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JULY 19, 2015 | A FINNICHE INITIATIVE
Do write to us at: finniche.imt@gmail.com
In Focus Opinion
Iran’s Nuclear Deal | 2
Term of Week
Grexit Worries | 4
ESOP | 6
Personality Ravi Venkatesan |11
Tech World iFusion |12
July 19, 2015 | Volume 40
IMT Ghaziabad will be hosting the launch of India’s most important biggest B school case study event on 19th July. Club FinNiche would like to take the opportunity to welcome all the juniors to the clubs and committees in IMT Ghaziabad. It is exciting to see the flare with which the juniors are taking the new leadership roles and carrying forward the IMT legacy. Iran’s Nuclear Deal
Grexit Worries
ESOP
FinNiche launches yet another edition of FinXpress with the In Focus section putting light on ‘Iran’s Nuclear Deal’. The Opinion gives an overview of ‘Grexit Worries’. The term of the week describes “ESOP", a decision by the board of the directors to increase the number of outstanding shares by dividing the shares, keeping the total value of shares same. Do have a look at the revamped market section which has included international markets and Tech world which brings to you iFusion. Hope everyone likes the revamped version of magazine. Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas. Happy Reading!
Ravi Venkatesan
Regards The Editorial Team Club FinNiche
iFusion
Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.
- By Shashwat Shekhar
Deal
has
the
potential
to
Iran reached an historic deal with six major
democratic party will have to vote against the
world powers on Tuesday. The nuclear deal
bill. On the other hand, it is not likely that
ends a decade of tough negotiations.
This
Iran will be able to receive benefits of the deal
change the political landscape
deal has a potential to transform West Asia.
before next year as it needs to be ratified. It is
of Western Asia.
The agreement was reached in Vienna, on the
also required to verify the implementation.
18th day of diplomatic talks. According to the Israel deal.
has
condemned
the
deal, the sanctions imposed on Iran by U.S,
Iran’s National Security Council will also
European Union and the United Nations will
review the deal and if it thinks that the deal is
be lifted and in return Iran will curb it’s
against national interest then Iran will not go
nuclear programme. The west has always had
ahead with the bill.
it’s suspicion that Iran’s nuclear programme is aimed at making a nuclear bomb. After the
The deal also has a “snapback mechanism.
deal, the President of the U.S, Barack Obama
Under this clause, some sanctions can be
said that the deal effectively blocks every path
re-imposed in 65 days if Iran violates the deal.
to a nuclear weapon that Iran can take. The
The ban on Iran for procurement of missile
foreign minister of Iran, Mohammad Javar
technology will remain for next eight years.
Zarif, called deal a “win- win”. The deal can
Similarly, embargo on weapons is to remain
be seen as a major victory for both U.S
for next five years. On the sidelines of the
President Barack Obama and his Iranian
deal, the International Atomic Energy Agency
counterpart Hassan Rouhani. The latter was
(IAEA) also reached an agreement with Iran
elected two years ago on a promise that he
on
would reduce the diplomatic isolation of
between the two by the end if thus year. The
Iran.\The Prime Minister of Israel, Benajmin
deal with the world powers hinges on the
Netanyahu, termed the deal a mistake of
condition that IAEA will be able to inspect the
historic proportions while the deputy foreign
nuclear sites in Iran. Iran is also expected to
minister of Isreal, Tzipi Hotovely, called the
answer questions of IAEA regarding military
deal “ historic surrender”.
aims of past research.
The U.S congress has 60 days to review the
The fact that the deal can benefit Iran has not
deal and if the congress chooses to reject the
gone down well with allies of U.S in West
deal, the US President, Barack Obama can
Asia. Iran does not officially recognize Israel
exercise his veto power. It would take two
and supports enemies of Israel. Some people
third majority of the lawmakers to override
believe that the reason behind the US
the veto. This means that for the bill to die,
improving its relationship with Iran is the
some fellow members of Obama from the
emergence of a common enemy in Islamic
ways
to
resolve
outstanding
issues
State which has gained ground in Syria and
prices” that countries like India will be able to
Iraq.
reap modest benefits of lower oil prices as the government
Oil prices are likely to drop in anticipation of excess supply.
Iran has the second highest gas reserves in the world.
does not fully pass on the
Lifting off sanctions can bring a rapid
benefits to the final consumers. The fall in
economic boon in Iran. The restrictions had
crude oil prices is expected to boost the global
reduced county’s oil exports and the economy
economy by
shrunk by approximately 20%. The global oil
and 2016. In the same period India’s GDP is
prices fell at the prospect of Iranian oil
expected to grow by 0.4 and 0.6 percentage
returning to the market. U.S and European
points respectively. This is done mainly by
Union will allow Iran to export oil to any
the government the budget deficit and correct
country and reduce restrictions on trading
the subsidiary burden. Fall in international
other products such as– chemicals, natural
prices of crude oil has helped the NDA
gas and refined products. Only Russia holds
government to keep the retail inflation below
more gas reserves than Iran.
5%.
Once the sanctions are removed , it will be
Low crude oil prices has also given countries
easier for India to pay in rupees for the crude
like India an opportunity to re-negotiate the
oil it imports from Iran. The plan of a gas pipe
conditions of imports. India has requested for
line from Iran to India through Pakistan can
a correction in terms and price
also be revived. Iran is also expected to open
Organization of the Petroleum Exporting
its substantial hydrocarbon reserves to Indian
Countries and has asked for abolition of
companies.
something
The prospect of oil production in Iran will put
Abolition of this premium will also help
downward pressure on crude oil prices. It is
Japan, China and Korea along with India.
estimated that crude oil prices will remain
OPEC accounts for 94% and 85% of India’s
below $70 per barrel in both long and
gas and crude oil imports respectively.
one percentage point in 2015
called
“Asian
with
premium”.
medium term. This will continue to have a profound effect on India’s import bill.
If the agreement manages to survive it will be one of the greatest foreign policy successes
India’s energy consumption is 4.4% of total
for
the
President
of
U.S.
Obama
had
global consumption of energy. It comes
personally started the initiative two years ago
behind only U.S, China and Russia in terms
with a call to the Iranian President Hassan
of energy consumption. Consumption of
Rouhani. In 1980, the U.S had cut diplomatic
petroleum products in India grew by 3.14% in
ties with Iran after a group of revolutionaries
the fiscal year 2014-15. IMF has pointed out in
attacked the U.S embassy in Tehran and kept
it’s report titled” Implications of lower oil
hostages for more than year.
- By Gayatri Pandit
Grexit,
an
abbreviation
for
"Greek exit," refers to Greece's potential
withdrawal
from the Eurozone, after which it would most likely revert to using the drachma, its currency until 2001
In European Union, most political decisions
implementation by Greece calls for another
related to money and migrants rests with 28
bailout
national
packages
governments.
The
tension
of
package
of
comes
€130 with
of
billion.
These
conditions
implementation
factors like currency, tax laws has become
structural
acute since 1999 on introduction of the euro,
government assets. It requires deep budget
which now binds 19 nations into single
cuts and tax increase.
reforms,
austerity
on
adjusting the economy according to other
and
measures,
privatization
of
currency which is watched by European Central Bank. However, it leaves budget
The bailout money was given to let the Greek
decisions and tax policies in the hands of each
economy stabilize its finances and quell the
country. With the beginning of Greece crisis
fears that the EU could break. Though it had
in 2010, many international banks and foreign
helped
investors sold their Greek bonds and holdings
unemployment raised above 25 percent. The
to avoid the repercussions of Greece debt
bailout money mainly goes toward paying off
crisis.
Greece’s international loans, rather than
to
reduce
problems
twinned
making out a way for economy to recover. The Greek government still has debt load
Bailouts to Greece
which could not be paid unless the recovery After Wall Street imploded in 2008, Greece
takes hold.
announced that it had been understating its deficit figures for years, which left investors
Very nearly 66% of Greece's obligation,
and
the
around 200 billion euros, is owed to the
soundness of Greek finances. By 2010, Greece
Eurozone bailout fund or other Eurozone
curtailed the borrowings in the financial
nations. Greece does not need to make any
markets which further threatened to set
payments on that obligation until 2023. So
financial crisis. To control this situation, the
while Greece's aggregate obligation is huge as
troika — the International Monetary Fund,
much
the European Central Bank and the European
economic output—it may not make any
Commission issued two international bailouts
difference much if the legislature did not have
for Greece, which would eventually total
to make payments for quite a long time to
more than 240 billion euros. In 2010, a €110
come. When the money came due, the Greek
billion bailout loan to rescue Greece from
economy could have sufficiently developed
sovereign default was launched and cover its
that the entirety no more appeared to be
financial needs throughout May 2010 until
daunting. In the short term, however, Greece
June
has
creditors
2013,
questioning
however
about
with
delayed
as
an
twofold
issue
the
nation's
annual
making payments due on
credits from the International Monetary Fund
looking at the current scenario with a very
and on securities held by the European
high debt (177% of its GDP) the solution of
Central Bank. Those commitments add up to
third bailout is a temporary fix as Greece is
more than 24 billion euros through the middle
likely to find it increasingly difficult to meet
of 2018, and it is impossible that either
the revenue and budget deficit targets.
institutions
would
agree
to
delay
the
repayments.
Currently, the Greek parliament has agreed to European demand of tough new austerity
As said by Paul Krugman, Greek economy can
measures and structural reforms for defusing
recover from the crisis by exiting from EU and
the country’s sovereign crisis. Now here the
launching a new currency. The Greece can
question raises whether the Europe is able to
further devaluate its currency to boost its
deliver the broad-based economic reforms to
exports and the debts can be paid with
stressed countries like Greece. The answer to
cheaper currency.
However, it may have
this question is obvious, in the global
consequences such as the dogma that the EU
economic crisis the outcome of euro zone is
membership would no longer be perceived as
disappointing which is due to the weak
irrevocable, which also led to impact on the
performance of Eurozone as a whole and
austerity measures set by IMF which has
asymmetric outcomes within the Eurozone
contributed to Greek depression. In addition,
countries.
- By Yojana Ranasaria
Employee Stock Ownership Plan or ESOPs is a type of employee benefit plan which tends
to encourage employees to acquire stock or A credit default swap is a type
ownership in the company. Certain stocks are
of
a
given to the employees at no or negligible
contract
guarantee
that
offers
the
costs under these plans and they remain in
non-payment of a loan. In this
against
the ESOP trust fund till the time the employee
agreement, the seller of the
retires or leaves the company and
swap will pay the buyer in the
employee can exercise the rights on such
case of a credit event (default)
shares.
the
by a third-party. If no default occurs, the seller of the swap
These plans aim to motivate the employees
will have collected a premium
and ensure dedication towards the company
focused on company performance and also
for improvement in work performance and
the appreciation of share prices. It acts as an
also to increase the value of the company by
interest builder to the employee as he will be
offering shares to the employees of the
interested in the performance
company. It is an incentive which is given to
prices
the
encouraging participants to do what is best
from the buyer.
employees
to
create
a
sense
of
the
of
the
company
commitment towards the company and is
for
shareholders
as
proven to be effective as an appeal to the
themselves are shareholders.
and the
and stock will
be
employees
employees. It generally appeals all kind of employees and the HR need not be in a fix as
Uses of ESOPs :
to what kind of incentives needs to be offered to the employees: monetary or non-monetary. ESOPs are often used as a corporate finance
To create an additional employee benefit: It can be used in conjunction with employee saving plans
employees with that of the interest of the
To borrow money at a lower after-tax cost: The ESOP borrows cash which it
organization. ESOPs are considered to be
uses to buy company shares enabling
qualified in the sense that it provides various
company to make interest and principal
tax benefits to the
deductions
strategy and to align the interest of the
company which is
sponsoring ESOPs, the employee and also to the selling shareholder.
To buy the shares of a departing owner: Owners of privately held companies can use ESOPs to create a ready market for
It can be used to keep plan participants
their shares.
INDIAN MARKETS BSE index ended up 0.06 percent, while the NSE index closed 0.02 percent higher, marking their highest close since April 16.For the week, the BSE 30-share index gained 2.9 percent and the broader NSE index rose 2.98 percent. Inflation data, Greek developments and companies' quarterly earnings decided the course for the stock markets this week. Besides, progress of monsoon, investment trend by foreign investors and the movement of rupee against the dollar also influenced sentiment. Indian markets start its upward journey on its own merits.
Open
High
Low
Close
SENSEX
28,480.92
28,576.32
28,417.46
28,446.12
NIFTY
8,623.65
8,642.95
8,593.15
8,608.05
BSE SENSEX
CNX NIFTY
COMMODITIES Commodity
Unit
Rs / Unit
% Change
Gold
10 grams
25498.00
-1.06
Silver
1 kg
34200.00
-0.88
Crude Oil
1 bbl
3208.00
-1.44
EXCHANGE RATES INR/ 1 USD
63.49
INR /1 EURO
69.14
INR/ 100 JAPAN YEN
51.20
INR / 1 POUND STERLING
99.42
INTERNATIONAL MARKETS Open
High
Low
Close
NYSE Comp
11,010.84
11,010.84
10,965.67
11,024.87
NASDAQ
5,196.11
5,210.16
5,183.23
5,210.14
S&P 500
2,121.50
2,123.00
2,120.75
2,121.25
FTSE 100
6,796.45
6,799.78
6,764.80
6,775.08
CAC
5,138.98
5,138.98
5,110.48
5,124.39
DAX
11,747.47
11,753.18
11,649.94
11,673.42
NIKKEI 225
20,646.63
20,658.95
20,611.22
20,650.92
SSE 50
2756.87
2834.18
2723.74
2742.85
Hang Seng
25,246.64
25,517.45
25,183.86
25,415.27
Data centres in India– Oracle With the increase in adoption of cloud based applications and solutions as well as increase in demand from the government segment, Oracle– an enterprise software company is now mulling data centres in India. This will help the software company to host the applications
and some other cloud based solutions within the country. Oracle presently does not have any data centre India and the potential growth as well as demand are certainly making the company to think over having some data centres in India. India is the second largest From merchandised dolls and board games to reality shows, amusement park sides and digital properties, Disney has
employee base for Oracle globally. Recently, Microsoft announced to set up three data centres in India. Considering data centre in India, Oracle will have 19 cloud data centres in India. Also the government will be benefitted through the applications and solutions in the ‘Digital India’ campaign. Other than public sector, the demand for such solutions is increasing in the banking, financial services, insurance, telecom and manufacturing sector.
mastered the art of making movies live forever. The Indian arm of Disney is even doing the
Declining steel prices are affecting makers of raw materials
same.
The declining steel prices are affecting the makers of pellets, sponge, pig iron units etc. Even in the last four months, several sponge iron units across the country have shut down , pellet plants have been unable to sell and the pig iron industry experienced reduction in capacity utilised. The industry has an annual capacity of 50 million tonnes but currently it is producing only 17-20 million tonnes, and that is how they are also failing to make money. Karnataka has experienced significant number of shut downs, 36 out of 66 units have shut down, 2 are sold and rest are running at the half the capacity.
WPI remains in negative zone for eighth month Annual wholesale prices continued to decline for the eighth consecutive month. WPI declined at a faster rate of 2.4% in June year-on-year compared with 2.36% in May. The WPI inflation in June 2014 was 5.66%. WPI food inflation also came down from 3.80% in the previous month to 2.88%. However, CPI inflation rose to a nine month high of 5.4% in June. Considering the difference in the WPI and CPI, economists said that higher margins at retail levels also led to the divergence between the two inflation numbers especially on food front.
Monsoon session could derail GST deadline Earlier this year, Finance Minister Arun Jaitley made an impassioned plea in the Lok Sabha to pass the GST bill. If the House did not pass it, he warned the Constitutional Amendment Bill would not clear the April 2016 deadline when it must be rolled out. And this fear may
come true. Other competitive political power in Bihar, where an election is yet to happen is likely to dominate the monsoon session and less amount of business may happen, especially in the Rajya Sabha. Whereas, other political leaders are also trying to extend the deadline. The All India Anna Dravida Munnetra Kazhagam (AIADMK) is not in favour of the bill in terms of its existing principle. On the other side, Congress which has 12 state governments out of 29, already showed its disagreement with the existing norms. So even after monsoon, it seems difficult to get the bill cleared having maximum votes in favour.
RBI reverses farm loan norms because of weak rains
Government showed its concern over a week monsoon’s impact on the agricultural sector as well as RBI adopted the policy of direct agricultural lending target for banks. In April this year, The RBI had announced revised norms for priority sector lending in which the distinction between direct and indirect lending was abolished. These norms became effective immediately. But RBI issued a circular to banks asking lenders to beef up credit directly to the farmers so that they do not resort only to corporate farm loans to meet targets. However, it is the banks duty to ensure that their direct lending to non corporate farmers does not fall below the system– wide average of the last three years. These norms not only abolished distinction between direct and indirect agricultural norms but also set targets for loans to marginal farmers and a variety of corporate loans.
Mindtree announced two acquisitions Mid-sized information technology services company Mindtree announced two acquisitions worth Rs. 425 crore. The reasons can be digital is getting more and more popularity and other big players are taking similar kind of steps and also the company will definitely experience certain increase in the cline base. These acquisitions are expected to expand the company’s offerings in the digital field and also overall revenue. Mindtree will acquire British technology consultancy Bluefin Solutions and US-based analytics firm Relational Solutions.
tenure Ravi helped to build India into Microsoft’s second largest presence in the IIT Bombay
world and one of its fastest growing markets.
Purdue University
He is also the creator of Microsoft India’s
Harvard Business School
Project Shiksha, which is a computer literacy program. It trained almost 40 million school children in India. At Cummins Inc. Ravi spent sixteen years with Cummins Inc.
2003 Distinguished Alumnus Award,
As a chairman of Cummins India he led its
IIT Bombay
transformation into India’s leading provider of engines and power solutions. He is one of
2011 Distinguished
the key members in establishing Cummins
Engineering
College of Engineering. It is India’s first
Alumnus, Purdue University
engineering college for women in Pune. Ravi Venkatesan is the former chairman of
2011
Microsoft India, now is the founder chairman
Most Influential MNC CEO,
of Social Venture Partners India. Through
Education Ravi Venkatesan has obtained his bachelor’s
Economic Times
Social Venture Partners Ravi Venkatesan
degree
formed a network of engaged philanthropists
Indian institute of Technology, Bombay. He
who are into addressing social problems
did his masters in engineering from Prude
through venture philanthropy. He is also
University and has a Master of Business
serves as a venture partner at impact investor
Administration
Unitus Seed Fund. He also serves as a board
School.
2013
India’s
Best
Management
Thinkers, Thinkers 50
in
mechanical
from
engineering
Harvard
from
Business
member of Rockefeller foundation, Infosys Ltd, and Strand Lifesciences. He is the author
He received Indian Institute of technology
of the book which is published in Harvard
Bombay’s Distinguished Alumnus Award.
Business Review, which is “Conquering the
He was also voted as one of India’s best
Chaos: Win in India, Win Everywhere”.
management thinkers by Thinkers50. He was voted the most influential MNC CEO for 2011
At Microsoft Ravi Venkatesan served as Chairman of
by the Economic Times daily. He was in the
Microsoft India from 2004 to 2011. during this
government for the post of chairman in PSBs.
news recently when he was shortlisted by the
- By Shubhra Sasmit
Bluetooth 2.1 + EDR
Apple 30-pin Connector
3.5mm stereo port for external
speakers
The iFusion device is a device that allow you
Key Features
to bring together the traditional features of the phone with the features of the iPhone, thus bringing a completely new device that Power Supply Input - 100-240V
enables the user to enjoy the benefits of both
auto sensing 50/60Hz 0.3A
the worlds.
DC to phone - 12V 1A
USD 29.95
Its ideal for the use as it allows for hands free talking especially in a home or office setting. With the prevalence of home offices, especially in a start– up, it becomes really ideal for them Its very easy to coordinate a video call in a skype or facebook app. Docks are integrated for helping it to get charged faster and easier. Streaming music is also easier from your iPhone. Compatibility is not an issue , as iFusion is highly compatible with iPhone PBX apps, Cisco Mobile 8.1, Avaya one-X Mobile, and MaxMobile for Microsoft Lync.
The Bluetooth technology is the latest to allow for rich audio and video quality to allow for rich quality. The speaker are dual full duplex for amazing audio quality in conversation or in audio quality. Highly efficient design, ergonomic, and very easy on the palm as well as in the hand. The embedded ports are integrated to provide the facility of charging. The data facilitation is easy as USB port allows data and other synchronization with a Mac or PC. It also comes with an audio enhancer, for external use. The USP of the device is that it allows all the platform of IOS to work , doing away with the compatibility issues, and the networking issues.