finxpress_12august2012

IN THIS IS

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AUGUST 12 ,2012

Company In Focus : Bharti Airtel

Cover Story: Survivor 4.0

Editoria

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Company in

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Term of t

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Mark

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News of t

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Cover Sto

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Fun Corner

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Term of the Week

INSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD

AUGUST 12,2012

EDITORIAL

Dear Readers, Greetings from FinNiche! As you would be aware, Survivor 4.0 was held last week and the response for the event was huge. People stayed awake the entire night leaving aside their respective quizzes and presentations to be part of this event. The FinNiche team hopes that it was one of the most memorable experiences for the participants. The details of the event are covered in the “Special Page” section. In this edition of FinXpress we have Bharti Airtel in the “Company in Focus” section. Bharti Airtel posted a bigger than expected 37 % dip in profit for the three months ending June 2012. Its shares slumped more than 6 per cent for two consecutive days to close at a six-year low. In the “Term of the Week”, we proceed with terms related to Shares like Book Building, Dual Listing and Preferential Issue. In the markets section, we bring you the fluctuations that took place this week and some important exchange rates. We have added simple moving averages and return on the index in this section as well. We sincerely hope that the readers find our content engaging. We would appreciate feedback and suggestions for improvement. We hope to bring you more information in the future thus keeping you updated and adding to your knowledge base. Till then, “Enjoy Reading”! Yours Sincerely, The Editorial Board “FinXpress”

PAGE 1 http://www.imtgfinxpress.co.cc

AUGUST 12,2012

COMPANY IN FOCUS

Bharti Airtel (Telecommunication Sector)

Bharti Airtel Limited, commonly known as Airtel, is an Indian telecommunications company that operates in 20 coun-

tries across South Asia, Africa and the Channel Islands. It operates a GSM network in all countries, provid-

ing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's third-largest mobile tele-

communications company with over 261 million subscribers as of August 2012.

Airtel is also a provider of broadband and subscription television services. It is headed by Sunil Bharti Mittal. In 1983,

Mittal was in an agreement with Siemens to manufacture push-button telephone models for the Indian market. In

1986, he incorporated Bharti Telecom Limited (BTL). In 1992, Mittal won a bid to build a cellular phone network in

Delhi. Bharti Enterprises went public in 2002. In 2003, the cellular phone operations were rebranded under the single

Airtel brand. In 2009, Airtel launched its first international mobile network in Sri Lanka. In 2010, Airtel acquired the

African operations of the Kuwait based Zain Telecom.

Bharti Airtel is the first Indian telecom service provider to achieve Cisco Gold Certification. It is known for being the

first mobile phone company in the world to outsource all of its business operations except marketing, sales and fi-

nance. Its network—base stations, microwave links, etc.—is maintained by Ericsson, Nokia Siemens Network &

Huawei and business support is provided by IBM. The transmission towers are maintained by Bharti Infratel Ltd. in

India.

On 18 November 2010, Airtel rebranded itself in India in the first phase of a global rebranding strategy. The company

unveiled a new logo with 'airtel' written in lower case. It is designed by London-based brand agency, The Brand Un-

ion.

Airtel has started a new mCommerce platform called Airtel Money with collaboration with Infosys. It was launched

on April 5, 2012. With the help of Airtel money, users can transfer money, pay bills and other financial transactions

using mobile phone.


AUGUST 12,2012

PERFORMANCE AT A GLANCE

SHARE PRICE OVER THE LAST ONE YEAR


AUGUST 12,2012

TERM OF THE WEEK : Terms related to Shares

In the last Edition of FinXpress, we had covered some basic concepts of shares. Now some more commonly used terms– Book Building, Dual Listing and Pref-erential issue have been taken up for discussion.

Book Building

According to SEBI Guidelines 2000, Book Building means a process undertaken by which demand for the securities proposed to be issued by a body corporate is elicited and built up, and the price for such securities assessed, for the de-termination of the quantum of such securities to be issued by means of a no-tice, circular, advertisement, document or information memorandum or offer

document.

In case of book building, the investors place their bids at different prices and finally the price at which there is maxi-mum demand is selected. The prospectus generally contains a base price and a maximum price between which the bids are made for the securities. The spread between the base price and the maximum price cannot be more than 20%. For example, of a company issues n number of securities with a base price of Rs 100, the maximum price can-not exceed Rs 120 (Rs 100 + 20% of Rs 100)

Difference between book building and fixed issue: In case of a fixed issue, the price of the issue is fixed first and then the securities are offered to the investors. Howev-er, in case of book building, the price is determined on the basis of the demand. The demand for securities in case of a fixed issue is known only at the close of the issue, whereas the demand is know on a regular basis in case of book building.

Dual Listing

Dual listing is a process that allows a company to be listed on the stock exchanges of two different countries and hence the shares of the company are traded in both the stock exchanges. Dual listing generally takes place when companies belonging to two different countries enter into an equity alliance. Royal Dutch Shell (UK/ Netherlands) and Unilever (UK / Netherlands) are examples of companies which have their shares dual listed.

Dual listing is not allowed in India and it will need major amendments to key corporate laws of the country to allow it. The Foreign Exchange Management Act (FEMA) too would need to be amended because in case of a dual listed company, an investor can buy shares in one country and sell it in an overseas market and this would require the Indi-an rupee to be fully convertible. Also, it should be noted that domestic trading in shares denominated in foreign cur-rency cannot take place without the permission of the Reserve Bank of India. It should be noted that the dual listing was one of the prime reasons for failure of the Bharti-MTN deal in the year 2009.

Preferential Issue

A preferential issue is an issue of shares or of convertible securities by listed companies to a select group of persons. The issuer company has to comply with Section 81 of the Companies Act, 1956 and to the guidelines laid down by SEBI. A preferential issue is neither a rights issue nor a public issue, and is a faster way to issue shares.

I hope that the readers found this useful. Feedback and suggestions is welcome.


AUGUST 12,2012

MARKETS THIS WEEK

BSE Sensex gained 2.09% from last week and ended the week at 17,557.

Simple Moving Averages

Returns - BSE SENSEX

NSE Nifty gained 2.01% from last week and ended the week at 5320.40 .

Simple Moving Averages


30 Days 50 Days 150 Days 200 Days

5,238.96 5,177.71 5,186.16 5,111.36

30 Days 50 Days 150 Days 200 Days

17267.93 17071.51 17099.39 16898.88

YTD 13.61 % 1 Week 2.09 % 1 Month -0.30 % 3 Months 6.90 %

6 Months -1.10 % 1 year 2.50 % 2 Year -3.60 % 3 Year 17.00 %

SENSEX

NIFTY

AUGUST 12,2012

Returns –NSE NIFTY

Overview

The Indian markets traded higher for the second consecutive week as the foreign funds remained net

buyers of the Indian stocks. Comments from the Union Finance Minister P Chidambaram to unveil a

path of fiscal consolidation shortly further boosted sentiments on the domestic bourses. On the other

hand, the major disappointment this week was the corporate earnings announcement, which failed to

cheer investors. State Bank of India was the main culprit in this corporate earnings season followed

by Bharti Airtel and Tata Motors.

The Key benchmark indices rose in two out of five trading sessions, while three sessions closed flat

with no major gains. The NSE Nifty maintained its key 5300 level. The BSE Mid-Cap index rose 0.45%

and the BSE Small Cap index rose 0.06%.The BSE Sensex rose 359.81 points or 2.09% to close at

17,557.74, while the NSE Nifty rose 104.70 points or 2.01% to settle at 5,320.40.

Major events of this week 1. The Index for Industrial Production (IIP) for the month of June 2012 declined 1.8% YoY, lower than the consensus estimate of a growth of 0.4%. 2. Car sales in India showed an annual growth of 6.7% in July, which is the ninth consecutive monthly rise but below industry estimates. From Earnings point of view 1. State Bank of India, the country's largest lender, posted a second-straight surge in quarterly net profit on August 10, 2012 on strong loans growth, beating street expectations, but a rise in bad loans pulled its shares down. 2. Country's largest commercial vehicle manufacturer Tata Motors reported a 12% rise in its net profit for Q1 on August 09, 2012. However, the shares in Tata Motors declined, after the Indian auto maker missed estimates with its first-quarter results and forecast lower sales for Jaguar Land Rover, its key subsidiary. 3. Bharti Airtel was reeling under pressure after the company reported disappointing numbers on Wednesday (August 08, 2012).


YTD 15.05 % 1 Week 2.01 % 1 Month -0.50 % 3 Months 7.10 %

6 Months -1.10 % 1 year 3.10 % 2 Year -2.60 % 3 Year 19.90 %

AUGUST 12,2012

Key Rates


Policy Rates Reserve Ratios Lending Deposit Rate

Bank Rate 9% CRR 4.75% Base Rate 10%-10.5%

Repo Rate 8% SLR 23%

Savings Deposit Rate 4%

Reverse Repo Rate 7%

Term Deposit Rate 8%-9.25%

Margin Standing 9%

Exchange Rate v/s INR Commodities Unit Rs/Unit

% change

Currency Symbol Rate %

change Gold 10 gms. 30034 0.86%

US Dollar $ 55.28 0.20% Silver 1 Kg. 53485 0.53%

Euro € 67.94 -0.35%

Brent Crude Oil 1 BBL 5140 -

Dirham AED 15.06 0.33%

Japnese Yen ¥ 0.70 0.38%

Chinese Yuan CNY 8.74 0.26%

AUGUST 12,2012

NEWS OF THE WEEK

FDI inflow declines

Foreign Direct Investment (FDI) in the country declined by over 65 per cent to $4.64 billion during April-June 2012-13

year-on-year amid global economic slowdown. The FDI inflows were $13.4 billion in April-June 2011-12 period. Ac-

cording to latest data of the Reserve Bank of India (RBI), the FDI inflow in the country was $1.32 billion in June as

against $5.73 billion in the same month last year.

Indian Oil Corporation posts historic loss

Indian Oil Corporation (IOC), the country's biggest refiner, created grim corporate history by posting a record quar-

terly loss of Rs 22,451 crore despite lower crude oil costs, as the freeze in diesel, kerosene and cooking gas prices,

depreciation of the rupee, and interest costs devastated its balance sheet. The state-run company suffered a foreign

exchange loss of Rs 3,187 crore and inventory loss of Rs 4,062 crore while the delay in government compensation

increased its interest burden to Rs 1,849 crore during the first quarter of the current fiscal.

Industrial output surprisingly contracts in June

India's industrial production unexpectedly contracted in the month of June, undermined by dwindling investments in

a sharply slowing economy, government data showed on Thursday. The combined output of Factories, Mines and

Power Utilities, as measured by the index of industrial production (IIP), shrank by 1.8% in June 2012 as against a re-

vised 2.5% expansion in May 2012, as quoted by the Commerce Ministry . The IIP had expanded by an impressive

9.5% in June 2011.Economists had forecast an increase of around 1% in June 2012.The cumulative growth rate in IIP

for the period April-June 2012-13 stands at (-)0.1% versus a growth of 6.9% in the corresponding period of the previ-

ous fiscal year.

Chidambaram promises reforms to bolster Indian economy

Finance Minister P. Chidambaram on Monday said that the Government will soon announce measures to contain

fiscal deficit, check rampant inflation and boost sagging investor confidence. Chidambaram also suggested that he

wanted interest rates to drop, prompting bond yields to decline. Bond yields fell few basis points after his comments

on interest rates. India's fiscal deficit for FY12 was 5.76% of GDP, and many economists warn that the goal to trim it

to 5.1% of GDP for this fiscal year is optimistic. For the April-June 2012 period, the budget shortfall rose to Rs. 1.9

trillion, or 37.1% of the full fiscal year 2012-13 target.

Citi, CLSA & GS cut India's GDP growth forecast

Citigroup, CLSA and Goldman Sachs have cut their outlook on India's GDP growth for FY13 to 5.4%, 5.5% and 5.7%,

respectively, citing weak southwest monsoon and other lingering headwinds such as sticky inflation, high borrowing

costs, widening twin deficits and policy inertia. Ongoing political gridlock, recent power outages, fragile exports and

falling domestic consumption will take a toll on the Indian economy. The Reserve Bank of India (RBI) has scaled back

its FY13 GDP projection to 6.5% from the earlier estimate of 7.3%.

EPFO allowed to invest in CDs, CBLO

The Central Board of Trustees —EPFO’s (Employees’ Provident Fund Organization) apex decision making body—on

Tuesday has decided to increase investments in certificates of deposits (CDs) and in term deposits with maturities

ranging from one to five years. The Trustees also allowed EPFO to borrow from the collateral borrowing and lending

obligations (CBLO) market, approved by the Reserve Bank of India. Until now, EPFO could invest only in fixed depos-

its with a tenure of less than a year. It was not allowed to invest in CDs or borrow from CBLO. The decision is ex-

pected to improve the performance of EPFO, which was forced to lower its returns to a 10-year low of 8.25% in 2011

-12.


AUGUST 12,2012

COVER STORY

Do you have it in you what it takes to be a Survivor? From deciphering cryptic to strategizing for winning, Survivor 4.0 had it all. Survivor is the ice breaking event of FinNiche, an annual B-school event for the first year students. Title sponsor for this year was Hotel Parth Inn. It is located about 2 kms from the campus, in Govindpuram opposite Impe-rial Farms. Swaad, its multi-cousin restaurant is elegantly designed, and the ambience emanates the rich aroma of the delicacies served there. The co-sponsor for the event was Hallmark, located in Sector 10, Raj Nagar.

The first round of Survivor 4.0, Kryptex, started on 6th August at 9:30 PM with 83 teams participating. There were 40

levels to be cleared and it was scheduled to end at 2:30 in the morning. On participants’ request the deadline was

extended till 4:30 AM with students striving till the last second. The event started smoothly with the organizers keep-

ing track of participants through the database. “Suvivor 4.0” facebook page was full of comments, discussions and

queries in a very short span of time. Hints for the respective questions guided the participants to reach further levels

and keep up the competitive spirit. At the end of Round 1, 10 teams were selected for the next round.

The second round, Radiance, was held at Amphitheatre. It started on 7th August at 6:00 PM with 10 teams fully

geared up to survive. Within no time the Amphitheatre was full of audience participating in the same zeal as the par-

ticipants. The event started with a warm-up round testing their knowledge about IMT and preparing them for lots

more that was to come. With the subsequent rounds, when certain teams got eliminated and others moved closer to

their dream of being ‘THE SURVIVOR’ the atmosphere got electrifying. The event continued till 8:00 PM and the team

of Aneesh Pani and Mitali Jain was adjudged Survivors for year. They were felicitated by last years’ winners Abhishek

Dixit and Ankit Lahoti and celebration followed. The remaining 9 teams were also felicitated with gift hampers spon-

sored by Hallmark and discount coupons sponsored by the title sponsor Hotel Parth Inn, presented by Senior

FinNiche team Members.

Though the event is over, yet the lasting impression which it has left on all the first year students about the club is

clearly evident by the comments by the participants on the Facebook page of Survivor 4.0. FinNiche will soon be back

with its next big event, “RISCON, the Risk Management Conclave.”

SURVIVOR 4.0


AUGUST 12,2012 PAGE 11 http://www.imtgfinxpress.co.cc

CAN YOU SOLVE IT?

Set A Match the following:

Set B

1. What are the assets that are not subject to depreciation? 2. Where would pending law suits is shown in a company's fi-

nancial statements?

CARTOONS:

**Rush in your entries to : [email protected]

The right entries will get their name featured in the next issue of FinXpress. So hit the quiz fast & get yourself visible among 1000 odd in the campus.

Feel free to write to us at : [email protected]

Drop in your suggestions to the editorial team :

Magazine design/news : [email protected]

Articles/quiz : [email protected]

LAST WEEK’S ANSWERS

SET A

1) New Trade Theory - Paul Krugman

2) Understanding Reforms - IFPRI

3) Bailout - Neil Barofsky

4) Mario Draghi - ECB

5) Outliers - Malcalm Galdwell

SET B

1. 11% , 5%

2. Schedule XIII

Last Week’s Winner: Lokesh Goyal

We are on the web !

http://www.facebook.com/FinNiche

http://www.imtgfinxpress.co.cc

WTO Jim Yong Kim

FICCI Pascal Lamy

World Bank Mario Draghi

IMF Christine Lagarde

European Central Bank Kamal Haasan

http://en.wikipedia.org/wiki/Jim_Yong_Kim

AUGUST 12,2012 PAGE 12 http://www.imtgfinxpress.co.cc

http://hotelparthinn.com/

SURVIVOR 4.0 SPONSORS

http://hotelparthinn.com/

finxpress_12august2012

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