EDITORIAL I S S U E
5
S E P T E M B E R
2 9 ,
2 0 1 5
Placement Week - SIP for batch of 2015-17 The Summer Placement Week for the batch of 2015-2017 began in the last week of
CONTENT World Bank Chief praises PM Modi | 2
September. The campus saw some high profile corporates and esteemed companies visiting. With almost half the batch placed, the placement scenario looks good and hope for remaining students is on high as many important companies are lined up for the following
Emission norms in
week. Club FinNiche appreciates the work done by Placement Committee and congratulates
India | 3
all placed students.
Effect of European Refugee Crisis on Global economy | 5
Prior to the placement week, the campus also witnessed a couple of pre-placement lectures
Future of Japan and its
about the current trends and challenges being faced by respective industries. The Student
growth | 7
Affairs and Welfare Committee of IMT has organized Cyclothon'15 - a social initiative to raise
TRENDING NEWS | 9
which were not only helpful for the placement preparations but also were quite informative
awareness about the Environmental Sustainability in Delhi. This campaign saw more 300 enthusiastic people cycle on a beautiful Sunday morning on Oct 13th. We also wish good luck
MARKET | 10
to all the teams participating in the prestigious Inter B-School fest hosted by college -
FIN-WORD | 11
PASSION after the scintillating inauguration ceremony. Passion is a 3 day event starting Oct
PERSONALITY | 13
9th and ending Oct 11th. May the odds be ever in your favour. Do take part in passion to unleash your passion. As always we are ready with insightful national and international articles and much more at your disposal. Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas.
Happy Reading!
Regards The Editorial Team Club FinNiche
PAGE
1
NATIONAL B Y
A B H I S H E K
G U P T A
World Bank Chief praises PM Modi World Bank President Jim Young Kim has coming up of Goods and Services Tax (GST)
SNIPPETS
praised the Indian Prime Minister Narendra l e g i s l a t i o n
Jim Young
get
even
Government in the past 1 Year. He said that projects for Indian Railways, 100 Smart Cities the reforms have had a huge impact on the way and Skilling India.
Reforms
India
World Bank
is
looked
at
by
the
world.
He She raised the fact that for prosperity to
acknowledged the fact that the kind of happen
MD hopes of India to be a
involvement
reforms happening in India were a lot different workplace
still
of
holds
women a
key.
at
the
She
was
from what is happening around the world. concerned regarding the lower employment of
economic powerhouse
will
Modi for all the reforms initiated by the NDA better. World Bank is keen on supporting the
Kim all hail for Indian
things
Reforms such as the ‘CLEAN ‘SWACHH
GDP growth
BHARAT’
GANGA’ and women despite the rise in education level for
have
gathered women
all
over
India.
India
is
been
appreciation from all over the world and the recognized as a key partner in ending poverty
rate expected
world bank stands as an important partner in globally,
to be 7%
these programme.
thus
to
support
the
cause
International Development Association (IDA)
‘Swachh Bharat’ campaign was launched on Oc- deputies have provided Transitional IDA funds tober 2 last year to cover 4041 statutory worth $3.4 billion for the next three years. For towns, to clean the
streets, roads and International Bank for Reconstruction and
infrastructure of the country. ‘Clean Ganga’ Development
(IBRD)
lending,
the
single
programme was launched for rejuvenating and borrower limit for India has recently been making the river Ganga pollution-free. Clean increased to $20 billion from $17.5 billion, and Ganga programme aims to generate 175 the gigawatts of renewable energy.
Government
of
India
agreement
to
purchase Special Private Placement Bonds of up to $4.3 billion - all geared to help create
Momentum on Reforms
additional borrowing options for India.
World Bank Managing Director Sri Mulyani World Bank in India Indrawati was on a 3 day visit to India and she also said that the global slowdown is not going to impact the Indian Economy and India will surely become a economic powerhouse if it keeps coming up with
reforms for the
prosperity of poor people. She emphasized that India will surely achieve the growth rate of 7 PAGE
2
percent for the next financial year and with the
World Bank assistance to India during the period from June’14 to June’15 amounted to $3.8 Billion. As of June’15 total World Bank commitments amounted to $24.9 Billion across 86 projects. This figure is expected to increase with
time
as
the
credibility
Indian projects grows worldwide.
for
NATIONAL B Y
N I S H A N T
R A T H I
Emission Norms in India SNIPPETS
Volkswagen’s diesel emissions fraud highlights debilitates the working of particulate
Over the last 18
how India trails developed countries in filters, catalytic converters and other
months, while the Indian
emission norms. Volkswagen is looking at a pollution-treatment devices in automobiles.
crude basket has fallen around 23% in
the stringent US regulations for cases as back says India ranks among the world's worst
fine of around $18 Billion as it did not meet No wonder World Health Organization as year 2009. On the contrary, VW cars are for its polluted air. Out of the 20 still
dollar terms, local petrol
satisfying
all
the
emission
norms most polluted cities in the world, 13 are
prescribed in India.
in India. Report submitted by Saumitra
prices have come down only by 4% Air pollution leads to around 620,000 early deaths in India Capital expenditure of Rs 80,000 crore is required for implementation of BS V Current Scenario
Chaudhuri called for a Sulphur cess of 75
Penetration of
Most of India still use Bharat Stage III diesel
paise per Litre on diesel/petrol to meet the
BS-IV petrol in the domestic
and petrol norms, with Sulphur content as
estimated capital expenditure of Rs 80,000
market is just 24%
high as 500 parts per million (ppm) which
crore over a five year period. With the fall
is 10 times the cap achieved 10 years ago
in global oil prices the government can
in mature markets. It has already missed
step up the cess and supply the entire
the 2014 timeline for rollout of BS IV and
nation with BS V quality fuel by the year
has extended it to the year 2017.
The
2017. In parallel, the rules in the Motor
norm in major cities is BS IV, with Sulphur
Vehicles Act can also be suitably amended
capped at 50 ppm. But BS V or Sulphur of
to make it mandatory for commercial
10 ppm is planned no earlier than 2020 and
vehicles to retro-fit catalytic converters
BS VI only by 2024.
and particulate filters within 24 months.
PAGE
3
The high Sulphur content in BS III diesel
Taxation
Scenario
on
Petrol and BS5 quality fuels. BS-4 vehicles and fuel are
Diesel
more expensive than BS3. Hence, public
Excise duty on Petrol and Diesel including buys BS3 vehicles and fuels from peripheral Education Cess as on September 2015 is Rs towns to evade registration taxes. Also 17.46 and Rs 10.26 respectively. Excise duty diesel to petrol usage ratio in India is almost was Rs 9.20 on Petrol and Rs 3.46 on Diesel (4.5): 1 hence there is more pollution. on 1st November 2014 which has been increased gradually and are now almost 90% However, this increase in private cost is higher for Petrol and 200% higher for offset by savings in health costs for the Diesel. This cess can be used for meeting public, as there is lesser amount of disease the capital expenditure requirement for fast causing particulate matter and pollution in forwarding to ultra low-sulphur fuel to the air. Exposure to air pollution can lead to hugely reduce vehicular pollution of nitrogen respiratory oxides and particulate matter.
and cardiovascular diseases,
which is estimated to be the cause for 620,000 early deaths in 2010, and the health
Bharat Standard : Limitation
cost of air pollution in India has been Four refineries in the North East- Guwahati, assessed at 3 per cent of its GDP. So faster Digboi, Numaligarh and Bongaigaon - their rollout of stringent emission standards has equipment outdated, cannot produce BS4, became the need of the day.
PAGE
4
INTERNATIONAL B Y
B H A G I R A D H
S I S T A
The European Refugee Crisis - its effect on Global Economy In
Europe
million have fled the country. The vast
experienced the highest influx of refugees
majority of them reside now in the camps
since the second world war. Why? The
in neighboring countries, who are taking
main reason is that Syria has become the
care of the 95% of the refugees, while the
world’s top source of refugees. Syria is
Arab states of the Persian Gulf (Saudi
located in the Middle East, an ancient
Arabia,
fertile land settled for at least 10,000 years.
accepted “0” Syrian refugees which has
Since, the 1960’s it has been led by the
been
al-Assad family, who have ruled it as
International.
quasi-dictators until the Arab Spring that
Even the UN and World Food Program
happened in 2011, a revolutionary wave of
were not prepared for a refugee crisis on
protests and conflicts in the Arab World
this scale. As a result many refugee camps
immigrant population might
that toppled many of the authoritarian
are crowded and undersupplied, subjecting
regimes. But the Assads refused to step
people to cold, hunger and disease. The
dominate the native population
down and started a brutal civil war.
Syrians lost their hope completely. So they
New opportunity for ISIS
decided
The refugees
ISIS, a militaristic jihadist group used the
Between 2007-2014 European Union had
start contributing
opportunity and entered the chaos with
invested about 2 billion € in defences, high
to the state’s GDP as soon as
the goal to build a totalitarian Islamic
tech security and border patrols but not a
Caliphate. Very quickly it became one of
lot
they are integrated to the workforce
the most successful and violent extremist
refugees. So it was badly prepared for the
organizations
sides
storm of asylum seekers. In the EU, a
committed horrible war crimes, using
refugee has to stay in the state they
chemical
executions,
arrived in first, which put enormous
torture on a large scale and deadly attacks
pressure on the border states that were
on civilians. The Syrian population was
already in trouble. Greece had its own
trapped between the regime, rebel groups
problems of economic crisis. This lead to
and the religious extremists.
terrible
SNIPPETS
Over 4 million Syrians have fled the country
New opportunity for ISIS for creating political chaos in Arab regimes
Fears in the Western World that the
the
summer
on
weapons,
of
2015,
Earth. mass
All
A third of the Syrian people has been displaced within Syria while over 4
PAGE
5
Kuwait called
in
to
etc.)
together
shameful
seek
asylum
preparation
scenes
of
by
of
have
Amnesty
in
Europe.
influx
desperate,
in
hungry
people on islands usually reserved for tourists. Instead of coming together, the
World has become divided. Many states
expected to be as low as 1.4% in the
downright refused to take in any refugees
2020-2030 decade.
leaving the border states in trouble. In 2014, UK lobbied to stop a huge
Contribution to the Economy
search-and-rescue operation called Mare
Most Syrian refugees are already well
Nostrum that was designed to stop the
educated.
asylum seekers from drowning in the
immigrants are less likely to commit
seas. But of-course in reality UK did not
crimes than the native population. When
succeed in this. The perception of the
allowed to work, they tend to start their
crisis around the world suddenly changed
won businesses and integrate themselves
when photos circulated of dead boy from
into the workforce as soon as possible
Syria found on a beach in Turkey.
paying more into the social systems than
Germany announced that it will accept all
they extract that from. Syrians coming to
Syrian refugees and in 2015 it’s preparing
the
to take 8 lac people-more than the entire
workers desperately needed to sustain
EU in 2014. The support for the Asylum
Europe’s aging population. Social media
seekers has majorly come from the
and internet has become a vital part of
citizens but not from the politicians.
being
Refugees
west are
a
who
become
potential professional
refugee. They
used social
networks, GPS and all technologies that
PAGE
6
Fears in Western World
helped them to migrate. This proves that
There are fears in the western world
these people are just like us. The EU is
that Islam, high birthrates, crime and
the wealthiest bunch of economies on
collapse of social systems. But the facts
Earth. It can handle the challenge of
are here. Even if EU were to accept all
refugee crisis if it wants to. The same
the 4 million refugees and 100% of them
with Western World too. While tiny
are Muslims, the percentage of Muslims
Jordan has taken over 6 lac refugees, the
in EU would only rise from 4% to 5%.
UK which has 78 times the GDP of
This is not a drastic change and certainly
Jordan has only said it would allow
will not convert Europe as a Muslim
20,000 Syrians across its borders over
continent. A Muslim minority here is
the next five years. The US 10,000 and
neither new nor a reason to be afraid.
Australia 12,000 people. Overall things
Birthrates in many parts of western
are slowly getting better but not fast
world are low, so some fear asylum
enough. By accepting them into the
seekers
native
countries and integrating to the societies
population in a few decades. But the
they have much to gain. The productivity
studies show that though the birthrates
of the immigrants will translate to the
of Muslims is high they adjust to the
increase in GDP of all the refugee
standard of living and become low.
accepting nations there by fostering their
Muslim
economies.
might
overtake
population
the
growth
rate
is
INTERNATIONAL B Y
A R A V I N D
K U M A R
Future of Japan and its Growth Through the span of two agonizing "lost
present
decades," Japan has lost much of its
organizations in Japan is 23 rate percentage
competitive edge. Its economy keeps on
points below the performance of equivalent
working
potential.
US corporations. Japan is on pace for
expected to be 71 million by
Profitability has consistently reduced in
languid yearly GDP development of only 1.3
each area including its signature advanced
percent through 2025 if these patterns
2020
manufacturing industries. Policy changes can
proceed. Be that as it may, there is still time
Labor
make the right conditions for reigniting
to take off this result.
Productivity has remained
development,
concentrate incredibly on what individual
One more decade of sluggish development
underneath 2% for past two decades
organizations can do quickly.
would do little to help household purchasing
A demographic challenge of historic extents
constrain the resources available for social
The current
has
security and health care just as demand for
annual GDP growth is 1.3% but it could boost
working-age populace will decrease from 79
SNIPPETS
The working age population is shrinking and
it up to 3%
underneath
yet
its
Japan
needs
there
is
a
considerable
and
to
power. Much all the more ominously, it would landed
on
Japan's
doorstep.
Its
them intensifies.
million in 2012 to 71 million in 20 extending gap
between
Japan and other major
On the off chance that Japan can twofold its
propelled economies. Capital productivity
rate
The following
has
the
methodology on expanding quality included
decade offers a
return on investment created by recorded
and also lessening expenses, it could boost
window of chance for Japan to shift its trajectory, to
non-financial 25, and its dependency ratio is
annual
set to take off from 0.60 to 0.73 over the
3 percent. This would increase Japan's GDP by
same
up to 30 percent over the present trajectory
a limited extent by capitalizing on immense flows of global trade.
correspondingly
period.
contracting,
disintegrated:
With
its
Japan
workforce needs
of
development,
GDP
growth
with
to
an
engaged
approximately
to
by 2025 and enhance its monetary viewpoint.
predominantly depend on enhancing its
Some $1.4 trillion in GDP development is in
productivity as an essential impetus for
question in 2025 alone. This vision is
development.
exceedingly optimistic, however Japan can start to move in this direction. Rather than
Japan's
PAGE
7
labor
productivity
growth
has
settling
for
1.3
percent
yearly
GDP
remained underneath 2 percent for a great
development, Japan could develop by a normal
part of the previous two decades, and at
of nearly 3 percent through 2025.
This would lift Japan's projected annual
by and by outpace the world in efficiency
GDP in 2025 by just about 20 to 30
and quality, developing as a worldwide
percent over current patterns.
pioneer in fields, for example, advanced materials, 3D manufacturing, and the life
Japan’s productivity growth has been hobbled
by
inadequate
sciences.
competitive
pressures and a rigid labor market.
As one of the most rapidly aging,
Executing
efficiency
example,
expanded
influence
occupations
upgrades,
for
urbanized,
automation
will
technologically advanced societies on the
in
numerous
planet,
globally
Japan
stands
connected, smack
in
and the
industries. Be that as it may, the quest
forefront of a global wave of disruption.
for new development markets and an
These trends present both pressures and
anticipated 3.7 percent decrease in
incentives to act. Japan can turn the
Japan's work power by 2025 can cushion
current wave of global disruption into
the net effect on employment. The public
opportunity.
and private sectors will have to work together to create the right environment
The following decade offers a window of
for growth, focusing on talent and skills
chance for Japan to shift its trajectory, to
development, labor market frameworks,
a limited extent by capitalizing on
entrepreneurship,
innovation,
immense flows of global trade, the ascent
competition,
infrastructure
of billions of new urban consumers in the
and
productivity.
emerging world, and innovation leaps forward. However, the new worldwide
The act of consistently catching new
economy is not just realigning; it is
profitability
improvements
likewise accelerating. The time is ideal for
troublesome
over
time,
yet
grows it
is
Japan to attempt bolder moves, greater
achievable, especially if Japan steps to
investments, and more profound changes.
make new aggressive progress crosswise
Decades ago, Japanese manufacturers
over entire industries. This effort goes
famously introduced the world to “lean�
past expense cutting; it is about spurring
practices. Today businesses throughout
growth and increasing value added by
the Japanese economy can apply these
launching business lines, pushing the
concepts to new industries and use
boundaries of innovation, and entering
digital technologies to take them to the
new markets. Private-sector initiative and
next level. Focusing on the priorities
drive will be key to the resurgence of
discussed here can help to address
Japan.
persistent legacy issues and put Japan on a faster track toward recovery and
Be that as it may, Japan has a window of chance to make a different outcome - to
PAGE
8
renewal.
TRENDING NEWS B Y
T U L I K A
India lays MAT controversy to rest
women’s doubles title of the year at
Foreign companies with no permanent
You Xiaodi 6-3, 6-1. The dynamic duo have
establishment in India have been relieved by
been on a winning spree across the world
the
Minimum
since coming together in march 2015.
Alternate Tax or MAT. MAT is levied on
Together they have a win loss record of
profit making
42-7.
GOI
from
payment of
entities that do not pay any
Guangzhou on 26 sept against Xu Shilin and
corporate tax because of exemptions and GOI will now amend sec115JB of the
Temporary workers protest at Manesar Plant
Income Tax Act to ensure that MAT
Maruti plant at Manesar is amid controversy
provisions are not applicable to Foreign
once again with the temporary workers
Portfolio Investors as well as foreign
protesting once again for a salary hike. The
companies with no permanent establishment
situation got a bit out of hand and Police
in the country and who are a resident of a
intervention was solicited. This protest
nation having
Double Taxation Avoidance
came up just two days after the salary hike
Agreement with India. This amendment will
that Maruti Suzuki announced for its 13000
have a retrospective effect from April 2001.
permanent factory workers by Rs.16,800 a
reliefs bestowed by the Income Tax Act.
month. Temporary workers draws a salary
Sania Mirza-Martina Hingis win Guangzhou Open title
of around Rs.15,000 pm as against a salary
The world number one team of Sania Mirza
worker and unlike the permanent workers
and
their wages are increased once every three
Martina
Hingis
continued
their
dominating run by winning their sixth
PAGE
9
of Rs.38,000 - 40,000 for a permanent
years.
MARKET INDIAN MARKETS Indian stock markets experienced a further slump this week. Most of the industries have been reporting a weak growth for quite a while and that has attributed to the fall. Raghuram Rajan is expected to come up with some reforms in the next RBI policy meeting as the federal reserve didn’t change the interest rate in this month’s meet. The policies might bring some good news for the investors and we may see the stock market booming. 3 BEST PERFORMERS
LUPIN LTD
MARUTI
Open
High
Low
Close
SENSEX
26,218.91
26,218.91
25,651.84
25,863.50
NIFTY
7,981.90
7,981.90
7,812.00
7,868.50
BSE SENSEX
SUZUKI
INFOSYS LTD
3 WORST PERFORMERS
TATA MOTORS
COAL INDIA
BHARTI AIRTEL
PAGE
10
CNX NIFTY
FINWORD B Y
T U L I K A
Trading on Equity Companies raise capital through two sources, debt when the amount of borrowings are relatively large
SNIPPETS
which is borrowed capital
and equity which is in relation to capital stock, the company is said to
owner’s capital. Both forms have their own merits be ‘trading on this equity’.
Trading on
and demerits. Generally there is no hard and fast
Feasibility
Equity occurs
rule as to when a company should go in for raising
Companies can take advantage of this situation and
capital through either of the means but in certain
maximize returns on equity only when its return
situations companies prefer debt over the equity
on investment (ROI) is greater then the rate of
component in order to increase shareholder’s
interest on borrowed capital, otherwise not.
when a company uses fixed rate of return bearing securities
return i.e. Earning Per Share (EPS).
Increase in debt will increase returns to
Companies can
shareholder’s .
take advantage of this situation and maximize
ROI = Interest
Company is indifferent.. It may or may not
returns on equity only
increase it’s debt component.
when its return on investment
interest on borrowed capital
decrease in returns to shareholder’s because of increased pressure by
the fixed interest the
Trading on Equity occurs when a company uses
company would have to bear
fixed rate of return bearing securities like bonds,
earnings.
debentures, long term loans, etc. to increase it’s
Trading on Equity is only feasible in it’s truest
earnings on common stock i.e. to increase returns
form in the first scenario only. It is here that
to the equity shareholders. The term owes its
the company can take advantage of the tax
name to the fact that the creditors are willing to
shield provided by the interest component and
advance funds on the strength of the equity
magnify its EPS.
supplied by the owners.
In the third scenario the chances of the company
Trading
11
ROI < Interest Increase in debt component will lead to
(ROI) is greater then the rate of
PAGE
ROI > Interest
feature
here
simply
signifies
taking
on it’s low
going bust or bankrupt are high. Rather than
advantage of the permanent stock investment to
acting
borrow funds at reasonable terms. Therefore,
component with its fixed interest payments will
as
a
financial
leverage
the
debt
increase the company’s financial risk.
capital structure wherein more of debt is
Taking a very basic example let us see how employed as against equity because the cost increase in debt component
when ROI is of raising debt is only 10% whereas returns
more than the interest liability the company’s
on capital employed is 24%.
EPS changes.
Things to look out for Raising capital through debt not only
Capital
Proposal A
Proposal B
provides financial leverage as discussed earlier it also keeps the control in the hands of the management. Unlike equity
Equity
400,000
200,000
shareholders who have a right to vote and as owners also have a stake in the profits
10% Debt
100,000
300,000
Total
500,000
500,000
No. of Equity shares
40,000
20,000
ROI
24%
24%
Particulars
Proposal A
Proposal B
EBIT
120,000
120,000
of the company debt holders or the lenders have no such rights making the debt component all the more a lucrative option. But at the same time we also need to keep in mind that raising more of debt even with a high ROI may not always be the best option.
Equity holders may not be ready to bear the added risks associated with the use of leverage.
Higher leverage=Higher cost of capital
Equity holders may ask for more returns Less: Interest
10,000
30,000
for bearing
these
extra
risks which
otherwise the company had hoped to EBT
110,000
90,000
plough
back
and
reinvest
in
future
ventures. Taxes-50%
55,000
45,000
In case the returns are fluctuating in nature then also it is highly unprofitable
EAIT
55,000
45,000
EPS
1.38
2.25
12
Therefore, it must keep into account the projected level of earnings based on past trends and future
projections
As can be observed the company’s EPS
before taking any rash decisions just for
increases when debt component increases as
the sake of increasing EPS in the short
a proportion to equity. Therefore in this case
run.
it beneficial for the company to have such a
PAGE
for the company to go in for debt.
PERSONALITY B Y
S H I L P A
K U M A R I
Jagmohan Dalmiya Mr. Jagmohan Dalmiya who has been
became the first non cricketer and first Asian
nicknamed in media as the “Machiavelli of
at the helm of ICC. Dalmiya was described
Indian cricket” has contributed towards
as a total control freak who knew how to
commercializing cricket. He was elected as
win the board room battles through his
the president of Board of Control for
amazing
Cricket in India (BCCI) initially in 2001 and
Dalmiya was described to be among world’s
then again on 2nd March,2015. After he has
top 6 sports executives. In the realm of his
been
administrative excellence in global sport he
reappointed,
deteriorating
and
his
was
health
admitted
was to
a
hospital in Kolkata after a cardiac attack on
words.
In
1996,
was awarded with the Sports Achievement award in 2005.
17th September,2015. He died three days later on 20th September. He was also a businessman brought up in the city of Kolkata and was born into a Marwari family of the Baniya caste. Started his career as
a
wicketkeeper
and
also
became the Co owner of the firm M.L. Dalmiya & Co. at the age of 19 after the death of his father.
PAGE
13
His played a major role in securing the rights
Jagmohan Dalmiya has helped BCCI attain
to host the 1987 World Cup and then again
position in the global market and has also
in 1996. In the year 1996 for the election of
helped in revenue generation for BCCI.
t h e
th e
After having done so much he died this
International Cricket Council, he secured 23
September on 20th due to his illness and
votes to 13 votes of Australian Malcolm
after his death his eyes were donated to
Gray but could not win the election as he
Vanmukta Eye Bank in Kolkata. The next day
could not attain two thirds majority as per
his body was taken from his house in Alipore
the ICC Constitution. He was elected as the
to Eden Gardens where several dignitaries
President of the ICC in 1997 wherein he
arrived including Sourav Ganguly to pay their
held
last respect to him.
C h a i r m a n
the
position
for
o f
3
years
and