INDEX

The Greek Economic Crisis – Parallels with Indian Crisis of the 90’s 1

Repercussion of underinvestment in Training: The plight of IT industry 3

Vyapam Scam: Glaring discrepancies exposed 5

Gold Monetisation Scheme- An Impact on Indian Economy 7

Japan’s Nikkei Going Global with Financial Times Takeover 9

Investments with Prospective Profits 11

Ever Fluctuating Gold Prices in India 13

India’s Position in BRICS 15

Effects of dividend on Future Market Options 16

The Greek Economic Crisis – Parallels with Indian Crisis of the 90’s

The Greek crisis brings back of the memories of the economic crisis that India went through in the late 90s. The economic

conditions were not the same but we can still relate some facts of the history. In 1991, India had flown an equivalent of 67 tonnes

of gold to the UK and Switzerland in order to prevent a foreign exchange crisis. Recently, it has been the case with Greece. The

country has been asked to put up to 50 billion euro as collateral by German as they are seeking for fresh loan from the Euro

members after defaulting the payment of their debts to the International Monetary Fund. Unlike Greece, India had never failed

to repay its debts to the International Institutions i.e. IMF and World Bank.

India had an increasing domestic public debt as well as external estimated at $70 billion. Similarly, the same is happening to

Greece recently. There are few causes classified into long-term and short-terms ones which led the Indian economy to that crisis.

The long-term reasons were that the public sector enterprises providing fewer yields, excessive nationalization of assets and

license raj- a result of the country’s decision to have a planned economy where all aspects were controlled by the state and

licenses given to few and the short-term ones are the political instability during that time and the gulf crisis marked by the Iraq’s

invasion to Kuwait.

India being a closed economy, through its new Government, took the necessary measures to adjust the country’s situation by

implementing the Liberalisation Privatisation Globalisation (LPG) policy which later helped the country to overcome the crisis.

Greece’s case is totally different as the country belongs to the Eurozone and has an open economy. Greece has struggled over

the past few years to pay back its creditors on time and recently received a loan in exchange of implementing stringent

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austerity reforms whereby the country found itself in the obligation to cut-off certain of its spending such as pension payments

and increased the VAT from 13% to 23% on certain commodities such as sugar, cigarette, transportation and so on.

Despite of these newly implemented austerity reforms, Greece still has a long way to go before rising from the ashes of the

collapsed economy and the entire world is interested to see how the Greeks will overcome it.

KALUBI KAYEMBE JEREMIE

I MBA(FM)

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Repercussion of underinvestment in Training: The plight of IT industry

This article highlights the adverse effects of organizations underinvesting in training their workforce to make them capable to

being in the position that they’ve been offered. This is specifically focussed on the Information Technology (IT) industry in India.

When the inefficiency of any organisation is concerned, it is interesting to look deep down into the reasons why organisations

trim down their budget or shy away from imparting expensive training programmes to their employees.

An Allied Workforce Mobility study found that, within a year, employers lose nearly one-quarter of new hires while another

one-third does not satisfy their productivity targets. The need for training as a means of employee retention is as strong as ever.

Employees are interested in performing their jobs well to advance the company, feel a sense of pride for a job well done and

advance to higher positions. When there is no training, employees do not understand how to do their jobs and none of these

goals are possible. This leads to low morale among workers, which results in employee turnover. A company with a reputation for

high employee turnover is also unattractive to potential job candidates.

The rate of production is low when employees don't know enough to perform their jobs confidently. Unskilled employees could

spend considerable time seeking help to perform their jobs or they could perform tasks to their understanding, to the detriment

of the work process. This could lead to errors and injury. Supervisors and more experienced employees must also spend time

monitoring unskilled workers, which detracts from their work and increases the amount of time necessary to complete

production. Untrained employees cannot develop the best technology solutions. They also lack adequate knowledge and skills

to provide satisfactory customer service. This combination results in unsatisfied customers. The company will experience declining

sales if unsatisfied customers choose competitors who can provide quality products and appropriate service.

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Inspite of so many known consequences of not providing trainings to employees, some companies stay away from expensive

training programmes due to fear of losing that employee. It is a known fact that companies are always on the lookout of

talented candidates and getting trained on the latest and greatest technologies can result in the employee being poached by

a competitor. In effect, the training cost borne by the employer essentially does not bear him any fruit. Secondly, technology

trainings do not come cheap. And if they are the latest in the industry, they are all the more expensive than regular trainings.

Some companies consider this cost as an additional burden in their expenses and expect the employee to learn from their

supervisors and team leads and develop skills on the job.

To overcome these challenges, an organization should set up a process where employees who are selected for these expensive

trainings should be screened well, to find if they are likely candidates for attrition. Previous performance ratings and feedback of

the employee can be used for this purpose. Supervisor’s feedback can also be a good way to identify if there is a likelihood of

this employee leaving the organization after getting trained. Another method of containing this will be asking the employee to

sign a bond which will ensure that he/she stays back for a stipulated time period even after the training, else he/she is liable to

pay the cost of the training to the employer. To bring down training costs, an organization can indulge in ‘train the trainer’

programs where they send one team member for the training and ensure that the person is capable of sharing the knowledge

and training his peers on what he learnt at the course. This way the entire team can get trained on the technology, at the cost of

just a formal training. Shying away from training employees is not an option for any technology company who intends to stay at

the top. The only thing worse than training your employees and losing them, is not training your employees and keeping them.

DEEPAK R . SEKHAR

I MBA (FM)

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Vyapam Scam: Glaring discrepancies exposed

An admission and recruitment scam in Madhya Pradesh making news recently. Top notch politicians, businessmen and senior

officials have also been involved in the scam. This malpractice has been happening since 2007, however, it’s been brought in

the limelight only in the recent years. Vyapam stands for Vyavsayik Pareeksha Mandal, this body conducts tests for various

professional courses and is involved in recruiting people to various posts, especially government jobs.

The modus operandi followed:

Candidates who are extremely intelligent and brilliant would sit for the exams. Following the exam, the board would

replace the photographs of the original candidate. The less deserving student would just pay a heavy amount to the

bureaucrats and board authorities. Even the students who wrote the exams get paid as a reward to have helped.

Sometimes Intelligent students would be seated in such a way, that the underperforming students who have bribed the

authorities can conveniently copy and pass with flying colours.

Sometimes students would leave the answer space blank to the questions they do not know, so the needful could be

done by the corrupt officials at the time of evaluation

These corrupt practices have been indulged since 2007, however, some details were exposed in 2013 and investigations

started. Until then, such malpractices were being carried out very smoothly for those who did not have that caliber or merit,

but had the money to pay to the bureaucrats and get the qualification or job of your choice.

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Investigation results revealed the deaths of about 45 people one after the other those who were directly or indirectly involved in

the malpractice. Further investigation linked these people, who must have been the basis for important clues behind the

malpractice, were found dead under mysterious circumstances. Top notch personnel conveniently termed the death as natural

death which was then realized that these deaths were actually murders. The Madhya Pradesh Government later admitted to this

harsh reality.

Recently CBI has been asked to investigate the matter and put all the persons involved behind bars. The Supreme Court has also

agreed to hear to the petitions and take decision as required. Recent exposures have found high bureaucrats and politicians

guilty including education minister Laxmikant Sharma. Over 2000 people have been arrested including bureaucrats, politicians,

students, their parents, officials of the MP board.

Congress has claimed that nearly 77 lakh candidates have paid bribes, which amounts to crores of rupees. Allegations state that

Chief Minister of Madhya Pradesh Shivraj Singh Chouhan, his wife Sadhna Singh, Union Minister Uma Bharti and Governor of

Madhya Pradesh Ram Naresh Yadav are all involved in the scam. Recent death of a journalist reporting on this scam Akshay

Singh and also the death of the dean of a medical college, has drawn so much attention to this issue. The opposition party is

constantly demanding an exposure of all involved and arrange for their punishment accordingly.

SIDDHARTH KUNDU

I MBA (FM)

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Gold Monetisation Scheme- An Impact on Indian Economy

Gold reserves of India have been influenced by various social, economic and cultural factors. The gold imports by India in the

financial year 2012 were US Dollar 56.5 billion and in the financial year 2013 were US Dollar 53.8 billion respectively which resulted

in current account deficit of 4.2 per cent and 4.8 per cent of Gross Domestic Product in these two years. In order to cut down

the gold import and reduce the current account deficit in the Indian economy, Mr. Arun Jaitley, Finance Minister of India

announced Gold Monetization scheme in the Union budget of 2015.

Under this scheme households, temples, trust and other institutions which hold large stocks of gold in India, can privately deposit

gold in the banks and earn interest on it. Bank can also deposit these Gold deposits with Reserve Bank of India or lend these gold

deposits to jewelers or to the institutions which are in need and earn margin on it. This scheme will bring Indian private holding of

Gold into circulation in the market. The country will be able to manage and get a control with its increasing Gold imports due to

the domestic recycling of gold will be adopted. The Gold owner will get return in the form of interest around 1per cent with a

minimum 30 grams of gold deposit with banks and bank will provide storage space for their gold reserves.

The Jewelry sector will boost as they have option to lend gold in form of raw materials from banks. There are also many

challenges which need to be work out which involves a vast setup of Infrastructure for facilitating easy, secure handling and

transparency for successful implementation of the scheme. This scheme will be launched only in few cities at the initial stage as

the infrastructure for refining of gold develops, the scheme will also be extended to other cities of India in a couple of years.

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Looking at the current situation there is an urgent need to imply this scheme in place or else the deficit position will go out of

hands and can be impossible to be controlled by the government. Government should take quick steps in order to establish

infrastructural facilities all over India for successful implementation of Gold Monetization Scheme. Advertising and promotional

campaigns should be launch by the government and banks in order to increase the awareness on Gold Monetization Scheme

among the individuals of the country. Government should pay lucrative interest rate on Gold deposits in order to make the

scheme successful. If this scheme turns out to be a success, India can be self-reliant on its gold reserves and may also be able to

export the reserves to other countries.

ASHWIN MANI PHILLIP

I MBA (FM)

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Japan’s Nikkei Going Global with Financial Times Takeover

Nikkei, The Japanese Media Group had consented to purchase the Financial Times on 23rd July 2015 from Britain’s Pearson in a

$1.3 billion arrangement that unites two budgetary news associations from two distinct mainland i.e., Europe and Asia. The news

that went ahead was that the 171 years old Pearson had a choice to offer the pink-paged business every day following the

theory that it could be sold, as Pearson ventured into instruction.

The released report made heaps of theories, with two daily papers including the Financial Times reporting that German’s Axel

Springer will be the purchaser, which was denied by Springer. In a joint proclamation, Pearson had consented to offer the

Financial Times gathering to Nikkei for $1.3 billion in real money. Its offer was up by 2.3 per cent. The Financial Times is referred by

shoppers as a salmon hued daily paper with an overwhelming accentuation on business, governmental issues and worldwide

news. While it’s ostensibly Pearson’s best known brand.

The Financial Times, as different papers have attempted to keep up print flow and publicizing deals even as the distribution

remains profoundly regarded among lenders and business news fans. The solid advanced dissemination development counter

balance proceeded with auxiliary decreases in print substance and promoting. In any case, Pearson, whose all-inclusive income

a year ago fell 4 per cent to $7.6 billion, is hoping to shore up different organizations that are far bigger. Its course reading

business keeps on being compelled by school’s relocation to eBooks and other online sources. Furthermore, its online school

reporting and information administration organizations confront rivalry from built up contenders and news businesses.

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The gossipy tidbits about Pearson’s enthusiasm for leaving the daily paper business have circled for quite a long time with

previous New York City Mayor Michael Bloomberg already said it was a conceivable purchaser. Pearson’s most recent endeavor

to empty the paper was initially reported by Bloomberg news, which said a few purchasers were intrigued, including German

distributer Axel Springer SE. The report likewise said an arrangement for Financial Times group could bring about $1.6 billion.

DEEPAK ARORA

I MBA (FM)

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Investments with Prospective Profits

This article suggest three companies in which one can invest and earn good profit from capital market or by investing in share

market. Share market is a place full of uncertainty, so one is expected to do research before investing in these companies to

avoid risks of loss as much as possible. The companies we discuss here are not big players like Reliance, L&T, Infosys etc. but they

certainly are doing well in their respective field of business and have sound fundamentals. These companies are namely: CCL

Products (India) LTD, Cosmo Film and Camlin Fine Sciences.

CCL Products (India) Limited was founded in the year 1994 with the vision of creating only the finest and the richest instant

coffee in the world. Today, this vision has steadily steered it into an Export Oriented Unit (EOU) with the right to import green

coffee from any part of the world and export processed coffee across the globe. CCL Product is listed on both stock exchanges:

National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The share price of CCL Product was around Rs. 70 in July

2014, since then the share price has gone up as much as to Rs. 247 on 23rd July 2015. Its share closed at Rs. 238 on 23rd July 2015

with increase of 11% on a single day. According to my estimate and analysis which includes both technical and fundamental

analysis, the CCL product share prices have the potential to cross Rs. 300 in next 3 to 6 months. An increase of 26% from current

share price of Rs. 238, I would suggest a stop loss of Rs. 200.

Coming to the second company, Cosmo Film is behind the packaging of many household brands across the globe. Its

innovative packaging problems solutions enable to transform our customers’ products into brands in the cost competitive

market. It has helped Cosmo to become a reliable name in the flexible packaging industry. The current price of Cosmo Films

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share is 138.85 on NSE (on 26th July 2015). Its share price was around Rs. 74 at the starting of April 2015, an increase of 87.6% just

over the period of 4 months. In my view the share has the potential to go up to Rs. 250 in next 1 year or so means an increase of

around 80% from current share price of Rs. 138.85. It’s a nice investment for medium term.

Third and final company under my research outcome is Camlin Fine Sciences: Camlin Fine Sciences is one of the India's leading

manufacturers and exporters of Bulk Drugs, Fine Chemicals and Food Grade products. It is the largest food antioxidant and

ingredient manufacturer in the world. The share price of Camlin Fine Sciences was around Rs. 70 in January 2015 and now the

share price is Rs. 109 on 23rd July 2015, an increase of 55.7% over the period of 6 to 7 months. As it is in a pharmaceutical sector, it

is a safe company to invest in with relatively low risk. Its share price has the potential to touch Rs. 170 in next one year or so means

an upward potential of 57%.

These three companies are in completely different sectors, investing in which helps one to develop a diversified portfolio and

spread the risk and according to my analysis, these three companies have a huge potential to give you good returns in near

future.

ABHISHEK SINGH

I MBA (FM)

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Ever Fluctuating Gold Prices in India

Globally, gold was trading lower at US $ 1,086.18 an ounce in Singapore, the lowest since March 2010. Prices sank 2.5% viz. the

least since March. The price of gold plunged due to panicked investors and speculators who went on a selling spree. The price

of Standard gold (99.5 purity) dropped by Rs. 520 from Rs. 25770 to Rs. 25250 per 10 grams. Pure gold price also sank by Rs. 520

from 25920 to 25400 per 10 grams. Tough measures were taken by the government and the RBI to restrict gold import due to

slowing investment demand. Increasing investment in the equities has declined the demand for gold. In 2014, India was the top

consumer for gold and the second biggest after China in the first quarter of this year. Higher domestic inventories in India are

influencing the price movements of gold.

Farmers play key role to India’s gold demand. Majority of the demand for gold in India comes from rural areas where jewelry is a

symbol and store of wealth for the people who do not have access to banks and banking system. The demand for gold is

sluggish because of the pertaining concerns about the weak monsoon which affects the crops turnout. Poor rains mean many

farmers from India's rural areas which make up nearly two thirds of domestic gold demand won't have the ready cash to buy

gold.

According to reports, in Shanghai spot market, some 33 tons of gold were sold as investors focused on other avenues. China

dumped a large amount of gold on the market resulting in the fall in price of gold. Reports of China’s gold reserve being less

than the expected level puts extra pressure on selling the gold. China's demand for gold has declined after it imported record

volumes in 2013. Fast-rising stock prices, a slowing economy and Beijing's anti-corruption drive, has restricted buyers from making

luxury buys of jewelry and have diverted all money away from bullion. China has a 57 percent increase in its gold reserves from

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2009 which is far less than what the market had estimated. A stronger dollar makes dollar priced commodities more expensive for

buyers using weaker currencies. This results in decline in demand and pulls down the price. In wider markets, the dollar hit a three

-month high against a basket of currencies, making dollar-priced gold more expensive for holders of other currencies. The recent

decline in the prices of Indian gold is positively related to recent strengthening of the US dollar. As the Federal Reserve is planning

to raise the interest rates in US the investors will be attracted to the dollar for higher returns leading to increase in the value of

dollar. Bullion prices have come under pressure from expectations of higher interest rates in the United States, which boosts the

dollar and makes non-interest bearing assets such as gold less appealing. There is high uncertainty in international commodity

markets due to the historic nuclear agreement between Iran and the world powers. It is also affected by the after math of Greek

debt deal.

The gold demand of India accounts for more than a fifth of global demand remains sluggish. The gold price dropped to $1,088.05

an ounce, its lowest since March 2010; Indian jewelers tried to contact the clients in order to encourage them to buy gold and by

offering to reduce the making charges by half. While the price slide sparked some interest, there has been no repeat of the 2013

buying frenzy. This year's Hindu calendar has fewer auspicious dates for weddings, a traditional time for buying and giving gold.

The Reserve Bank of India’s inflation targeting efforts have helped bring price rises under control eliminating one major reason for

Indians to hold gold as a store of value. The rate of inflation has halved to 5.4 percent from double-digits at the end of 2013.India

spent a record $15.2 billion on gold imports in April-May 2013, with gold bars selling locally for more than $20 an ounce above the

global spot price. That premium is now just around $1 an ounce. Indian households own, directly or indirectly, around $1 trillion in

gold, about the same as in bank fixed deposits, and against just $400 billion in shares though low cost stockbrokers are looking to

use a 42 percent drop in gold prices over the past four years to lure investors into buying more shares. As a result of these reasons

there is decline in the price of gold as there is fall in the demand for gold.

ARJUN

I MBA (FM)

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India’s Position in BRICS

BRICS is the acronym given to the Big Four developing economies: Brazil, Russia, India, China (and the addition of South Africa).

These countries consists of 40 percent of the world population and are grouped together solely on their potential to create an

influential economic block. Currently, many of the BRIC nations are dipping economically; China has been sluggish with

increasing unemployment rate; Brazil has been involved in corruption scandals while Russia’s growth is constrained by sanctions.

However, India’s economy is in a perfect situation for growth and there are several reasons for the same. Under the

administration of Prime Minister Narendra Modi, the size of the cabinet was reduced to decrease inefficiencies and video

surveillance system is set up to track public employees at work. Moreover, the slow economic growth of China has made India

to emphasize on import substitution and focus on driving the growth by increasing domestic demand in the future. India is

‘capable of doing this as its dependence on external demand is low. In addition to this, the Rupee is now extremely competitive

in the region as it has been on a steady decline. Also, 45 percent of India’s imports are made up of global oil and gold, because

of the drop in prices for both these commodities; researchers at Capital Economics predict that it is possible for India to have a

current account surplus over the coming months. Finally, The New Development Bank (NDB) which was recently established by

BRICS will help getting infrastructure funding in the emerging economies. The National Development Bank is also targeting to end

extreme poverty by 2030 and to reduce inequalities. Overall, India has a promising economic future in relation to other BRICS

countries and may take the lead among them.

CHRISTOPHER BOBBY CHERIAN

I MBA (FM)

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Effects of dividend on Future Market Options

When a company makes a profit it may decide to reward its investors by giving them a share in the profits in the form of a

payment known as dividend. The impact of dividend on stock option, if companies pay dividend in form of cash could reduce

the price of a stock due to reduction in the company’s asset. It becomes intuitive to know that if stock prices decrease, cal l

options fluctuate in extrinsic value while its put options will gain in extrinsic value as it happen earlier. As we already know,

dividends decrease the extrinsic value of call options and inflate the extrinsic value of put options, weeks or even months before

an expected dividend payment.

Dividend payment in call option will lead to decrease in extrinsic value of call options not only because of an expected

reduction in the price of the stock, but also due to the fact that call options buyers do not get paid the dividends as compared

to those who purchase the stock and get such dividend. It makes the dividend paying call option stock less attractive and

decreases its extrinsic value. The value of an option can drop due to dividends; ‘in the money’ call options with high delta would

be expected to drop the most on ex-date while ‘out of the money’ call options with lower delta would be least affected. This is

also why many options traders exercise their interest with ‘in the money’ call options with close to zero extrinsic value just before

the dividend pay-out date.

Exercising the call options for the dividends will help to preserve the value of the position as the dividends received offsets the

drop in price of the stock . The impact of dividend on put option based on such analysis that the stock market never gives away

return in free. If there is an expectation for stock prices to decreases to a certain amount, the drop in advance would price into

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the extrinsic value of its put options before it could happen. The impact may be the result of the constant function of options

moneyless during this period, put options in the value of money raise in extrinsic value more than as expected ‘out of the money’

put options. This was the reason ‘in the money’ put options with delta of close to – 1 would gain almost on the drop of a stock. As

such, ‘in the money’ put options would rise in extrinsic value almost as much as the dividend rate itself while ‘out of the money’

put options may not experience any changes since the dividend effect may not be strong enough to bring the stock down to

take those ‘out of the money’ put options ‘in the money’. Another justification for the higher extrinsic value of put options on

dividend stocks is due to the fact, that if you are short and wanted to payback the expected dividend declared while no such

payback is needed, then it will be put option if you own. Results come where holding of put option is considered more desirable

than shorting the stock itself.

ARUN VAIDYANATH K

I MBA (FM)

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EDITORIAL TEAM

CHIEF EDITOR

Dr JAIN MATHEW

HEAD OF DEPARTMENT

MANAGEMENT STUDIES

ACADEMIC CO-ORDINATOR

PROF SURESHA B

FACULTY CO-ORDINATOR

Dr SUNITA PANICKER

EDITORS ANKITA BHATTACHARYA

ANUPAMA SAPRU

ERICA NIKHITA D’SOUZA

ANJALI SINGH

SHREYA KARWA

VIPUL JAIN

RADHIKA MEHTA

CREATIVE TEAM UMME SALMA

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CHRIST UNIVERSITY

HOSUR ROAD, BANGALORE– 560029

KARNATAKA, INDIA

TEL: +91 80 4012 9100 FAX: +9180 4012 9000

finometrics@mfm.christuniversity.in

Website: www.christuniversity.in

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