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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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