
6570.24
6471.38
6501.14
CAC
4249.26
4272.83
4149.14
4179.07
DAX
9813.99
9860.18
9601.75
9648.50
NIKKEI 225
17318.74
17342.65
17129.53
17197.73
SSE 50
2554.29
2692.61
2540.34
2569.02
Hang Seng
24049.70
24169.06
23859.49
23919.95
Diageo India merger with USL gets shareholder nod Minority shareholders of United Spirits Ltd (USL) have voted in favour of a special company resolution that will see the transfer of business of Diageo India to USL, a strategic move which only 45 days ago was rejected by the same set of shareholders. The special resolution encompasses three key business contracts between USL and its present owner
Diageo Plc, which controls 54.78% stake in the Indian spirits company. These contracts include: import of finished goods for distribution in India; import of bulk scotch to be Prime Minister Narendra Modi will inaugurate the 7th edition of Vibrant Gujarat Summit, a flagship programme of Gujarat
bottled and distributed in India; and the licensing of global brands that would be manufactured and distributed in India. The latest move will add Rs 700 crore to USL's revenue and Rs 70 crore to the EBITDA. In the last fiscal, USL's revenue stood at Rs 8,665 crore. Since the resolution was a related-party
government, in Gandhinagar
transaction, Diageo by law had to abstain from voting. A little over 76% of minority
on Sunday, which will see
shareholders cast their vote in favour of the resolution as against 70.20% shareholders who
participation of UN Secretary
voted in favour last time, which saw the resolution getting defeated. To be passed, the
General Ban Ki-Moon and US
resolution required at least 75% to vote for it.
Secretary of State John Kerry
Directorate of Revenue Intelligence issues notice to Vodafone The Directorate of Revenue Intelligence (DRI) has issued a show-cause cum demand notice to telecom major Vodafone and its two subsidiaries for allegedly evading anti-dumping duty of Rs.330 crore. “We have issued the notice to Vodafone,” confirmed a senior DRI official. Vodafone imported Synchronisation Digital Hierarchy based transmission The present was amid the announcement on Friday that that Infosys will provide 100 percent variable bonus pay-out to
its
employees
December quarter
for
the
equipment from China by declaring it as non-SDH equipment, for allegedly evading the duty, according the DRI. The Directorate General of Anti-Dumping has initiated the action after a local Indian manufacturer Tejas Networks filed a complaint against cheap imports from China and other
countries. Officials said that Vodafone, during the proceedings, opposed the levy of antidumping duty, saying that SDH was critical for the telecom sector. “We have investigated and found out the modus operandi of the duty evasion,” said the official. Vodafone spokesperson could not be contacted for a comment. Vistara to run cost-effective model to stay afloat in market The newest full service carrier Vistara, which took to the Indian skies on Friday, will run a very cost-effective model to remain competitive in the aviation market where it faces challenges from competition like Air India and Jet Airways. The key factor for us will be to keep our costs low, Vistara’s chief executive officer Phee Teik Yeoh told FE on Friday.
Vistara, which currently has 400 staff in its rolls, including about 140 cabin crew staff, plans to follow a lean hiring model.
Govt approves 12 FDI proposals worth Rs 1827.24 crore The Government has approved 12 foreign direct investment (FDI) proposals worth Rs 1827.24 crore, including one by Ratnakar Bank Limited, Mumbai for an initial public offer (IPO) of its equity shares to residents and non-residents
including Foreign Portfolio
Investors (FPIs), Foreign Institutional Investors (FII), Foreign Venture capital Investors
(FVCIs). The approvals were given on the basis of the recommendations of the Foreign Investment Promotion Board (FIPB) at its meeting held on December 19. Oil strikes new low, gold gains Oil prices tumbled this week, hampered by oversupplies and weak global demand despite a pick-up for the US economy, traders said. Brent North Sea crude dropped to $48.90 a barrel Friday and the New York price hit $46.85 on Wednesday — the lowest levels since late April 2009. A decision last month by the Organisation of Petroleum Exporting Countries, which supplies about a third of the world’s oil, to leave output unchanged despite the price plunge
has rattled the market in recent weeks. By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in February tumbled to $49.67 a barrel from $57.02 the previous week. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for February slumped to $47.96 a barrel from $53.49. Gold won support from its status as an economic haven amid concerns for the eurozone. Falling industrial output and exports suggest Germany’s current economic weakness is not over yet, while concerns persist regarding Greece’s future role in the single currency bloc. By Friday on the London Bullion Market, the price of gold rose to $1,217.75 an ounce from $1,172 a week earlier. Silver climbed to $16.24 an ounce from $15.71. On the London Platinum and Palladium Market, platinum grew to $1,225 an ounce from $1,193. Palladium
edged up to $795 an ounce from $791. Government to invest Rs 3 lakh crore for building power infrastructure, says Piyush Goyal An amount of Rs 3 lakh crore would be invested in building infrastructure for transmission and distribution of power in the country, Union Power Minister Piyush Goyal today said. This would facilitate a 24x7 power supply, the minister said, adding the revenue to be generated from the auction of coal blocks would be spent on the development of coalbearing areas. Focusing on the NDA government's commitment to provide 24x7 power supply to people, Minister of State for Power (Independent Charge) Goyal said the eastern states would
get lakhs of crores of rupees through auction of coal blocks.
CMU, NASA, UNESCO, Japan Science & Technology to name a few. Before joining MIT, Pranav worked as a UX Researcher with Microsoft.
14th May, 1981
B. Tech. - Nirma Institute of Technology M. Des. - IIT, Bombay PhD - MIT Media Lab
Young Global Leader 2013 by World Economic Forum 50 Most Creative People of 2010 by Creativity 50 TR35 by Technology Review in 2009
He is from Palanpur, North Gujarat. He has completed his Bachelor's Degree in Computer Science and Engineering from the Nirma Institute of Technology in Ahmedabad, Gujarat. Pranav holds a Master's degree in Media Arts and Sciences from MIT and Master of Design from Industrial Design Center, IIT Bombay. Prior to that, he also dropped out of Architectural college prior to his Bachelor's degree. Later he was a research assistant and a PhD candidate at MIT Media Lab. A man who loves designing and wants to see technology from design perspective, He is proud 'Designeer'. Career He joined Samsung as the Director of Research in 2012, and now serves as the Vice President of Global Operations of the Korean Company. He introduced Samsung Galaxy Gear smart watch in September 2013. In the past, he has worked with Microsoft, Google,
Mistry is best known for his work on SixthSense. Among some of his other work, Pranav has invented Mouseless – an invisible computer mouse; SPARSH – a novel way to copy-paste data between digital devices; Quickies – intelligent sticky notes that can be searched, located and can send reminders and messages; Blinkbot - a gaze and blink controlled robot; a pen that can draw in 3D; and a public map that can act as Google of physical world. Mistry is one of the top Inventor Under-35 and people know for His Sixsense and Samsung galaxy Gear Smart watch. In News As part of restructuring process and to arrest the slide of profits margins of company's cash cow Mobile division, Samsung Electronics has crowned 33-year-old Pranav Mistry, as vice president (Global operation) in December 2014. Prior to this promotion, Mistry was Vice President of Research & Development and the head of Think Tank Team based in Silicon Valley, USA. He also came in news last year when he said that he wants to work with Mr. Narendra Modi and is willing to leave his present job to do so. He said “I am waiting for him to pop the question... and ready to say bye to my lab”.
- By Mohammed Zakir Ahmed
Phaz P2 headphones were launched at the CES 2015 held in Las Vegas from Jan 6th to 9th 2015.
The P2’s are available for preorder now at $249.99 and will
start shipping in April 2015.
Phāz Music, an audio company that launched Tuesday, has introduced its first product: The Model P2 headphones. The P2s are coolly designed, with carbon fiber frame and bright-orange ear cups, but the appearance doesn’t make it unique. The P2s are the first headphones that double as a portable battery pack for your smartphone with a battery power of 1200mAh. While this may sound as an complex gadget, the tech used is actually pretty simple: it just has a pair of headphones and a portable battery pack strapped inside the headphone. That’s basically what the P2s are, just sleeker. The P2s have a USB port under one of the ear cups which is used for charging. If you want to listen to music and charge your phone at the same time, you’ll need two cables (an audio cable and a USB cable). The P2s also have a built-in amplifier that can power the phone’s 40mm drivers for better
sound quality and also a 15dB bass booster. The amp and bass booster could use up approximately 10 percent of the headphone’s built-in battery, which would mean you can get about 10 hours of amplified, bass-boosted playback along with charging your phone. The phone would work passively even without the amplifier or the bass booster (unlike some noise-cancelling headphones), so when the battery runs out there is still plenty of playtime left. Another neat feature on the P2s is the sharing port. The audio-out port under one of the ear cups lets you plug in a second pair of headphones and “share” your music with a friend. The P2s are fashionable, with the battery pack, amp, bass booster, and sharing port, but they’re also pretty lightweight (comfortable to wear for long duration). The headphones though is not on par with gadgets of the same price range.