Term of Week

In Focus

Opinion

Personality Tech World

Capital Gearing

Ratio|6

WattUp |12

Prasoon Joshi |11

Bump in India’s GDP rate,

Who is to Credit?| 4

“Say no to cutting lending

rates”, banks | 2

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FEBRUARY, 01 | 2015 | A FINNICHE INITIATIVE

Do write to us at:

finniche.imt@gmail.com

Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.

India’s biggest B-School Sports event Chakravyuh’15 is a fortnight away. IMTian’s are

busy forming their squad of 25 sportsmen and women. Teams are practicing with full on

vigor keeping in mind the trophy of Chakravyuh and every individual planning to bag

the title of Abhimanyu.

Club FinNiche releases its weekly magazine FinXpress, with the In Focus talking about

the ‘Say no to cutting lending rates, Banks’. The Opinion gives an overview of ‘Bump in

India’s GDP Rate, Who is to credit?’

The term of the week describes “Capital Gearing Ratio", relationship between equity

financing and debt financing. Do have a look at the market section, Tech world which

brings to you about Wattup: This Router can power your devices wirelessly from 15 feet

away and Personality of the week, Prasoon Joshi.

Club FinNiche welcomes any comments, suggestions or criticism regarding the

magazine. Please do write to us and share your ideas.

Happy Reading!

Regards

The Editorial Team

Club FinNiche

February, 01 | 2015 | Volume 32

“Say no to cutting lending

rates”, Banks

Bump in India’s GDP Rate,

Who is to credit?

Capital Gearing Ratio

Prasoon Joshi

Wattup: This Router can

power your devices

wirelessly from 15 feet

away.

Banks say no room to cut

lending rates despite

RBI's rate cut

Nationalised banks' non-

performing assets shoot

up to R2,16,739 crore

- By Shikha Sharma

Only three of the nation's 45 business banks

have cut base giving rates since the Reserve

Bank of India's (RBI) surprise easing, stinging

the government's drive to lift business

venture.

Bank administrators demand they can't lower

credit rates notwithstanding the authority

premium rate cut on the grounds that money

conditions are tight, and currency markets

are minimal changed since the cut, however

RBI insiders see that as more a reason to

ensure net revenues.

The inability to pass on the rate slice to

organizations and consumers has both

weakened the effect of monetary strategy and

debilitated the push by the legislature to

rapidly open more acknowledge and goad

ventures as the economy battles to recoup

from its slowest development rates

subsequent to the 1980s.

"We are now giving liquidity higher than

what the keeping money framework

requires. We don't want to build that sum,"

said a senior policymaker with learning of

the national bank's money administration

method. "Banks need to deal with their

benefits and liabilities all the more

proficiently," he included.

Bankers say the normal finances the RBI

gives the business has been consistent at

around Rs 1 lakh crore ($16.2 billion) a day

since the repurchase (repo) rate was sliced by

25 bps to 7.7%. The sliced rate has had little

effect in money related markets, proposing a

blockage in approach transmission.

The interbank overnight money rate, a key

measure of money conditions that has a

tendency to track the repo rate, has stayed

around 8% regardless of the rate cut.

Moreover, three-month wholesale store rates

have held almost 8.50% and the one-year

wholesale store rate has climbed 10 bps to

8.60%.

The Reserve Bank deals with the measure of

liquidity in the business to support

transmission of its rate choices. Experts don't

anticipate that it will ease again in any event

until after the Union Budget toward the end

of February.

"In the event that RBI gave somewhat more

liquidity than what it is giving now, it will

constrain banks to trim their base loaning

rates," said CVR Rajendran, chairman and

managing director at state-run Andhra Bank.

Experts say the RBI will in the end need to

infuse more subsidizes, despite the fact that

may not as much as loan specialists need, on

the off chance that it keeps facilitating money

related strategy.

Credit developed at a yearly rate of 10.7 % in

right on time January, close decade lows, and

the Narendra Modi government has been

looking for lower investment rates to help

start a recovery in loaning to business.

“Say no to cutting lending rates”, Banks

Bank Of Baroda Q3 profit

tanks 68%, provisions &

tax hurt

ICICI Bank Q3 profit & NII

rise 14%, asset quality

worsens

Prior in January, the RBI ordered that loan

specialists change the technique used to

register the base rate, or the base loaning rate,

in an offer to goad all the more giving.

Banks keep on suffering from decaying

resource quality, which is compelling profit.

Bank of Baroda, the nation's second-greatest

loan specialist by resources, on Friday posted a

69 % fall in quarterly benefit because of higher

procurements for bad loans advances and a

surge in expense costs.

ICICI Bank missed road desires on Friday

with the third quarter net benefit climbing 14

percent year-on-year to Rs. 2,889 crore, helped

by other salary and net premium pay.

Nonetheless, higher provision restricted profit

growth.

Provisions for bad loans shot up 41 percent

year-on-year (up 15.4 percent consecutively) to

Rs 980 crore with procurement scope degree at

63.5 percent as on December 31, 2014. Resource

quality was intensified amid the quarter as

terrible non-performing resources (NPA)

expanded 35 bps year-on-year (up 28 bps

quarter-on-quarter) to 3.4 percent and net NPA

rose 33 bps Y-o-Y (up 18 bps Q-o-Q) to 1.27

percent.

The BSE Sensex and Nifty fell more than 1.5

percent on Friday after prior hitting a record

high for a seventh session in eight, as ICICI

Bank and Bank of Baroda posted baffling

results.

Union Bank of India has dipped 6% to Rs. 236

in the wake of reporting a lower than

anticipated net benefit at Rs. 302 crore for the

second from last quarter finished December 31,

2014 (Q3), because of higher provisioning for

awful advances and representative expense.

The state-possessed loan specialist had benefit

of Rs. 349 crore in a year prior quarter.

As indicated by the Reserve Bank of India

(RBI), its non-performing assets of nationalized

banks has swelled from Rs. 9,190 crore in 2011-

12 to Rs. 2,16,739 crore in 2013-14. India's more

than two dozen state-run banks, which

represent more than 70 percent of advances,

have long been obliged by bad loans, chiefly

because of a log jam in the nation's monetary

development in the previous two financial

years. This has pulled their gainfulness well

beneath private-division rivals. An official at

an open division bank recognized benefit was

a variable in the hesitance to lower loaning

rates yet said liquidity was a greater issue.

"There is a considerable measure of micro-

administration of liquidity by RBI. Banks are

taking as much time as required to cut loaning

rates on the grounds that we are still not

certain about RBI's liquidity approach," he

said.

"Regularly banks are quicker in raising giving

rates than cutting to appreciate fat premium

edges," the official included.

- By Arihant Jain

On January 30, 2015, Indian government

surprised the economists by increasing the

GDP growth in the last fiscal year from 4.7%

to 6.9%. World Bank recently predicted that

India’s GDP will surpass that of China’s by

2017 but nobody thought that it would reach

closer to that so suddenly. China’s GDP

growth rate for the 2014 calendar year was

7.4%. With this increase it may even be

possible that India’s GDP growth rate will

outgrow the China’s GDP growth rate this

year itself. So what made this possible?

This sudden surge in India’s economy was

due the change in base rate for the GDP

calculation. Previously Indian Government

used financial year 2004-05 for GDP growth

rate calculation but now the base year has

been changed to financial year 2011-12.

First let’s understand what base year has

impact on the GDP calculation. For

calculating the real GDP of a country, the

economic trends of the current year are

calculated with reference to the economic

trend of another year defined as the base year

for that calculation. It is done so to eliminate

the impact of inflation of such calculation.

₹ (Base Year) is calculated as:

While calculating real GDP, a base year is the

year which is picked for the weights allocated

to it as per the fixed weight procedure. This

base rate was last revised in January 2010 by

the Indian Government

One of the reasons why Indian public voted

for BJP in the recent polls and eventually Mr.

Narendra Modi as the Prime Minister of India

was due to frustration of lack of development

and thus lack of growth in India’s GDP. With

this recent change, it seems that India was not

doing as bad as it was perceived, in the UPA

administration. As soon as the base year was

changed, Mr. P. Chidambaram came in the

defence of the previous government led by

Congress saying that the credit of the revival

of the economy goes to the UPA government

only.

This change will boost Indian growth rate for

the current year which was predicted by RBI

to be around 5.5 per cent. It will also reduce

the fiscal defect for the country despite the

shortfall in revenue.

India’s fiscal deficit overshot

the Budget Estimate of Rs 5.31

lakh crore by December end

and may prompt the Centre to

take tough steps in the

remaining part of FY15 to

restrict it to 4.1 per cent of

GDP. This change will certainly

help the Government in

achieving that goal.

The change in base year of

national accounts statistics will

result in an increase in the size

of the economy in 2013-14 to

Rs.111.7 trillion as against the

earlier estimate of Rs.105.4

trillion.

CHANGES IMPLEMENTED

Apart from updating the base of national

accounts to 2011-12 from 2004-05, Indian

Government has implemented some other

changes as well which have been explained

below:

Change in Method to comply with

International Practice

While compiling numbers, the government

has moved to the internationally accepted

market prices as opposed to the previous

factor-cost method, which considered cost of

factors consumed for producing goods and

services.

Thus, instead of GDP at factor cost, Gross

Value Added (GVA) will be taken for in the

official releases by the Indian Government.

Increase in Coverage

Coverage has become wider to include a

bigger set of numbers from the corporate

affairs ministry's database and more of the

unorganised sectors. In terms of the size, the

economy remains the same at nearly Rs 113.5

lakh crore in fiscal 2014, which suggests some

growth redistribution is behind the spurt in

growth from earlier estimate.

IMPACT OF CHANGE

It is still uncertain what this calculation

change will mean for the more recent growth

but it has raised question that whether the

decision of central bank to lower interest rates

in January was correct as it was partly based

on the weak growth rate of India. The

government has mentioned that this change

has not impacted the ratios much but it has

definitely transferred the onus of maintaining

the GDP growth rate on the new government.

Source: Ministry of Statistics and Program Implementation

Capital Gearing Ratio

establishes relationship

between equity financing and

debt financing. This ratio is

critically analyzed by potential

investors, Banks and other

financial institutions.

- By Priti Sureka

Capital Gearing ratio is one of the

fundamental ratios used by financial analysts,

bankers and investors to understand the

capital structure of a company. It basically

indicates the relationship between various

types of securities. This ratio is also known as

financial leverage. This ratio differs between

companies and industries and even change

time to time. This is the most difficult and

important ratio for managers to decide on

source of financing.

Capital Gearing Ratio = Equity/Fixed Interest

Bearing funds, where Equity includes Equity

Share Capital, Free Reserves, and Balance in

Profit and Loss Account. Fixed Interest

Bearing Funds include Debentures,

Preference Capital and Long term loans.

A company is said to be low geared if major

portion of the capital structure is financed by

equity. While, if the company is majorly

financed by external funds or fixed interest

bearing securities then the company is said to

be highly geared. A high gearing ratio

indicates that company is using debt for its

normal operations and in a business

downturn these companies may face

bankruptcy risk. Whereas a low gearing ratio

indicates a conservative financial

management.

In case of a regulated industry such as utility

industry, a high or low gearing ratio is least

concerned. Some companies may have large

and continuous fixed assets requirements,

such companies are likely to have a high

gearing ratio.

An investor studies the balance sheet and

capital gearing ratio of a company before

investing into it. Therefore, this ratio is

carefully analyzed by actual and potential

investors. Although cost of external funds is

relatively cheap but a highly geared company

is a risky investment for potential investors as

the company will have fixed obligations in

terms of interest expense and it may fail in

paying regular dividend. Even Banks and

other Financial Institutions don’t easily give

loans to highly geared companies.

At the time of leveraged buyout, the ratio

increases as the company will employ more

debt in order to finance the acquisition.

Therefore, before undertaking a leveraged

buyout, a company must critically evaluate

its ability to pay additional amount of

interest.

Depending upon the situation or any event, a

company may wish to increase or decrease

the ratio. A company can increase the ratio in

following ways-

Raise additional debt

Buy back issued shares

Pay dividend from the retained earnings

A company can also decrease the gearing ratio

depending upon the market requirements in

the following ways-

Repay a part of interest bearing debt

Issue new equity shares and pay off

external borrowing

INDIAN MARKETS

Selling activity took its toll and dragged the benchmark Indian Indices lower too. The

benchmark indices were down by 0.3% for the week gone by. Besides various macro

factors, lower than expected earnings of some blue-chip companies pushed the indices

to lower levels. Most of the global markets ended on a negative note in the week gone

by. Disappointing macro economic data and weak corporate earnings cut short the

market optimism. Among the global indices, the Chinese market (down 4.2%) was the

top loser during the week.

BSE SENSEX

CNX NIFTY

Open High Low Close

SENSEX 27173 29,844.1 29,070.48 29182.95

NIFTY 8854.7 8,996.60 8,775.1 8808.9

COMMODITIES

EXCHANGE RATES

INTERNATIONAL MARKETS

Commodity Unit Rs / Unit % Change

Gold 10 grams 27895.00 1.71

Silver 1 kg 38105.00 2.15

Crude Oil 1 bbl 2855 3.54

INR/ 1 USD 61.75

INR /1 EURO 70.02

INR/ 100 JAPAN YEN 52.4

INR / 1 POUND STERLING 93.13

Open High Low Close

NYSE Comp 10787.3 10,670.18 10,532.55 10537.22

NASDAQ 4752.36 4,703.81 4,631.10 4635.24

S&P 500 2050.42 2,023.32 1,993.38 1994.99

FTSE 100 6754.72 6,843.98 6,749.40 6749.4

CAC 4620 4,660.71 4,583.68 4604.25

DAX 10592.97 10,804.04 10,555.51 10694.32

NIKKEI 225 17761.73 17,808.47 17,661.10 17674.39

SSE 50 2562.92 2,471.23 2,400.63 2405.38

Hang Seng 24850.45 24,771.37 24,450.05 24507.05

US President Barack Obama assures $4 billion investment in India

Addressing an India-US CEO summit hosted by Prime Minister Narendra Modi, Obama

committed a $ 4 billion financial package to set the ball rolling and said the two countries

would work together to develop new technologies to help India leap forward. The Overseas

Private Investment Corporation will lend $1 billion to small and medium sized enterprises

in underserved rural and urban areas of India. Besides, the U.S. Export-Import Bank would

finance $1 billion in exports of 'Made-in-America' products to India. The $4 billion deals

include $2 billion of leveraged financing for renewable energy investment.

At the same time, Obama sought consistency and simplicity in the tax and regulatory

environment in India and resolution of issues relating to intellectual property rights to

significantly increase trade and business between the two countries. India crosses nuclear

liability hurdle, which makes easier for companies to invest in India's nuclear power sector.

Defence framework agreement was renewed for 10 years Defense Technology and Trade

Initiative operationalized with focus on co-development and coproduction in India for India

and global market, should boost 'Make in India'.

Sergio Mattarella elected as President of Italy

Italy’s parliament has elected constitutional court judge Sergio Mattarella as the country’s

president. He will be Italy’s 12th president and succeed Giorgio Napolitano who had

resigned earlier in January 2015 citing reason of poor health before his 2020 expiry term.

India tops Credit Suisse emerging consumer scorecard 2015

India has topped in the list of Credit Suisse emerging consumer scorecard 2015, among the 9

emerging economies. This scorecard was prepared by fifth annual Emerging Consumer

Survey by the Credit Suisse Research Institute.

The survey had interviewed consumers across nine emerging economies including Brazil,

China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Turkey. This survey

had profiled the consumer sentiment and its drivers across the emerging world. Thus,

providing insights regarding consumer sentiment and future consumption patterns in

emerging economies. As per the survey, the formation of a strong government at the Centre

in India had triggered a major revival of consumer sentiment in 2014.

It also mentioned that, e-commerce share in India have increased to 32 per cent from 20 per

cent in 2013. In 2014 survey, India was placed at fourth position.

US President Barack Obama

visit to India brings $4 Bn

investment in India

Sergio Matterella elected as

the 12th President of Italy

India tops the Credit Suisse

emerging Consumer scorecard

mainly because of formation of

strong government at centre

and rising share in e-commerce

in India

Record Coal India share sale boosts privatization drive

India has raised about $3.6 billion by selling a 10 percent stake in state-run Coal India Ltd in

the largest ever equity deal in the local market, giving a welcome boost to the government's

faltering divestment drive. The share sale will move the government closer to the still

distant target of raising $10 billion by selling minority stakes in state-owned companies to

trim the fiscal deficit to a seven-year low by the end of March. The strong investor response

to the Coal India issue is expected to bolster the government's plans to offload shares in

other state firms including Oil and Natural Gas Corp and Power Finance Corp.

Overseas and local portfolio investor demand for Coal India shares exceeded supply, with

their category oversubscribed by 1.2 times.

Third Quarter Results announced for different IT companies

Infosys, which posted a 13 percent rise in third-quarter profit, confirmed it expects sales

growth of 7 to 9 percent for the year ending in March 2015, in constant currency terms and

based on exchange rates for the September quarter.

India's third largest software services company Wipro, in the midst of a turnaround,

announced slightly better-than-expected third-quarter numbers. It clocked revenues of Rs

12,085 crore for the quarter ending December 31, a sequential growth of 3.8 per cent. The net

profit of the company was Rs 2203 crore, a growth of 5 per cent over the previous quarter.

Wipro, however, is likely to end the year with 7 to 8 per cent growth, less than the industry

growth pegged at around 13 per cent.

Tata Consultancy Services Ltd (TCS), the country's largest IT services exporter, reported a

net profit of Rs 5,440 crore, up 2.94% QoQ, for the third quarter of the current financial year.

Base year for GDP changed, Indian economy grew at 6.9%

A change in base year for computing national accounts pushed up the economic growth rate

for 2013-14 to 6.9 per cent, while earlier estimate on the basis of old series was 4.7 per cent.

Similarly, the economic growth rate for 2012-13 has been revised upwards to 5.1 per cent,

compared with 4.5 per cent estimated earlier. These changes follow a revision in the base for

calculating national accounts to 2011-12 from 2004-05. The base year was last revised in

January 2010. Besides, government also introduced the new concepts like Gross Value

Added (GVA) to the economy. Changes are aimed at improving the "ease of understanding

(data) for analysis and facilitate international compatibility". Similarly, the economic growth

rate for 2012-13 has been revised upwards to 5.1 per cent from earlier estimate of 4.5 per

cent.

India raised $3.6 Bn by selling

10% stake in state run Coal

India Ltd

Third Quarter results of IT

companies shows signs of

positivity

Change in base year for GDP

calculation, surges the

economic growth rate to 6.9%

CEO of McCann Worldgroup India, Writer, Poet, Lyricist,

Adguru and Ex-IMTian

Born in Almora, Uttarakhand in 1971. In his

childhood, he has travelled across the North

India, which gave Prasoon a remarkable feel

for the real Indian pulse that he is now

celebrated for in his lyrics and advertising.

Prasoon did his BSc and post graduation in

Physics, then elected to pursue an MBA

from Institute of Management Technology,

Ghaziabad in 1988. During his MBA

education he decided to fuse his love for

culture and art and his faculty for the

commercial dynamic and make his career in

advertising.

Career

He started his career with one of the world's

leading agencies, Ogilvy & Mather, in Delhi.

Over 10 years, he became a creative star and

rose to be executive creative director of the

flagship Mumbai office. In early 2002, he

joined McCann-Erickson as executive vice-

president and national creative director. By

2006, he was regional creative director, South

and South East Asia. In December 2006 he

was elevated to executive chairman for

McCann Worldgroup India and regional

creative director for Asia Pacific.

Notable are his campaigns for NDTV India

(Sach dikhate hain hum), Saffola (Abhi to

main jawan hoon) LG, Marico, Perfetti and

the Cannes-winning Thanda matlab Coca-

Cola campaign with Aamir Khan. His

Happydent television commercial is

considered by experts as India's best ad till

date, which has rightfully earned him the title

of "The Ad Guru of India". Prasoon has also

offered his services for various public service

campaigns.

Film Career and Global Recognition

He made his debut as film lyricist

with Rajkumar Santoshi's Lajja, and this soon

led to Yash Chopra's Hum Tum and a string of

highly successful Bollywood films

like Fanaa, Rang De Basanti, Taare Zameen

Par, Black and Delhi 6. With Rang De

Basanti (2006), he also became a dialogue

writer. He won the Filmfare Best Lyricist

Award for "Chand Sifarish" from the

film Fanaa in 2007, for "Maa" from Taare

Zameen Par in 2008 and for “Zinda” from

Bhag Milkha Bhaag in 2014. He has won the

prestigious National Award twice. The first for

his work in Taare Zameen Par and the second

one in 2013 for Chittagong. Prasoon has also

been a part as a Jury member at Cannes,

Commonwealth games in 2010. He was

awarded Padma Shri, the fourth highest

civilian award of India, recently in 2015.

16th Sept 1971

MBA - IMT Ghaziabad

Recently awarded Padma Shri

- fourth highest Civilian award

for his contribution in poetry,

cinema and communication as

a writer

Twice won the National Award

for best Lyricist

Thrice won Filmfare Best

Lyricist Award

In today’s world we cannot imagine our world

without gadgets. Mobiles phones to laptops all

the gadgets face same problem, charging them.

These mobile devices are no more mobile

when they are tied to their chargers. So, power

without wires is what we need now. But sadly

none of the current wireless charging

technologies have set our devices free from a

charging pad, which is tantamount to plugging

them in, really. Energous is one of the very few

companies which are planning to change this.

It claims that you can charge you devices from

up to 15 feet away, without need of any wires.

It is called WattUp, which won the best

innovation and best home product of

Consumer Electronics show 2015.

How it works?

It works using a mix of Bluetooth, RF and a lot

of patented technology. It is the transmitter

which does the magic. It locates and

communicates with all of the devices within its

range using low-energy Bluetooth. Once it has

established contact with the device, it sends

focussed RF signals on the same bands as WiFi

that are then absorbed and converted into DC

power by a tiny chip embedded in the device.

These transmitters can be built into any

household appliances, TV’s, speakers and

standalone “energy routers”.This conversion

which is known as “rectification”, is not a new

idea, but its application into WattUp by

Energous is.

As of now there are no devices that directly

integrate with Wattup technology. For the

purpose of demonstration Energous used

modified battery cases for phones. With the

size of the chips, which are very small nothing

is stopping Samsung or Apple from adding

this technology to their devices.

-by Mohana Krishna Kummara

Energous Corporation is a

technology and intellectual

property licensing company

which will leveraging strategic

partnerships to expand the

WattUp ecosystem.

The entire WattUp wire-free

charging system is software

controlled. Using either a

mobile app or cloud-based web

portal, you can to identify

which devices you want to

receive power, in which order

of priority, and even at what

times you want the devices to

charge.