nishka august issue 2011
DESCRIPTION
NewsletterTRANSCRIPT
A F I N A N C I A L N E W S L E T T E R F R O M C U I M K E N G E R I A F I N A N C I A L N E W S L E T T E R F R O M C U I M K E N G E R I
DATE 5th AUGUST 2011 ISSUE16
INDEX
ECONOMIC ROLLERS 2
RBI COLUMN 3
MERGERS AND ACQUISITIONS 5
CONTEMPLATORS 7
US DEBT CRISIS-IN AND OUT 7
RBI MONETARY POLICY- A LOPSIDED APPROACH 10
OWNING A HOUSE DREAM OR REALITY 11
NISHKA EQUITY RESEARCH 13
FINANCE BUZZ 15
PHOTO FIND 16
FINANCE QUIZZ 17
CROSS WORD 18
CAMPUS POLL 19
VERIFY YOURSELF 21
2
ECONOMIC ROLLERS
Bank Rate 60
Repo Rate 8
Reverse Repo Rate 7
Marginal Standing Facility Rate 9
CRR 60
SLR 24
91 Days T bills 83946 (as on 31st July 2011)
690 GS 2019 80907-80907
Inflation 944 as on july 2011
Forex Reserve (as on 17th July 2011) - $314507 billion
IIP (for May 2011) - +56
10 year G - Sec Yield (as on 27th July 2011) ndash 820 - 850
CBLO 749bps (as on 22nd July 2011)
Exports during June 2011 $2921 billion
Imports during June 2011 $368 billion
Source Finance Ministry Office of Economic Advisory HDFC Securities Reports
Ministry of Commerce
BY
PRATEEK LAKHMANI
II MBA C
ldquoInflation is as violent as a mugger as frightening
as an armed robber and as deadly as a hit man ldquo
3
CHALLENGES FOR NEXT GENERATION BANKING BY K C CHAKRABARTY
Indian Chamber of Commerce and Industry (ICCI) Coimbatore conducted lsquoVoice of
Tomorrow- Fuel to Excelrsquo along with The Hindu in Coimbatore The voice of tomorrow
belongs to the youth and the millions of business entrepreneurs of the country The private
business community will increasingly shape the face of the economy and also become a
prominent voice in setting our vision for the future in a market based economy With likely
8 of growth in eleventh 5 year plan Indian economy is aiming for 10 growth rate in 12th
5 year plan with underlying factors such as private enterprise amp investments coupled with
demographic advantage and sustain it With this Indian contribution to the world GDP will
raise from current 2 to 10 by 2030To achieve this we have to overcome some challenges
amp opportunities offered by global amp domestic developments
As estimated by the United Nations India is the only country with increase in working
population at 312 million by 2041 while in china it declines by 126 million Young demogra-
phy offers us an opportunity but addressing the challenge of creating adequate productive
employment opportunities will determine how best we are able to reap the demographic
dividend
The challenge in creating gainful employment for this order of new entrants is the
quality of education amp skill development Technology amp innovation can make quality educa-
tion accessible and affordable by bringing down the unit cost of quality education
With services accounting for 65 percent of the countryrsquos GDP one would tend to
presume that Indiarsquos growth must be skill intensive Facts however suggest the opposite
Many developed countries have tertiary enrolment (ie vocational training) levels of 60 to 80
per cent in the age group of 15-29 which is as high as 96 per cent for Korea The comparable
level for India is less than 15 per cent Expenditure on research and development (RampD) in
the developed countries is in the range of 2 to 3 per cent of GDP on an average which is just
08 per cent in India This probably explains the gap between employment and employability
in our country
RBI COLUMN
4
To deal with absorbing a large number of new entrants to the job
market the Government has set a target of raising the share of manufac-
turing in GDP from the current level of about 16 per cent to 25 per cent by
2025
The field of finance and banking often attracts the best from among
the youth Any misuse of the financial system ndashcaused by the actions of a
few smart educated individuals ndash could impact the life of a billion plus
population
Recent estimates suggest that for every one percent increase in
GDP demand for education loan increases by 3 per cent and demand for
housing loans increases by 5 per cent Given the demography as income
increases more and more students would aspire to get quality education
as a means to a better future After education once they get gainful em-
ployment decent housing will be the next aspiration While banks will
have to meet the aspirations of the youth by ensuring access to credit at
competitive price to get quality education and shelter the private sector
would have to recognize that artificially created inflation driven by unrea-
sonable profit motives in these two critical segments would be a con-
straint to our growth and development ambitions
BY
MADHAV A
II MBA B
ldquoMonetary policy itself
cannot sensibly be directed at reducing
imbalancesrdquo -TIMOTHY GEITHNER
5
EagleBank to acquire Alliance Bankshares
Bethesda-based EagleBank has reached an agreement to acquire Alliance
Bankshares of Chantilly for about $312 mn or
$611 per share The report stated that the
merger will give EagleBank an additional $536
million in assets $412 million in deposits and six branches in Northern
Virginia
Cognizant to buy CoreLogic Pvt Ltd
Cognizant a leading provider of information technology consulting and
business process outsourcing services and Core-
Logic a leading provider of information analytics
and business services has announced a definitive
agreement under which Cognizant will acquire Core-
Logic Global Services Private Limited (CoreLogic In-
dia) the India-based captive operations of Core-
Logic The purchase price will consist of a cash payment of approximately
$50 million plus adjustments for working capital and other charges or
credits which will be determined at closing
DiamondRock acquired Courtyard Denver
DiamondRock Hospitality Co has acquired the Courtyard Denver Down-
town for about $46 mn It is stated that
the deal is the companyrsquos second in
Denver in about two months Diamon-
dRock paid $726 million for the JW
Marriott Denver Cherry Creek
MERGERS AND ACQUISITONS
6
Merger of JetLite and Konnect
Jet Airways is planning to consider merger with JetLite
and Konnect into a single low-cost brand The airline is
evaluating options regarding a possible merger There
are reports that since Jet Airways and JetLitehave separate operating permits transfer of
plans from one to another brand would require regulatory approval
National Technical acquired Rockford
National Technical Systems Inc a leading provider of testing and engineering services
announced today that it has completed a key step in its strate-
gic growth plan with the acquisition of substantially all of the
business and assets of Ingenium Testing a leading product
compliance and engineering services provider based in Rock-
ford IL NTS acquired the business and assets of Ingenium and two affiliated companies
for US$125mn in cash plus potential earn-out consideration in the event certain perfor-
mance targets are met
Merger of Express Scripts and Medco Health Solutions
Express Scripts Inc and Medco Health Solutions Inc announced that
they have entered into a definitive merger agreement Under the agree-
ment Medco shareholders will receive US$7136 per
share in cash and stock or US$291bn based on yes-
terdayrsquos closing price Medco shareholders will receive US$2880 in
cash and 081 shares for each Medco share they own upon closing of the transaction The
agreement has been unanimously approved by the boards of directors of both companies
The merger will combine the expertise of two complementary pharmacy benefit manag-
ers (PBMs) to accelerate efforts to lower the cost of prescription drugs and improve the
quality of care for Americans
BY
SHUBHAJIT GHOSHAL
II MBA A
7
US DEBT CRISIS ndash In and Out
The very week when we were busy with our mid-term examinations world economy was
struggling with Sovereign Debt crisis of which US being majorly hit It is nothing but surpris-
ing to see that worldrsquos largest economy is under 1429 tr USD debt Let us identify and ana-
lyse the reasons behind this debt crisis in United States of America
One reason behind it is US not being able to borrow any more money The US national debt
cannot legally exceed a debt ceiling of $1429 trillion (pound886tn) ndash a seemingly huge amount
but one which was reached in May Now US government is left with two options either in-
crease the debt limits or not (which would result in a very likely default) The country is al-
ready in deficit of 1 tr in 2011 The upcoming presidential elections on November 6 2012 are
also not helping the cause The factors which gave birth to this crisis are numerous but there
are two main factors-
1) Bailout of large financial institutions after recession US government has pledged
more than $116 trillion on behalf of American taxpayers over the past 19 months ac-
cording to data compiled by Bloomberg
2)Huge Defence expenditure Total defense expenditure by US govt (base + war) in
recent years has been following
Source- wwwusgovernmentspendingcom
This huge amount led government to go for borrowings These are the years when US was
fighting wars in Afghanistan and Iraq
The next important question is who is the major owner of these US sovereign debt instru-
ments
Year National Budget(in
bn)
War Expenses(bn) Total(bn)
2012 553 118 671
2011 549 159 708
2010 529 162 691
2009 520 146 666
CONTEMPLATORS
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
INDEX
ECONOMIC ROLLERS 2
RBI COLUMN 3
MERGERS AND ACQUISITIONS 5
CONTEMPLATORS 7
US DEBT CRISIS-IN AND OUT 7
RBI MONETARY POLICY- A LOPSIDED APPROACH 10
OWNING A HOUSE DREAM OR REALITY 11
NISHKA EQUITY RESEARCH 13
FINANCE BUZZ 15
PHOTO FIND 16
FINANCE QUIZZ 17
CROSS WORD 18
CAMPUS POLL 19
VERIFY YOURSELF 21
2
ECONOMIC ROLLERS
Bank Rate 60
Repo Rate 8
Reverse Repo Rate 7
Marginal Standing Facility Rate 9
CRR 60
SLR 24
91 Days T bills 83946 (as on 31st July 2011)
690 GS 2019 80907-80907
Inflation 944 as on july 2011
Forex Reserve (as on 17th July 2011) - $314507 billion
IIP (for May 2011) - +56
10 year G - Sec Yield (as on 27th July 2011) ndash 820 - 850
CBLO 749bps (as on 22nd July 2011)
Exports during June 2011 $2921 billion
Imports during June 2011 $368 billion
Source Finance Ministry Office of Economic Advisory HDFC Securities Reports
Ministry of Commerce
BY
PRATEEK LAKHMANI
II MBA C
ldquoInflation is as violent as a mugger as frightening
as an armed robber and as deadly as a hit man ldquo
3
CHALLENGES FOR NEXT GENERATION BANKING BY K C CHAKRABARTY
Indian Chamber of Commerce and Industry (ICCI) Coimbatore conducted lsquoVoice of
Tomorrow- Fuel to Excelrsquo along with The Hindu in Coimbatore The voice of tomorrow
belongs to the youth and the millions of business entrepreneurs of the country The private
business community will increasingly shape the face of the economy and also become a
prominent voice in setting our vision for the future in a market based economy With likely
8 of growth in eleventh 5 year plan Indian economy is aiming for 10 growth rate in 12th
5 year plan with underlying factors such as private enterprise amp investments coupled with
demographic advantage and sustain it With this Indian contribution to the world GDP will
raise from current 2 to 10 by 2030To achieve this we have to overcome some challenges
amp opportunities offered by global amp domestic developments
As estimated by the United Nations India is the only country with increase in working
population at 312 million by 2041 while in china it declines by 126 million Young demogra-
phy offers us an opportunity but addressing the challenge of creating adequate productive
employment opportunities will determine how best we are able to reap the demographic
dividend
The challenge in creating gainful employment for this order of new entrants is the
quality of education amp skill development Technology amp innovation can make quality educa-
tion accessible and affordable by bringing down the unit cost of quality education
With services accounting for 65 percent of the countryrsquos GDP one would tend to
presume that Indiarsquos growth must be skill intensive Facts however suggest the opposite
Many developed countries have tertiary enrolment (ie vocational training) levels of 60 to 80
per cent in the age group of 15-29 which is as high as 96 per cent for Korea The comparable
level for India is less than 15 per cent Expenditure on research and development (RampD) in
the developed countries is in the range of 2 to 3 per cent of GDP on an average which is just
08 per cent in India This probably explains the gap between employment and employability
in our country
RBI COLUMN
4
To deal with absorbing a large number of new entrants to the job
market the Government has set a target of raising the share of manufac-
turing in GDP from the current level of about 16 per cent to 25 per cent by
2025
The field of finance and banking often attracts the best from among
the youth Any misuse of the financial system ndashcaused by the actions of a
few smart educated individuals ndash could impact the life of a billion plus
population
Recent estimates suggest that for every one percent increase in
GDP demand for education loan increases by 3 per cent and demand for
housing loans increases by 5 per cent Given the demography as income
increases more and more students would aspire to get quality education
as a means to a better future After education once they get gainful em-
ployment decent housing will be the next aspiration While banks will
have to meet the aspirations of the youth by ensuring access to credit at
competitive price to get quality education and shelter the private sector
would have to recognize that artificially created inflation driven by unrea-
sonable profit motives in these two critical segments would be a con-
straint to our growth and development ambitions
BY
MADHAV A
II MBA B
ldquoMonetary policy itself
cannot sensibly be directed at reducing
imbalancesrdquo -TIMOTHY GEITHNER
5
EagleBank to acquire Alliance Bankshares
Bethesda-based EagleBank has reached an agreement to acquire Alliance
Bankshares of Chantilly for about $312 mn or
$611 per share The report stated that the
merger will give EagleBank an additional $536
million in assets $412 million in deposits and six branches in Northern
Virginia
Cognizant to buy CoreLogic Pvt Ltd
Cognizant a leading provider of information technology consulting and
business process outsourcing services and Core-
Logic a leading provider of information analytics
and business services has announced a definitive
agreement under which Cognizant will acquire Core-
Logic Global Services Private Limited (CoreLogic In-
dia) the India-based captive operations of Core-
Logic The purchase price will consist of a cash payment of approximately
$50 million plus adjustments for working capital and other charges or
credits which will be determined at closing
DiamondRock acquired Courtyard Denver
DiamondRock Hospitality Co has acquired the Courtyard Denver Down-
town for about $46 mn It is stated that
the deal is the companyrsquos second in
Denver in about two months Diamon-
dRock paid $726 million for the JW
Marriott Denver Cherry Creek
MERGERS AND ACQUISITONS
6
Merger of JetLite and Konnect
Jet Airways is planning to consider merger with JetLite
and Konnect into a single low-cost brand The airline is
evaluating options regarding a possible merger There
are reports that since Jet Airways and JetLitehave separate operating permits transfer of
plans from one to another brand would require regulatory approval
National Technical acquired Rockford
National Technical Systems Inc a leading provider of testing and engineering services
announced today that it has completed a key step in its strate-
gic growth plan with the acquisition of substantially all of the
business and assets of Ingenium Testing a leading product
compliance and engineering services provider based in Rock-
ford IL NTS acquired the business and assets of Ingenium and two affiliated companies
for US$125mn in cash plus potential earn-out consideration in the event certain perfor-
mance targets are met
Merger of Express Scripts and Medco Health Solutions
Express Scripts Inc and Medco Health Solutions Inc announced that
they have entered into a definitive merger agreement Under the agree-
ment Medco shareholders will receive US$7136 per
share in cash and stock or US$291bn based on yes-
terdayrsquos closing price Medco shareholders will receive US$2880 in
cash and 081 shares for each Medco share they own upon closing of the transaction The
agreement has been unanimously approved by the boards of directors of both companies
The merger will combine the expertise of two complementary pharmacy benefit manag-
ers (PBMs) to accelerate efforts to lower the cost of prescription drugs and improve the
quality of care for Americans
BY
SHUBHAJIT GHOSHAL
II MBA A
7
US DEBT CRISIS ndash In and Out
The very week when we were busy with our mid-term examinations world economy was
struggling with Sovereign Debt crisis of which US being majorly hit It is nothing but surpris-
ing to see that worldrsquos largest economy is under 1429 tr USD debt Let us identify and ana-
lyse the reasons behind this debt crisis in United States of America
One reason behind it is US not being able to borrow any more money The US national debt
cannot legally exceed a debt ceiling of $1429 trillion (pound886tn) ndash a seemingly huge amount
but one which was reached in May Now US government is left with two options either in-
crease the debt limits or not (which would result in a very likely default) The country is al-
ready in deficit of 1 tr in 2011 The upcoming presidential elections on November 6 2012 are
also not helping the cause The factors which gave birth to this crisis are numerous but there
are two main factors-
1) Bailout of large financial institutions after recession US government has pledged
more than $116 trillion on behalf of American taxpayers over the past 19 months ac-
cording to data compiled by Bloomberg
2)Huge Defence expenditure Total defense expenditure by US govt (base + war) in
recent years has been following
Source- wwwusgovernmentspendingcom
This huge amount led government to go for borrowings These are the years when US was
fighting wars in Afghanistan and Iraq
The next important question is who is the major owner of these US sovereign debt instru-
ments
Year National Budget(in
bn)
War Expenses(bn) Total(bn)
2012 553 118 671
2011 549 159 708
2010 529 162 691
2009 520 146 666
CONTEMPLATORS
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
2
ECONOMIC ROLLERS
Bank Rate 60
Repo Rate 8
Reverse Repo Rate 7
Marginal Standing Facility Rate 9
CRR 60
SLR 24
91 Days T bills 83946 (as on 31st July 2011)
690 GS 2019 80907-80907
Inflation 944 as on july 2011
Forex Reserve (as on 17th July 2011) - $314507 billion
IIP (for May 2011) - +56
10 year G - Sec Yield (as on 27th July 2011) ndash 820 - 850
CBLO 749bps (as on 22nd July 2011)
Exports during June 2011 $2921 billion
Imports during June 2011 $368 billion
Source Finance Ministry Office of Economic Advisory HDFC Securities Reports
Ministry of Commerce
BY
PRATEEK LAKHMANI
II MBA C
ldquoInflation is as violent as a mugger as frightening
as an armed robber and as deadly as a hit man ldquo
3
CHALLENGES FOR NEXT GENERATION BANKING BY K C CHAKRABARTY
Indian Chamber of Commerce and Industry (ICCI) Coimbatore conducted lsquoVoice of
Tomorrow- Fuel to Excelrsquo along with The Hindu in Coimbatore The voice of tomorrow
belongs to the youth and the millions of business entrepreneurs of the country The private
business community will increasingly shape the face of the economy and also become a
prominent voice in setting our vision for the future in a market based economy With likely
8 of growth in eleventh 5 year plan Indian economy is aiming for 10 growth rate in 12th
5 year plan with underlying factors such as private enterprise amp investments coupled with
demographic advantage and sustain it With this Indian contribution to the world GDP will
raise from current 2 to 10 by 2030To achieve this we have to overcome some challenges
amp opportunities offered by global amp domestic developments
As estimated by the United Nations India is the only country with increase in working
population at 312 million by 2041 while in china it declines by 126 million Young demogra-
phy offers us an opportunity but addressing the challenge of creating adequate productive
employment opportunities will determine how best we are able to reap the demographic
dividend
The challenge in creating gainful employment for this order of new entrants is the
quality of education amp skill development Technology amp innovation can make quality educa-
tion accessible and affordable by bringing down the unit cost of quality education
With services accounting for 65 percent of the countryrsquos GDP one would tend to
presume that Indiarsquos growth must be skill intensive Facts however suggest the opposite
Many developed countries have tertiary enrolment (ie vocational training) levels of 60 to 80
per cent in the age group of 15-29 which is as high as 96 per cent for Korea The comparable
level for India is less than 15 per cent Expenditure on research and development (RampD) in
the developed countries is in the range of 2 to 3 per cent of GDP on an average which is just
08 per cent in India This probably explains the gap between employment and employability
in our country
RBI COLUMN
4
To deal with absorbing a large number of new entrants to the job
market the Government has set a target of raising the share of manufac-
turing in GDP from the current level of about 16 per cent to 25 per cent by
2025
The field of finance and banking often attracts the best from among
the youth Any misuse of the financial system ndashcaused by the actions of a
few smart educated individuals ndash could impact the life of a billion plus
population
Recent estimates suggest that for every one percent increase in
GDP demand for education loan increases by 3 per cent and demand for
housing loans increases by 5 per cent Given the demography as income
increases more and more students would aspire to get quality education
as a means to a better future After education once they get gainful em-
ployment decent housing will be the next aspiration While banks will
have to meet the aspirations of the youth by ensuring access to credit at
competitive price to get quality education and shelter the private sector
would have to recognize that artificially created inflation driven by unrea-
sonable profit motives in these two critical segments would be a con-
straint to our growth and development ambitions
BY
MADHAV A
II MBA B
ldquoMonetary policy itself
cannot sensibly be directed at reducing
imbalancesrdquo -TIMOTHY GEITHNER
5
EagleBank to acquire Alliance Bankshares
Bethesda-based EagleBank has reached an agreement to acquire Alliance
Bankshares of Chantilly for about $312 mn or
$611 per share The report stated that the
merger will give EagleBank an additional $536
million in assets $412 million in deposits and six branches in Northern
Virginia
Cognizant to buy CoreLogic Pvt Ltd
Cognizant a leading provider of information technology consulting and
business process outsourcing services and Core-
Logic a leading provider of information analytics
and business services has announced a definitive
agreement under which Cognizant will acquire Core-
Logic Global Services Private Limited (CoreLogic In-
dia) the India-based captive operations of Core-
Logic The purchase price will consist of a cash payment of approximately
$50 million plus adjustments for working capital and other charges or
credits which will be determined at closing
DiamondRock acquired Courtyard Denver
DiamondRock Hospitality Co has acquired the Courtyard Denver Down-
town for about $46 mn It is stated that
the deal is the companyrsquos second in
Denver in about two months Diamon-
dRock paid $726 million for the JW
Marriott Denver Cherry Creek
MERGERS AND ACQUISITONS
6
Merger of JetLite and Konnect
Jet Airways is planning to consider merger with JetLite
and Konnect into a single low-cost brand The airline is
evaluating options regarding a possible merger There
are reports that since Jet Airways and JetLitehave separate operating permits transfer of
plans from one to another brand would require regulatory approval
National Technical acquired Rockford
National Technical Systems Inc a leading provider of testing and engineering services
announced today that it has completed a key step in its strate-
gic growth plan with the acquisition of substantially all of the
business and assets of Ingenium Testing a leading product
compliance and engineering services provider based in Rock-
ford IL NTS acquired the business and assets of Ingenium and two affiliated companies
for US$125mn in cash plus potential earn-out consideration in the event certain perfor-
mance targets are met
Merger of Express Scripts and Medco Health Solutions
Express Scripts Inc and Medco Health Solutions Inc announced that
they have entered into a definitive merger agreement Under the agree-
ment Medco shareholders will receive US$7136 per
share in cash and stock or US$291bn based on yes-
terdayrsquos closing price Medco shareholders will receive US$2880 in
cash and 081 shares for each Medco share they own upon closing of the transaction The
agreement has been unanimously approved by the boards of directors of both companies
The merger will combine the expertise of two complementary pharmacy benefit manag-
ers (PBMs) to accelerate efforts to lower the cost of prescription drugs and improve the
quality of care for Americans
BY
SHUBHAJIT GHOSHAL
II MBA A
7
US DEBT CRISIS ndash In and Out
The very week when we were busy with our mid-term examinations world economy was
struggling with Sovereign Debt crisis of which US being majorly hit It is nothing but surpris-
ing to see that worldrsquos largest economy is under 1429 tr USD debt Let us identify and ana-
lyse the reasons behind this debt crisis in United States of America
One reason behind it is US not being able to borrow any more money The US national debt
cannot legally exceed a debt ceiling of $1429 trillion (pound886tn) ndash a seemingly huge amount
but one which was reached in May Now US government is left with two options either in-
crease the debt limits or not (which would result in a very likely default) The country is al-
ready in deficit of 1 tr in 2011 The upcoming presidential elections on November 6 2012 are
also not helping the cause The factors which gave birth to this crisis are numerous but there
are two main factors-
1) Bailout of large financial institutions after recession US government has pledged
more than $116 trillion on behalf of American taxpayers over the past 19 months ac-
cording to data compiled by Bloomberg
2)Huge Defence expenditure Total defense expenditure by US govt (base + war) in
recent years has been following
Source- wwwusgovernmentspendingcom
This huge amount led government to go for borrowings These are the years when US was
fighting wars in Afghanistan and Iraq
The next important question is who is the major owner of these US sovereign debt instru-
ments
Year National Budget(in
bn)
War Expenses(bn) Total(bn)
2012 553 118 671
2011 549 159 708
2010 529 162 691
2009 520 146 666
CONTEMPLATORS
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
3
CHALLENGES FOR NEXT GENERATION BANKING BY K C CHAKRABARTY
Indian Chamber of Commerce and Industry (ICCI) Coimbatore conducted lsquoVoice of
Tomorrow- Fuel to Excelrsquo along with The Hindu in Coimbatore The voice of tomorrow
belongs to the youth and the millions of business entrepreneurs of the country The private
business community will increasingly shape the face of the economy and also become a
prominent voice in setting our vision for the future in a market based economy With likely
8 of growth in eleventh 5 year plan Indian economy is aiming for 10 growth rate in 12th
5 year plan with underlying factors such as private enterprise amp investments coupled with
demographic advantage and sustain it With this Indian contribution to the world GDP will
raise from current 2 to 10 by 2030To achieve this we have to overcome some challenges
amp opportunities offered by global amp domestic developments
As estimated by the United Nations India is the only country with increase in working
population at 312 million by 2041 while in china it declines by 126 million Young demogra-
phy offers us an opportunity but addressing the challenge of creating adequate productive
employment opportunities will determine how best we are able to reap the demographic
dividend
The challenge in creating gainful employment for this order of new entrants is the
quality of education amp skill development Technology amp innovation can make quality educa-
tion accessible and affordable by bringing down the unit cost of quality education
With services accounting for 65 percent of the countryrsquos GDP one would tend to
presume that Indiarsquos growth must be skill intensive Facts however suggest the opposite
Many developed countries have tertiary enrolment (ie vocational training) levels of 60 to 80
per cent in the age group of 15-29 which is as high as 96 per cent for Korea The comparable
level for India is less than 15 per cent Expenditure on research and development (RampD) in
the developed countries is in the range of 2 to 3 per cent of GDP on an average which is just
08 per cent in India This probably explains the gap between employment and employability
in our country
RBI COLUMN
4
To deal with absorbing a large number of new entrants to the job
market the Government has set a target of raising the share of manufac-
turing in GDP from the current level of about 16 per cent to 25 per cent by
2025
The field of finance and banking often attracts the best from among
the youth Any misuse of the financial system ndashcaused by the actions of a
few smart educated individuals ndash could impact the life of a billion plus
population
Recent estimates suggest that for every one percent increase in
GDP demand for education loan increases by 3 per cent and demand for
housing loans increases by 5 per cent Given the demography as income
increases more and more students would aspire to get quality education
as a means to a better future After education once they get gainful em-
ployment decent housing will be the next aspiration While banks will
have to meet the aspirations of the youth by ensuring access to credit at
competitive price to get quality education and shelter the private sector
would have to recognize that artificially created inflation driven by unrea-
sonable profit motives in these two critical segments would be a con-
straint to our growth and development ambitions
BY
MADHAV A
II MBA B
ldquoMonetary policy itself
cannot sensibly be directed at reducing
imbalancesrdquo -TIMOTHY GEITHNER
5
EagleBank to acquire Alliance Bankshares
Bethesda-based EagleBank has reached an agreement to acquire Alliance
Bankshares of Chantilly for about $312 mn or
$611 per share The report stated that the
merger will give EagleBank an additional $536
million in assets $412 million in deposits and six branches in Northern
Virginia
Cognizant to buy CoreLogic Pvt Ltd
Cognizant a leading provider of information technology consulting and
business process outsourcing services and Core-
Logic a leading provider of information analytics
and business services has announced a definitive
agreement under which Cognizant will acquire Core-
Logic Global Services Private Limited (CoreLogic In-
dia) the India-based captive operations of Core-
Logic The purchase price will consist of a cash payment of approximately
$50 million plus adjustments for working capital and other charges or
credits which will be determined at closing
DiamondRock acquired Courtyard Denver
DiamondRock Hospitality Co has acquired the Courtyard Denver Down-
town for about $46 mn It is stated that
the deal is the companyrsquos second in
Denver in about two months Diamon-
dRock paid $726 million for the JW
Marriott Denver Cherry Creek
MERGERS AND ACQUISITONS
6
Merger of JetLite and Konnect
Jet Airways is planning to consider merger with JetLite
and Konnect into a single low-cost brand The airline is
evaluating options regarding a possible merger There
are reports that since Jet Airways and JetLitehave separate operating permits transfer of
plans from one to another brand would require regulatory approval
National Technical acquired Rockford
National Technical Systems Inc a leading provider of testing and engineering services
announced today that it has completed a key step in its strate-
gic growth plan with the acquisition of substantially all of the
business and assets of Ingenium Testing a leading product
compliance and engineering services provider based in Rock-
ford IL NTS acquired the business and assets of Ingenium and two affiliated companies
for US$125mn in cash plus potential earn-out consideration in the event certain perfor-
mance targets are met
Merger of Express Scripts and Medco Health Solutions
Express Scripts Inc and Medco Health Solutions Inc announced that
they have entered into a definitive merger agreement Under the agree-
ment Medco shareholders will receive US$7136 per
share in cash and stock or US$291bn based on yes-
terdayrsquos closing price Medco shareholders will receive US$2880 in
cash and 081 shares for each Medco share they own upon closing of the transaction The
agreement has been unanimously approved by the boards of directors of both companies
The merger will combine the expertise of two complementary pharmacy benefit manag-
ers (PBMs) to accelerate efforts to lower the cost of prescription drugs and improve the
quality of care for Americans
BY
SHUBHAJIT GHOSHAL
II MBA A
7
US DEBT CRISIS ndash In and Out
The very week when we were busy with our mid-term examinations world economy was
struggling with Sovereign Debt crisis of which US being majorly hit It is nothing but surpris-
ing to see that worldrsquos largest economy is under 1429 tr USD debt Let us identify and ana-
lyse the reasons behind this debt crisis in United States of America
One reason behind it is US not being able to borrow any more money The US national debt
cannot legally exceed a debt ceiling of $1429 trillion (pound886tn) ndash a seemingly huge amount
but one which was reached in May Now US government is left with two options either in-
crease the debt limits or not (which would result in a very likely default) The country is al-
ready in deficit of 1 tr in 2011 The upcoming presidential elections on November 6 2012 are
also not helping the cause The factors which gave birth to this crisis are numerous but there
are two main factors-
1) Bailout of large financial institutions after recession US government has pledged
more than $116 trillion on behalf of American taxpayers over the past 19 months ac-
cording to data compiled by Bloomberg
2)Huge Defence expenditure Total defense expenditure by US govt (base + war) in
recent years has been following
Source- wwwusgovernmentspendingcom
This huge amount led government to go for borrowings These are the years when US was
fighting wars in Afghanistan and Iraq
The next important question is who is the major owner of these US sovereign debt instru-
ments
Year National Budget(in
bn)
War Expenses(bn) Total(bn)
2012 553 118 671
2011 549 159 708
2010 529 162 691
2009 520 146 666
CONTEMPLATORS
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
4
To deal with absorbing a large number of new entrants to the job
market the Government has set a target of raising the share of manufac-
turing in GDP from the current level of about 16 per cent to 25 per cent by
2025
The field of finance and banking often attracts the best from among
the youth Any misuse of the financial system ndashcaused by the actions of a
few smart educated individuals ndash could impact the life of a billion plus
population
Recent estimates suggest that for every one percent increase in
GDP demand for education loan increases by 3 per cent and demand for
housing loans increases by 5 per cent Given the demography as income
increases more and more students would aspire to get quality education
as a means to a better future After education once they get gainful em-
ployment decent housing will be the next aspiration While banks will
have to meet the aspirations of the youth by ensuring access to credit at
competitive price to get quality education and shelter the private sector
would have to recognize that artificially created inflation driven by unrea-
sonable profit motives in these two critical segments would be a con-
straint to our growth and development ambitions
BY
MADHAV A
II MBA B
ldquoMonetary policy itself
cannot sensibly be directed at reducing
imbalancesrdquo -TIMOTHY GEITHNER
5
EagleBank to acquire Alliance Bankshares
Bethesda-based EagleBank has reached an agreement to acquire Alliance
Bankshares of Chantilly for about $312 mn or
$611 per share The report stated that the
merger will give EagleBank an additional $536
million in assets $412 million in deposits and six branches in Northern
Virginia
Cognizant to buy CoreLogic Pvt Ltd
Cognizant a leading provider of information technology consulting and
business process outsourcing services and Core-
Logic a leading provider of information analytics
and business services has announced a definitive
agreement under which Cognizant will acquire Core-
Logic Global Services Private Limited (CoreLogic In-
dia) the India-based captive operations of Core-
Logic The purchase price will consist of a cash payment of approximately
$50 million plus adjustments for working capital and other charges or
credits which will be determined at closing
DiamondRock acquired Courtyard Denver
DiamondRock Hospitality Co has acquired the Courtyard Denver Down-
town for about $46 mn It is stated that
the deal is the companyrsquos second in
Denver in about two months Diamon-
dRock paid $726 million for the JW
Marriott Denver Cherry Creek
MERGERS AND ACQUISITONS
6
Merger of JetLite and Konnect
Jet Airways is planning to consider merger with JetLite
and Konnect into a single low-cost brand The airline is
evaluating options regarding a possible merger There
are reports that since Jet Airways and JetLitehave separate operating permits transfer of
plans from one to another brand would require regulatory approval
National Technical acquired Rockford
National Technical Systems Inc a leading provider of testing and engineering services
announced today that it has completed a key step in its strate-
gic growth plan with the acquisition of substantially all of the
business and assets of Ingenium Testing a leading product
compliance and engineering services provider based in Rock-
ford IL NTS acquired the business and assets of Ingenium and two affiliated companies
for US$125mn in cash plus potential earn-out consideration in the event certain perfor-
mance targets are met
Merger of Express Scripts and Medco Health Solutions
Express Scripts Inc and Medco Health Solutions Inc announced that
they have entered into a definitive merger agreement Under the agree-
ment Medco shareholders will receive US$7136 per
share in cash and stock or US$291bn based on yes-
terdayrsquos closing price Medco shareholders will receive US$2880 in
cash and 081 shares for each Medco share they own upon closing of the transaction The
agreement has been unanimously approved by the boards of directors of both companies
The merger will combine the expertise of two complementary pharmacy benefit manag-
ers (PBMs) to accelerate efforts to lower the cost of prescription drugs and improve the
quality of care for Americans
BY
SHUBHAJIT GHOSHAL
II MBA A
7
US DEBT CRISIS ndash In and Out
The very week when we were busy with our mid-term examinations world economy was
struggling with Sovereign Debt crisis of which US being majorly hit It is nothing but surpris-
ing to see that worldrsquos largest economy is under 1429 tr USD debt Let us identify and ana-
lyse the reasons behind this debt crisis in United States of America
One reason behind it is US not being able to borrow any more money The US national debt
cannot legally exceed a debt ceiling of $1429 trillion (pound886tn) ndash a seemingly huge amount
but one which was reached in May Now US government is left with two options either in-
crease the debt limits or not (which would result in a very likely default) The country is al-
ready in deficit of 1 tr in 2011 The upcoming presidential elections on November 6 2012 are
also not helping the cause The factors which gave birth to this crisis are numerous but there
are two main factors-
1) Bailout of large financial institutions after recession US government has pledged
more than $116 trillion on behalf of American taxpayers over the past 19 months ac-
cording to data compiled by Bloomberg
2)Huge Defence expenditure Total defense expenditure by US govt (base + war) in
recent years has been following
Source- wwwusgovernmentspendingcom
This huge amount led government to go for borrowings These are the years when US was
fighting wars in Afghanistan and Iraq
The next important question is who is the major owner of these US sovereign debt instru-
ments
Year National Budget(in
bn)
War Expenses(bn) Total(bn)
2012 553 118 671
2011 549 159 708
2010 529 162 691
2009 520 146 666
CONTEMPLATORS
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
5
EagleBank to acquire Alliance Bankshares
Bethesda-based EagleBank has reached an agreement to acquire Alliance
Bankshares of Chantilly for about $312 mn or
$611 per share The report stated that the
merger will give EagleBank an additional $536
million in assets $412 million in deposits and six branches in Northern
Virginia
Cognizant to buy CoreLogic Pvt Ltd
Cognizant a leading provider of information technology consulting and
business process outsourcing services and Core-
Logic a leading provider of information analytics
and business services has announced a definitive
agreement under which Cognizant will acquire Core-
Logic Global Services Private Limited (CoreLogic In-
dia) the India-based captive operations of Core-
Logic The purchase price will consist of a cash payment of approximately
$50 million plus adjustments for working capital and other charges or
credits which will be determined at closing
DiamondRock acquired Courtyard Denver
DiamondRock Hospitality Co has acquired the Courtyard Denver Down-
town for about $46 mn It is stated that
the deal is the companyrsquos second in
Denver in about two months Diamon-
dRock paid $726 million for the JW
Marriott Denver Cherry Creek
MERGERS AND ACQUISITONS
6
Merger of JetLite and Konnect
Jet Airways is planning to consider merger with JetLite
and Konnect into a single low-cost brand The airline is
evaluating options regarding a possible merger There
are reports that since Jet Airways and JetLitehave separate operating permits transfer of
plans from one to another brand would require regulatory approval
National Technical acquired Rockford
National Technical Systems Inc a leading provider of testing and engineering services
announced today that it has completed a key step in its strate-
gic growth plan with the acquisition of substantially all of the
business and assets of Ingenium Testing a leading product
compliance and engineering services provider based in Rock-
ford IL NTS acquired the business and assets of Ingenium and two affiliated companies
for US$125mn in cash plus potential earn-out consideration in the event certain perfor-
mance targets are met
Merger of Express Scripts and Medco Health Solutions
Express Scripts Inc and Medco Health Solutions Inc announced that
they have entered into a definitive merger agreement Under the agree-
ment Medco shareholders will receive US$7136 per
share in cash and stock or US$291bn based on yes-
terdayrsquos closing price Medco shareholders will receive US$2880 in
cash and 081 shares for each Medco share they own upon closing of the transaction The
agreement has been unanimously approved by the boards of directors of both companies
The merger will combine the expertise of two complementary pharmacy benefit manag-
ers (PBMs) to accelerate efforts to lower the cost of prescription drugs and improve the
quality of care for Americans
BY
SHUBHAJIT GHOSHAL
II MBA A
7
US DEBT CRISIS ndash In and Out
The very week when we were busy with our mid-term examinations world economy was
struggling with Sovereign Debt crisis of which US being majorly hit It is nothing but surpris-
ing to see that worldrsquos largest economy is under 1429 tr USD debt Let us identify and ana-
lyse the reasons behind this debt crisis in United States of America
One reason behind it is US not being able to borrow any more money The US national debt
cannot legally exceed a debt ceiling of $1429 trillion (pound886tn) ndash a seemingly huge amount
but one which was reached in May Now US government is left with two options either in-
crease the debt limits or not (which would result in a very likely default) The country is al-
ready in deficit of 1 tr in 2011 The upcoming presidential elections on November 6 2012 are
also not helping the cause The factors which gave birth to this crisis are numerous but there
are two main factors-
1) Bailout of large financial institutions after recession US government has pledged
more than $116 trillion on behalf of American taxpayers over the past 19 months ac-
cording to data compiled by Bloomberg
2)Huge Defence expenditure Total defense expenditure by US govt (base + war) in
recent years has been following
Source- wwwusgovernmentspendingcom
This huge amount led government to go for borrowings These are the years when US was
fighting wars in Afghanistan and Iraq
The next important question is who is the major owner of these US sovereign debt instru-
ments
Year National Budget(in
bn)
War Expenses(bn) Total(bn)
2012 553 118 671
2011 549 159 708
2010 529 162 691
2009 520 146 666
CONTEMPLATORS
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
6
Merger of JetLite and Konnect
Jet Airways is planning to consider merger with JetLite
and Konnect into a single low-cost brand The airline is
evaluating options regarding a possible merger There
are reports that since Jet Airways and JetLitehave separate operating permits transfer of
plans from one to another brand would require regulatory approval
National Technical acquired Rockford
National Technical Systems Inc a leading provider of testing and engineering services
announced today that it has completed a key step in its strate-
gic growth plan with the acquisition of substantially all of the
business and assets of Ingenium Testing a leading product
compliance and engineering services provider based in Rock-
ford IL NTS acquired the business and assets of Ingenium and two affiliated companies
for US$125mn in cash plus potential earn-out consideration in the event certain perfor-
mance targets are met
Merger of Express Scripts and Medco Health Solutions
Express Scripts Inc and Medco Health Solutions Inc announced that
they have entered into a definitive merger agreement Under the agree-
ment Medco shareholders will receive US$7136 per
share in cash and stock or US$291bn based on yes-
terdayrsquos closing price Medco shareholders will receive US$2880 in
cash and 081 shares for each Medco share they own upon closing of the transaction The
agreement has been unanimously approved by the boards of directors of both companies
The merger will combine the expertise of two complementary pharmacy benefit manag-
ers (PBMs) to accelerate efforts to lower the cost of prescription drugs and improve the
quality of care for Americans
BY
SHUBHAJIT GHOSHAL
II MBA A
7
US DEBT CRISIS ndash In and Out
The very week when we were busy with our mid-term examinations world economy was
struggling with Sovereign Debt crisis of which US being majorly hit It is nothing but surpris-
ing to see that worldrsquos largest economy is under 1429 tr USD debt Let us identify and ana-
lyse the reasons behind this debt crisis in United States of America
One reason behind it is US not being able to borrow any more money The US national debt
cannot legally exceed a debt ceiling of $1429 trillion (pound886tn) ndash a seemingly huge amount
but one which was reached in May Now US government is left with two options either in-
crease the debt limits or not (which would result in a very likely default) The country is al-
ready in deficit of 1 tr in 2011 The upcoming presidential elections on November 6 2012 are
also not helping the cause The factors which gave birth to this crisis are numerous but there
are two main factors-
1) Bailout of large financial institutions after recession US government has pledged
more than $116 trillion on behalf of American taxpayers over the past 19 months ac-
cording to data compiled by Bloomberg
2)Huge Defence expenditure Total defense expenditure by US govt (base + war) in
recent years has been following
Source- wwwusgovernmentspendingcom
This huge amount led government to go for borrowings These are the years when US was
fighting wars in Afghanistan and Iraq
The next important question is who is the major owner of these US sovereign debt instru-
ments
Year National Budget(in
bn)
War Expenses(bn) Total(bn)
2012 553 118 671
2011 549 159 708
2010 529 162 691
2009 520 146 666
CONTEMPLATORS
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
7
US DEBT CRISIS ndash In and Out
The very week when we were busy with our mid-term examinations world economy was
struggling with Sovereign Debt crisis of which US being majorly hit It is nothing but surpris-
ing to see that worldrsquos largest economy is under 1429 tr USD debt Let us identify and ana-
lyse the reasons behind this debt crisis in United States of America
One reason behind it is US not being able to borrow any more money The US national debt
cannot legally exceed a debt ceiling of $1429 trillion (pound886tn) ndash a seemingly huge amount
but one which was reached in May Now US government is left with two options either in-
crease the debt limits or not (which would result in a very likely default) The country is al-
ready in deficit of 1 tr in 2011 The upcoming presidential elections on November 6 2012 are
also not helping the cause The factors which gave birth to this crisis are numerous but there
are two main factors-
1) Bailout of large financial institutions after recession US government has pledged
more than $116 trillion on behalf of American taxpayers over the past 19 months ac-
cording to data compiled by Bloomberg
2)Huge Defence expenditure Total defense expenditure by US govt (base + war) in
recent years has been following
Source- wwwusgovernmentspendingcom
This huge amount led government to go for borrowings These are the years when US was
fighting wars in Afghanistan and Iraq
The next important question is who is the major owner of these US sovereign debt instru-
ments
Year National Budget(in
bn)
War Expenses(bn) Total(bn)
2012 553 118 671
2011 549 159 708
2010 529 162 691
2009 520 146 666
CONTEMPLATORS
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
8
Source httpwwwtreasurygov
This pie chart shows the owners of US debt If US default then whole world economy will go for
a toss The owners of US debt instruments will be directly affected and it will trigger a chain of
events which will ultimately prove a catastrophe for world economy
Whatrsquos next
Either the US raises the debt ceiling (and can then issue more debt) or it does not (and is then
barred from borrowing to pay its bills) With a 2011 deficit of at least $1tn the stakes are high
The second option points directly to default
Why doesnt Obama just raise the ceiling
Because the leader of the worlds largest economy does not have the authority Any changes to
the debt ceiling need to be approved by Congress and this has led to a protracted stalemate
between Republicans and Democrats
Why cant the two sides agree
Both the parties realize that the US debt needs to be brought under control but have rather dif-
ferent ideas about how to do it Obama is proposing a 10-year $4tn package of spending cuts
and tax rises ndash including higher income taxes The Republican Party supports a $24tn package
of spending cuts but is not backing the tax raise The upcoming elections of 2012 are playing a
crucial role here
How has America been keeping afloat since May when the debt ceiling was reached
This is done by stopping the payments to certain federal pension schemes and by liquidating
some of the schemes assets Treasury secretary Tim Geithner has pledged that the shortfall
will be repaid once the ceiling is raised
Has the debt ceiling often been raised
It has been raised more than 70 times since the mid-1960s and 10 times in the last decade Its
not been entirely one-way traffic though since Congress did vote to lower the limit twice in the
1950s during Americas postwar economic boom
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
9
What impact would a default have
Some experts have predicted a major panic Standard amp Poors has made it
clear that it would cut the US rating from AAA (the top) to D (the bottom)
That would mean banks would technically be barred from using US debt
as collateral with central banks (although these rules could be changed)
As Gary Jenkins of Evolution Securities has rightly put it as They wouldnt
dare would they Even Bernanke has conceded that failure to lift the US
debt ceiling would throw the financial system into tremendous disarray
We all can just imagine the effects on world economy if US defaults
The road ahead
There are two main problems when it comes to raze out the US Dollar The
ballooning debt and the future interest costs add to 12 per cent of the gov-
ernmentrsquos tax revenue which will grow beyond control The only answer
the government has is to cut down spending which is unlikely to happen
according to Faber The governments will either print money at enormous
levels This will further aggravate the problems by increasing inflation
The scenario and future of debt crisis doesnrsquot seem to be in good health as
US has bleak chance of resolve its worsening financial position The man-
ufacturing industry continues to contract which leaves the nation with
very little goods to export The persistent current account deficits by
the US were creating an unsustainable boom in global credit that was
destined to break down and result in a worldwide recession So the only
sustainable solution for US is to go for enormous cut in expenditure I just
hope that US will find some sustainable way to get out of this debt spiral
because we live in the highly netted world economy where everyone is
connected to each other so does our placements too So letrsquos hope and
pray that we donrsquot witness another recession
ldquoOne of the greatest
disservices you can do a
man is to lend him
money that he canrsquot pay
back ldquo
- Jesse Jones
BY
MADHUKAR
amp
PRATIMA TIWARI
II MBA C
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
10
RBI MONETARY POLICY ndash A LOPSIDED APPROACH
ldquoWhen you canrsquot cut the tree from one side then do it from the other siderdquo thatrsquos what the RBI is
doing in case of controlling inflation RBI has increased key policy rate 11th time since March 2010
with repo rate standing at 8 Many economists called it ldquomadness some called it as lack of basic
knowledge in macroeconomics but the intention behind it is to ldquohammer the inflationrdquo
ldquoIt is important to recognize the absence of appropriate action for addressing supply bottlenecks
especially in food and infrastructure questions about ability of the economy to sustain current
growth rate without significant inflationary
pressures come to forerdquo this is the statement
made by RBI governor D Subba rao in the press
conference His intention is RBI has very little to
do with supply side bottle necks in the economy
to contain the inflation and it needs support
from the central government to check supply
shocks Hence it is going by the other side that is
reducing the demand for consumables in the
economy by increasing the key rates In fact
when you want to remove excess liquidity in the
economy you donrsquot need to take off excess liquidity already existing but you can reduce pumping
into economy Then excess liquidity will be automatically readjusted Thatrsquos what exactly the RBI is
doing by making bank loans dearer This move reduces the demand and consumption in the econo-
my which in turn reduces the prices of the consumables
Some say this move may hammer the growth as well But according to D Subba Rao growth will
take care of its own What needs to be checked is increasing prices When higher inflation is
matched with higher salaries small doses of rate increase fail to pull down demand As people
learn to live with high prices almost unknowingly they prepare them-
selves for higher inflation in future and then one day inflation spins out
of control Here RBI strategy is to maintain around 8 growth rate for
some time with these key rates and there by controlling the inflation in
near future
But how far this strategy works out until and unless central government
cannot remove supply side bottle necks remains a big question When
the banks loans get dearer not only house and cars loan rates increase
but also rates for agriculture and its allied activities increase resulting in creating supply side bot-
tlenecks again Thereby turning out this strategy to be counterproductive
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
11
Does RBI have nothing to do with supply side inflation Yes it may show some im-
pact if the bank rates are allotted sector wise instead of affecting the economy as a
whole But the division of the sectors should be in such a way that they have less
correlation to other To implement these strategies RBI and Central Government
should go hand in hand and help each other to stabilize the economy as a whole For
example whenever food inflation is more central government may import food
items for the short term demands and RBI should reduce rates on agriculture sector
thereby increasing supply and ensure that will not happen again in near future
Same strategy may be applied to other sectors and sub-sectors as well
Hence the need of the hour is the coordination between Central Government and
RBI that will actually keep the economy under equilibrium
BY
TVSRAVI TEJA
II MBA B
OWNING A HOUSE DREAM OR REALITY
Home has been one of the basic necessities of life Apart from food and clothes people crave for
shelter where they seek safety affection and sense of belongingness with the society But in mod-
ern context amidst inflation owning a house is a dream which only bunch of people can afford In-
crease in interest rates by Reserve Bank of India by 50 basis points is only worsening the situation
Whenever the monitory policy is to be announced one sector which pays close heed to it is real
estate sector hoping that this time announcements will be favourable But like the previous 10
times this policy has upset the industry
As per the RBI announcement
1)Repo rate under the Liquid Adjustment facility (LAF) is up by 50 basis points from 75 to
80 with immediate effect
2)The Reverse Repo rate now stands at 70 with immediate effect
3)The Bank rate has been retained at 60
4)The Cash Reserve Ratio of scheduled banks has been retained at 60
5)Annual headline inflation has accelerated to 944 in June
Real estate sector is currently in a soup and hike has made it sourer It has increased the burden
on the shoulders of existing as well as prospective buyers Developers are also facing the heat of it
with increase in expenses The cherry on the cake is RBIrsquos strict and tedious guidelines to banks
before granting loans to real estate developers and buyers
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
12
RBI has also asked banks to independently verify the authenticity of chartered
accountant certificate property valuation certificate legal certificate and
guaranteeline of credit or any other third-party certification submitted by
the borrower This has increased the time period of sanctioning the loans Be-
cause of this real estate developers are now looking towards external fund
sources which is more expensive RBI statement can be proved detrimental to
both industry and economy
There has been an 18 gross rise in construction cost over the last 2 years
(2011 over 2009) As per DLF steel and cement make 40 of cost of con-
struction and civil costs (ie - steel cement labour) constitute around 70 of
total costs High global demand for commodities higher production and trans-
portation costs partly due to higher fuel prices has led to the rise in prices of
commodities Further demand for skilled labour has led to the labour cost
seeing a rise of 25 in the past decade Input costs are continuously in-
creasing almost reaching to peak It may effect in delay in old projects
change in product-mix onetime cost adjustments or phasing out small
players from the industry Some can even think of passing extra cost to
customers resulting in slow sales and decreased demand In the last 17
months demand for steel cement has fall down considerably
This situation has put customers into confusion as to what to do They
are not been able to think that they should buy the home now fearing
further increase in prices or wait for the right time when price will fall
down again Buyers are in a favourable condition from one aspect that
they are in a position to negotiate with developers over price In order
to increase sales builders can opt for distress sales to generate cash
flows But still expensive home loans are making it difficult for new
buyers to go for a purchase and increased interest rates are creating dif-
ficulty for existing owners to maintain their budget
Thus there is no right or wrong time for purchasing home in todayrsquos
context The only idea is to grab the best price deal with proper docu-
mentation leaving no further worries
BY
NIDHI JAISWAL
I MBA B
ldquoOwning a home is a
keystone of wealth both
financial affluence and
emotional securityrdquo
-Suze Orman
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
13
Orient Paper and Industries
Orient Paper and Industries Q1FY12 revenues grew 21 yoy to Rs533bn
led by better than expected cement realization Cement revenues grew 114
yoy driven by a sharp 294 yoy jump in cement realizations to Rs3565t
even volumes declined 14 yoy due to decline in cement demand in AP Elec-
trical division registered healthy topline with growth of 223 yoy With bet-
ter realization Q1FY12 EBIDTA came in at Rs11 bn +546yoy Overall
EBIDTA margins at 208 improved by 453bps yoy driven by 450 bps im-
provement in EBIT margins of Cement division to 318 Cement EBITt stood
at Rs1133 +51 yoy With 8 decline in interest charge OPILrsquos PAT at
Rs584 mn came in with a growth of 70 yoy The Board has approved De-
merger of Cement Business into a new wholly owned sub- Orient Cement Ltd
(OCL) Post the necessary approval OPIL shareholder will get 1 share of OCL
for each share held in OPIL Stock trades at 66x FY12 PER amp EVEBIDTA of
4X OPILrsquos cement business as the de-merger will ensure that the cement cash
flows will be dedicatedly used for funding the growth of the business rather
than supporting the losses of the paper division
CMP 60
Target Price 66
Stop Loss 53
NISHKA EQUITY RESEARCH
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
14
Hexaware Technologies Ltd (HEXW)
Hexaware Technologies Ltd (HEXW) has posted a growth in revenue of
nearly 33 on an annual basis and 5 on a quarterly basis to INR 3341
mn Revenue growth was aided by a 6 growth in volumes while pricing
remained stable during the quarter EBITDA at INR 511 mn clocked a
growth rate of 201 YoY and 12 QoQ Strong growth of operating margin
of HEXW was aided by the strong volume growth in this quarter A corre-
sponding improvement in EBITDA margin too was witnessed Margin im-
proved by nearly 850 bps on a YoY basis and 101 bps on a sequential basis
despite the increase in compensation of its off shore employees Net Profit
came in at INR 603 mn for the quarter reflecting a growth of 251 on an
annual basis On a sequential basis PAT witnessed a growth of 12 Net
Profit margin was 180 in Q1 a 1232 bps growth YoY Other Highlights
HEXW signed its largest deal to-date during Q2 An agreement worth ap-
proximately USD 177 mn was signed with an existing US client incremental
business of USD 100 mn and extending existing business worth another
USD 77 mn over five years Head count as of Q2 stood at 7419 up by 755
employees 14 new clients were added taking HEXWrsquos total client base to
190
CMP 92
Target Price 101
Stop Loss 77
BY
LALIT GOEL
II MBA A
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
15
1 Peace Dividend
A political slogan popularized by US President George HW Bush and UK Prime Minister Margaret
Thatcher in the early 1990s purporting to describe the economic benefit of a decrease in defence
spending It refers to the money that becomes available in a national governments budget when the
country is at peace
2 Lease Extension
A legal agreement that extends the term of a rental agreement The lease extension document should
name the parties to the agreement provide the dates on which the extension begins and ends and
reference the earlier agreement that is being extended Lease payments do not have to remain the
same under a lease extension
3 Price creep
A steady yet gradual increase in the market price or valuation of an asset Because of price creep of-
tentimes investors will eventually be less reserved about paying a higher price for a particular asset
or investment In the financial markets price creep can occur when investors gradually assign a high-
er valuation to a particular stock or security
4 Inflation Hedge
An investment designed to protect against inflation risk An inflation hedge typically involves invest-
ing in an asset that is expected to maintain or increase its value over a specified period of time Alter-
natively the hedge could involve taking a higher position in assets which may decrease in value less
rapidly than the value of the currencyOne example is stock of companies that operate in the natural
resources industries
5 Seasoning
The length of time a debt security has been publicly traded Seasoning determines if a premium
should be made for the security in the secondary market The debt security can be unseasoned if
has been traded for less than a year or seasoned if it has been traded for over a year with a good
payment track record
6 Stock basher
An individual that seeks to artificially reduce the value of a companys stock by spreading misinfor-
mation about the company This illegal practice is generally undertaken with the intention of short-
selling the stock in order to profit from a drop in price or purchasing the stock after the price drops
BY
MANISH SANTANI
II MBA A
FINANCE BUZZ
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
16
PHOTO FIND The given below are the celebrities in the corporate world Find out
who they are
1) _______________________ 2) _____________________
3)_______________________ 4) _____________________
5) _____________________
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
17
1) The 11th Five Year Plan is termed as plan forhelliphelliphelliphelliphellip
2) Euro is the currency of European Union When did it come into
being
3) What is a Bank which has capital and reserves of over Rs 5 lakhs
called
4) What does devaluation of a currency mean
5) Which sister organization of the World Bank provides long-term
loans at zero interest to the poorest developing countries
6) Which Public sector bank is planning to setup 600 financia inclusion
centres 300 by March-end 2011 and another 300 by March-end
2012
7) Who won the prestigious PCMahalanobis Award (Medal) for 2010
8) What system did BSE launch recently
9) Which sister organization of the World Bank helps private activity
in developing countries by financing projects with long-term
capital in the form of equity and loans
10) The International Bank for Reconstruction and Development
(IBRD) is better-known ashelliphelliphelliphelliphelliphelliphelliphellip
FINANCE QUIZ
ldquoBefore borrowing
money from a friend decide
which you need mostrdquo
-Anonymous
By
SHILPI KUMARI
II MBA B
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
18
CROSS WORD
1 a company known as mini LampT 2 name the building in which BSE is located 3 FICO score provider 5 a dividend carrying an attached franking or tax credit 7 the process of calculating the present value of a future amount
1 implies that a business is managed to maximise the difference between revenues and expenses in
any period 4 interest rate tsars in US 6 a discrete number which identifies each business registered with the ATO so that the regulation of
taxation is facilitated 8 highest paying dividend company in India 9 a legal structure where property is nominally owned by one party on behalf of other parties
BY
SKANDAN YN
II MBA A
Across
Down
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
19
Q1)
As per the survey-
Out of 109 respondents 46 (42) believe that RBI should stop increasing the interest
rates Whereas 23(21) are of the opinion that there is a necessity to continue the
hike
Best Answer
Itrsquos high time to take a pause on this act Economists and bankers fear a hit on the
investments and profitability of companies due to continuous hike in rates A well
calculated forecast on the change in prices of oil and food in monsoon in connection
with the global changes in price of commodities is required to control the rate hikes
and curb the inflationary related problems
NISHKA CAMPUS POLL
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
20
Q2)
As per the survey- Out of 109 respondents 58(53) believe that India has sufficient liquidity to man-age a possible debt default by US Whereas 40(37) believes that India is strong enough to face the challenge Best Response
Indian economy is becoming stronger day by day We have invested very less
amount in US markets when compared to China or Japan So even if there is case
of debt default by US India has enough liquidity to manage it
BY
PRAVEEN KUMAR CH
II MBA D
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
21
VERIFY YOURSELF
Photo Find
1) C RangarajanChairman of the PMEAC
2) NoutWellink Chairman of the Basel Committee
3) Carlos Slim Chairman amp CEO of TELMEX(richest person in the world)
4) Larry Ellison CEO of Oracle Corporation
5) C B Bhave Former Chairman of SEBI
ANSWERS FOR FINANCE QUIZZ
1) Indiarsquos Education
2) 1999
3) Scheduled Bank
4) Decrease in the external value of money
5) International Developmental Association
6) SBI
7) Mr Abhiman Das Asst Advisor in the Department of Statistics and Information
management RBI
8) Index-based circuit breaker system
9) International Finance Corporation
10) World Bank
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
22
CROSS WORD
1 PUNJLLOYDmdasha company known as mini LampT
2 PJTOWERSmdashname the building in which BSE is located
3 FAIRISAACmdashFICO score provider
5 FRANKEDDIVIDENDmdasha dividend carrying an attached franking or tax credit
7 DISCOUNTINGmdashthe process of calculating the present value of a future amount
1 PROFITMAXIMISATIONmdashimplies that a business is managed to maximise the difference
between revenues and expenses in any period
4 FEDmdashinterest rate tsars in US
6 ABNmdasha discrete number which identifies each business registered with the ATO so that
the regulation of taxation is facilitated
8 ONGCmdashhighest paying dividend company in India
9 TRUSTmdasha legal structure where property is nominally owned by one party on behalf of
other parties
Across
Down
ldquoBusiness is the art of extracting
money from another mans pocket without
resorting to violencerdquo
-Max Amsterdam
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari
23
ABOUT ldquoNISHKArdquo
NISHKA is a monthly finance magazine brought by the students of the finance club
of CHRIST UNIVERSITY Institute of Management Kengeri Campus The Idea behind
coining the issue of this magazine is to establish a learning among the students
which helps them to gain an insight about the world of finance
- TEAM NISHKA
FACULTY CO-ORDINATORS
Prof Anirban Ghatak
Dr Jeevananda CAMPUS POLL
CO-ORDINATORS Neizel M Souza
Flavia Deepika Tellis Praveen Kumar CH
Azhagumathivanan R
ARTICLES
EDITORS Anish Kumar Singh
Divyashree R Aarthi K
Madhav B Neha Singh
CREATIVE amp DESIGNING RETROSPECTION
Gowthaman N Manish Santani
ECONOMIC ROLLERS CROSS WORD
Prateek Lakhmani Skandan Y N
STOCK ANALYSIS QUIZ
Lalit Goel Shilipi Kumari