ISSUE - 133
23rd NOVEMBER [WEDNESDAY]
- SWATI VERMA
The IBS Times comes again this week to enrich you with the happenings across the globe. We try to touch on issues affecting people globally; bringing in our own perspectives to make you think in an alternative context. Gear up for yet another scintillating read. The „King of Good Times‟ seems to be entering into a really dark tunnel ,with all the resources to finance his very ambitious Kingfisher Airlines running out. The financial heads of the company are rattling their brains to procure funds so that one of India‟s most popular airline does not become a distant memory. Kingfisher thus, forms the basis of the Cover Story this week. Luxury and elegance personified– Prada is the theme we focus on this week. How this brand, which started with light weight status luggage, turned out to be a major fashion brand and the various stages it went through to become what it is now. Much has been talked about Global Warming and it‟s adverse effect on the human civilization. But the need for more awareness is mandatory, as most of us are not even close to realizing the detrimental impact it could have on us if its implications are continued to be ignored. The Kyoto Protocol and The Carbon Credit Dealings which are being abused across the world is something overseen by many. We try to bring in our perspective on the same through the Focus this week. Moreover we have our regular sections of Fast Track, Quick Bites, Market Watch and a special dose of News @ IBS to give all of you a glimpse of the happenings last week on campus! Happy Reading! Cheers, Swati Verma
1 OPINION 2 BRAND
5 FOCUS 6 NEWS @ IBS
3 QUICK BITES
THE IBS TIMES
COVER STORY– THE KING IN CRISIS…
- DEVANSHI PODDAR
Kingfisher airlines, the no. 3 aviation company, is facing a huge financial crisis and is incurring twice the loss it has been incurring till now. The company‟s share prices have gone down by 64% in 2011. Rising crude prices, depreciating rupee, cut throat competition and fierce price wars between a handful of companies are the main reasons stated for the crisis. Kingfisher has been canceling almost 50 flights daily since the starting of the month. Mr. Vijay Mallaya says that the reason for cancellation of the flights is that there are technical improvements to be done in the fights. Moreover there are also few seats to be added to domestic flights.
Looking at the current condition of Kingfisher airlines, one question that is there in the minds of its loyal customers as well as public at large is that; will Kingfisher survive this crisis?
If this is the actual cause then there should not be any reason for more than 130 pilots to be on sick leave simultaneously for over one and a half month and moreover there is a delay in the salary payment of almost all the employees working at any position and a prospective date has been given when these dues would be cleared. Seeing the scenario we can say that Kingfisher is going through a bad financial phase. Also HPCL, IOC and BPCL, the three oil companies, have refused to lift jet fuel on credit basis and have asked for payments on daily basis. This shows that the oil companies have somewhere lost their faith in the company. The cash strapped carrier has also not paid dues to the operators and other agencies. Kingfisher has reported a loss of 468.66 crore for the second quarter of the fiscal owing to higher fuel costs and low yields and to look at it in a broader perspective, it incurred a loss of 1027 crore in 2010-11 and has a mounting debt of 7057.08 crore. Together 13 banks hold 23.4% stake in Kingfisher and has an exposure of over 7700 crore. Increased fuel prices (by 30%) since December 2010, which made the fuel cost almost 50% of the total operating costs of the Kingfisher airline.
Battling the crisis, Vijay Mallaya, has not called for capital restructuring but has sought help from the banks to raise short term funds to the tune of Rs. 700-800 crore as working capital and interest concession and ruled out its closure. The company has filed a Rs. 2000 crore right issue Indian aviation ministry with market regulator SEBI to raise capital. has announced that the government will not help in bailing out the private Mr. Mallaya has also applied to Directorate General of Foreign Trade for direct import of jet fuel firms and that they will to reduce costs drastically. Though India‟s civil aviation ministry has proposed a 24% cap on have to work their way Foreign Direct Investment by international airlines in domestic carriers but the final decision has out of the crisis. been left to the cabinet. Indian aviation ministry has announced that the government will not help in bailing out the private firms and that they will have to work their way out of the crisis. In the opinion of some company heads, this step of government is very well justified as the private firms work according to their terms and conditions when they are into profits and even if not in profits in an operating condition, then they should also take out solution in condition of crisis and not asks help from the government.
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THE IBS TIMES - KRITIKA SETHI
Advani’s yatra as a lip- service and an attempt to stay afloat in BJP-Congress Dismissing LK Advani's criticism of UPA government on corruption, Congress dubbed his yatra as a mere „lip service‟ and an attempt by him to remain „afloat‟ in his party. Congress spokesperson Abhishek Singhvi said that merely taking out so-called anti-corruption yatra is nothing but lip service; this is nothing but grand preaching without a millimetre of practice. Accusing the government of lacking political will to fight graft, Advani said the only route to end corruption is through public awakening or a change of government.
Gujarat CM Narendra Modi in Poll gear Narendra Modi is stepping on the election pedal these days. He distributed 6,598 prizes worth Rs.121.35 crore to various gram panchayats as part of the state's golden jubilee celebrations. Modi also ensured that the sarpanchs of all the 18,000 villages carried home a set of 31 pocketsize booklets, which list the achievements of various departments of his government.
Karnataka CM D. V. Sadananda Gowda loses cool The soft-spoken Karnataka Chief Minister, D. V. Sadananda Gowda, rarely loses his patience. But the delay by Governor H. R. Bhardwaj in approving the government's proposal to appoint Justice S. R. Bannurmath as the next Lokayukta has angered him. An upset Gowda issued an ultimatum to the governor to take a quick call on the government's proposal.
ASSOCHAM said that Prime Minister and Judiciary should be kept out of Lokpal ambit The Prime Minister and the higher judiciary should be kept out of the ambit of the Lokpal, according to leading business chambers body ASSOCHAM which will launch a media campaign on the issue. With the Lokpal bill a priority agenda of the government in the winter session of Parliament, the industry body has suggested that Prime Minister be kept outside the purview of the Lokpal.
More models with CNG to come out soon-Maruti Suzuki The country's largest carmaker Maruti Suzuki India is planning to add more models with environment-friendly CNG option to its existing fleet of five such cars. The company currently offers five models in CNG options - compact cars Alto, WagonR and Estilo, multi-purpose van Eeco, and sedan SX4. Bhargava said the auto industry requires backing from the government to make vehicles with eco-friendly alternate fuel options a success.
Montek Singh Ahluwalia admits their error while projecting inflation Planning Commission Deputy Chairman Montek Singh Ahluwalia conceded that they went wrong while projecting moderation in inflation which remains near the double-digit mark. Karan Thapar said that it is true they were hoping that this moderation in inflation will happen earlier and that becomes a question in an interview when government's repeated projections on inflation proved false.
Kingfisher to restore operations in 3 to 4 months Cash-strapped Kingfisher Airlines has drastically reduced its services for the past one week. They would normalize the entire flight schedule in the next three to four month. Top Kingfisher officials, including CEO Sanjay Aggarwal, met Director General of Civil Aviation (DGCA) E K Bharat Bhushan to brief the regulator about the flight curtailment plans of the major domestic carrier.
Choppy Market- A stock market condition whereby prices swing up and down considerably but with no resulting overall price movement in either direction.
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THE IBS TIMES CBI raids Airtel and Vodafone offices regarding 2G spectrum case The CBI carried out searches at the Vodafone office in Mumbai and Airtel office in Gurgaon after registering a case against ex-telecom secretary Shyam Lal and the two telecom service providers for alleged irregularities in spectrum allocation during tenure of Pramod Mahajan as telecom minister in the NDA government. Besides Ghosh, the case was registered against former director of Bharat Sanchar Nigam Limited, J.R. Gupta.
Singapore honors India's first Prime Minister Nehru as friend Sixty-one years after Jawaharlal Nehru last visited this city-state, Singapore commemorated for posterity India's first Prime Minister as a „friend to our shores‟ and a „visionary‟. With Prime Minister Manmohan Singh unveiling a bronze bust of Nehru at the Asian Civilization Museum green on the picturesque banks of the Singapore River along with Emeritus Senior Minister Goh Chok Tong, it was further affirmation of a historic connect that also includes Netaji Subhas Chandra Bose who spent some years there.
PM seeks trade pact with ASEAN Prime Minister Manmohan Singh said that India is seeking a comprehensive economic cooperation agreement (CECA) with ASEAN. He sought early conclusion to the commercially meaningful Services and Investment Agreement in order to create a positive atmosphere for the implementation of the CECA as envisaged in the Framework Agreement of 2003.
Sensex extends losses for 7th day A benchmark index for Indian equities markets managed to pull back from the day's lows to end 90 points lower in its seventh straight negative closing. The 30-scrip sensitive index (Sensex) of the BSE, which opened lower at 16,387.7 points, closed at 16,371.51, down 90 points. The 50-scrip S&P CNX Nifty of the National Stock Exchange also ended in the red, 20.3 points or 0.41 percent lower at 4,914.45 points.
ICC, BCCI refute Vinod Kambli's match-fixing claim Former India batsman Vinod Kambli seemed to be fighting a lone battle as the International Cricket Council (ICC) and the Indian Board rubbished his claim that the 1996 India-Sri Lanka World Cup semi final could have been fixed. ICC president Sharad Pawar termed Kambli's allegations as an „irresponsible statement‟ whiles the Board of Control for Cricket in India (BCCI) felt they were not worth taking note of.
TN v/s Delhi: Milind Kumar and Yogesh Nagar revive Delhi hopes After conceding a sizeable lead instead of taking one, Delhi were battling hard to save their skins in their Ranji Trophy Super League match against Tamil Nadu in New Delhi at the Ferozeshah Kotla. But by the end of the penultimate day's play, the hosts fought their way back in the match after reaching 233 for five, a lead of 139 runs.
Barefoot Pilgrim- Being labelled a barefoot pilgrim is far from enviable. It is usually the result of taking on more risk than necessary or entering investments carelessly, without doing the proper research.
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THE IBS TIMES
OPINION FORUM– PUZZLE OVER DOWNGRADING OF INDIAN BANKING SECTOR!
-AVLEEN KAUR SARNA
It seemed as if India was absorbing the blowback from Europe when the global rating firm, Moody‟s downgraded the outlook on India‟s Rs.64 trillion banking sector to „negative‟ from „stable‟ amid an economic slowdown in domestic as well as international markets. But the bankers as well as the government uniformly dubbed this action to be „unwarranted‟ and „uncalled for‟ as they believed that the Indian banking sector was adequately capitalized and strongly regulated in comparison to their global counterparts. Arguing its case for the outlook downgrade, Moody said that the slowing growth was affecting the asset quality, capitalization and profitability of the Indian banks and a negative outlook clearly indicates volatility and uncertain conditions in this segment. Furthermore, monetary tightening and a slowdown in the economy is set to reduce the growth in
Moody’s cut the standalone rating of State Bank of India, the country’s largest bank citing concerns over capital and weakening loan quality
bank loans and the deregulation of interest rates on savings account will put pressure on the profitability. It was only a month ago, that Moody‟s cut the standalone rating of State Bank of India, the country‟s largest bank citing concerns over capital and weakening loan quality. Some of these concerns have again been cited to justify the downgrade of the entire Banking sector. Apart from that, on the positive side Moody‟s recognized Indian banks stable customer deposit base and high level of government securities holdings, which provide them with a resilient funding and liquidity profile that buffer them against destabilizing shocks. While on the other hand a day after Moody‟s downgraded the outlook, S&P upgraded its rating of the Indian banking sector stating that the banking regulations are in line with the international standards and the regulator (RBI) has a moderately successful track record. Appreciating the views of Standard & Poor‟s on the Indian banking sector, planning commission deputy chairman Montek Singh said that rating agency has corrected the negative signals given by its global rival Moody‟s. The bankers were even more critical if not sharper in criticizing Moody‟s downgrading of Indian banking sector stating that the downgrade is not justified at this point of time because it‟s premature. Also, brushing aside the downgrade the government said the rating had no significance as the domestic lenders are much stronger than their global peers. But as much of the overall sentiment regarding the condition of Indian banking is driven by the state of the largest commercial bank, State bank of India (SBI) the industry downgrade came as the market discounted the improved bottom line in the banks second quarter results. This is because provi-
Appreciating the views of
sioning has not kept pace with the rise in non-performing assets leading to a fall in the overall coverage. The rising
Standard & Poor’s on the
non-performing assets have been a worry for the Indian banking sector in the past one year, mainly from repeated
Indian banking sector, planning
chairman Montek Singh said that rating agency has corrected the negative signals given by its global rival
restructuring of loans given to companies in the real estate, aviation, microfinance and power businesses. Also in the wake of the global financial meltdown, the banks restructured at least 5% of their loans across sectors. At least 1015% of these restructured loans have turned out to be bad for most lenders depicting poor capital conditions. Interestingly, Moody‟s negative outlook on the banking system is in contrast with its own stable outlook assigned to the bank financial strength ratings of 14 of the 15 banks it rated. Overall the results of the macro stress tests using different scenarios, suggested that the banking sector would be able to withstand macroeconomic shocks though the prevailing interest rates and inflation is expected to have an adverse effect on the asset quality of the banks.
Options Backdating- The process of granting an option that is dated prior to the date that the company granted that option. In this way, the exercise price of the granted option can be set at a lower price than that of the company's stock at the granting date.
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THE IBS TIMES
BRAND TRACK–THE (RICH LUXURY SEEKING SHOPAHOLIC) DEVIL WEARS PRADA
“Luxury”- think vintage, expect classic, look for retro? Prada thinks otherwise. The „DNA‟ of the brand being modernity; to avoid nostalgia would only be natural. Miuccia Prada busted the myth about luxury (that it had to be “Classic” and “Known”) when she successfully introduced the light weight status luggage- black nylon holdalls. An overnight success, the trunks became the first range of accessories that survived the market for long, and introduced the designer to the world of fashion.Miuccia Prada, granddaughter of Mario Prada (founder of Prada), led the brand to success, when she decided to introduce new range of accessories and clothing. Then, a simple leather goods producing company, Prada went on to be one of the most exquisite and sought after labels of the glamour industry. Miuccia started to design for the brand herself in 1979, and took on “non-pretentiousness” as a hallmark.
During the 1980’s the brand’s prime agenda was expansion, careful but exquisite displays of its designer range in many upscale shopping districtsamong the elite fashion shoppers.
During the 1980‟s the brand‟s prime agenda was expansion, careful but exquisite displays of its designer range in many upscale shopping districts. Prada‟s strategy was successful and the label became well known among the elite fashion shoppers. But it backfired in 1990‟s, and Prada risked overexposure. Its products were easily available- found almost anywhere, besides they had lost their uniqueness. Thus a new range of working fashion was introduced, that would appeal to the newly emerged corporate elite. Also in the early 1990‟s Prada‟s collections were displayed more selectively, and this time, special museums of fashion (like the flagship Prada store in New York) were erected to give that overall “unique” shopping experience to its clientele. Along with a huge investment in real estate (at peak prices), Prada‟s acquisition spree led to its holding stakes in Jil Sander, Helmut Lang, Church's shoes, Azzedine Alaïa, Carshoe and the Genny Group, as well as a considerable chunk of Fendi. Clearly the label had lost its owner‟s attention due to many other obligations in terms of debt problem‟s of the recently acquired brands. To fend this, some of the acquired brands were sold, and in 1996, the company was listed. Also in 1992, Miu Miu-a sister brand of Prada, that was more affordable, was introduced and was taken to the Asian markets later where it enjoyed more success due to its chic and trendy appeal. Though Prada sounds to be a huge unwieldy giant that does not show much inclination to either move fast or keep pace with innovation, it‟s not the entirety of the fact. Prada, to be of an appeal to its younger
Also in 1992, Miu Miu -a sister brand of Prada, that was more affordable, was introduced and was taken to the Asian markets later where it enjoyed more success due to its chic and trendy appeal.
clientele, has launched various ranges of smart mobiles, digital watches and also joint ventured with De Rigo group, to manufacture eyewear. Prada also sources in some of the best artisan around the world to give that “out of the world” feeling to its product and a fresh approach that new designers bring in. It has also had an apparent success in “riding the recession” and coming out as „profitable‟, but its debt heavy structure and huge investments do not let its balance sheet budge. Profit or no profit, Prada has always hired the famous, the exclusive and the best (not to mention the costliest!). To design its stores, Rem Koolhaas (Pritzker Prize 2008 winner) was invited. As to the promotion of the brand, Drew Barrymore and Nicole Kidman are some big names that endorsed it. Every year, apart from a lot of happening fashion shows, Prada does a unique campaign. Year 2011 has seen “Real Fantasies”. And just to cool you off at a distant destination, Prada plans a 2012 Resort Campaign. Imagine what that would be like; really FRESH! So what‟s so maliciously attractive about that Devil who wears the Prada? Consider interviewing Anne Hathaway before going to Milan for the Resort Campaign next year!
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THE IBS TIMES
QUICK BITES- NEWS THAT CAN’T BE MISSED !
- ANKIT SHARMA
Big Shots… Nomura India's three top executives Nipun Goel, Indraneil Borkakoty and Shubham Majumder resign. GE India appoints Banmali Agrawala CEO of energy biz . Fortis Healthcare CFO Yogesh Sareen resigns . ING Vysya appoints Vijaydeep Khanna as its head for emerging corporates biz . Lowell Paddock apointed new GM India chief.
Company Talks… Vineet Rai has made microfinance advisory Intellecap into a Rs 30 crore venture. Krish Gopalakrishnan suggests six national agendas to ensure that India reaches its full potential of equitable economic growth. Brands such as Hastens, Audi, Porsche, AB Jewels, Marigold throng rural Gujarat to tap neo-rich Hindujas group to give 250,000 pounds for 500 children of widows in India . Tata Sons board may see new faces such as Muthuraman, Ravi Kant, Ramadorai & Prasad Menon soon . Patni's ex-CEO Jeya Kumar joins IT outsourcing solutions provider IPsoft. Reliance Industries poaches Anand Pillai from HCL Technologies . Bhartiya names Ajay Malhotra as new Group CFO. Kohinoor Foods Q2 profit jumps sharply to Rs 212 crore . Indian firms make highest contribution to Luxembourg Exchange. BSNL's H1 FY12 revenue for MP Circle grows 8.4% at Rs 402 crore. Kingfisher Airlines doubles loss on fuel costs to Rs 469 crore. Camson Biotech Q2 net rises to Rs 3.2 crore . Tech Mahindra Q2 net profit up 60%. Insecticides India's net profit up 27% in Sept Q.
Economy Speaks… Pranab Mukherjee urges spread of banking facilities in rural areas. Rangarajan says RBI should intervene in forex market when rupee becomes volatile . The finance ministry is working on a comprehensive social security insurance scheme for lakhs of workers in the unorganised sector.. EGoM meet to decide on sugar exports postponed . C Rangarajan for RBI intervention to check rupee fall. RBI to issue Rs 1,000 and Rs 10 notes with rupee symbol . India's foreign exchange reserves fell by $326 million to $314.34 billion for the week. Finance Minister Pranab Mukherjee sticks to target, fuelling talks of Plan B for selloffs . RBI Governor said RBI will not relax quantum of deposits banks have to park with central bank, dubbed the CRR, to ease current liquidity pressures. Some analysts and traders said Beijing's imports might pause before resuming next year as domestic prices have eased.
The Captains of the Ships… CEO of HCL technologies- Vineet Nayar Vice Chancellor of Indian Maritime University: Captain Mukesh Baveja Executive Chairman Infosys: K. Gopalakrishna
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THE IBS TIMES
FOCUS OF THE WEEK– THE PROTOCAL– FOR GREENER TOMORROW
What we now know as Global Warming has already led to season shifting, changing landscapes, rising sea levels, increased risk of droughts and floods, stronger storms, and a definite increase in heat related illnesses and diseases all over the world.
Annex I countries such as United States of America, United Kingdom, Japan, New Zealand, Canada, Australia etc agree to reduce their emissions particularly carbon dioxide to 1990 levels
- AKSHAY AGRAWAL
Venturing out to Hyderabad city yesterday for my long pending chores in broad daylight made me realise one thing, it was almost impossible to walk in the harsh (read biting) Sun. Attributing this to the sedentary lifestyle that takes its toll (the brief job stint and now the coursework) I moved on. Bemused at myself calling my three year job experience as a brief stint gave me instant gratification on two counts, First it made me feel much younger! Secondly there were actually very few moments to be cherished. Thinking on the same lines, by evening, I was definite on what to write for this week‟s Focus. Deciding that I had already imparted a lot of technical „gyaan‟ pertaining to the Financial and Economical aspects per say, I vowed to shift the attention of my readers to something much more crucial and vital for our existence, the Earth. Our Earth is undoubtedly warming. Day by day the cycle of climate is changing. What we now know as Global Warming has already led to season shifting, changing landscapes, rising sea levels, increased risk of droughts and floods, stronger storms, and a definite increase in heat related illnesses and diseases all over the world. Think Finance, and you think of numbers! Similarly think Global Warming and the word Kyoto Protocol should be ringing in our ears. But is it the case? I have serious doubts regarding this. Since the inception of the Kyoto Protocol in 1997 countries all over the world have become more concerned about Global Warming. Industrialized nations are the major contributing to these emissions compared to the developing countries. India being one of the developing countries has ratified the Kyoto Protocol and is emerging as one of the leading carbon traders the Clean Development Mechanism (CDM) of the Kyoto Protocol. The aim being to reduce overall emissions of six greenhouse gases – carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, HFC‟s PFC‟s. The CDM is an arrangement under the Kyoto allowing industrialised nations to invest in emission reducing projects in developing countries as an alternative. A developed country can take up a greenhouse gas reduction project activity in a developing country where the cost GHG reduction is much lower. The developed country will be given Carbon Credits for meeting its emission reducing targets while the developing country would receive the capital and clean technology to implement the project. Carbon credits are certificates that are issued to countries that reduce their emission of GHG which causes Global Warming. Carbon credits are measured in terms of certified emission reductions (CERs), each CER being equivalent to one tonne of carbon dioxide reduction. Its rate stood at 22 Euros in April, fell to below 7 Euros, then stabilising at around 12-13 Euros. Thus countries with surplus credits can sell the same to countries with quantified emission limitation and reduction commitments. Annex I countries such as United States of America, United Kingdom, Japan, New Zealand, Canada, Australia etc agree to reduce their emissions particularly carbon dioxide to 1990 levels. If they cannot do so they must buy emission credits from developing countries or invest in conservation. Developing countries like India have no immediate restrictions under the UNFCC. This serves three purposes: Avoids restrictions on growth because pollution is strongly linked to industrial growth, and developing economies can potentially grow very fast. It means that they cannot sell emission credits to industrialized nations and permit them to over-pollute. They get money and technologies from the developed countries. This time, I write this article with the intent of imparting or rather accenting the knowledge that the common reader has about emissions and Carbon Credits. Not sounding like a Celebrity (Bollywood or Hollywod, whichever you would prefer) who continuously keep preaching about doing their „bit‟ to save the planet, but for me definitely this is the time to Wake Up!
Gharar- An Islamic finance term describing a risky or hazardous sale, where details concerning the sale item are unknown or uncertain. Gharar is generally prohibited under Islam, which explicitly forbids trades that are considered to have excessive risk due to uncertainty.
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THE IBS TIMES
NEWS @ IBSâ€“ ALL HAPPENINGS IN IBS HYDERABAD!
- AVLEEN KAUR SARNA
With less than four months left for the completion of their course, the senior batch, rather the future managers, are all too busy with their placements as many companies are coming to the campus every week for recruitments. As the show must go on, the juniors are coming up with a whole lot of interesting and knowledgeable events every week adding the fun elements to it along with learning. Some of the events that took place this week were:MAVERICK-KOOTNEETI The club organized a very interesting event and the participants enjoyed each and every round thoroughly .There were four rounds. In the beginning a tambola game was played and only 12 teams were selected on the basis of luck. The second round was a type of barter system round testing the negotiating skills while the third round, the poker face, was of a card and mind game assessing the analytical skills of the participants. The last round tested the convincing and the decision making power within a limited span of time. On the whole, the game was a success and it attracted huge crowd. The winners of the game were Kapil Otswal and Pooja. ECOBIZZ- MONETIQUE The club came up with the first ever banking simulation game in IBS. The first round tested the general awareness of the participants by identifying pictures of major events in history on the basis of which the first five teams became banks while the others were customers. In the next rounds the analytical abilities were tested as the teams were given different scenarios and the banks were to maximize their wealth while the customers were to maximize their wealth. Hence the bank and customer with maximum wealth wins. Overall the event was a huge success and the winners were Rahul and Apurva. NAZARIA- SPLASH A workshop organized exclusively for the nazarians providing them useful insights and basics of photography beginning from the usage of cameras and guiding them with its features to all the technicalities regarding shutter speed, aperture, ISO and exposure thus basically guiding them in how to use the camera. It was a fun-filled event as the photographers were delighted to learn a new range of things which made a lot of difference in their work.
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THE IBS TIMES MARKET WATCH
- SWATI VERMA
The past week ended with yet another downfall of major indices across the world. The rising yields of the Euro bonds having a cascading effect on the cost of borrowings of banks have raised the fear of default on a massive scale, in turn putting the existence of the entire Euro zone in question. The scenario at home has not been that pleasant either. With the headline inflation for the month of October being 9.73%, which is much above the forecasted figures, continues to add to the miseries of the common man. We are still to see the trickledown effect of the multiple interest rate hikes carried out by the RBI since October last year, to squeeze the liquidity out with an aim to control the consistently rising inflation. The Indian Rupee again did not show any signs of recovery depreciating further to Rs.51.12 making it the worst performer in the Asian currencies, for this week. The exports which should have witnessed a rise did not, due to the contraction in demand of our major exporting ally- The European Region. The imports, deriving from the falling Rupee, will cause crude oil bills of oil companies to raise, further leading to retail goods to become expensive thus adding to the woes of the RBI again. All the Sectoral indices ended the week in the red with Realty, Capital Goods and Oil and Gas leading the downfall by 9.8%, 9.5% and 6.9% respectively. Stocks in the Information Technology (IT) and Pharma saw relatively moderate losses during the week. With the Government expediting clearances to three major infrastructure projects namely the L&T Hyderabad Metro, Hinduja Power Project in Vishakhapatnam and Andhra Pradesh highway project by Seemapuri Expressways, one could see an upward trend in the stocks of these companies in the near future.
Movers and Shakers of the week:
Oil PSU majors, GAIL (Gas Authority of India Ltd) and HPCL (Hindustan Petroleum Corp Ltd) have stated that they will form a joint venture with Greater Calcutta Gas Supply Corporation Limited (GCGSCL) for supplying coal bed methane gas in the West Bengal. The Pharma Pricing Policy 2011 that aims to bring a lot more number of medicines under its purview of price control was a news maker this week. The Supreme Court warned pharmaceutical companies not to raise the current prices post the implementation of the policy which could have a bearing on the stock prices of major pharma giants across. Energy major Reliance Industries and London-based BP on Friday announced the formation of an equal joint venture in India that will focus on global sourcing and marketing of natural gas in Asia's third-largest economy. Share prices of, the once very famous airline, Kingfisher plummeted 18% as the funds required to fuel up the airline were hard to spot. The airline's chairman was supposedly close to securing a $250 million equity injection by an Indian investor the details of which were not divulged by the company board.
Global Cues: Performance of major world indices was again weak with France and Germany down by 4.8% and 4.2% respectively during the week. Hong Kong and UK followed the decline by 3.4% and 3.3% respectively. In US, the Dow fell 2.9%, the S&P dropped 3.8% and the Nasdaq lost 4%, thanks to the Euro
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THE IBS TIMES MARKET WATCH 14 7 NOVEMBER 2011 2011
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Vest Fleece– Slang term used to describe a situation in which a company's executives accelerates the vesting of their employee stock options. Usually, accelerated vesting is preceded by a period of excessively high employee stock option grants. BUSINESS JARGONS BY – KRITIKA SETHI
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DisclaimerThis newsletter is just a compilation of news from various sources. Thus, readers are expected to cross-check the facts before relying upon them. Though much care has been taken to present the facts without error, still if errors creep in, necessary feed back will be always welcomed. Editors will not be responsible for any undertakings. The newsletter is not meant for sale and hence, no part of the newsletter should be used without the prior permission of the editorial team.
SourcesThe Economics Times, The Hindu Business Line, Times of India, Business Standard, Financial Ex-press, Financial Times, Business Week, Business World, The Economist, Wall Street Journal, Bloomberg, Reuters, Moneycontrol.com, Vccircle.com, yahoofinance.com, Business Today, India Today, Investopedia.com, Wikipedia.com, DNA, The Deccan Chronicle, The Hindu, The Tele-graph.
EDITORIAL TEAMAKSHAY AGRAWAL, ANKIT SHARMA, AVLEEN KAUR SARNA, DEVANSHI PODDAR, KRITIKA SETHI, POOJA DALAL, SWATI VERMA
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