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Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you

had hair. - Sam Ewing, American Writer

National Headlines Bharti Airtel on Saturday announced that it had decided to disengage from the merger

talks with South Africa-based telecom giant MTN after the latter deviated from the agreed

terms decided during exploratory discussions.

City Union Bank has reported a good performance in the 12 months ended March 31,

2008. It has achieved two landmarks in 2007-08. Total business touched the Rs. 11,000-

crore mark and the profit after tax surpassed the Rs. 100-crore mark.

Stock broking firm Geojit Financial Services said that the companys board had approved

the offer from French banking major BNP Paribas to acquire a 35 per cent stake in one of itssubsidiaries

The Securities and Exchange Board of India proposed a payment process for public

issues which do not require retail investors to block their money unless they are allottedshares.

HSBC, through its group subsidiaries, is to acquire 73.21 per cent of IL&FS Investsmart

Limited (Investsmart), the broking arm of Infrastructure Leasing and Financial ServicesLimited (IL&FS).

Dhamra Port Company Ltd. (DPCL), a 50:50 joint venture of Larsen & Toubro (L&T) and

Tata Steel to set up a port at Dhamra, Orissa is expected to commission the port by April2010. Estimated to cost Rs. 2,463 crore in the first phase, more than 25 per cent of the work

International Headlines

1st JUNE 2008

Volume 2, Issue 5

..Tracking the Economy

What separates the winners from the losers is how a person reacts to each new twist of fate.-Donald Trump

Inflation 8.1% , IIP 8.1%

Issue AttractionsNationalHeadlines

1

InternationalHeadline

1

CorporateInterview

2

Quiz 2

Student Editorial 3

InvestorsCheck/Taglines/BuzzWord/Logos

4

15 days Movements

CHAANAKYACHAANAKYACHAANAKYACHAANAKYAWealth Incorporation - A CCIM Finance Club Initiative Presents

Eicher Motors Ltd. (EML) and the worlds second largest truck maker Volvo formalized

their joint venture in which the Swedish auto major will pump in Rs. 1,082.10 crore.

Samsung Electronics is going merge its home theatre, DVD and Blu-ray player

businesses with its global No. 1 TV business as part of its restructuring plan.

Nissans joint venture with electronics maker NEC Corp. Automotive Energy Supply

Corp. will invest 12 billion yen ($115 million) to start mass production of lithium-ionbatteries a technology widely viewed as key for next-generation green cars.

The U.S. accused China of keeping its yuan currency substantially undervalued. Kawasaki Heavy Industries will start selling Kawasaki brand sports motor bikes in India

through carmaker Bajaj Auto by the summer of 2009 to tap growing demand.

Vodafone will acquire Denmark-based ZYB, which operates a social networking site

focused on mobile phone users, for about 31.5 million euro. ZYB would be incorporated intoVodafones Internet Services Division.

Nokia shut down its mobile-phone production in the western German city of Bochum

near Dortmund, cutting down more than 2,000 jobs and moving the plants production toRomania.

IFC, a member of the World Bank Group, and Standard Chartered Bank, announced

that they had collaborated on the launch of the first-ever issuance of notes backed by loansto micro finance institutions in Africa and Asia.

0

0

0

0

0

0

1 2 3 4 5 6 7 8 9 1 0 11 12 13

Sensex

Sensex

1 2 3 4 5 6 7 8 9 10 11 12 13

Gold(per gram)

Gold

1 2 3 4 5 6 7 8 9 10 11 12

Rs/$

Rs/$

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Quiz

Literature was formerly an art and finance a trade; today it is the reverse Joseph Roux,

French Artist

1. Name the method used by monetary authorities to equalize the effects of foreign exchange transaction the domestic monetary base by offsetting the purchase or sale of domestic assets within the domemarkets. The process limits the amount of domestic currency available for foreign exchange.

2. What is the name given to the day of deregulation of the securities market in London, England October 27, 1986), in which the London Stock Exchange (LSE) became a private limited company? event revitalized the LSE because outside corporations were allowed to enter its member firms aautomated price quotation was established.

3. What is a foreign exchange term for a thinly traded currency?

4. A differential measuring the gap in interest rates between two similar interest-bearing assets. Na

the term we are referring to.

Mr. Betdur is a BCOM, ACA and A&CWA. He started his career in VYSYA BANK (now known as ING VYSYA BANK) in 19and is still working there. He is now the Head-SLMG. His role is to monitor and check the movement of NPAs across branches of the bank throughout the country and to maximize the recovery efforts to ensure that SLMG contributes m

to the bottom line and ultimately enhances the profitability of the bank. Sumiran Raj interviewed him. Here are his views

Q- What is your view about the market of securitization of bad loans in India?

R- The original idea of securitization is to clean the balance sheet completely and obviously securitization will reduce tNPAs, unblock the funds and recycle the money. Initially few players were there, now some more players have come

but the market for securitization of bad loans is yet to stabilize and achieve the desired the result.

Q- What could be the impact of sale/purchase of NPAs on the operational efficiency of the bank?

R- I dont think Banks as on today are purchasing NPAs except very few players like Kotak Mahindra. Though banks aselling NPAs but the irony is that the amount banks have been getting, is not at all lucrative and then realization of montakes lot of time. At times, it is on upfront basis also. Hence the impact of sale/purchase of NPAs on operational efficienof bank is expected to be very feeble.

Q- Do you feel the adoption of Basel II norms will enhance the market of securitization of NPAs in India? yes, please comment on the extent of impact?

R- Obviously, once Indian banks shift towards Basel II norms in September, 2009 meeting the adequate caprequirement would be prime most agenda. Hence bank will go for more and more securitization of NPAs. But keepingview the market condition, the impact would be sizeable and positive.

Q- When the seller and buyer are from the same institution (in context to ARCIL) i.e. seller (the loan sidand buyer (the treasury), then how does it reduces the risk of the bank?

R- It is a very rare and very unique case. It does not happen generally. But if it happens there wont be any impact

balance sheet of the Bank. The prime motive would be fulfilled.

Q- Where does your bank stand, in context of securitization of loans or sale/purchase of NPAs?

R- Standard assets are exit ones. Our bank does very nominal in this context. But our further move will depend up

market condition & number of QIBs.

Q- What do you feel, should be next prudent move in terms of recovery after SARFEASI Act 2002,

improve NPA management practices in banks?

R- It is very good act. But during the amendment, the shift of 75% deposit to 0% of total repayable amount hweakened it. If it is brought back up to 50%, then only it can be more useful. The borrower can file as many petitions

he wants & as many times as he wants without depositing any amount and it is also left to the discretion of the presidi

officer/ judge. This is what needs to be strengthened.

A piece of advice from your side to MBA-Finance students

R- Be practical. Try to enrich your knowledge base and explore the possibility of maximum utilization of your skills a

expertise in a positive manner irrespective of the field you enter into.

Christ College is one of the premier institutes in Bangalore, rolling out class students. I have been there once as a jud

for a management event. It was great experience and the college is doing well. All the best!

Interview With Mr. M.R.Betdur, Head- SLMG, ING Vysya Bank

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Did you Know?

The term "bu

relating to the s

for U .S . do

originated from

Old West w

buckskin was

common mediumexchange with Ind

Later as currereplaced the ba

system, people

refer to a dollar

buck.

GREAT OFFSHOR

BSE 532786,

NSE GTOFFSHOR

CMP- Rs. 748.35

TARGET PRICE RS

ITC ,BSE- 500875

NSE ITCCMP- Rs. 218.20 TAR

PRICE: RS.179

HDIL, BSE 53287

NSE HDIL

CMP- Rs. 742.65

TARGET PRICE: RS R

(CMP Current Market

Stock Ratnas

Global interdependence today means that economic disasters in developing countries couldcreate a backlash on developed countries. - Atal Bihari Vajpayee

Answers To Quiz

1. SterilizedIntervention

2. Big Bang

3. Exotic Currency

4. Interest RateDifferential

Bubble in Oil (Part 1) By:

Sasmit K SahuThe situation

Oil was at $26 a barrel when the US vowed to go into Iraq and secure oil supplies. It isnow trading at over $130 a barrel. And while the price of oil is soaring, the Indiangovernment continues to fool around with what the price of oil should be to the endconsumers. What is formula? How much of the "oil subsidy burden" must be shared

between the government, the oil producing companies, the oil refinery companies, andthe oil marketing companies. And they change the formula when they want - for anyreason.

The petroleum ministry has been pushing for a combination of duty cuts and price hike(Rs 10 per litre in petrol, Rs 5 a litre in diesel and Rs 50 per LPG cylinder) to bail outPSUs IOC, HPCL and BPCL that are on the verge of running out of cash in the next 2-3months to import crude. At inflation rising over 7.5%, the price hike will definitely give ita push.

Reason for the rise in Global Oil Price

The price of oil is rising due to a combination of rise in demand from developing

countries, a weakening dollar, the reduction in supply from the Persian Gulf nations andthe unprecedented spurt in crude price is speculation. The speculated oil bubble willburst if the US & UK goes into recession, thus the demand for oil will fall making oilcheaper in the international market. In this case, hedge funds & the companies whichare bullish about the future oil price will incur huge losses.

Oil Pricing in India

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

2002 2003 2004 2005 2006 2007 2008

Global Oil Price Retail Price (Mumbai)

Morarji Desai

the only Ind

Finance Minister

have presented

budgets on

birthday, Febr

29, in 1964 and 19

Break up of petrol & Diesel(In Delhi)

Petrol Diesel

Sales tax 7.74 3.81

Customs 1.83 2.23Excise 15.02 4.76

Totaltaxes 24.59 10.8

Withouttaxes 20.93 20.96

Total 45.52 31.76

Source: Petroleum Planning &

Analysis Cell

To be continued in next

issue...

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INVESTORS CHECK

10 tips for Stock market investorsInvesting in stock markets is an art. It is a science as well. You can never earn money in markets without hard work.

Here are some tips for stock market investors. Follow these tips and your judgements, mix in some analysis and

hardwork, and you are bound to earn more than just your money back!

1. Never invest in stock just based on rumors. If they become news, you may hit jackpot, if not you will be bankrupt.

2. Never invest in stocks just based on the broker or magazine recommendations. That stock price may have already

risen due to these recommendations.

3. Never invest in IPOs which are overpriced or from promoters who have bad credentials.

4. Entering or exiting a stock that bid late may be better than making instant decisions based on rumors that could lead

to losses.

5. Fundamentals are more important along with entering price. Though Reliance industries, SAIL, Bharti, ABB and Sun

Pharma are good stocks with strong fundamentals, you may not get good returns due to their share price (over

valued). (To be continued in the next issue)

Please mail your valuable feedbacks, reviews at chaanakya.ccim@gmail.com

Buzz Word

Yield curb

Mainly applies to convertible securities. Difference in currentyield between the convertible and theunderlying common.

Parallel loan

A process whereby two companies in different countries borroweach other's currency for a specific period of time, and repay theother's currency at an agreed maturity for the purpose ofreducing foreign exchange risk. Also referred to as back-to-backloans.

Path dependent option

An option whose value depends on the sequence of prices of theunderlying asset rather than just the final price of the asset.

Quotes:"There comes a time when you look into tmirror and you realize that what you see is that you will ever be. And then you accept Or you kill yourself. Or you stop looking mirrors.

Tennessee William

I am enough of an artist to draw freely upmy imagination. Imagination is more importathan knowledge. Knowledge is limiteImagination encirc les the world

Albert Einste

Tag Lines:

ITS TIME FOR CLARITY KPMG

IMAGINE IT. DONE. UNISYS

LIFE. MONEY. BALANCE BOTH - SCOTIABANK,

CANADA

ONE CLIENT AT A TIME - MORGAN STANLEY

FACTORING SPREADING ITS WINGS - FCI (FACTORS

CHAIN INTERNATIONAL)

HAVE YOU MET LIFE TODAY?/GET MET. IT PAYS -

METLIFE - METROPOLITAN LIFE INSURANCE

COMPANY

TAKING CARE OF WHAT'S IMPORTANT -AVIVA

INSURANCE GROUP, UK

A. Capital Bank of Latvia B. National Australian BankC. Deutsche Bank D. Saudi Investment Bank

A.

C. D.

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Contributions made by :

Logos, Taglines & Editing Arihant PatawariFouzia Taranum B

News Anup RajanAshish Poddar

Did you know, Quotes SukruthaStock Ratnas, Quiz Lavanya

Graphs Gnana DeviInvestors Check Diwakar GroverInterview Sumiran RajBook Quotes, Buzz Word Nikhil Mehta Article Sasmit K SahuCoordination Manish Sinha