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Institute Of Management Technology Ghaziabad Inside this issue: Company in Focus:

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Olam International

FinXpress

StartUp in focus: DECEMBER 11, 2011

SUPPLYING INTERNATIONALLY

IN FOCUS

3

Wave Markets this Week

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News of the Week

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CAN YOU SOLVE IT?

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Sources of Data:

 HDFCsecurities  Economic Times  The Hindu  Rediff Money  MoneyControl.com  Financial Express  Indiapetro


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FinXpress

Company in Focus : Olam International Who are they? Olam International Limited is a leading global integrated supply chain manager and processor of agricultural products and food ingredients, sourcing 20 products with a direct presence in 65 countries and supplying them to over 11,000 customers. With direct sourcing and processing in most major producing countries for various products, Olam has built a global leadership position in many businesses, including cocoa, coffee, cashew, sesame, rice, cotton and wood products. Headquartered in Singapore and listed on the SGX-ST in 2005, Olam currently ranks among the top 40 largest listed companies in Singapore in terms of market capitalization and is a component stock in the Straits Times Index (STI), MSCI Singapore Free, S&P Agribusiness Index and the DAXglobal Agribusiness Index. What do they do? Though an estimated one-third of world's raw cashew nuts are being produced in Africa, 80% of this is being exported to India or Vietnam for raw processing. Olam too was initially exporting cashew from Nigeria to India. From Nigeria, it went into other key producing countries in West Africa like Cote d'Ivoire, Burkina Faso, Mali, Guinea Bissau and East Africa, including Tanzania, Mozambique, Kenya and Madagascar, and finally expanded into Vietnam and Indonesia. It then expanded down the processing value chain by processing raw cashew nuts that it sourced from these origins into blanched kernels, first in India, then Vietnam and then Brazil. It is now scaling the cashew processing in the raw nut origins and have built a scalable model for this in Tanzania, Mozambique, Cote d’Ivoire and Nigeria. For instance, in Tanzania, with the help of the Government and funded by USAID, Olam along with Technoserve, is participating in activities to improve productivity of small farmers and increase yields and incomes in rural areas. CSR OLAM international’s Corporate Social Responsibility is commendable. They are guided by the following principles in implementing their sustainability objectives: 1. Improving the livelihoods of farmers and communities in which they operate through initiatives that enhance productivity and returns 2. Forming alliances with developmental partners who bring skills and knowledge in areas relevant to their business 3. Ensuring a safe, healthy and productive workplace for their people and those who work in their operations 4. Participating in professional associations at international and national levels to further develop their key CRS goals Assessing the impact of their programmes on the community, the workplace and the environment FACTS · Global leader in 8 out of the 14 product platforms in its portfolio. · World’s largest supplier of cashew, robusta coffee and sesame. · Amongst the top 3 suppliers in cocoa, rice and cotton. · Amongst the top 5 suppliers in peanuts, cotton and tropical hardwoods.


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FinXpress

StartUp in Focus : Waze Waze is a 100% free turn-by-turn GPS navigation application that provides real-time traffic updates, plus all kinds of cool social and geo-gaming elements that actually make commuting fun. Wazers can actively update one another on traffic, police traps, construction, speedcams and more - and because it's user-generated, the more people who use it, the better (and more addicting) it gets! Vision At waze, their vision is to work in cooperation with drivers worldwide to create the world's first live driving map, providing users with the real-time road intelligence they need for better everyday driving. The Product Waze is a social mobile application that enables drivers to build and use real-time road intelligence. The service includes constantly-updated road maps, alerts on traffic and accidents, and data providing users with the fastest route to get to wherever they need to go. Map and traffic updates are automatically collected and generated as users drive with waze activated, but drivers can also actively report and update other users with what's happening on the road including accident alerts, police traps, weather hazards, cheap gas offers and more. And the best part? Because the map and all of its content is driver-generated, waze is completely free for users. At waze, they encourage developers to build additional applications for drivers using their live maps. They provide access to the map and the map data itself as well as their real time API. History The idea for waze originated years ago, when Ehud Shabtai, a software engineer with a degree in Philosophy and Computer Science from Tel Aviv University, was given a PDA with an external GPS device pre-installed with navigation software. Ehud's initial excitement quickly gave way to disappointment - the product didn't reflect the dynamic changes that characterize real conditions on the road. An experienced open-source developer with deep experience of Web 2.0 applications, Ehud took matters into his own hands and started to build the first dynamic traffic platform which combined GPS, open-source software and a community of drivers. His goal? To accurately reflect the road system, state of traffic and all the information relevant to drivers at any given moment. The way it works By simply driving around with the waze client installed on their smart phones, users share real-time information that translates into traffic conditions and road structure. Drivers using waze can also actively report to the community on traffic, accidents, police traps, blocked roads and more. This information is collected and immediately analyzed to provide waze drivers with the most optimal route to their destination, 24 hours a day. Some of the waze community members with a passion for maps also take an active role in editing and updating the waze map, itself. Most of the editing work is done on the waze Web site, but some parts, such as the naming of streets, can be done through the application directly. Gaming and Social Elements In terms of the gaming bits, keep your eyes open for treasure chests and other 'road goodies' on the streets you travel for the change to earn extra points or to win cool real-world prizes. You can also complete a few actions, found on the 'me' tab of the waze scoreboard, to unlock bonus point candies that have the potential to take you to the next rank level - and even all the way up to waze royalty! The social side of waze has a lot going on, too. You can create or join all kinds of local driving groups to benefit from the wisdom of the crowd and you can also enjoy some of our groovy integrations with Foursquare, Twitter and Facebook. 'Check in' to locations on Foursquare to earn waze's 'Road Warrior' badge, use Twitter to tweet your activities on waze to your followers and connect to Facebook to see all of your waze-using Facebook friends around you on the map - it's all a whole lot of fun!


FinXpress

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Markets this week After rising smartly last week, the week gone by saw the Sensex/Nifty attempting to move higher. They however found resistance at the 17004/5099 levels and slid lower. The selling pressure intensified in the last two sessions of the week as the bears got the upper hand. W-o-W, while the Sensex lost 3.83%, the Nifty lost 3.63% over the same period. Market breadth was negative in two out of the four trading sessions of the week. CURRENCIES The rupee declined 1.9 percent this week to 52.2012 per dollar. The euro fell 0.1 percent to $1.3386 from $1.3391 on Dec. 2, after touching a one-week low of $1.3282 yesterday. The shared currency declined 0.5 percent to 103.89 yen and the Japanese currency gained 0.4 percent to 77.65 per dollar. KEY HIGHLIGHTS India’s commerce ministry said it overstated merchandise exports by $9 billion in the eight months through November because of “misclassification and errors” in computing overseas sales. European Union leaders dropped their demand that investors share the cost of bailouts as Germany abandoned a campaign that helped deepen the two-year-old financial crisis. Bank Indonesia Governor Darmin Nasution told the nation’s commercial lenders to lower borrowing costs as Southeast Asia’s biggest economy looks to domestic consumption to drive growth amid a global slowdown. Banks worldwide earned $13 Billion by taking advantage of below-market rates on emergency U.S. Federal Reserve Loans from August 2007 through April 2010. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Gold traders are more bullish as investors buy metal at the fastest pace in a year to protect their wealth from Europe's escalating debt crisis. State Bank of India , the country's biggest lender, expects a capital infusion of 30-40 billion rupees this month or at the latest by the end of the fiscal year, chairman Pratip Choudhuri said. National Agricultural Bank for Rural Development (Nabard) has sanctioned ` 615.33 crore to Government of Maharashtra, out of its Rural Infrastructure Development Fund (RIDF) for development of roads and bridges, minor irrigation, kharland projects and construction of anganwadi centres projects in the state.

OUTLOOK OF THE WEEK With the Indian markets drifting down this week, the upmove seen last week seems to have been negated. Traders will now need to watch if the Nifty can hold above the supports of 4755. Else, a further sell-off can be seen.


FinXpress

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News of the Week RBI notifies new FDI norms for pharma sector

The Reserve Bank notified on Friday of new rules doing away with automatic approval for foreign direct investment (FDI) in existing pharmaceutical companies. Tightening the norms, the government had last month done away with automatic approval of FDI in the existing pharmaceutical companies. Under the new rules, for any merger or acquisition, the overseas investor will have to seek permission from the Foreign Investment Promotion Board (FIPB). After six months, it will be the monopoly watchdog Competition Commission of India (CCI) which will vet such deals. The decision follows directions from Prime Minister Manmohan Singh, who along with his senior Cabinet colleagues had deliberated on October 10 over concerns arising out of several acquisitions of domestic pharmaceutical companies by overseas firms. For the new investment, 100 per cent FDI will be allowed under the automatic route, under which investors only inform the Reserve Bank about the inflows and no specific government nod is required.

Risks rise for India as global economy totters Risks for the Indian economy have intensified in recent weeks and any drastic change in ratings by global rating agencies in

coming months could pile pressure and add to the gloom that has gripped Asia's third -largest economy. Ratings agency Standard & (S&P) says risks associated with weaker-thanexpected global growth, sovereign debt concerns in Europe and potential tightening in funding conditions weigh on Asia-Pacific's sovereign credit trends. The Indian economy faces the added risk of heightened policy paralysis, which economists say has the potential to hurt growth as investors stay on the sidelines. "The three risks would be inflation, low or negative growth in the agricultural sector and potential policy paralysis if further issues arise which could stop the proceedings in the Parliament, as has been the case until quite recently this year," said Takahira Ogawa, S&P's director of sovereign and international public finance ratings. According to Ogawa, the fiscal deficit - a measure of the extent to which the government has to borrow - could widen to 5.7% of gross domestic product this year if crude prices remain high. S&P has a BBB- (stable) rating on India, which implies investment grade.

Home loan EMIs to rise by ` 6k cr

Increase in equated monthly installments (EMIs) due to rising interest rates and reset of teaser loans will put additional annual burden of about ` 6,000 crore on home loan borrowers.

According to a report by Crisil, higher EMIs and slowdown in economic growth would also increase bad loans for lenders. In view of the persistently high inflation, RBI has hiked key policy rates 12 times in the past 18 months, leading to higher interest burden for home loan borrowers. The reference floating rate for the industry has increased by 200-250 bps during this period, which translates into an average increase of 15% in EMIs. Although banks and housing finance companies have reset their benchmark rates, the increase has not yet affected customers who have opted for teaser loan schemes, which were launched in early 2009 to stimulate dwindling home demand. According to the Crisil report, a large number of borrowers who are on teaser loans will get hit with a sudden jump in rates when the teaser rates reset to market rates. This shift is expected to take place from April 2012.

Air India, Kingfisher Airlines accounts frozen by service tax dept The service tax department has frozen the bank accounts of Air India and Kingfisher Airlines for non-payment of dues. This shows the extent of cash crunch the aviation industry is facing, making defaults in payment almost routine. While the state-run carrier has dues of ` 170 crore, the Vijay Mallya-promoted airline has to pay ` 100 crore as service tax liability. According to, Air India


FinXpress

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News of the Week continued... chairman and managing director Rohit Nandan, Air India has paid ` 85 crore on Thursday and expects its account to be de-frozen. A company cannot operate any of its bank accounts or write a cheque if its accounts are frozen until recoveries are made. Tax experts say a freeze on bank accounts is a standard procedure when statutory dues are not paid by assesees despite notices being served to them. The service tax department has frozen the bank accounts of Air India and Kingfisher Airlines for non-payment of dues. This shows the extent of cash crunch the aviation industry is facing, making defaults in payment almost routine.

SKS Microfinance plans to prune micro-lending exposure

SKS Microfinance, India's only listed microfinance lender, has announced a derisking strategy wherein it plans to significantly prune down exposure, over the years, to the microfinance sector that has plunged into crisis over the past year or so. The micro lender has decided to reduce its exposure to microfinance in terms of assets, revenues and profits, said chief executive officer MR Rao and CFO Dilli Raj at a media conference in Hyderabad on Wednesday. The company will launch a wholly-owned subsidiary for its non-microfinance business. It expects this business, which would largely focus on meeting

the needs of existing microfinance borrowers, to help derisk operations from microfinance. By March 2013, it expects to bring down its exposure to microfinance in terms of assets to 90% from nearly 100% now. In terms of revenue, the exposure would come down to 80% and in profit terms, it would come down further to around 70%.

Kinetic Motor to merge with KEL Kinetic Engineering (KEL) board has approved the merger of Kinetic Motor (KMCL) with self in the swap ratio of 31 shares of KMCL for every four of KEL. The merged entity will now hold Kinetic Motor's 17% stake in Mahindra Two Wheelers. The board has also approved the appointment of Sulajja Firodia Motwani, a director of the company, as vice chairperson of the merged entity. Kinetic Engineering, which used to make mopeds and motorcycles, had moved its automotive original equipment manufacturing business to Kinetic Motor to become an automotive systems and powertrain components supplier. In quarter ended September 30, Kinetic Engineering's losses jumped more than threefold from a year ago to ` 7 crore. Its net sales fell to ` 21.27 crore from ` 24.54 crore a year earlier. In fiscal 2010 -11, KEL had reported net sales of ` 90.03 crore and net loss of ` 10.93 crore. Kinetic Engineering has lowered its total debt to ` 23 crore from ` 105 crore a year ago through a sale of non-core assets such as land and from profits earned through stake sale in KMCL to Mahindra group.

Europe moves ahead with fiscal union, UK isolated

Europe divided on Friday in a historic rift over building a fiscal union to preserve the euro, with a large majority of countries led by Germany and France agreeing to move ahead with a separate treaty, leaving Britain isolated. Twenty-three of the 27 leaders agreed to pursue tighter integration with stricter budget rules for the single currency area, but Britain said it could not accept proposed amendments to the EU treaty after failing to secure concessions for itself. After 10 hours of talks, all 17 members of the euro zone and six countries that aspire to join resolved to negotiate a new agreement alongside the EU treaty with a tougher deficit and debt regime to insulate the euro zone against the debt crisis. European Central Bank President Mario Draghi called the decision a step forward for the stricter budget rules he has said are necessary if the 17-nation euro zone is to emerge stronger from two years of market turmoil. German Chancellor Angela Merkel said she was very satisfied with the decisions. The world would see that Europe had learned from its mistakes and avoided "lousy compromise", she said.


Solve it Now!

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CAN YOU SOLVE IT ?

Set A Who’s the boss here!!!! Apple Inc.

Daniel Akerson

Ericsson

Stephen Elop

General Motors

Tim Cook

Nokia

Bill McDermott

SAP AG

Hans Vestberg

Set B Identify the Identity.. 1)

2)

3)

4

LAST WEEK’S ANSWERS SET A 1.ABC paper Ans. Asset-backed commercial paper. 2. Asset-Liability management Ans. Techniques for protecting a firm's solvency in the context of accrual accounting. 3. Asset-based lending Ans. Collateralized lending. 4. Arbitrage Ans. A transaction that generates a risk-free profit 5. Basis risk Ans. Risk from exposure to uncertain spreads 6. Asset-liability risk Ans. Risk to a firm whose assets and liabilities do not offset one another 7. Debenture Ans. An unsecured corporate bond SET B 1) Abbott 2) World Bank 3) Rothschild 4) Macquaire 5) Edelweiss

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finxpress_11dec2011