Company in Focus:

Goldman Sachs

2

StartUp in focus:

HarVa

3

Markets this Week 4

News of the Week 5

CAN YOU SOLVE IT? 7

Sources of Data:

HDFCsecurities

Economic Times

The Hindu

Rediff Money

MoneyControl.com

Financial Express

Inside this issue:

BRIDGING

RURAL URBAN

DIVIDE

FINDING SAFER HAVENS

FinXpress AUGUST 14, 2011

Institute Of Management Technology

Ghaziabad

About Goldman Sachs The Goldman Sachs Group, Inc. is a leading global financial services firm providing investment banking, securities and investment management services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals in some 25 countries. Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world. The firm also engages in proprietary trading and private equity deals, and is a primary dealer in the United States Treasury security market. Structure Goldman Sachs is divided into three businesses units: Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services. The Investment Banking segment provides financial advisory services in areas including mergers and acquisitions, divestitures, and restructuring, and underwriting services including public offerings and private placements of common and preferred stock. The Trading and Principal Investments segment trades and invests in fixed income and equity products, currencies and more, and clears client transactions on stock, options, and futures exchanges. The Asset Management and Securities Services segment provides investment advisory and financial planning services. Year 2010 In the year 2010, the firm generated net revenues of $39.2 billion with net earnings of $ 8.4 billion. It faced major challenges in the year 2010 along with economic slowdown, it also faced sec civil fraud lawsuit. Indian operations Goldman Sachs's annual revenue in India from all of its businesses is about $100 million. It has been ranked second in mergers and acquisitions and 13th in arranging local equity sales, according to data compiled by Bloomberg. The company's advance was helped by its role advising Reliance Industries, headed by billionaire Mukesh Ambani, which sold stakes in 23 oil and gas areas in India to BP in February for $7.2 billion. Challenges in india Goldman Sachs is the only major foreign securities firm in India without either a commercial-banking license, needed to engage in currency transactions, or a permit to underwrite government bonds. Also, companies in India are reluctant to pay for advice on mergers. Banks accept tiny fees for taking state enterprises public because they want to build goodwill with the government and advance in deal rankings

Opportunities in India

India is among the emerging markets that Goldman Sachs is targeting as the firm faces more restrictive rules in the U.S. and Europe on how it can deploy capital

Emerging markets / further global expansion

Private equity deals - Despite economic woes, historically more and more companies have been privatized in the US (more than 1,000 were privatized in 2005 vs. 650 in 2004)

Strong investment banking operations

Leader in merger and acquisitions advisory services

Technical expertise as evidenced by the company's history and pioneering in research, M&A, and corporate financial services

Page 2 FinXpress

Company in Focus : Goldman Sachs

There have been a lot of organizations which have been working for the farmers and people in rural India. Most of these are non-profit organizations. HarVa is certainly not one of them. HarVa means Green for the villages and stands for “Harnessing Value” of rural India. They are a rural start up that primarily focuses on Skill Development, BPO, Community based farming and Microfinance. HarVa aspires for sustainable inclusive growth by creating value in the heart of Rural or Real India. Their model focuses on the vast intellectual and infrastructural capital in the interiors by developing several productive communities that enhance the intrinsic value of villages. HarVa specializes in finding the right approach to achieving maximum social, economic and environmental sustainability through appropriate development in rural India. At the same time, we focus on enhancing the capacity of the villagers who then become HarVa brand ambassadors and implement these sustainable development changes.

They aim to assist rural India to access and harness the opportunities that urban India / local environment offers for a bet-ter quality of life. It includes supporting various development projects that create employment for villagers. Our foundation is built on "Blue Ocean" strategy with dual benefits of building a profitable business model and creating socio-economic value.

The Value

HarVa aims to take up the challenge by blending both a profitable and social model. The hybrid model takes entrepreneurship to new a level where profits are maximized by adapting various innovative steps aimed to reap benefits from the current rural labor arbitrage and address the social issues like rural employment and education.

Strategy

The innovative concept of HarVa “parivaar” gives them a cutting edge. They endeavor to train entire families and employ them according to their skill. This helps them to build strong relationships and ensure that attrition is minimal. Productivity and efficiency are driven by incentives linked to joint performance by each family. Each member of the family experiences great competitive pressure from each other to perform to the best of their ability.

The CapEx required to start a business venture in rural areas is very high. In order to justify and optimize the expenses, they have modeled their enterprise for end-to-end solutions; from skill development to employment generation. Backward and forward integration of their business vertical gives them several opportunities to rationalize the overall expense. Looking forward, its believed rural sector will be the engine for growth because prospects in urban India are shrinking. With technological advances, the outlook of villages has improved significantly, thus allowing companies to produce array of goods and services for and from the villages.

Page 3 FinXpress

StartUp in Focus : HarVa

Page 4 FinXpress

Markets this week

Markets continued to slide lower this week, after falling sharply last week. The intensity of selling was however less this week as the Sensex/Nifty lost only 2.83/2.65% W-o-W. The minor fall this week nevertheless led to the Sensex/Nifty moving below their intermediate trend reversal levels of 17314/5195. A fresh intermediate downtrend was therefore confirmed. Reflecting the negative sentiments, market breadth was negative in four out of the five trading sessions of the week.

The gainer of the week is Jindal Steels gaining 2.57% followed by M&M with 1.82% gain. Tata Motors and Hindalco Industries were among the losers and lost 5.26 and 4.04 respectively.

Gold extended its losses for a second straight day, following a stellar record run earlier in the week. Those earlier rallies guaranteed a gain: Gold rose 5.5% for the five-day period, which included an intraday record of $ 1, 801 an ounce and a settlement record on Wednesday.

Oil fell as much as $ 3 a barrel on Monday as worries over a possible double-dip recession spread after S&P cut the United States' top-tier credit rating and European central banks struggled to contain a deepening debt crisis.

Indian cash rates were slightly higher on Friday as banks borrowed for last minute requirement, but sufficient liquidity to meet demand kept the rates from rising sharply. the four-day inter-bank cash rate was at 7.95/8.00 per cent, compared with Thursday's close of 7.75/80 %.

SOME MAJOR HAPPENINGS THIS WEEK

A ban on short-selling financial stocks in four European countries including France, a coordinated attempt to restore confidence in a market hit by rumours and higher borrowing costs. France will ban short selling on 11 financial stocks for 15 days, Spain will protect 16 stocks for 15 days, while Belgium will ban short selling of four financial stocks for an indefinite period.

S&P's downgrade of the United States' credit rating by one notch to "AA", removed the world's largest economy from the Triple A-club for the first time in history. The credit agency cut the credit ratings of government-backed mortgage financiers Fannie Mae and Freddie Mac, dozens of U.S. insurance companies, as well as several municipalities that all had AAA ratings before the U.S.

China's currency staged a small but unexpected rally this week, as the country's central bank allowed it to rise 0.72 percent against the dollar. Despite the gloom over the US, lenders in Europe and Asia refused to part with dollars, creating what a cash dollar shortage in the money market. On Thursday, though the Sensex fell 71 points to close at 17, 059.4, Nifty ended 22 points lower at 5, 138.3 and FIIs sold stocks worth just 60 crore, dollar rose against the rupee.

SEBI plans to add another Executive Director (ED) to the already existing seven posts of ED. The regulator plans to recruit a Chief Economist at the position of an ED, and a proposal has been put before the board for approval. The Chief Economist would be in charge of the Department of Economic Policy and Analysis.

Exxon ended the week holding the title of the most valuable company in America after earlier being passed by Apple.

Tracking a firming global trend, gold prices rose ` 138 to ` 25, 869 per 10 grams at the futures trade on fresh buying by speculators.

Major banks up the loan

rates

The two major banks of India, the SBI and ICICI have increased their lending rates by 50 basis points with effect from August 13 .On one hand, the SBI, India’s largest bank, has increased the its base rate and the benchmark prime lending rate (BPLR) to 10% and 14.75%, respectively. On the other hand, ICICI, India’s largest private lender, has increased its base rate from 9.50% to 10%. ICICI has also announced an increase in its benchmark prime lending rate and the floating reference rates (FRR) for consumer loans. The rise in rates follows the RBI’s decision to increase short term key rates in its first quarter review of monetary policy last month.

Food inflation inflates to

9.9%

Food inflation has increased to 9.9% year-on-year for the week ended July 30. It is the highest figure of inflation in three months with the inflation being

Page 5 FinXpress

News of the Week

8.06% last week. The rise has taken place on the back of costlier proteins food, fruits and vegetables. The prices of egg, meat and fish have risen by 13% from the prices present a year ago. Prices of fruits have increased by 16% while onion has become 36% costlier. The finance ministry has blamed the rise to demand-supply mismatch and transportation bottlenecks.

PHL to buy 5.5% of

Vodafone

Vodafone Plc has is about to enter into a new partnership for its telecom venture with Piramal Health Care (PHL). PHL has agreed to shell out $ 640 million to buy 5.5% stake in of Vodafone which is presently held by the Ruias’. The announcement comes barely two weeks after Vodafone bought 33% of the stake held by its previous partner, the Ruias’ (Essar), through external entities. The buy-out also settled the tax issue with which Vodafone remained entangled throughout last year. The Ruias’ still hold 11% of the stake through its Indian entities, half of which is being bought by PHL, according to this recent agreement.

Ailing IOC in no hurry to cut

petrol prices

Indian Oil Corporation, IOC, has indicated that it will not reduce oil prices any soon even though global crude oil prices stay volatile under the impact of US credit ratings. IOC is suffering a loss of 81 paise per litre on petrol and if global oil prices fall, IOC plans to make even its losses first before reducing prices. Indian Oil suffers a loss of ` 6.82 on a litre

of diesel, ` 24.93 on a litre of kerosene and ` 247 per domestic LPG cylinder for selling all these at government regulated prices. The IOC had earlier suffered a net loss of ` 3, 719 crore in the first quarter of this year’s fiscal for selling diesel and LPG below cost.

SEBI allows qualified foreign

investment into mutual

funds

The Securities and Exchange Board of India has unveiled norms allowing qualified foreign investors (QFIs) to invest $ 13 billion in the equity and debt schemes of mutual funds. According, to the market regulator, the aggregate investment by QFIs will be subject to a ceiling of $ 10 billion for equity schemes and $3 billion for debt schemes. At present, only Foreign institutional investors (FIIs), sub-accounts registered with SEBI and NRIs are allowed to invest in mutual funds. QFI includes retail foreign

investors and also pension funds and insurance companies.

Selling frenzy pulls sensex

below 17k mark

The sensex fell below the 17k for the first time in 14 months as a wave of selling by foreign investors fol lowed the unprecedented decision by rating agency Standard & Poor’s to strip US of its triple A credit rating. In the US, the Dow Jones and Nasdaq fell by 4.19% and 5.53%, respectively. In India, the market capitalization of BSE on Monday fell by ` 95, 582 crore which meant that the investors had lost ` 2.2 lakh crore in the previous two trading sessions. The Indian market averted a catastrophic fall thanks to short-covering by some investors and value buying by domestic institutional investors.

L &T net profit up by 12%

Engineering giant Larsen & Toubro has reported a 12% increase in its net profit at ` 746.15 crore in its first quarter ended June 30 owing to healthy order book and better execution of contracts. The company had

Page 6 FinXpress

News of the Week continued...

recorded a net profit of ` 666.17 crore for the same period a year ago. Analysts had expected L&T to report a net profit in the range ` 720 to ` 750 crore. Despite a rise in its expenditure in raw materials, components and raw materials to ` 8, 523.99 crore, it has received fresh orders of the amount ` 16, 190 crore from sectors such as building and factories, infrastructure, power generation, transmission and distribution and hydrocarbons.

Car exports rise in July-

SIAM

Passenger car exports have increased in July by 40.83% owing to rise in demand from non European countries as per the Society of Indian Mobile Manufacturers (SIAM). According to SIAM, car makers sold 48, 091 units last month compared to 34, 149 units for the same period in the previous year. The growth in foreign sales is quite contrary to the trend observed by the domestic sales which has fallen for the first time in 30 months by 15.76%. New markets which exporters have tapped include Latin America and Africa. The country’s largest car exporter, Hyundai Motors India increased its exports by 11.23%. However, market leader Maruti Suzuki India’s overseas sales dropped by 17.50%.

Hero Motors prepares to go

global

Hero Motors Corp (previously Hero Honda) will invest over ` 4, 500 crore over the next 5 years to fund its global foray and domestic expansion. It plans to over 30 international markets which include Africa, Latin America and South-East Asia in the next two quarters with Hero branded bikes. It aims to sell 10 million units globally with 10% of the sales coming from international markets over the next five years. Hero is already in talks with European and British firms for technological tie-ups. The investments will be made through internal accruals.

London burns under the

shadow of riots

London lost its image of tranquility after decades when riots broke out in the city. The series of events started with the death of a 29 year-old black man, Mark Duggan who was cornered and shot by the police after he allegedly fired shots at them on August 4, in Tottenham. A peaceful protest later on Saturday turned violent which took the shape of a riot. Later in the week, the riots spread across many parts of London and cities across UK such as Manchester, Br is to l , L iverpool and Birmingham, where the third test between India and England is on. Buildings have been burnt down and hooded and masked can be seen rampaging shops with impunity. The riots seem to have moved away from its original reason and have turned into a quasi-war situation between the lower deprived class and the middle class.

Cartoons

Solve it Now!

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**Rush in your entries to :

finniche.imt@gmail.com

First 3 right entries will be given exciting prizes courtesy Pizza Hut, as well as get their name featured in the next issue of FinXpress. So hit the quiz fast & get yourself visible among 1000 odd in the campus.

Set A Match the Stock Exchanges and their countries

1) Deutsche Börse South Africa

2) BM&F Bovespa Russia

3) Shenzen Stock Exchange Germany

4) JSE limited China

5) MICEX Brazil

Set B Question of the week :

What is the full form of IIP and GICS ?

CAN YOU SOLVE IT ?

Feel free to write to us at : Drop in your suggestions to the editorial team :

finniche.imt@gmail.com Magazine design/news : ameybadkar@hotmail.com

Articles/quiz : debjyoti.chanda89@gmail.com

LAST WEEK’S FIRST 3 RIGHT ENTRIES WERE FROM

Deepti Kanodia Pramod Vemuri

Pranav Upadhyay

OTHER RIGHT ENTRIES

Abhusha Sarraf Saurabh Bansal

Ashish Sarolia Raghvendra Vaidya

Syed Faiz Ahmed

LAST WEEK’S ANSWERS

Set A -

1) Juhi Chawla

2) Rahul Dravid

3) Venkatesh Prasad

4) Hema Malini

5) Shahrukh Khan

6) Mona Singh

Set B - Automated Teller Machine