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OCTOBER 19, 2014 | A FINNICHE INITIATIVE
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Crude Oil Prices and its Effect on India| 2
FII Activity in E-commerce | 4
Qualified Institutional Investors | 6
Satya Nadella |11
IPad Air 2|12
October, 19 | 2014 | Volume 17
Crude Oil prices and its effect on India
Our campus has been busy this weekend, welcoming participants from outside college for cultural and management events and esteemed judges. Coke Studio, the sponsors of the event made their presence felt with Faridkot. A scintillating performance by the band to keep every student on their toes. The atmosphere of the college has build up to its summit with the performance of Euphoria and the Sunburn eagerly awaited by the students to wrap up a peerless event. We appreciate the hard work put in by Cultural Committee and SAWC in bringing out Passion ‘14.
FII activity in E-Commerce heats up further
Qualified Institutional
FinNiche launches yet another edition of FinXpress with the In Focus section putting light on ‘Crude Oil prices and its effect on India’ which makes a comprehensive coverage about the impact of oil on the economy of our country. The Opinion gives an overview of ‘FII activity in E– Commerce’ which is about the growth of E-commerce industry with help of FII’s.
Placements
The term of the week describes “Qualified Institutional Placements", a financial tool used by Indian and South Asian market to raise capital. Do have a look at the revamped market section which has included international markets and Tech world which brings to you iPad AIR 2. Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas. Satya Nadella
Happy Reading! iPad AIR 2
Regards The Editorial Team
Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.
- By Kartik Awasthi
Crude Oil Prices and Its Effect on India
OPEC will be meeting on November 27 in Vienna, and a debate
regarding
output
is
almost guaranteed.
Crude oil prices continue to show a declining trend globally. Now at their lowest levels since January 2012, crude prices have been under pressure in the past few months. Oil price have continued to drop since June 2014 as the supply of the oil globally exceeds its demand. The demand of oil has slowed down this year because of the growth of China has been weaker than it was anticipated while the supply of oil remains strong.
Already, comparisons with the bubble burst of oil price crash that occurred in 2008 are being drawn in which oil prices plummeted from as high as $146 to $35 within a small period of 6 months. While it was the decline in the demand that was the major driver for the 2008 crash, the steep drop in prices this time are being attributed to a supply glut. The growth of the shale production continues in the U.S. and the increase in exports of non-OPEC countries has led to excess capacity.
Brent oil prices were down 4.3% to $85.04 on Tuesday. That
was
Brent's
As Saudi Arabia is the top exporter of the oil in the world, it has a strong influence of the oil prices. It was expected that Saudi Arabia will cut down on its production in oil to raise the price of the oil but they are taking a different approach. Rather than slowing their production of oil they have decided to let the oil price hover around $80 for some time. Following the decision from Saudi Arabia, the officials from Iran and Kuwait have also taken the decision of not curbing the price of the oil.
biggest
one-day drop since September 2011.
The increase in supply is attributed to increased output in Saudi Arabia, Nigeria Angola and Iraq as well as recovery in Libya. There has been a huge impact of global oil supply due the shale boom in U.S. which has now become the largest producer of liquid petroleum. The oil output by U.S. reached 8.7 million barrels per day which is its highest output total in 30 years.
The middle-east region has been an area of a lot of military activities on a very regular basis. The impact of this increase in the US oil production is quite immense, that unlike in the past, geopolitical tensions have been unable to push oil prices to a higher value. However, the further crude prices fall in the near future, the faster they may rebound, as low prices become the engine that leads to a resumption of demand and world economic growth.
India depends on import of crude oil as its production can meet only around one-fourth of its demand and the rest has to be imported and thus the reduction in the crude oil prices will help India in a positive manner. It will help in improving the important macroeconomic factors such as Current Account Deficit and Fiscal Deficit besides giving a boost to energy as well as consumer companies.
1.7% to 1.3% of the GDP. According to a estimate given by Reserve Bank of India, a 10% decline in oil prices will result directly into a 0.70 percentage point drop in consumer price inflation (CPI) of India. As per some economists there will be indirect impacts as well like lower food prices because of reduction of the transport cost which could lead to a further 0.80 percentage point reduction in inflation. The drop in the global prices of oil already seems to be helping India. This week India reported that in September consumer inflation dropped to 6.46% which is almost a three-year low value, while wholesale inflation fell to 2.38% which is a five-year low value.
The net imports of crude oil of India amounts to around a billion barrels each year. Therefore, if the average price of the crude oil averages about $100 per barrel in the current fiscal than the import bill of our country are likely to fall by $10 billion and the current account deficit will reduce from
Three main fuel retailers of India which are run by state have reported profit on fuel sales. These companies have been losing money as the global oil prices have been much higher than what the Indian government allows them to charge the consumers. On Thursday, oil ministry of India reported that fuel retailers are now earning 3.56 rupees on every liter of diesel they are selling as compared to losing about 1.6 rupees per liter in June. Lower oil prices could even be of help to India and other similar emerging markets with the expected end of quantitative easing policies which are adopted by some of the developing nations.
- By Rishabh Agrawal
What:
Many e-commerce giants are raining funds for expansion
Softbank to invest $650
Softbank would now become the largest
sector. Softbank is already the biggest investor
shareholder
second
in Alibaba, an e-commerce giant of China
biggest online retailer, as it is set to invest
with a 32% stake. Indian e-commerce sector
$650 million in it. This would help Softbank
has been continuously raising funds to
have nearly about 35% stake in Snapdeal.
expand and compete with Amazon. This
in
Snapdeal,
India's
investment Softbank Corporation is a Japanese internet
will
be
the
single
largest
investment by a Japanese firm in India.
operations and telecommunication company and this step was taken by the company to
Snapdeal started as a discount coupon
million in Snapdeal
expand its operations in India. This amount is
providing site and now has become one of the
Softbank has invested in
set to be the biggest investment in India's e-
leading players in India, with more than
a number of start-ups in
commerce industry after Flipkart raised $1
50,000 sellers. It has expanded itself by having
India
billion in July. This fund raising would leave
many fundraising rounds, and thus have
Snapdeal with a valuation of around $2
investors like eBay, Intel Capital, Temasek,
billion. Masayoshi Son, founder of Softbank
BlackRock and Tybourne. The company has
Corp. will visit India on October 27 and 28.
raised a total of $320 million from a number of investors in various rounds, out of which $233 million was raised in the last two rounds this year. Softbank also has a huge investment in
Softbank's investment pattern shows that it is trying to set its strong foothold in the Indian market. It has already invested in many of the Indian start-ups, the most notable of them being InMobi. It also had entered into a joint venture with Bharti Group. All these facts make it a serious player in India's online retail
E-commerce giants adopting aggressive business model and undergoing a price war.
Flipkart and Amazon bagged important deals with many
In the competitive Indian market, Flipkart,
had its big billion day sale to attract
Amazon
constantly
customers and it was in response to it that
engaged in an aggressive price battle to gain
Snapdeal also lowered its prices. Although
customers. Just after the Flipkart raised a
this gave a negative publicity to many of the
fund of $1 billion, Amazon’s chief executive
companies.
and
Snapdeal
are
announced that it would like to invest $2 billion in India’s business. Recently, Flipkart
India’s e-commerce market, excluding travel services and tickets, is worth $3.1 billion and is estimated to grow to $22 billion in five years, according to CLSA’s November 2013.
brands.
If Snapdeal has to become a part of this
Snapdeal needs to effectively
exponential growth, it will have to compete
utilize its funds to get to the
with Flipkart’s aggressive business model,
top.
especially in the area of exclusive brand launches. Flipkart has managed to bag important deals with brands like Xiaomi, Huawei, Asus, Alcatel and most notably Motorola
for
exclusively
launching through
its
their
devices
distribution
channels. This is where Flipkart has taken a lead in brand penetration and customer reach. Even Amazon has managed to bag a few deals with Samsung. Thus Snapdeal should use its fresh round of investments in devising
new
strategies
to
establish
corporate partnerships & customer base.
Qualified Institutional Placements (QIP) is a capital raising tool, usually used in Indian and South-Asian markets, wherein a listed company can issue equity shares, partly and fully convertible debentures, or any other securities except warrants which are convertible to equity shares. Apart from preferential allotment, QIP is the only quick method of private placement to issue shares and convertible securities to a select group of investors. Moreover the firm issuing a QIP does not have to undergo elaborate procedural requirements to raise the capital
For issue size of more than Rs 250 crore, there must be at least five investors A single investor cannot be allotted more than 50% of the issue How the price of a QIP is decided? The QIP will be priced not less than the average of weekly high and low of the closing prices of the equity shares during the two
Who can participate in a QIP issuance? Unlike IPO or FPO, only institutions or qualified institutional buyers (QIB) can participate. The Need for introducing QIPs in India The market watchdog , Securities Exchange Board of India (SEBI) introduced the QIP process through a circular released in May 2006. The aim was to reduce the excessive dependence of our firms on foreign capital. Prior to the introduction of QIP Indian companies were assessing International funding by issuing securities in the outside market. So, to curb the export of domestic equity market QIP was introduced Regulations governing a QIP The market regulator has stated some the regulations for issuance of QIPs For a issue size of less than Rs. 250 crore, there should be at least two QIBs
weeks preceding the relevant date. And the relevant date is opening date of the issue, as decided by the company’s board. QIP in Recent news Fund-raising through QIPs route in first eight months of the Calendar year 2014 has crossed the Rs 26,000 crore mark The Multiplex Operator PVR Cinemas Ltd plans to raise Rs. 500 crore through QIPs DCB bank raises Rs 250 crore via QIP to fund its growth
INDIAN MARKETS The benchmark BSE Sensex continued its downward march for the fourth straight week, tumbling 189 points to end at two-month low of 26,108.53 after plunging below the 26,000-level during the truncated week under review on global growth worries and capital outflows. The BSE and the NSE were closed on October 15, 2014 on account of assembly elections in Maharashtra and Haryana. The Sensex resumed slightly lower at 26,275.07 but tried to recover to log a high of 26,550.79 on better-than-expected Chinese trade data and fall in global crude oil prices to near 4-year low that will help India to contain current account and fiscal deficit. However, heavy sell-off across the board on Thursday due to concerns over the global growth worries pulled the world stock markets down. Open
High
Low
Close
SENSEX
26,275.07
26,550.79
25,910.77
26,108.53
NIFTY
7,831.00
7,928.00
7,723.85
7,779.70
BSE SENSEX
CNX NIFTY
COMMODITIES Commodity
Unit
Rs / Unit
% Change
Gold
10 grams
27,256
-0.70
Silver
1 kg
38,399
-1.22
Crude Oil
1 bbl
5095
-0.27
EXCHANGE RATES INR/ 1 USD
61.62
INR /1 EURO
78.89
INR/ 100 JAPAN YEN
58.02
INR / 1 POUND STERLING
99.12
INTERNATIONAL MARKETS Open
High
Low
Close
NYSE Comp
10,317.54
10,362.07
9,886.08
10,250.54
NASDAQ
4,274.91
4,303.82
4,116.60
4,258.44
S&P 500
1,905.65
1,912.09
1,820.66
1,886.76
FTSE 100
6,340.00
6,405.00
6,072,70
6,310.30
CAC
4,033.74
4,104.00
3,789.11
4,033.18
DAX
8,703.85
8,872.40
8,354.97
8,850.27
NIKKEI 225
15,300.55
15,300.55
14,529.03
14,532.51
SSE 50
2,360.82
2,388.11
2,316.07
2,342.18
Hang Seng
22,884.00
23,409.96
22,040.80
23,023.21
Arvind Subramanian appointed Chief Economic Adviser to Modi government Former IMF economist Arvind Subramanian was appointed Chief Economic Advisor in the Finance Ministry on October 16th, 2014. An alumnus of IIM-Ahmedabad, Subramanian joins the Finance Ministry at a time when the government has started work for the 2015-16 budget which will be the first proper budget of the Modi government. The post of CEA has been lying vacant since Raghuram Rajan left the Finance Ministry to join the Reserve Bank as Governor in September last year. The Finance Ministry has prepared an interim budget and full fledged budget for 2014-15 without a formal CEA in office. A graduate from St Stephens College, Subramanian has been advising the Indian government in different capacities and has been a member of the Finance Minister's Expert Group on the G-20. He was Assistant Director in the Research Department of the International Monetary Fund and was associated with the GATT (1988-92) during the Uruguay Round of trade negotiations. Subramanian was the Dennis Weather stone senior fellow at the Washington-based Peterson Institute for International Economics.
New Delhi to Pay Iran $900 mn in Oil Dues in 2 Tranches As a part of the pending dues to Iran for oil imports, India will pay Iran $ 900 million in two tranches starting next week. Sources said the payment will be on over and above $1.65 billion it had paid in June-July to clear more than one-third of over $4 billion in dues that had accumulated. India, Iran’s top oil client after China, imported about 267,800 barrels per day (bpd) of crude from Tehran. Iran’s share of total Indian oil imports was about 7 per cent in the first nine months of this year compared with 4.9 per cent last year, tanker data showed. Indian refiners — Mangalore Refinery and Petrochemicals, Ltd (MRPL), Essar Oil, Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Ltd (HPCL) — will make payment of the first instalment of $400 million on Monday or Tuesday, sources added. The remaining $500 million will be paid before November 24.
Telenor completes acquisition of Uninor Telenor Group announced on October 17th, 2014 that it has completed the acquisition of 100 per cent stake in its Indian subsidiary Tele wings. The Norwegian company has acquired the 26 per cent stake held by Lakshdeep Investment & Finance. Tele wings’ revenues in the first half of 2014 compared to the same period last year have increased by more than 40 per cent. With a network of more than 1,500 stores and 3.65 lakh points of sale, Tele wings has the second largest distribution network in its operating circles.
Disappointing TCS, HCL Tech numbers leave IT defenceless Tata Consultancy Services and HCL Technologies each declined about 9 per cent on Friday, the worst daily fall in at least five years and HCL Technologies each declined about 9 per cent on Friday, the worst daily fall in at least five years, amid investor concern over growth prospects after the financial performance of both software exporters in the September quarter missed analysts' expectations. The 10-share S&P BSE IT index dropped 4 per cent while the benchmark Sensex gained 0.4 per cent. TCS reported revenue of $3,929 million for the quarter, compared with expectations of about $3,975 million. HCL Tech's revenue grew 1.9 per consequentially to $1,433 million, lower than the analysts' estimate of over 3.5 per cent. HCL Tech fell 9.09 per cent to Rs. 1,505.55 and TCS closed 8.73 per cent lower at Rs. 2,444.90, the biggest losers on the IT index. Both companies said they were hurt by unfavourable cross-currency movements.
Rs. 43,425 crore disinvestment programme on track, schedule soon: Finance Minister Arun Jaitley The government's Rs. 43,425 crore disinvestment programme is on track and a schedule for sale of stake in state-owned firms will be announced shortly, Finance Minister Arun Jaitley said on Friday. He was responding to queries related to the government's stake sale programme in Public Sector Undertakings (PSUs). Last month, the government had approved diluting its equity stakes in Coal India Ltd (CIL), ONGC and NHPC. The stake sales in these three blue-chip companies could fetch government about Rs. 42,000-43,000 crore.
IFCI plans to mobilise up to Rs. 2,000 crore through NCDs IFCI, on Friday, said it would raise up to Rs.2,000 crore through a public issue of secured redeemable non-convertible debentures (NCDs). The issue is scheduled to open on October 20 and close on November 21 with an option for early closure or extension. “The NCDs will have a face value of Rs.1,000 each, amounting to Rs.250 crore (base issue size) with an option to retain oversubscription aggregating up to Rs.2,000 crore,� said IFCI CEO and Managing Director Malay Mukherjee at a press conference here. The NCDs would be listed on the BSE and the National Stock Exchange. The NCDs, with five-year tenure and coupon pay-out option, will have a coupon rate of 9.80 per cent annually for all categories of investors.
group. In this role he led the transformation to the cloud infrastructure and services business, which outperformed the MARKET and took share from competition. Previously, Nadella led R&D for the Online Services Division and was vice president of the Microsoft Business Division.
January 6, 1967
Manipal Institute of Technology (B.Tech)
He loves cricket. Growing up he called the sport his passion, and played on his school’s team. “I think playing cricket taught me more about working in teams and leadership that has stayed with me throughout my career” .
University of Wisconsin, Milwaukee (M.S) University of Chicago (M.B.A)
Sun Microsystem before joining Microsoft in 1992
Satya Nadella is an Indian-American business executive. He is the current Chief Executive Officer of Microsoft. He was appointed as CEO on 4 February 2014, succeeding Steve Ballmer. Joining Microsoft in 1992, he quickly became known as a leader who could span a breadth of technologies and businesses to transform some of Microsoft’s biggest product offerings. Most recently, Nadella was executive vice president of Microsoft’s Cloud and Enterprise
He reads poetry. Nadella says he kicks back by reading poetry, which he says is like code. “You’re trying to take something that can be described in many sentences and pages of prose, but you can convert it into a couple lines of poetry and you still get the essence, so it’s that compression. He’s a multi-tasker. When he joined Microsoft in 1992, he was on track to get his master’s degree. Rather than choose between the two, he did both, flying out from Redmond on Friday nights for classes at the University of Chicago.He is well compensated. He made about $7.6 million in 2013.
- By
Abhinay Gandotra
Apple on Thursday launched its two most awaited products iPad Air 2 and iPad mini 3.
payments. Apple has also told that Touch ID will enable users to use Apple Pay for purchases.
iPad Air 2 16GB Wi-Fi model and 16GB Wi-Fi + cellular model are priced at Rs 35,900 and Rs 45,900 respectively whereas iPad Mini 3 16GB Wi-Fi model and 16GB Wi-Fi + cellular model are priced at Rs 28,900 and Rs 38,900 respectively. Moving on the similar lines of iPhone 6 Apple has discontinued its 32 GB storage capacity model for iPad and introduced a new 128GB model at the top end. iPad is available in three colors silver, space grey and its new color variant gold .
Apple iPad Air 2 will be using Apple’s new A8X processor which will make it 40 percent faster than its original iPad Air which used to run on A7. In terms of graphic performance also iPad Air 2 will be 250 percent faster than its original version.
iPad Air 2 is the thinnest tablet in the world with just 6.1 mm thickness. This is a huge 18% reduction in comparison to the previous model iPad Air. In addition to making it more skinny Apple has introduced the long awaited addition of TouchID home button, The addition of Touch ID button will be extremely useful as now developers will be able to tap into the sensors to allow authentication and
Talking about camera Apple has taken a huge jump introducing 8 megapixel f2.4 rear facing iSight camera. This might be behind the iPhone 5s camera but it is still phenomenal upgrade in comparison to its previous model iPad Air which sported a 5 megapixel f2.4 camera. One of the distinguishing features of iPad has been its battery life. iPad Air 2 much like its previous model can support up to 10 hours of battery life with surfing over web and up to 9 hours surfing using cellular.