Niveshak March 2012

Niveshak THE INVESTOR

VOLUME 5 ISSUE 3

March 2012

Twin-Deficit in India

Is it a ticking time bomb?

The game of currency>> Pg. 08

Social mdeia IPOs: just a fad? pg. 16

FROM EDITOR’S DESK Dear Niveshaks,

Niveshak Volume V ISSUE III March 2012 Faculty Mentor Prof. N. Sivasankaran

THE TEAM Editorial Team Akanksha Behl Akhil Tandon Chandan Gupta Harshali Damle Kailash V. Madan Nilkesh Patra Rakesh Agarwal Creative Team Anuroop Bhanu Venkata Abhiram M.

All images, design and artwork are copyright of IIM Shillong Finance Club ©Finance Club Indian Institute of Management Shillong www.iims-niveshak.com

The positive mood in the Indian markets continued this past month with the Foreign Institutional Investors infusing record levels of equity into the market. The investment by overseas investors into the Indian stock market since the beginning of 2012 has crossed USD 7 billion level, out of which more than USD 5 billion were pumped in the month of February. The major reason for this is the reversal in the RBI’s Monetary Policy and improved liquidity position. However, the global outlook still looks gloomy with no major headway being made in the Eurozone. As a result, experts believe that there will be a strong upsurge in the prices of precious metals. Silver, they say, is expected to hit highs of INR 1 lakh per kilogram.

This year, the budget was presented on March 16th, instead of the traditional last day of February by the Honorable Finance Minister of India, Pranab Mukherjee. The crux was to find a balance between the growth rate and inflation, while also keeping the fiscal deficit at a manageable level. Infrastructure sector was a major focal point and as a precursor to this, four banking and financial giants, ICICI Group, Life Insurance Corporation, Citicorp Finance India and Bank of Baroda, joined hands to launch the country’s first infrastructure debt fund. A more detailed analysis of the Union Budget would be done in our upcoming issues.

There now seems to be some hope for the debt-ridden Kingfisher Airlines. The Vijay Mallya-led airline, heavily plagued by debt has found another alternative apart from asking its creditors to convert their debt into equity. Talks are on to rope in PE buyout majors like TPG, Blackstone and Cerebrus Capital. However, the level of dilution of promoter held equity is still unknown and further selling of stake could happen, by way of Etihad and British Airways, once the Government allows foreign airlines to invest in Indian carriers.

The past month has also brought some cheer to the gloomy primary market, with Facebook filing for its IPO. The much talked about IPO, values the social networking firm between $80-$100 million. On the domestic front, Multi Commodity Exchange, filed for its IPO. This was the first major IPO after the Coal India listing almost one and a half years back. The issue was oversubscribed in excess of 50 times and listed on March 9th at the ceiling of the price band of INR 860 – 1032 owing to strong demand.

With higher capital adequacy ratios demanded by the BASEL 3 norms; major international banks are booking profits in their Asian investments. Citigroup, a global financial major, sold off its 10% stake in HDFC for nearly $1.9 billion clocking an after tax profit of $722 million.

This month’s issue brings to you an insight into the effects of the dreaded twin deficits in different economies. The article of the month explains the role of the currency in shaping the developments all across the world and also analyzes critically the role of currency in Euro debt crisis. The article also discusses about the effects of depreciation of Indian Rupee. The issue also features interesting reads on social media IPOs, scenario of non-performing assets in India and the issue of privatization of PSUs in the country. This month’s classroom section explains to you the concept of ‘Islamic Finance’.

We would like to thank our readers for mailing their wonderful articles and appreciation e-mails. It is your constant encouragement and enthusiasm that keeps us going.

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always, Stay Invested.

Team Niveshak

Disclaimer: The views presented are the opinion/work of the individual author and The Finance Club of IIM Shillong bears no responsibility whatsoever.

CONTENTS Cover Story Niveshak Times

04 The Month That Was

Article of the month

08 The Game of Currency

11 Twin-Deficit in India : Is it a ticking Time Bomb?

Finsight 14 Should PSU banks be

privatised? : The Indian Scenario

Fingyaan

18 Non-Performing Assets: Indian Scenario

Perspective 16

Social Media IPOs: Just a Fad?

CLASSROOM

21 Islamic Finance

NIVESHAK

The Month That Was

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The Niveshak Times Team NIVESHAK

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S&P Warns of Possible Downgrade for Japan On 20th February, 2012 S&P re-affirmed Japan’s AA- rating but maintained a negative outlook towards its economy. It didn’t downgrade Japan’s sovereign debt rating because the country’s rating is backed by a strong currency reserve position and steady current account surpluses, which indicate that Japan is still a major player in international trade. It also means that the country has an incessant movement of international funds going in and out of it. However, analysts have pointed out that the country’s massive debt of 200% of GDP is the highest among the industrialized nations. But the markets are not too worried about this as most of the debt is held by big financial firms. Moreover, Japan’s sovereign ratings are controlled by the government’s weak policy foundations, large fiscal deficits, and high debt, as well as prolonged deflation and an aging and shrinking workforce. Therefore, there is a 33% chance that the country could see another downgrade in the next couple of years.

Second bailout to Greece On 27th February, the German policymakers sanctioned the second bailout for Greece. There was opposition regarding this from within German Chancellor Angela Merkel’s Christian Democratic Union. However, Germany agreed to their contribution to the €130 billion rescue package with the consent of the large majority. This bought Greece one step closer to receiving its second bailout.

In order to meet the requirements of the bailout, Greece needs to complete a series of austerity measures linked to its initial rescue package.

Therefore, to prevent a financial breakdown,

March 2012

Greece’s parliament has approved cuts in pensions and health care. This would reduce the state spending. Moreover, the changes in the labour laws would liberalize the jobs market. As these measures are believed to drive the economy into a deeper recession and with unemployment rising to 21 per cent, there is a huge discontentment among Greeks. The economy shrank 6.8 per cent last year and is set to contract for a fifth year in 2012.

Citi exits HDFC, pockets $1.9 billion – to follow Basel – III norms The global banking major, Citigroup, has sold off its 9.9% stake in Indian’s biggest mortgage lender HDFC for nearly $1.9 billion. This is so far the largest equity offering. The shares were offered to the institutional investors through a book building process. Citi had to sell off its stake in HDFC in order to meet the new regulatory requirements of Basel – III norms. As per Basel - III, any equity investment by a bank in a financial firm is directly subtracted from the bank’s equity capital while calculating the bank’s capital adequacy ratio. Citi got two major benefits from selling off its stake in HDFC. Firstly, it made a profit of about $722 million which added on to its bottom line profit in the time when it is going through a difficult phase. Secondly, this has reduced its hunt for capital for complying with the Basel – III new international agreement on capital requisite for banks.

MCX IPO Multi Commodity Exchange of India (MCX), the country’s largest commodity exchange with 87% market share in the commodities market and the world’s fifth largest exchange, made an initial public offering on February 22. It is India’s first exchange to hit the capital market, offering 64.27 lakh equity shares through this issue. On the basis of trading volumes, globally, MCX was the largest exchange for silver, the second largest exchange for gold, copper and natural gas, and the third largest exchange for oil in the cal-

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endar year 2010 and the six months ended 30th June, 2011. The public offer emerged as the most successful IPO since the one by Anil Ambani-led Reliance Group’s R-Power in January 2008. The MCX IPO was over-subscribed by over 54 times with bids worth about Rs 36,000 crore on robust demand from retail, HNIs and institutional investors.

Vedanta set to merge Sterlite, Sesa Goa

Metal maven Anil Agarwal announced the formation of a much speculated organisational rejig that combines two Indian companies - Sesa Goa and Sterlite Industries into a new single entity named Sesa Sterlite , enabling in one stroke the cut in debt exposure of its parent, the LSE-listed Vedanta Resources plc. This move will give rise to a new company with the shareholder value worth $ 1 tn. The boards of Sterlite and Sesa Goa agreed to merge the two companies into Sesa Sterlite, through a swap ratio that stipulates three Sesa Goa shares for every five held in Sterlite.

Parent Vedanta’s debt will shrink by almost 61% to $3.8 billion and the debt-service liability will be reduced by $300 million for the year ending March 31, 2013. In one deft stroke, through this restructuring, the cash guzzling aluminium business and the cash spewing oil and gas business will be put under the new entity. The deal is expected to sort out the burden of debt arisen from the ambitious Greenfield expansion and also the bulge bracket acquisition of oil and gas major Cairn Energy as the cash guzzlers will be adequately covered by the cash generating businesses in the group.

Berkshire identifies Buffett successor Berkshire Hathaway has identified the chief executive who will succeed Warren Buffett when the 81-year-old investor steps down. Though the successor’s name is not known, the most common guess among Berkshire watchers is Ajit Jain, who runs Berkshire’s reinsurance business. Buffett and his partner Charlie Munger have always

been lavish in their praise for him. The other part of Berkshire’s succession plan - who will run its huge investment portfolio when Buffett is gone - is much clearer. The company has hired two investment managers, Todd Combs and Ted Weschler, to manage its investment portfolio.

There had been speculation that Berkshire might add a third manager down the line.

Crude may scale $150 on Iran crisis Oil, which already touched $124 a barrel mark, is set to touch a new record and breach the $150 mark on mounting Iran crisis. Analysts feel that the government is holding back from hiking fuel prices because of the on-going elections and a steep hike is very much likely next month.

Oil has surpassed the forecast price and is now trading at $124 a barrel. It will continue moving north on account of mounting Iran crisis. Saudi Arabia’s oil capacity is never tested and thus oil prices are expected to rise unless there is a severe demand. The price rise is also expected to have a strong impact on India as oil accounts for over 40% of India’s imports and 80% of trade deficit. Oil import bill is likely to surpass $142 billion this fiscal according to Prime Minister’s Economic Advisory Council (PMEAC).

Government says ONGC auction a success!!!

Life Insurance Corporation (LIC) pumped in over Rs 12,000 crore and purchased 95% of the equity put on the block in the first-ever stake sale of ONGC through auction process. LIC picked up 40 crore shares, or 95% of the ONGC shares, sold through the auction route fetching the government a total of Rs 12,766.75 crore. There was no participation from foreign institutional investors and a very little participation was witnessed from retail investors. About 42 crore ONGC shares, representing a little less than 5% of government stake in the oil major, were sold at an average price of Rs 303.67 per share.

© FINANCE CLUB, INDIAN INSTITUTE OF MANAGEMENT SHILLONG

The Month That Was

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Article Market of Snapshot the Month Cover Story

Market Snapshot

Source: www.bseindia.com www.nseindia.com

MARKET CAP (IN RS. CR) BSE Mkt. Cap Index Full Mkt. Cap Index Free Float Mkt. Cap

63,18,228 29,53,740 14,74,523

LENDING / DEPOSIT RATES Base rate Deposit rate

10%-10.75% 8.5% - 9.25%

Source: www.bseindia.com

CURRENCY RATES INR / 1 USD INR / 1 Euro INR / 100 Jap. YEN INR / 1 Pound Sterling

49.94 65.40 60.72 78.25

CURRENCY MOVEMENTS

RESERVE RATIOS CRR SLR

4.75% 24%

POLICY RATES Bank Rate Repo rate Reverse Repo rate

9.50% 8.50% 7.50%

Source: www.bseindia.com 15th February to 12th March 2012 Data as on 12th March 2012

March 2012

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BSE Index Sensex

Open 18,000

Close 17,588

% Change -2.29%

MIDCAP Smallcap AUTO BANKEX CD CG FMCG Healthcare IT METAL OIL&GAS POWER PSU REALTY TECK

6,348 6,965 10,154 12,199 6,247 10,569 4,160 6,353 6,074 12,618 8,831 2,202 7,734 1,947 3,594

6,397 6,796 10,107 12,234 6,759 10,449 4,169 6,434 6,067 11,605 8,439 2,233 7,635 1,850 3,572

0.77% -2.43% -0.46% 0.29% 8.20% -1.14% 0.22% 1.27% -0.12% -8.03% -4.44% 1.41% -1.28% -4.98% -0.61%

© FINANCE CLUB, INDIAN INSTITUTE Of MANAGEMENT SHILLONG

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Market Snapshot

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Article of the the Month Article of Month Cover Story

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The Game Of Cu nc Rishi Gupta & Manan Jain

IIM Shillong

The debt crisis in Europe and the future of the Euro have been hogging the headlines of financial dailies of not just the west but all across the globe. Moving from the West to the East, time and again, China has come under criticism for artificially devaluing Yuan. In the Indian context, we have seen how the depreciation of the Indian National Rupee (INR) has spelled doom for the importers and has made TCS the most valued company listed on the Indian stock markets. In Iraq, no weapons of mass destruction have been found. Were there any other motives behind the invasion of Iraq? In the West, why did the European countries other than England want to come together to form a monetary union? And now, after almost a decade why has it become essential to contain the European debt crisis to save the Euro? The answers to several of these questions and many others lie in the GAME of Currency. It becomes imperative to understand how currency plays a role in not just the world economics but also in world politics.

Role of European Nations Taking the questions in a chronological manner, the answers can be traced back to the times when Euro came into existence on 1st January 1999 in non-physical form and later on 1st January 2002 in the form of notes and coins. The major Europe-

an economies that embraced it were France and Germany which had much weaker currencies in Frank and Deutsche Mark. England, with a strong currency in Sterling Pound ÂŁ decided against it.

Soon, more and more economies accepted it, and it became the second most traded currency in the world, leaving behind Japanese Yen ÂĽ and Sterling Pound ÂŁ. The leveraging of a common currency by smaller economies in Europe by borrowing at lower rates spurred an era of growth. Recession in the US during 2001-2003, only helped the Euro to gain. However, some of the smaller European economies borrowed beyond their means and used it to fund social benefit schemes. The Housing crisis in the later decade compounded their

Fig 1: Movement of Dollars with respect to Euro since 1999

It becomes imperative to understand how the currency plays a role in not just the world economics but also in the world politics.

March 2012

NIVESHAK

How could Iraq, which was already under heavy sanctions, pose any threat to the two of the strongest currencies in the world? The answer lies in the term PETRO- DOLLARS.

Š FINANCE CLUB, INDIAN INSTITUTE Of MANAGEMENT SHILLONG

Article of Month Article of the the Month Cover Story

debt problem, which led to countries like Greece, Bush went ahead with the invasion, targeting a Portugal, Spain and others into a sovereign debt second term as US President. But the question crisis. Now again, two of the largest Euro econo- arises why Britain played the active role. One reason could be to support their currency and the mies are toiling hard to save the currency.

But, why do Germany and France need to bear US $. But then how could Iraq, which was already under heavy sanctions, the brunt of reckless pose any threat to two of spending by other Euro the strongest currencies Zone economies. Firstly, The article highlights in the world. The answer both the countries have the role of the currency wrests with the term export oriented econoin shaping the developPETRO- DOLLARS. mies with 40% of their ments all across the globe. exports directed towards Petro-Dollars: The The article highlights the debt ridden Euro zone Crude Way reason behind England’s nations. If they default, US $ dollar is the most decision against adopit can spell doom for Gertraded currency in the tion of EURO and why in man and French factory world because crude is output. Though depre2009 among the three traded in dollars. Due to ciation of the Euro will largest economies in Euthe inability of the human result in better realizaro-zone, only France and race to substitute crude tion of their exports, a Germany are toiling oil for its sheer volume, stable currency is also dollar remains the most hard to save debt ridden essential for their export traded currency in the Greece, Portugal and to the rest of the world. world. And since anyone Italy. The article also exSecondly, French and and everyone who needs amines the correlation German banks have very crude needs dollars, it of currency movement high exposure to Soverhas naturally become the of the invading countries eign debt. If Greece and strongest currency. Howlike United States, Engother countries default, ever, Iraq started to sell land and Australia against it will put severe stress crude against the Euro.

EURO. The articles also on their own banking Within two years, the Euro states effect of depreciasystem. But the efforts appreciated 20% against tion of Indian Rupee on of France and Germany the dollar and threatened need to be appreciated the economy. The article to emerge as the currenas it may very well help concludes emphasizing cy of global trade. Pound prevent another recesderives its high valuation on the important it is to sion just when the world due to the strength of the understand the crucial economies have started US dollar due to its investrole of the currency in an to recover from the U.S. ment in US companies. era of globalization. housing crisis.

Australia derives majority of its GDP from the export United Stated invaded of its mineral wealth and Iraq in March 2003. US agricultural harvest like found a major ally across the Atlantic in England and across the Pacific in wheat; which are traded in exchange of US dolAustralia. They went ahead with the invasion in lars. By taking down the Saddam Hussain respite of severe opposition from other permanent gime, US could not only secure its crude assets members of the United Nations Security Coun- but also secured its currency. cil (UNSC). There were speculations that George But still the question remains unanswered as to

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Table 1: Most traded currencies by value ( as on April 2010)

why the US, in spite of its economic clout needs to maintain the supremacy of the US $. The answer lies in the fact that the prosperity of US companies is largely dependent on a strong dollar. From the late 1990’s, US economy is largely fueled by high domestic consumptions which are supported by cheap imports from low cost countries. A strong currency makes its imports cheap and helps derive higher return from its exports and investments abroad. Britain also largely thrives on the same for its strong currency. These countries work in a diametrically opposite manner to China, which strives to devalue its currency in order to make its exports cheap. This makes US a perfect destination for the products manufactured in China. Western powers rarely come under criticism, but China goes under the hammer for the same.

At the end of the first decade of the new millennium, US printed more than $ 1 trillion of currency to clear its massive debt. If any other country had opted for the same, it would have resulted in massive devaluation of the currency. But as

the US dollar has massive demand all across the globe, it resulted in as little as a 10% devaluation of its currency. In contrast, when Russia in 1998, had no option but to print its currency to pay off its debt, it got devalued from 5 rubles/$ to 28 rubles/$. In 2009, only China raised its voice against the devaluation of US $, as it held more than $ 3 Trillion dollars of dollar dominated assets. US being the arrogant superpower that it is didn’t pay much heed to this and used its liberty to print the dollar. Once again, US resorted to its currency advantage but this time to clear off its debt.

The Effects The game of currency affects each and every nation and India is no exception. India with nearly $500 billion of trade contributes to only 2 % global commerce, and hence the INR has little influence. The European debt crisis compounded with the problem in the domestic economy, prompted investors to withdraw from the Indian markets. Dollar outflow has resulted in INR to depreciate almost 20% in last six months, giving a huge boost to Indian exports. But our imports far exceed exports which can be detrimental. As the currency weakens, India also suffers from heavy inflation due to high import costs of coal and crude. There are already indications of missing export targets of 2011-12, but on the flip side, foreign investments have become cheap. If the currency is a short term phenomenon, it can very well turn out to be good for long term growth.

There is not even an iota of doubt about the role of the currency in shaping events across the globe. It not only swings the profits of the multinationals, but also extends influence in the geo-political developments. If stronger currency results in prosperity in some parts of globe, devalued currency brings growth in others. With increasing global trade and overseas investments, currency movements will continue to influence our lives more than ever. Therefore, it becomes essential to understand the effect of currency on increasing interconnected globalized world economies.

If stronger currency results in prosperity in some parts of globe, devalued currency brings growth in others.

March 2012

NIVESHAK

Akhil Tandon & Rakesh Agarwal

Team Niveshak

The word ‘deficit’ implies that there exists a gap.

Twin deficit is used to refer to a country which suffers from both a fiscal deficit and a current account deficit. The presence of even one of these deficits can have dire consequences for an economy, and one can just wonder the plight of the countries which are plagued by this syndrome of Twin Deficits.

Before marching ahead, it is important to understand what these terms actually mean.

A fiscal deficit is said to occur when the government’s expenditure exceeds its revenue. The excess of spending is funded by domestic savings.

This leads to higher interest rates, which in turn crowds out private investment and eats up the domestic consumption.

A current account deficit occurs when the money value of imports is higher than that of exports.

This calls for foreign funds to plug this excess of imports. This leads to depreciation of the domestic currency as more and more dollars are demanded, which eventually results in imports being costlier.

Now, if both these deficits occur simultaneously, it can spell doom on an economy as it makes it vulnerable to both domestic savings as well as foreign funds.

HISTORICAL PERSPECTIVE Twin deficits have been prevalent in many of the major economies of the world, especially in the last decade.

USA The United States has been battling with twin

deficits since 1980s. Barring a brief period during President Bill Clinton’s regime, the current account deficit has always been in red for United States. However, in the latter half of the last decade, the current account deficit started diminishing owing to depreciation of the dollar, which provided an impetus to American exports and made imports less competitive. Now, as per the recent IMF projections, the current account deficit will again adopt an upward spiral. The dollar is expected to become stronger, which will result in lesser exports, thereby resulting into relative higher imports.

The fiscal health of the United States has not been satisfactory since long. The fiscal stimuli in 200809 were a testimony of the same, as the government was widely criticized for the stimulus being too small. This resulted in a slow and fragile recovery from the recession.

United Kingdom The situation in United Kingdom has been no different than that of the United States. Fiscal position of United Kingdom has not been encouraging, as it has suffered deficits for the last 3 decades barring 1988-89 and 1999-01. The fiscal deficit has widened significantly during the crisis period to touch 9.4% in 2011 and is expected to ease hover round 4% by 2015. Current account has been in red for the entire last decade, and is expected to remain so till 2015.

While comparing to US, the fiscal deficits of both countries are more or less similar as a percent of GDP but current account deficit in UK was much

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Cover Story Article of the Month Cover Story

TWIN-DEFICIT in India : Is it a ticking Time Bomb?

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lower than US in the same period. However, on a macro level, the economy of United Kingdom is more vulnerable, as the financial sector is the mainstay of its economy. As the global economy tanked, it raised questions about the size of the financial sector and the degree of control on the tax revenues.

In terms of Current Account Deficit, the Great British Pound depreciated significantly in wake of the crisis. So, there was more currency adjustment in the United Kingdom than the United States.

European Union The European Union nations had signed the Growth and Stability pact in 1997, under which they promised to limit their fiscal deficit to 3% of the GDP. However, this has been violated by the signatories from time to time. Even countries like France and Germany were marred by high deficits on numerous occasions. This encouraged the smaller nations, and they soon followed the suit.

Prime example of this was Greece which brought down its deficit close to 3% of the GDP in order to qualify for the union in 1999. However, it has been missing that target ever since, barring a minor recovery during the global economic slowdown. Of late, the budget deficit has risen to alarming levels of 10.6% (2010). Similar is the case with economies like Spain where the budget has squeezed from a surplus in 2006 to a deficit of 9.3% in 2011. Ireland, which was dubbed as a Celtic Tiger economy for its promising growth potential, has slided from a surplus in 2002 to a deficit of a whooping 31.3% as per the latest data.

Within the European Union, there was a huge disparity with respect to the current account deficits of various countries. While PIGS economies ran their imbalances, countries like Germany and France have enjoyed surpluses. The troubled economies of PIGS grew on account of consumption, and Germany grew because of its export orientation. However, the economic slowdown turned the table upside down. The pressure was now on the respective governments to rescue their respective economies. Being a Monetary Union, the pressure was on the fiscal policy, which was paralyzed was lack of a fiscal union.

Greece has been leading the pack here, as its current account deficit crossed 14% in 2008. Portugal is yet to achieve a current account surplus since 1994. With the advent of European crisis, the foreign

inflows almost stalled, which has made the financing of this deficits all the more difficult. Ireland had lower current account deficits than the other three but faced a much bigger problem from the surge in fiscal deficits.

Indian ‘TWIN-DEFICIT’ India has been running persistent twin deficits since 1980-81. The real concern is that we have not managed to learn any lessons from our economic history. The 1991 crisis is widely known as the balance of payments crisis but was basically a twin deficit crisis. In 1991, India experienced a classic external payments crisis: high fiscal and current account deficits, external borrowing to finance the deficits, rising debt service obligations, rising inflation, and inadequate exchange rate adjustment. In 1979, the oil shock, agricultural subsidies, and a consumption-driven growth strategy had pushed up the fiscal deficit. It further increased in the mid-1980s as defense expenditure was substantially increased and direct taxes were progressively reduced. The result was that the deficit ballooned from 1985 to reach 9.4 percent by 1990–1991. India was on the brink of bankruptcy. In response, a reform process began.

India sought help from the International Monetary Fund. Engagement with the International Monetary Fund (IMF) had its risks: if India could not deliver on its promises of economic reform, investors would exit again; if the government pushed too hard on reforms, domestic opposition would become unmanageable.

Yearning for government action Similar to the appalling situation in 1990-91, the country is facing yet another fiscal and balance of payments crisis. With increasing integration with the global economy, the country has become highly vulnerable to global macroeconomic shocks.

Cyclical slowdown underway In recent months India’s growth has been decelerating and its currency came under pressure in late 2011. As elsewhere in Asia, the slowdown has been due partly to weaker external demand. In India, however, the main factor has been domestic issues, including widening “twin” deficits on the fiscal and the current accounts, high interest rates and inflation, sluggish progress in key policy reforms and administrative red tape.

The policy decisions and actions taken by the government in the near future with a long-term outlook will shape the new Indian economy that could ride out the rough patch in the global economy.

March 2012

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Article of the Month Cover Story

Fig 1: GDP growth rates

All these have taken a toll on the growth of the country which slowed to its weakest annual pace in almost three years rising 6.1 per cent in the third quarter compared to a year earlier.

In this situation, the policy decisions and actions taken by the government in the near future with a long-term outlook will shape the new Indian economy that could ride out the rough patch in the global economy.

1.Medium-term prospects India has been one of the world’s fastest growing economies since the early 1990s, becoming the world’s third-largest economy on a purchasing power parity (PPP) basis (according to the IMF and World Bank), behind the US and China.

Among the strengths that make India one of Asia’s brightest prospects for medium-term growth and favorites among foreign investors are: favorable demographics, rising income levels, rapid urbanization, a stable and well-regulated financial sector and vast untapped potential in energy, infrastructure, retail and banking.

India ranks highly among the group of Emerging and Growth Leading Economies-- “EAGLEs”--and is expected to grow by 8% per year and contribute a whopping 10% of global growth in the coming decade, second only to China.

2.Markets are recovering from a sharp selloff In the near-term, the sharp depreciation of the rupee in late 2011 leaves upside risk to inflation. The depreciation (18.7% against the USD in 2011, making it Asia’s worst performing currency) occurred as India’s external vulnerability came to fore, with a current account deficit of 3.5% of GDP and high de-

pendence on foreign capital inflows. The currency’s losses were further exacerbated by dampened investor sentiment on account of backsliding on key reform initiatives, particularly in the infrastructure and retail fronts. Subsequent forex intervention by the RBI with a series of measures to stimulate capital inflows and curb speculative activity in the FX market have helped stem further losses. More recently, the rise in global risk appetite has led to a sharp rebound in the currency. Following sharp declines last year, India’s equity markets and the domestic currency have recovered in early 2012.

However, with the global outlook still fragile and the Indian economy struggling to tackle key challenges, both on the macroeconomic as well as policy front, risks of renewed pressure on equity as well as forex market, continue to loom large.

3.Policies to restore confidence At a time when India needs visible progress on investment reforms and a boost to investment spending, an unhealthy fiscal situation is acting as a potential dampener for private investment. India’s fiscal deficit is expected to overshoot the budget estimate for FY12 (5.6% of GDP compared to 4.6% budgeted) amidst subdued revenue growth due to weak tax receipts and excessive public expenditure. The large deficit could potentially crowd out credit flows to the private sector, while further slippages could fuel inflationary pressures in the economy. The onus lies on the government to kick-start fiscal consolidation by paring back subsidies and implementing tax reforms. In this context, the Union Budget for FY13 in March will be closely watched for government policy action.

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Article Finsight of the Month Cover Story

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Should PSU Banks Be Privatised?

The Indian Scenario Neha Jain & Sourabh Sahu

IIM Indore

Although ideological considerations - exemplified by statements like, “governments have no business to be in business” - have often been paramount in driving privatisation in various parts of the world, It is also true that privatisation has brought a radical change in the functioning of various organisations. In the banking sector also, the partial disinvestment of government in the PSUs done during 1990s helped to increase efficiency, and foster healthy competition. In the light of the recent developments, like government planning to amend the Banking Regulations Act and the various Bank Union strikes, the matter of further privatisation of banks is back in discussion. In this background, this article focuses on the feasibility of privatisation of Indian PSU banks and the effects it will have.

Objectives For Privatisation – Analysis In Today’s Scenario The advocates of privatisation have sought to justify privatisation with the following objectives 1. Increased efficiency 2. High Revenues - bridging Fiscal Deficit 3. Reduced government interference 4. Wider ownership share and development of capital market 5. Fostering competition Of these, the first objective, the need to promote efficiency in running the commercial organizations, has arguably been the dominant motivation. There is a sense that public ownership somehow leads to lower levels of efficiency than are possible under private ownership. But, the basic issue here is the basis of the argument about the efficiency levels. There are no parameters that measure and compare the efficiency of the PSU and private sector banks. It is so, because both these setups are based on different motives and business models and hence they could not be compared directly.

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Secondly, it is said that privatisation helps in earning high revenues and hence bridging fiscal deficit. Considering that India still has a considerable population under poverty line, considering profits only in services like banking might hamper the growth of the nation.

Thirdly, Privatisation is supposed to reduce government interference. Though it is a characteristic of privatisation, this might not be a very good thing for India today because the mass participation of banks in ‘not so profitable’ areas is achieved by the government regulations and interference.

Further, the development of capital market is something that in this case would be done by diluting government’s stake. This would also make the bank more risky. The development in the capital market is thus happening at the cost of the shareholders.

Lastly, privatisation helps in fostering healthy competition. In the current scenario, there is a fine balance in this segment. In case privatisation is done, SBI, which is the largest bank would have huge power. Going with this approach would hence lead to monopolised markets, going against our objectives.

Hence we see that almost none of the objectives fit with the present scenario. The problem cannot be addressed by privatisation.

The Issue The major problem is not the lower efficiency of the PSU banks, as is pointed out by the advocates of privatisation. This section gives some of the issues which we feel are most important in this scenario.

1. Measuring the performance of public and private banks The achievement of the public sector banks in India in the last 36 years, is particularly reaching out to the masses in the hitherto neglected villages. Even in china, the banks could not reach the level of rural penetration which the Indian public sector banks have been able

There are no parameters that measure and compare the efficiency of the PSU and private sector banks

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on the public sector banks, sapping their income and profits.

Potential Effects of Privatisation If implemented, Privatisation would go against the government’s policy of Financial Inclusion. On one hand, when government is taking all necessary steps to bring banking in reach of every person in India, going for privatisation of banks is not feasible.

The private banks, with profit as their aim, would not open branches in areas where they don’t expect profits. Also their interest rates are higher, which would make credit unavailable for people from lower income group.

Also, in the current scenario, when many economies are in recession, having some control on our banking system is good.

This guards us from the global recession to a certain degree. Especially after having withstood the global economic crisis of 2008, The PSUs have proven their mettle.

Conclusion The current state of the public banks is a complex result of many factors. The key to improve their performance lies in understanding the core difference between the two types of financial institutions. From analysis, it seems that the difference between the working of private sector banks and PSU banks emerges from the policies and regulations and not their efficiency. The solution to the stagnation of banks is standardising the regulations and minimising bureaucratic control, not hasty privatisation.

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The solution to the stagnation of banks is standardising the regulations and minimising bureaucratic control, not hasty privatisation

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to. This has helped in rural development and hence contributed in the country’s development. But, while measuring the performance of the PSU banks and while comparing them with private entities, these achievements are not factored in. Hence, to be able to compare the PSU banks and private banks we need to have some metrics which consider the difference in the objectives of the two different kinds of establishments.

2. Stricter Regulations for public banks While foreign banks are permitted to open 12 branches per year by installing hundreds of ATMs throughout India and through their financial subsidiaries, significant retail and consumer banking business are transacted. For example, Citibank alone, besides branches, now has more than 150 outlets under the guise of Citi Financial Company.

As against this, the applications for license to open a branch in New York made

by SBI are pending for over two years. This creates a bottleneck for the growth of PSU banks.

3. Lesser formalities and checks on private banks For any transaction, for example, private banks modify the KYC norms to make a hassle free process for getting loans. This attracts more loan seekers as compared to public banks. But, due to this they need recovery teams etc. There have been incidents when the private banks have been accused of harassing the customers for recovery.

4. Different regulations for Private players The foreign banks are permitted to open their financial subsidiaries to indulge in trading and services to increase their income and profits. This allows the private banks to generate huge profits, which does not happen in public banks. Hence the revenues of public banks and private banks cannot be compared as such.

5. Exemption for private banks from social banking The private banks are exempted from social banking and agricultural credit. These burdens are put solely

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Article Perspective of the Month Cover Story

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Social

Media IPOs :

Just a Fad ?

Karandeep Singh Batth

FMS, New Delhi

What is common between LinkedIn Corp, FriendFinder Networks, Groupon Inc, Yandex N.V., The Active Network Inc, Jiayuan.com Int’l Ltd, Pandora Media Inc, Taomee Holdings Ltd, Tudou Holdings and Renren Inc? Other than the fact that these are all social media corporations, one underlining rallying point is that they have been big losers on the worldwide exchanges in 2011.

The year 2011 was the year when Investment Bankers caught the friending fever – welcoming the new breed of “Computer Nerds” who were connecting the whole world together. The “Nerds” too saw an opportunity, and thus 2011 became a year to cash out for them. Doesn’t matter if one calls it a wave or a bubble, these social media companies have caught hold of everyone’s eye – and more importantly wallet.

Let’s take a deeper look.

The Story So Far 2011 saw, as most experts say, the initial hype over social media IPOs “burst”. While most of the social media stocks were trading high at the outset, they have since sunk, and so have the hopes of the numerous entrepreneurs and Wall Street Investment Banks looking to make a “living” out of these ventures. A research by Kevin Pleines, an analyst at Birinyi Associates in Westport (Conn.), shows that out of all the social media stocks that have gone public since 2010, 60% are trading below their issue price; aggregated downward movement of these stocks since issue is 32%.

The following two tables bring forth the gloomy picture that the year gone by painted for the social media corporations: Index/Stocks

Return in 2011 (%) As on 1 Dec 2011

NASDAQ

-1.01

S&P 500

-1.04

All 2011 IPOs

-10.56

Social Media IPOs

-24.69

Table 1: Returns of various Indices/Stocks in 2011

March 2012

Stocks

Loss since IPO (%) As on 29 Dec 2011

Renren (RENN)

76.4

Tudou Holdings (TUDO)

63.6

Demand Media (DMD)

59.8

Phoenix New Media (FENG)

51.9

Jiayuan.com International (DATE)

45.6

21Vianet Group (VNET)

39.7

Pandora Media (P)

37.4

Yandex (YNDX)

20.8

HomeAway (AWAY)

14.8

Zynga (ZNGA)

5

Table 2: Social Media Stocks (in order of losses from original IPO pricing)

The But even amongst all this gloom, there have been those who have gone against the bearish wind: the well-known ones being Bankrate/RATE (+30.96%) and Jive Software/JIVE (+6.67%). Such performing stock, though few in numbers, have given a much needed glimmer hope for the investment community.

The Real Question So let’s get down to the real question: Is this social media IPO boom an actual wave or just a fad? As hype and concern continue to build around the IPOs, investors have started to wonder whether these stocks are worth the price.

Most of the experts express negative sentiments; and it’s not tough to figure out why: First, Social Media Stocks work purely on the basis of projections, without any actual projections for returns and growth. Put mildly, investing in products based solely on intuition is a fool-hardy decision.

Second, revenues of Social Media Corporations aren’t accounted for. Most of their revenues come from advertisements, which are a limited source of income and has probably come to saturation point already. For example, 85% of Facebook’s revenues come from advertisements.

Third, since the social networks operate outside

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So why have some still paid, as they say, “outrageous premiums” for some of the social media stocks? Most of them have looked at revenues; LinkedIn for example had some odd $300 million in revenues and is believed to be growing at more than 100% every year. This school of thought believes that if LinkedIn continued to double, the stocks would rationalize a move upwards. When the search giant Google had made its debut in 2004 at $85 per share, most people believed it was massively overvalued; Google

now is trading around $500 a share. It was anything, but overvalued. They also point out that there isn’t enough excitement amongst the public for this sector and the common investors are still on the sidelines; for a bubble to exist, the common man has to be all in because it’s the average investor who takes the final beating.

Is the general skepticism overhyped? Only time will tell. But amidst all the frenzy surrounding the billion dollar valuations of Social Media Companies, market experts unanimously point out one fundamental investing rule: look at the business model sustainability, revenue sources and profitability potential. Only profits will justify stock prices in the long-term. The current social media

valuations are based on future earning potential as opposed to historical data, which makes scrutinizing the individual business model even more important. Maybe a few like Facebook and LinkedIn deserve the high valuation that they are getting because they have strong business models.

But others like Groupon have a business model that is easily replicable, but are still attempting to get high valuations.

For most, the honeymoon is likely to be shortlived. The companies that survive are going to be the ones which were able to leverage their user base, visits and page views, and generate sustainable cash flows. What will you be a part of: the next Google-like boom, or the News Corp’s loss of $545 million in MySpace buyout?

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the Wall Street, they aren’t required to report their earnings. Thus, investors would risk the investing in companies that are overvalued.

Fourth, users are the sole reason why Social Media Corporations exist. With questions regarding user privacy and data protection being raised every passing day, they are trying to keep the trust of users while attempting to appease the advertisers. This very risk was mentioned by Facebook in its IPO filing, where it was required to cite risk factors by law.

Fifth, the life expectancy of Social Media Websites is a big question. For example, when MySpace started out in 2005, it was a big instant hit, but where it stands now is anybody’s guess.

How sound an investment would it have been now if one had invested in it in 2005?

Lastly, the very fact that management of various Social Media Corporations are already looking for new opportunities for growth is a telling news; they themselves aren’t sure of the longterm sustainability of their business models.

For example, Zynga, India’s most famous online poker game platform founded in 2007, is already considering a move into online gambling space.

A change of focus so early is a big red flag for Zynga investors.

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Article of the Month Cover Story FinGyaan

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Non Performing Assets

Indian scenario Shirish Jain

IIM Shillong

Non-Performing Assets (NPA) are one of the key financial indicators of any bank. It’s very much important to understand NPA norms (provision, classification and income recognition) and various NPA terminologies which are applicable to the banking industry; for example, Gross NPA, Net NPA and Slippage ratio.

The article analyses Indian banking scenario and its recent performance in the given light. Also the article highlights the reasons for NPA rise in India, Option for trading NPAs, concerns in near future and the way ahead in the banking sector.

One of the perennially dreaded words in the banking sector has been this three letter word ‘NPA’. Non-Performing Assets (NPA) also sometimes known as NonPerforming Loans (NPL) have long since been considered as one of the very key financial health indicators of the bank.

In this article, we will try to understand basic terminologies and norms surrounding NPA’s, like Income recognition norms, Gross vs. Net NPA’s and Slippage ratio.

Later we will analyse the current Indian banking scenario in perspective of NPA levels.

Indian NPA Classification Norms 1. An asset (including a leased asset), becomes non-performing when it stops generating income for the bank.

3. Interest income on the government guaranteed advances that turn into NPA’s are not taken to income statement in any case unless realised.

4. The availability of security (LIC policy, KVP, etc.) or net-worth of guarantor / borrower should not be considered for the purpose of treating an advance as NPA or otherwise.

Provision norms in India Provision norms for NPA advances in India are as follows : Category of Advances

Provision (%)

Sub- standard Advances - Secured Exposures

15%

2. A non performing asset (NPA) is defined as a loan or an advance where interest and/ or instalment of principal portion of amount remains overdue for a period of greater than 90 days in case of a term loan, or the account remains ‘out of order’ for 90 days, in respect of an Overdraft/Cash Credit (OD/CC)

- Unsecured Exposures

25%

Doubtful Advances – Unsecured Portion

100%

Income Recognition for NPA’s 1. Income from NPA is not recognised on accrual basis but on receipt basis. Therefore banks cannot account for any interest income on NPA accounts in their income statements.

2. However, there are some exceptions like interest on advances against term deposits, NSCs, IVPs, KVPs and Life policies which are usually taken to income statement on the due date, on the condi-

March 2012

tion that adequate margin is available in the accounts.

Doubtful Advances – Secured Portion - For Doubtful up to 1 year

25%

- For Doubtful > 1 year and up to 3 years

40%

- For Doubtful > 3 years

100%

Loss Advances

100%

Table 1: Provision norms for NPA advances in India

The regulatory norms as given above for provisioning represent only the minimum requirement. A bank, if so desires, may make specific provisions for advances at rates higher than the rates prescribed under existing regulations in order to make provision for estimated loss in collectible amount or loan.

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Gross NPA’s reflect assets which do not earn any interest income at present i.e. non-performing.

Out of their gross NPA’s, banks have to make provisions for the same out of their profits, according to regulatory requirements. Net NPA’s are basically gross NPA’s after provisions.

sistently since 2008 but witnessed an improvement in 2010-11, which shows the recovery of growth.

New Private sector banks i.e. NPRB’s (comprising of HDFC Bank, ICICI Bank, DCB, Indusind Bank, Kotak Mahindra Bank, Axis Bank and Yes Bank) recorded the lowest slippage ratio, while SBI group recorded the highest. Old private sector banks (OPRBs), Nationalised banks (NBs), and Foreign Banks (FBs) have moderate slippage ratio.

Fig. 1: GNPA trend

As the asset quality of banking sector has improved, the overall Gross NPA ratio has improved to 2.25% in 2010-11 compared to 2.39 % in the previous year.

Also the growth in the GNPA has reduced to 15.6 %, and shows good promise going ahead. In general, most important things to look into NPA numbers comprise three things, fresh additions to NPA (i.e.

Slippages), reductions in NPA, and net addition / reduction.

It might also be interesting to look deeper inside and we can find that Schedule Commercial banks and Public sector banks are performing pretty consistently around the 1% net NPA mark; however private sector banks and foreign banks have gained serious ground in this regard as can be seen in the figures.

Fig. 3: Slippage percentage

Fig. 4: Slippage Ratio - Bank group wise 2010-11

Sector-wise Composition of NPA’s The share of priority sector NPA’s in gross NPA’s of domestic sector banks witnessed an upward trend in 2010-11 compared to the previous year. While the ratio of priority sector gross NPA’s to priority sector advances increased in public sector banks in 201011 over the previous year, it showed the downward trend in the private sector banks during the same period. This can be due to either lower priority sector lending or better recovery rates. NPA’s for Agricultural advances and weaker section advances increased in both public sector and private sector banks.

Fig. 2: Net NPA

Within the sector, the Reduction in NPA can occur due to recovery, up gradation (NPA assets have turned regular paying), and write-off (taken off the balance sheet). Preference order for reduction would be recovery, up gradation followed by write-off.

Slippage ratio Slippage ratio, which is the gross NPA’s added during the year as a percentage of outstanding standard assets of the last year, is an important indicator of asset quality.

Slippage, ratio as can be seen above, increased con-

Fig. 5: Composition of incremental NPA’s of Domestic Bank 2010-11

Among different sectors, Agriculture sector contributes around 44% of the new NPA’s, suggesting that the high growth witnessed in earlier five years have resulted in low credit quality. Also implementation of Agriculture Debt Waiver and Relief Scheme, 2008 is and will be having a cascading effect on agricul-

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Gross vs. Net

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Article of the Month Cover Story FinGyaan

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tural loan recovery rates over the next few years at least, as the farmers feel dis-incentivized in repaying loans. This has resulted in more than proportionate increase in Public sector banks agriculture NPA’s compared to Private sector banks.

FIN-Q Solutions February 2012

Factors for Rise in NPA’s in India Factors that have led to rise in NPA’s in India can be classified basically into categories:

1. Super Bowl Indicator

1. Macro - environment or state level 2. Micro - company level Ineffective legal system with large backlog of cases and poor recovery rates together with grand political schemes / Govt. policies like debt waiver form the most important macro level factors; while defective lending policies, poor credit appraisal systems, and inadequate controls to check forged / manipulated data comprise the major micro level factors. Micro level factors with increased technology and data interchanges have been controlled to a large extent but controlling macro level factors still remains a mirage.

2. Pick and Shovel Play 3. Leveraged Buyout – LBO 4. Brattle Prize, The Journal of Finance

Trading NPA’s Banks have an option of trading their NPA’s with any other bank, NBFC or a financial institution. Many banks (especially private sector banks) actively use this route to liquidate their NPA’s. However this is extremely expensive as the bank will receive not more than 5-10% of the asset value. RBI has prescribed guidelines to banks on purchase/sale of non-performing assets in its master circular dated July 1, 2011. These guidelines would provide the banks with better options to trade their NPA’s by providing a healthy secondary market for the NPA securities.

5. KBC Bank, First Indian woman CEO 6. Rothschild Family 7. Almondz Global Securities, PG Electroplast

Concerns and way ahead….

Although gross NPA ratio has improved, the asset quality concerns still looms large over the sector. In the last few years, we have witnessed high write-offs to clean up balance sheets like SBI in 2010-11. Also there remains a concern over restructured accounts with regards to their quality. Also a major concern is the huge contribution of agriculture advances to the slippages in NPA. Managing rather than attempting to eliminate NPA is always a more prudent option. Also major NPA levels comprise of priority sector advances which are extremely crucial for a developing country like India, and clearly cannot be done away with. However India definitely needs a more robust legal and legislative framework, which if combined with efficient lending practices from the banks will clearly see them through rough NPA waters.

March 2012

8. Pairs Trade 9. Countries with the highest tax rates in the world

10. Laissez Faire

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Islamic Finance

Sir, Luc Frieden, Luxembourg’s Minister of Finance, seeing the prosperity of Islamic institutions in spite of the credit crunch, said in a keynote address that it can learn and win from Islamic finance.

What is this Islamic finance & how is it different from regular banking?

Islamic finance refers to a financial system that is consistent with the principles of Sharia, the sacred law of Islam.

Unlike the regular banking, it prohibits earning of interest (or riba) through the business of lending. Since interest based lending is strictly prohibited in Islamic finance, trading is the only option for profitable investment for Islamic Financial institutions (IFI), but in regular banks, trading is prohibited since 1929-1932 experience.

Kamal Nayan srivastava IIM Shillong point of major concentration in Europe, its provision for risk, all according to Friedman is worth learning from Islamic finance.

Oh! So their ethics, lender-borrower relationship & provisions for risk have been the reason for stability of Islamic financial institution.

Exactly!

Sir, what are the key financial instruments of Islamic finance?

Key instruments of Islamic finance include Mudarabah (profit-sharing agreement), Wadiah (safe keeping arrangement), Musharakah (joint venture for a specific business), Murabahah (cost plus arrangement where goods are sold with a pre-determined margin of profit), Ijirah( leasing arrangement), Sukuk (Islamic bonds), Takaful (Islamic insurance), Tawarruq (Monetization of commodity) and Istisna’a (Commissioned manufacturing).

What else does Islamic finance prohibit?

Islamic finance prohibits Riba (giving or taking of interest), Masir, (involvement in speculative and gambling transaction), Gharar (uncertainty about the terms of contract or the subject matter) e.g. prohibits selling something which one does not owe, investment in businesses dealing in alcohol, drugs, gambling, armaments, etc. which are considered unlawful or undesirable.

With so many prohibitions in Islamic finance, why does Luc Friedman feel that Europe should learn from Islamic finance?

According to Luc Friedman, the key elements in Islamic finance that the world needs today, particularly Europe, are stability, financial partnership, and speculation as well as ethical principles which are all found in Islamic principle. The element of financial relationship between the lender and borrower assuring the “partnership mentality”, the prohibition of speculation and gambling in Islamic finance which is the

Is Islamic finance prevalent only in Islamic countries?

Yes, primarily they are common in Islamic countries of Middle East, South East Asia and Kazakhistan. China became its active member in 2001. Germany issued its first Islamic bond in 2004 while UK its first Islamic mortgage in 2003. USA, Brazil, Australia & India are few other important locations. More than 300 Islamic institutions are located in 50 countries.

Who are the major players in Islamic finance?

Major players in Islamic finance are Bank Aljazira, Bank ALbilad, Al Rajhi, Kuwait Finance House, Bank of Islam Malaysia, Dubai Islamic bank, Qatar Islamic bank and others. HSBC, ABN AMRO, Barclays, Citi Islamic Investment bank, Deutsche bank & Standard chartered are few among the western players.

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CLASSROOM FinFunda of the Month

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FIN-Q 1. This organization, formed in 1992, is a quasi-legislative, judicial and executive body in India. Name the organization and its current Chairman.

2. This is an award in the field of Economics that is annually given by a Japanese organization formed in 1934 and is currently headed by Kazuo Ueda. Name the award and the organization.

3. This institute established under the Young Plan has 55 members. Name this organization.

4. Name this index.

5. X comes on Friday and gives information on management and strategy to CEO’s. This is related to Mr. Mahanta. Name X. 6. X is an approach for tax avoidance and is named after a case dated 1966 relating to the sale of undesired assets. Name the two parties involved in the case and term “X”.

7. This is an exchange that trades only in coffee. It was formed in Dec 2008 and is the only commodity exchange of country X. Name the exchange and the country.

8. This company declared bankruptcy in 1923. This company has awarded $2 million to conservation projects around the globe in 2011. Name this company.

9. X is an Act formed in 2005 which operates under a Central Council currently headed by Ashwani Kumar. Name X. 10. Name this NBFC.

All entries should be mailed at niveshak.iims@gmail.com by 25th March, 2012 23:59 hrs One lucky winner will receive cash prize of Rs. 500/-

March 2012

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WINNERS Article of the Month

Prize - INR 1000/-

Rishi Gupta & Manan Jain IIM Shillong

FIN - Q

Prize - INR 500/-

Paul Roy

SJMSOM, IIT Bombay

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