The IBS Times; 190th issue; July 2016

KIVASTIC AMAZON BY ANUMPAMA KUMARSWAMI

The IBS times COVER STORY

UDAY : THE NEXT GAME-CHANGER

BY SANDHYA ADHAVAN

INDIA-IRAN PORT DEAL

THE BYPASS PORT

BY PRATEEK PANDEY

NEW RBI GOVERNER

THE REALITY OF REXIT

BY JATIN SHARMA

BRITAIN LEAVING EU

THE BREXIT TURMOIL

BY EYAMINI N.

FinStreet, IBS Hyderabad

ISSUE NO. 190, JULY 2016

What’s Inside

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INTELLIGENCE BEYOND SUCCESS LETTER FROM THE EDITOR

TEAM IBS TIMES ISHAN GUPTA (EDITOR-IN-CHIEF) ROHIT TILLU (MANAGING EDITOR) ABHINAV BANERJEE

ANUPAMA KUMARSWAMI CHESTHA KUMAR EYAMINI N HEMLATA HAJONG JATIN SHARMA PRATEEK PANDEY RANU SARUPRIA SANDHYA ADHAVAN SWARUPA ROY

Dear Readers, Greetings from Team FinStreet.

We thank all who have contributed and made us where we stand today. We look forward to continue our work of making available all the latest happenings round the globe with your gracious support.

Team FinStreet is proud to present the 190th edition of The IBS Times.

For any economy the most important sector is the power sector. It forms the core and enables other sectors to grow. Since the formation of the new government this sector has been buzzing with activity. We look at this sector through our cover story UDAY : THE NEXT GAME-CHANGER and THE FALL OF SUNEDISON AND ITS IMPACT ON INDIA . We look at the impact of two major turmoil's for our market in our articles THE BREXIT TURMOIL and THE REALITY OF REXIT. India recently completed negotiation for investment in Iran for a port is covered in our segment THE BYPASS PORT. The Chinese steel glut is highlighted in CHINA'S SLOWDOWN- TIME TO CUT THE GLUT. Warehousing becomes an important strategy for an E-commerce firm, we highlight Amazon‘s advantage in KIVASTIC AMAZON. For Sector research we‘ve published a report on INDIAN POWER SECTOR and the Market Watch, TWIN EXITS will help you understand the movement of market for your future reference. From an investment point of view, this issue also brings to you an exhaustive report on TATA POWER by Team Vriddhi Research.

Do make the most out of it and keep enjoying the experience of The IBS TIMES. Your feedbacks and opinions will help us make it better.

Regards, Ishan Gupta Team FinStreet

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BREXIT AFTERMATH THE BREXIT TURMOIL

Brexit has increased volatility throughout the world, especially in terms of currency and capital markets. Sterling has bygone, more than 10% of its value against the dollar since Brexit. With the pound worth about $1.32, which is the lowest since 1985. Its value has decreased majorly against the Euro. In 2015 the pound would buy you between €1.351.45. This year sterling has weakened against the euro, and dropped after the Brexit vote to about €1.20. There is much impact on day-today spending. Even if the pound recovers some of its value, currency experts expect it to stay at least 10% below where it was on 23 June, for a long term. It is expected that in the next five months, the UK will be deficient.

You can also anticipate many ballots in several other EU countries. Boris Johnson is likely to be the next Prime Minister. The weakening of the British pound will make an addition to the economic distress of Japan, Europe, and beyond. If this infection reaches the U.S., it will be against the political prospects of Hillary Clinton and in the approbation of those of Donald Trump.

The overall economic growth has been very slow, Financial market Volatility has raised and the central Banks are less effective at present in terms of overall control.

It will in turn induce the western politicians to take responsibility to set up their own economic governance. But a few fears that this might lead into recession and financial disruption.

It is also predicted that In approximately five years, The United Kingdom will dissolve. scotland

-Eyamini Natranjan

Scotland may also become independent and part of Europe. Mostly all or parts of Northern Ireland will fuse with Ireland. Many countries would have left the European Union, Only core Eurozone will remain. The US- UK relationships might hinder as US may try to unite with countries in many other regions.

The UK conservative party will be integrated under a new leader Theresa May who has replaced the Prime Minister David Cameron.

There are Discussions going on with Europe for a type of ―association agreement‖ to substitute Britain‘s full EU membership.

These proceedings are going on at a very slow pace as Most of the European countries are undergoing Anti-establishment movements.

Impact on the European Union

Britain played an important role in the EU. In many factors such as Total population, GDP or FDI. It ranked in the top 3 countries of EU Thus, Brexit will have negative on the EU. Most importantly the trade channel will be hit. While not every sector is as endangered to a British demand shock, manufacturing in general and air transport would be affected.

Also a Brexit could actually divert investments to continental Europe, through repatriations or new investments from nonEU countries which had earlier taken UK as an entrance point to the European Single Market. There are two main economic effects for Brexit. One is that there will be no future unity to trade . Second currency has become more competitive and there is will be more than sufficient supply.

4

Current scenario

The immediate effects would be reducing of investment activity and reduce hiring. There will be a massive slowdown of growth. As a result Britain will become less productive.

There are high chances for a favorable trade agreement to be signed, in order achieve an advantage for both the parties. Otherwise Britain might have to face tariffs under ‗mostfavored nation‘ rules, though its impact might not be so bad. Exporters will incur some additional cost, in order to go in accordance with the EU rules of origin, if they were exterior to the single market. These factors won‘t be barriers to trade, They would rather be hindrances to trade. Financial services will lose more compared to other sectors. The city will suffer for a short term but won‘t end up in a disaster. The major advantage would, be UK can broker trade deals with developing markets that can pay them dividends in the long run in the finance sector. Prime Minister Theresa May said immigrations will be mainly focused during the negotiations. The main issue will be whether other EU nations will allow the UK access to the single market, while at the same time will they be allowed to restrict the rights of EU citizens to live and work in the UK. Mrs. May said she strongly wants to cut down on the net immigration and bring it down to a sustainable level, maybe below 1,00,000 a year which is at present 3,30,00 a year.

The other major outcomes mainly depend on the leadership from within the EU and UK. Thoughtful leaders will inculcate the Brexit lessons and recognize that breaking the sovereignty of member states is bad. They will further become more serious about the Immigration issues. The world is relishing a pop

populist moment If national leaders start addressing the actual and real problems that lie below the populism — a growing underclass, anger at the government and tides of refugees, then Brexit will be the warning call.

The United Kingdom can be in recession, there will be a moderate hit to European and global economy. There will be some disintegration of the United Kingdom, a ―core‖ Europe centered around Germany that's reasonably integrated politically and economically while the broader European Union is regarded as a failed political and economic experiment.

Brexit will cause volatility only for a short period of time. In the long run the economies will rebalance. It will be favorable for a few economies only. This volatility will increase the pressure on oil prices, which could help countries like India. The dollar economies will strengthen. Emerging economies like India will also benefit as once UK decides to be independent, the bilateral trade will not be chained by EU policies. There will even be growth of Chinese investments in the UK. There will be more trade opportunities between UK and India. Immigration norms in India will be eased. There is a need for cooperation between Small and medium sized enterprises (SME). The Indian SME can be developed through more experience and the advent of technology. This will in turn boost the Indian economy. The EU too without Britain now needs to stand up and compete and, therefore, trade opportunities will grow enormously for developing economies.

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FIXING THE DISCOMS UDAY : THE NEXT GAME-CHANGER

UDAY scheme The Ujwal Discom Assurance Yojana known as UDAY, is a scheme for the financial turnaround of power Distribution Companies - DISCOMS by Government of India with an objective to improve the operation and financial efficiency of State owned Discoms.

UDAY scheme which was to be launched on 31st March, 2016 has been extended to 31st March, 2017. This extension would help the other states that have not yet participated to join the scheme and benefit out of it.

What are Discoms?

Discoms are primarily State-owned and have been financially distressed for several years despite reforms in the power sector. The power sector intended to sell - power generation, transmission and distribution activities as a separate unit in order to identify the performance of the different sector and focus on the least performing sector.

Discoms have been historically distressed by the following sectors: (i) Transmission and Distribution T&D losses - that arise mainly from theft of electricity, subsidized tariff for agricultural consumption, leakages in transmission and distribution systems, etc. and (ii) Aggregate Technical and Commercial AT&C losses - due to billing and collection inefficiencies.

Discoms‘ accumulated losses as on March 2015 is estimated at Rs.4.3 trillion, out of which

-Sandhya Adhavan

which major part is the debt funded by banks and financial institutions.

Discom Bailouts Previously the discoms have been bailed out by the government thrice in thirteen years.

But the bailout packages were a failure due to political instability. The state governments are taking over up to 75 per cent of their respective discoms‘ debt and issuing sovereign bonds to pay back the lenders.

Kameswara Rao, Partner, Energy & Utilities at PwC, said, ―Before they go into this, the states have to do their own financial restructuring, from in-principle approval to actually signing is a slightly circuitous path, so this will take time.‖ K. Ravichandran, Senior Vice President and Co-Head, Corporate Sector Rating, ICRA said ―The scheme has its own merits and demerits from the states‘ point of view. Many of them are weighing the pros and cons, so this decision is to give them time. It shows the government is expecting some more states will join the scheme.‖ Features of UDAY Scheme • To improve operational efficiency within a specified time frame and measured against AT&C losses as per trajectory to be finalized by the Ministry of Power (MoP) and participating states • As costly power is the primary reason for the systemic financial distress of Discoms, the UDAY scheme has proposed steps to reduce 6

reduce cost of power

• For the financial turnaround of Discoms, the UDAY scheme seeks 1. Participating States to take over 75% of the debts of Discoms over a period of two years: 50% of such debts will be taken over in the financial year 2015-16 and 25% in the financial year 2016-17 2. Participating States to issue non-statutory liquidity ratio bonds, including state development loan bonds against Discoms‘ loans, by pension funds, insurance companies and other institutional investors. The balance bonds will be offered directly to lender banks (or) financial institutions in proportion to their current lending to Discoms. Proceeds of such issues of bonds will be transferred to Discoms for paying off their loans to lender banks/financial institutions 3. Lender banks (or) financial institutions will not levy pre-payment charge on Discoms‘ debts and will also waive off unpaid overdue interest 4. 50% of Discoms' debt to be converted into loans or bonds with interest rate not exceeding the concerned Bank's based rate plus 0.1%. Plus, Discoms may issue State guaranteed bonds against the debt at a rate not exceeding the bank's base rate plus 0.1%. The State will take over 50% of the remaining 50% debt (i.e., 25%) in 2016-17. The balance 25% remaining with Discoms will be dealt with through a mechanism to be development by the MoP •

and fund future losses of Discoms in a graded manner until the financial year 2020-21. Also, lender banks (or) financial institutions will no longer advance short term loans to Discoms for financing losses but will finance Discoms' working capital requirement by way of loans only upto 25% of the concerned Discom's previous year's annual revenue • States which achieve operational milestones of the UDAY scheme will be entitled to additional (or) priority funding through various funds of the MoP and Ministry of New and Renewable Energy Total Installed 30.06.2016)

Capacity:

(As

on

Conclusion

Aiding the ailing discoms is a good initiative that would not only accelerate the performance of the distribution companies but also reduce future losses in this sector.

Though it has been put on the table, the implementation is yet to happen. Let us hope that the debt re-structuring of discom happens at the earliest without any political instability that has been the cause for failure in the past two schemes.

For financing future losses and working capital of Discoms, States will take over the 7

CHABAHAR PORT DEAL THE BYPASS PORT

PM Narendra Modi's visit to Iran has at long last prompted the abundantly anticipated marking of the settlement for India to build up the key Chabahar port. Building up the port is comprehended to be a noteworthy leap forward for India's exchange with West Asia.

-Prateek Pandey

to the Indian Ocean , New Delhi started transactions with Tehran over 10 years prior to building up the Chabahar port to counter the Chinese moves in a territory which India sees as a component of its range of prominence.

Five things about this huge advancement: 1) Where is Chabahar?

The port of Chabahar is situated in southeastern Iran in the Gulf of Oman. It is the main Iranian port with direct access to the sea.

India, Iran and Afghanistan were marking an agreement to assemble an exchange and transport hallway, assigning Chabahar port as the center point. Presently, this will be what I call the 'amusement changing of the distinct advantage since building up the Chabahar port won't just permit New Delhi to bypass Pakistan (which has a restricted exchange association with India because of conciliatory strains and regional question) and get to worldwide markets, additionally counter China's growing impact in the Indian Ocean locale. As per several reports Chabahar port could cut down expenses and also the time taken to transport freight exchange to Europe by around 50 for every penny. India does not have direct land access to Afghanistan and through it, to Central Asia, on account of the nearness of Pakistan. What's more, with the Chinese subsidizing the key port in Gwadar, which India accepts will allow Beijing access

2) What does the settlement involve and what are India's arrangements for Chabahar? a) India will create and work the Chabahar port. India Ports Global, an as of late shaped port undertaking speculation arm of the transportation service and a joint endeavor between the Jawaharlal Nehru Port Trust and the Kandla port, will put $85 million in creating two holder compartments with a length of 640 meters and three multi-freight billets. b) The agreement is for a long time and extendable. It will take year and a half to finish stage one of the port development. The initial two years of the agreement are effortlessness period which implies India doesn't need to ensure any load for the port. c) From the third year, India will facilitate 30,000 TEUs (Twenty Foot Equivalent) of cargo at the port. The quantum will rise to 25000 8

250000 TEUs by the 10th year.

3) Is that all?

No, State run railway body IRCON International will set up a railway line at Chabahar to move goods right up to Afghanistan. The 500km rail link between Chabahar and Zahedan will link Delhi to the rest of Iran's railway network. Also, part of the agreement is a free trade zone where a total investment of Rs. 1 lakh crore is envisaged. Indian companies would set up a range of industries from aluminium smelter to urea plants in the region. State owned NALCO will set up an aluminium smelter while private and cooperative fertiliser firms are keen to build urea plants. India will also supply $400 million of steel rails to Tehran.

There are plans of a fertilizer plant through a joint venture with the Iran government.

Protecting hydrocarbon sources is an important for India as Delhi and Tehran would be looking for a nexus in the near future.

routes for moving freight between India, Russia, Iran, Europe and Central Asia. The route primarily involves moving freight from India, Iran, Azerbaijan and Russia. The objective of the corridor is to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Astrakhan etc.

It would counter Chinese presence in the Arabian sea through the support to Pakistan in developing Gwadar port. It can be used to station security vessels for merchant ships off the African coast apart from giving the country a foothold in the western Arabian Sea, which is important as many of its energy imports pass through the route.

4) Why is it so important for India?

No other international port has seen the level of involvement and enthusiasm from Chabahar as India. The port will make way for India to bypass Pakistan in transporting goods to Afghanistan using a sealand route.

At present, Pakistan does not allow India to transport through its territory to Afghanistan.

It has, however, recently allowed some Afghan shipments to come to India.

This will also give momentum to the International NorthSouth Transport Corridor of which both are initial signatories along with Russia. Iran is the key gateway in this project. It entails the ship, rail, and road routes

5) India has been making efforts to finalise this deal. What took it so long and what is the history?

The port was partially built by India in the 1990s. An initial pact to build the Chabahar port was first inked during the Atal Bihari Vajpayee's government in 2003, but the deal slipped through during subsequent years.

Negotiations only intensified after nuclear deal between P5 + 1 (the UN Security Council's five permanent members China, France, Russia, UK and US plus Germany) and Iran last year. But reaching the deal was 9

far from smooth and differences cropped up over ownership as Tehran's Port Authority introduced role of private player in the process. After several rounds of negotiations between India's consortium of JNPT, Kandla Port Authority and Iranian authorities, the contract was deemed ready for signing.

highly anticipated.

From the above it is apparent that Mr Modi's drive to create Chabahar would contain Chinese and Pakistani impact in the locale in this manner solving two problems at once. By the by, the area is going to witness extreme rivalry amongst China and India for its control. Chabahar gives a clear key edge to India.

An expression of alert for fear that we are let down. The accomplishment of Indian aspiration in the locale to an expansive degree will rely on upon a tranquil and stable Afghanistan. India will, in this way, need to continue assessing its vital alternatives to guarantee that Afghanistan is not permitted to float away from the way of peace and advancement. India ought to be set up to foil any abhorrent plans against India's vital advantages in the locale. India needs to build up the capacity of 'out of range' mediation to ensure its vital advantages. A complete sync between India's remote and safeguard arrangement is something which should be highly 10

MARKETWATCH TWIN EXITS

Britain‘s decision to exit the European Union (EU) jolted equity markets across the world, prompting a flight of investors to safe-haven bets. Volatility and uncertainty will likely shadow markets the world over. This is a huge negative shock. It is completely different from what the Street was expecting. Indian markets joined a global sell-off that ensued, although they closed off their lows. The BSE‘s 30-share Sensex closed 2.24%, or 604.51 points, lower at 26,397.71, after having slumped more than 1,000 points.

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.6% and the Hang Seng fell by 1.3%. The Shanghai Composite lost 0.5%. European markets are trading mixed today. The CAC 40 is up 0.09%, while Germany's DAX is up 0.5% and London's FTSE 100 is down 0.3%.The initial reaction by investors will be negative, further direction for the Indian equity market will depend on the contagion impact of this event and how it impacts the fragile fault lines in a globally interconnected world. Even the exit of the RBI Governor Raghuram Rajan is having the twin effect on Indian economy. Rajan has been a key force behind the outperformance of the rupee vis-avis other currencies, so his departure from the central bank is being seen as a major negative by foreign investors. It may lead to capital outflows from the country at a time when global investors are already nervous ahead of the key Brexit referendum.

-Ranu Sarupriya

by 0.1% at the time of writing. The commodity has witnessed selling pressure throughout the week and has touched to its three-month lows. As there is sharp rise in crude prices witnessed since the start of this year, Asian refiners had begun to cut crude orders.

If the June quarter results are to be taken as a benchmark, cotton spinning mills are looking at a tough year ahead. 67% drop in average net profit from a year ago. The main reason for this sudden turn in fortunes is the weakening global demand for cotton yarn. were 11% lower than the previous month and nearly 30% lower than in January.

Gold has rallied 28 percent this year and will remain low for longer. The U.K.‘s vote to exit the European Union added to global growth concern, spurring volatility in financial markets and boosting demand for haven assets. Spot gold swung between gains and losses.

Silver slipped 2.1 percent to $19.8932. Prices climbed 8.6 percent in the two days, the most since May 2011. Gold and silver have already come a long way, so perhaps it‘s not surprising to see them pull back a little.

Commodity Markets Crude oil is trading marginally lower, down by 11

Movers And Shakers During This Week

Sectoral indices are trading on a mixed note with stocks from the telecom and capital goods sector leading the losses. and the healthcare, oil and gas sectors leading the gains. Consumer durables and banking stocks are however trading in the red. Gains were largely seen in auto and healthcare stocks.

However in Pharmaceutical sector, Cipla Ltd recently acquired a portfolio of three products from Teva Pharmaceutical Industries Ltd in the US. A key thing to watch out is to see whether this deal unlocks the opportunity to Indian companies and gains traction in the US market.

Even telecom and information technology sector are witnessing maximum selling pressure. While, stocks from metal sector are witnessing buying interest.

Currency Market The rupee had gained 10 paisa to close at 67.04 per dollar on persistent selling of the American currency by banks and exporters in view of sustained foreign capital inflows into domestic equities.

The Japanese yen has climbed by more than 2% against the US dollar, after the Bank of Japan decided to keep interest rates on hold after its two-day meeting.

Rainfall Indian Meteorological Department (IMD) stated that the rainfall for the country as a whole

whole was 4% below the long-period average.

Further, there has been scanty rainfall However, the same is expected to pick-up in the coming week. Reportedly, 80% of the country's area has received normal to excess rainfall and 20% has received deficient rains.

A normal monsoon will lead to higher disposable income in the hands of farmers, which in-turn will boost the rural consumption and to keep the inflation at low levels. The possibility of a good monsoon would also increase the chances of the country's central bank retaining its easy money policy.

GST a real game changer The news of strong possibility of passage of Goods and Services Tax (GST) Bill is doing the rounds. The implementation has not happened due to the contentions of the Congress Party. As soon as it gets some whiff from this corner, there's a beyond normal movement in the stock markets. This explains that the GST is looked upon with much optimism and importance. As far as financial markets are concerned, GST will not change the perception regarding business and following a bottom-up approach and picking undervalued stocks during such times could continue to prove to be the best play.

Brexit Effects Analysts have been expecting companies linked to the Sensex and Nifty to post doubledigit profit growth in the current fiscal year. If commodity prices, especially crude oil prices, fall further, corporate profits could receive a further boost. The medium- to long-term outlook for Indian market remains bullish, as our domestic economy is consumption driven, and not export-dependent. Our economy is growing 12

growing at a good rate, inflation is coming down.

Chinese Economy Meltdown

had overtaken India as the largest consumer of gold. Prices of gold have slipped to a four month low in expectation that the present meltdown will spill over to the gold market.

The Chinese dragon seems to have run out of fire, with nearly 40% of its wealth wiped out in less than a month and had contagious effect on other global markets. The main engines driving global growth is sending panic waves across the globe. Chinese economy can impact Indian Economy. Hard commodities have been hit in expectation of a Chinese slowdown. Copper is trading at a 6-year-low.

China has resorted to aggressive selling to clear its inventory and raise cash during adversity.

China only nudged the prices lower. For India, low oil prices helps in controlling its deficit and keeps inflation under check. As auto-ancillary suppliers will be hit as China consumption falls.

Automobile exporters and manufacturers, especially Tata Motors will feel the pinch as China was its fastest growing market. Chinese 13

AMAZON WAREHOUSING STRATEGY KIVASTIC AMAZON

“Will robots take over the world? In a word, yes - at least the world of e-commerce.”

-Jessica Dineen The Amazon warehouses are abuzz with activities. Along with the workers walking with black and yellow crates are orange stubby army of robots sliding on the floor with piled up high towers of products which are waiting to be shipped to the customers.

Amazon is the sixth fastest growing company in U.S by Inc.500 in 2009 and ranked as the 23rd most innovative company in the world in 2012 by Fast Company, this change was bound to happen. Leading this change are these 320 pound, two foot tall orange bots manufactured by Kiva System, a company found at Massachusetts in 2003. Kiva focuses on developing technologies which would eventually revolutionize the warehousing operations with the help of robots for packing, picking and shipping the products. The company became so important that Amazon bought it for $775 million in cash. This addition of robots reduces Amazon‘s operating expenses by 20%. It even reduces the fulfillment expenses in the new warehouses by $22 million. If Amazon brings in these robots to 100 or more distribution centres which haven‘t yet implemented this new technology, then that would help Amazon save $2.5billion more.

How is Kiva driving the growth in Amazon?

This acquisition has placed Jeff Bezos on the peak of the market. He decided to use these bots for Amazon only and this ended Kiva‘s

-Anupama Kumarswami

sale for warehousing products. With contracts getting expired, there was no other alternative to Kiva. It took 4 years for start-ups to come along and finally replace Kiva. These startups are ready to furnish the warehouses with new robotic technology. Kiva‘s robots are proving to be more efficient at stacking and shipping stuff than as compared to human counterparts. The new robots being introduced look very different as well as function differently too. The industry is still experimenting with the technology and patent issues still exist. Even with the difference, all this robotic technology is aimed at reducing the cost at the end for the retailers and helping to make the products available to the customers as quickly as possible.

Kiva is ensuring a competitive advantage for Amazon in the fields of speed and fulfillment capacity. Kiva offers Amazon with services to modernise the fulfillment operations alongwith their expansion. The company has already installed 15000 robots. With the company‘s fulfilment network expanding and growing, distribution networks worldwide reaching a total of 139 and comprising of 90.8 million sq. feet, there is more need of robots.

With increase in the e-commerce sale of 15.4 % from 2013, Kiva robots are a great help for facilitating this growth with the decrease in expense of fulfilment. Not just the expenses, Kiva robots are helping in saving space. With the clutter-defying system algorithm, the robots are helping in increasing the storage capacity to 50%. These bots can easily relocate an entire warehouse facility in just 48 hours.

sale

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What are the odds?

The robotics is one of the major promising technologies in the world right now. Even though a whole warehouse can be run just with the help of robots, but human intervention is required to ensure that the right product goes in the right place.

Employees‘ contribution is still considered for high value work. There are new robots which could easily pluck the desired products out of the shelf. This bot works with the help of a vehicle topped with a rotating arm which grabs the products with a suction cup. Human intervention is required here too as carefully stacking up of boxes is necessary for the precise selection by the robot. The warehousing business depends largely on human labour. About half of this labour in the warehouse, slog away their time on completion of simple and tiring tasks. These tasks involve simply moving the stuffs around just like restocking the shelves in the grocery.

It is a vigorous work load for the employees as they have walk dozens of miles in a day for finishing their duties. With the availability of new robotic technology like Kiva bots for big e-commerce giants like Amazon with vast inventory and intricate packing operations, these human counterparts are the ones who are going to be affected the most.

What’s in store for future?

Amazon is one of the fastest growing ecommerce companies. It realises that the mounting pressure form the market would crash its business. In order to curb the oncoming force, it realises that it should make its warehouses more efficient. Amazon has its own robotics lab where in the midst of electronics and biopharmaceutical firms, it is developing all kinds of automation that would

lead to cutting of costs and speeding up the fulfilment process. Along with the Kiva bots, Amazon is developing automated drones.

Amazon had conducted a conference in March, where robotics companies had flocked in for three days at the Parker Palm Springs.

All the attendees of the conference had joined in for talks and seminars ranging from artificial intelligence till space exploration kind of topics. Representatives from fellow companies‘ robotic division and academicians also stopped by and ushered their knowledge in the conference. Even Jeff Bezos made sure that he interacted with the guests. No details were shared with the outside world. Even now after 4 years of Kiva acquisition, Amazon remains silent about its robot tactics. Jeff Bezos had put out the word that their drone fleet was on their 10th or 11th iteration. While he had divulged the fact that they were working on artificial intelligence for past 4 years now and have devoted 1000 staff members for it. Amazon had renamed the Amazon Robotics team to Kiva and is dedicated to bring up a new robotic platform.

This company is going to have a big impact upon the society in the next 20 years and Kiva is just the small beginning of something very big.

15

RAGHURAM RAJAN SAGA THE REALITY OF REXIT

‗REXIT‘, the term coined by social media on the lines of BREXIT to define exit of Raghuram Rajan (RRR) from governorship of Indian central bank, The Reserve Bank India (RBI). Just like BREXIT, REXIT too has an interesting story behind it. Triple R (RRR), the most high profile RBI governor apparently had an amicable relationship with Narendra Modi (NAMO). Did the author of the famous book ‗Fault lines‘ didn‘t see the fault lines within his relationship with NAMO? It all started during April – May 2016, when Raghuram Rajan was asked at an event whether he would accept the second term as the governor of RBI when his term ends on 4th September this year. He replied that ―I might but the government needs to ask me first‖. On May 14 2016, during a television interview in London he was asked whether he felt his objective as the head of the central bank would remain unfinished if he didn't get a second term, Rajan said: "It's a good question. I think we have accomplished a lot but there is always more to do." These two statements made by him hinted towards the fact that he was not very keen to return to academics as his current project was incomplete. Now the kind of rock star image Raghuram Rajan has made this a very hot topic not just in India but all over the World.

With top executives lauding his works and Indian business magnates like Narayan Murthy and Uday kotak throwing their weight behind RRR pressure excitement was getting built up. The former IMF chief economist has enormous backing from Indian Incorporation:

-Jatin Sharma

an ET survey in May found that 90% of CEOs wanted Rajan to stay on as the Governor of Reserve Bank of India. On June 11, 2016, Union Law Minister Sadananda Gowda said ―that the government would take its own course on giving second term to the current RBI governor‖. The unsystematic manner in which the search for heads of key institutions is done, points towards the fact that selections are not always rule based. The tenure of current head of SEBI, U.K. Sinha, expired last year and selection committee short listed four names. Just at the last moment when the current SEBI chief had his bag packed, news came that he has got an extension for another year.

The real rift between Triple R and government came when BJP MP Subramanian Swamy launched an attack against Rajan and wrote to Prime Minister Narendra Modi to remove him. After this, Subramanian Swamy launched a series of attacks on Mr. Rajan calling him ―not fully mentally Indian and alleging that he has planted a bomb in Indian financial system and it will explode in December 2016. If a bomb was indeed there of which Mr. Swamy had information, then why didn‘t he furnish more details about this alleged bomb. On Jun 18, 2016, Raghuram Rajan announced that he will return to academics after his term ends on September 4. This was announced by the governor in his message to the staff which was made public late on Saturday. ―I will, of course, always be available to serve my country when needed," said Rajan in a statement‖. Rajan will be rejoining Booth School of Business at the univaersity 16

University of Chicago, he was on leave till the period of his tenure. Just after this announcement the government announced the decision to declare new RBI governor earlier than usual and thus taking a break from their habit of procrastinating such decision towards the tenure end. This was done in order to curtail the decline of markets already battered

by REXIT and BREXIT. What was really surprising that nobody from BJP came to support Raghumram Rajan until he resigned.

Our P.M. has a knack for keeping mum on key issues (Mohammad Akhlaq‘s mob lynching and Gujarat riots). Though this time the PM decided otherwise and broke his silence but the timing was a bit off target. Had he broken his silence a little earlier then maybe the writer would not have been writing this article. On June 27, 2016, Prime Minister Narendra Modi, without naming anybody said ―such things are inappropriate, the nation won‘t benefit from such publicity stunts and anyone who believes he is bigger than the system is wrong‖.

The major achievements during his tenure were announcement of universal new bank licenses for two organization Bandhan (now Bandhan bank) and IDFC. Ten licenses were issued for small finance banks and eleven payment banks licenses during his period since 2014. The last bank license was issued almost a decade back in 2004. Rajan introduced MCLR (marginal cost based lending) from this year and will help fixing the faulty transmission mechanism to some extent. Transmission mechanism is efficiency of changes in bank rates in response to change in REPO rate. Tackling high NPAs of banks head on was one the most important project that got initiated under the strong leadership of Raghuram Rajan. Monetary policy committee

committee has adopted inflation targeting regime. He also succeeded in maintaining high GDP growth along with low inflation which was a job well done.

Two names that have been shortlisted for filling Rajan‘s shoes. Rakesh Mohan, twotime deputy governor of the RBI. He also served as secretary at the department of economic affairs in finance ministry and held positions at the International Monetary Fund (IMF). Subir Gokarn, 56, also a former deputy RBI governor and current executive director at the IMF. He also looked after monetary policy during his previous stint at the central bank until the end of 2012. The final decision is due soon and Rajan‘s predecessor is going to have a tough time balancing RBI‘s autonomy and aiding pursuit politically set economic goals. The government is seeking an economist to replace Raghuram Rajan. The real question is, given his formidable reputation for predicting things, did he foresee that the government was against offering him a new term or did he not see this one coming?

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CHINA STEEL INDUSTRY CHINA'S SLOWDOWN- TIME TO CUT THE GLUT

China's role in the global steel industry?

The iron and steel industry, which is one of the most important fundamental sectors of the national economy of the country, is one of the most significant indicators of the economic power and comprehensive national strength of a country. The iron and steel of China remained weak and under developed for a prolonged period of time before the founding of the People's Republic of China in 1949.

However, China has managed to establish a complete iron and steel industry. It is the largest producer and maker of steel industry.

It has become , especially after China started to implement the policy of reform and opening-up in the late 1970s, China has managed to establish a complete 2 iron and steel industry, which has made enormous contributions to national construction and development. In addition, boosted by China‘s entry into the World Trade Organization at the beginning of the 21st century, the Chinese iron and steel industry has been developing by leaps and bounds, and fully meeting the demands brought about by the rapid economic and social development of China.

At present, given the fact that China is still in the process of rapid industrialization and urbanization, the iron and steel industry, as a sector producing fundamental supplies, is expected to continue playing an irreplaceable role in the development and structural adjustment of the Chinese economy.

What the glut is all about ?

China has been aggressively shipping out its surplus steel products and selling them, according

-Chestha Kumar

according to other nations, at unfairly low prices. According to the China Iron and Steel Association, Total steel capacity in China is estimated at around 1.2 billion tones and is expected to further increase. The plunge in the prices of steel amid a slowdown in China's economic growth has taken a toll on producers earnings. During this year China exported more steel in first 10 months than in all of 2007. According to the General Administration of Customs, Chinese exports of steel products totaled 73.8 tones million, rising 42.2% from the last year.

Who all are affected?

Falling domestic price has widened the gap between China and other countries. China's excess production of steel is causing a crisis for the global steel industry not only the steel market is in crisis but major countries have also suffered due to it. U.S industry has suffered price declines, decreased profitability and job-cut offs Steel around the world have been complaining about China's relentless it has led to a collapse in the global price of steel used in the production.

China is facing increasing international presence to tackle a steel supply glut that has flooded global markets and left beleaguered overseas producers at risk of closure. China produces half of the world's steel .Chinese has used market- distorting subsidies and industrial policies to prop up their own industries and rip-off American Jobs. The steel market is in a state of crisis resulting primarily from massive global excess capacity much of which has stemmed from trade 18

trade distortive government policies and action. China's has faced a steel glut since 2014, when a real estate and debt shock forced demand for construction materials into a nosedive. China is doubling down on efforts to keep unprofitable factories afloat despite for years pledging to curb excess capacity, adding to a glut of basic materials flooding the global economy. The country's overproduction of steel, aluminum, diesel and other industrial goods has driven down the prices and crippled competitors, leading to thousands of lost jobs in the U.S. and elsewhere. China's continuing aid for unneeded factories is triggering a sharp rise in trade disputes and protectionist sentiment , especially in the U.S. where trade has emerged as one of the pivotal issues in the U.S. presidential election.

Massive investment in heavy industry in China's boom years has led to an overhang of production capacity. With the economic growth slowing, the government has been left propping up industries such as steel, aluminum, shipbuilding and coal mining. China is accused of dumping much of the excess production in the Western Markets, causing job-losses and protests. The U.S commerce reported last month by imposing antidumping and anti-subsidy duties on many Chinese steel products." Excess capacity has a distorting effect and damaging effect on global markets. Implementing policies to substantially reduce production in a range of sectors suffering from overcapacity, including steel and aluminum, is critical to function and stability of global markets.

trading partners. The U.S. Department of commerce has imposed anti-dumping duties on Chinese steel wire, as it was being sold at less than fair value. The European Union began an investigation in August into possible Chinese dumping of electrical steel sheet.

Road ahead With China's steel capacity surplus at around 400 million tones and average utilization rate at under 70%, the government is aiming to shut down around 100-150 million tones of capacity in the next five years. The local government is focusing on how the capacity closure targets will be divided among producers. U.S. and the European Union are trying to push the glut down. But what will exactly happen ? It's not clear whether China will stop producing or Not ?

According to Lew " excess steel capacity would also have a "corrosive" effect on China's economic efficiency. As the China's steel exports grow , too many friction with the 19

INDUSTRY ANALYSIS

POWERING UP THE ECONOMY

-Ishan Gupta

In this fast-paced rapidly evolving world we come across new, innovative and exciting business models. We forget the core of any economy that supports this growth i.e. the power sector. India is the fifth largest producer of electricity in the world and this sector has been constantly changing in the hands of the new government.

First let us look at some statistics for the power sector over the past period. As of June 2016, the public sector represents 58.8% of the installed capacity in the country. Looking at the generation break-up 69.8% of the energy is generated from thermal power (Coal, gas and oil), 28.2% from renewables (Hydro, biomass and wind) and the rest from nuclear energy.

India has witnessed strong and continuous power generation growth over the period although the growth rate has been topsy-turvy due to the political and economic headwinds.

There has also been a substantial change in the demand-supply situation of energy.

The energy deficit situation has drastically improved over the period paving way for India to become energy surplus for the first time in its history. The situation has improved so much that in April there was no demand for

for electricity at zero price at the energy exchange (Vidyut Pravah). Further the global push for clean energy has changed the modus operandi of the industry. The government has set a very ambitious target in the field of renewable energy. In the union budget of 2015 the government chartered a roadmap to generate 175 gigawatt (GW) of clean energy.

The aim is to achieve this through 100 GW in solar, 60 GW in wind, 10 GW in biomass and 5 GW in small hydro projects. The seriousness and achievement of the government can be assessed from the fact that this segment contributed only 6.5% of India‘s energy during that period and today it contributes about 14% in generation.

Although the picture looks great but there are some indicators which are a cause of worry.

One of the most important indicators in this industry is the Plant Load Factor (PLF). It tells us about the utilization of the plant capacity and is an important metrics for the health of the industry.

This metrics has been reducing constantly over the years. There is a large pipeline of projects waiting to be commissioned and this metrics highlights the risk for the industry. All three sectors are witnessing a drop in their capa 20

capacity utilization. Central companies have reduced it from 85.5% to 74.9%, the states are down from 70.9% to 57.9% and the private sector has been the worst hit coming down from 83.9% to 59.6%. The drop in PLF can be attributed to two major factors: sticky tariff and discoms financial health.

Two most important agreements for a power generator are FSA (Fuel Supply Agreement) and PPA (Power Purchase Agreement). The difference between the two is their income.

Due to the paucity of coal mining and the subsequent cancellation of mining right by the Supreme Court resulted in an acute shortage of fuel. To bridge this gap most producers turned to imports. The two major markets for Indian power generators are Indonesia and Australia. Over the years the price of imported coal has been rising steadily. The discoms are not ready to increase the tariff due to both financial and political reasons. One of the best examples is that of the largest private power producer in the country: Adani Power. Their Australian coal mine project has been stuck in legal hurdles and they are dependent on high priced Indonesian coal. Further their PPA tariff are stuck in legal hurdles in India with power companies trying to prove that increase in coal is force majeure, entitling them to higher tariff compensations. This has adversely affected these companies.

The second part of the problem is the discoms

health. A step in the direction has been project UDAY (Ujwal Discom Assurance Yojna).

This scheme focuses on making discoms more energy efficient (reducing transmission and distribution losses), reducing power consumption and transferring the debt of discoms to their respective state governments.

This deleveraging of discoms will result in reduction of financial instability, ability to acquire funds at a cheaper rate and provide room to enter into new PPA‘s. Only six states (Karnataka, Gujarat, Punjab, West Bengal, Delhi and Sikkim) are not in red. It is touted as a revolutionary scheme which will fix the weakest link in the power industry. However, concrete results are yet to be seen.

The next big thing Globally, the energy industry is changing its gears. Most major players are focusing on two things: improving the efficiency of clean energy sources and storing power. Clean energy technologies have a very low Capacity Utilization Factor (CUF). Most operate in the 20-30% range and the focus is to push it to higher levels to reduce costs.

The second factor is energy storage. The world is still struggling and innovating in this direction. Energy produced has to be consumed immediately and it cannot be stored. However the world is working on product 21

There is something new coming around regularly and it is being implemented. It is widely accepted that rusted cogs are now working at full speed and the results are clearly visible on some fronts. The industry itself is going through an evolution and the industry we see today may not even exist in the next 10-20 years.

products that can store it for future use and implementing smart grid which will help transfer this energy from a producer to consumer. An introduction of an efficient battery has the power to revolutionize the entire industry and change the industry structure itself.

A final innovation that is being worked on is the rooftop solar systems. Pilots have been launched in various parts of the world. This project aims to use the urban landscape to generate its own power. Every household will have a solar panel which will supply electricity to the house and the excess to the grid. It will create an ecosystem that will reduce energy cost and save energy by transferring it from people with surplus to people with deficits.

Conclusion All in all, since the new government has taken over this sector has been buzzing around. there 22

SUNEDISON’S DOWNFALL THE FALL OF SUNEDISON AND ITS IMPACT ON INDIA

The energy and power industry is one of the most prominent industries of any country.

Both the renewable and non-renewable sectors of power industry play a vital role in the growth and development of economy and progress. While the non-renewable sector has been growing and being competitive since years, the threat of replenishing of these resources has now shifted the focus to renewable energy sector (solar energy, wing energy, biomass, hydroelectricity). According to International Energy Agency (IEA), renewable energy will contribute to nearly 26 percent to global electricity generation by the year 2020. Recently, the growing market of renewable sector received a setback when SunEdison the leading global renewable energy company filed for bankruptcy in April 2016. The news triggered a debate across the globe, leading to speculations about mergers and acquisitions along with the impact it would have on the renewable energy sector.

About SunEdison SunEdison was founded in the year 1959 at St. Peters, Missouri, as Monsanto Electronic Material Company (MEMC), a wing of the multinational U.S based Monsanto. Back then the company was in the production of silicon wafer and silicon ingots. In the year 1995, it was declared as an IPO (Initial Public Offering) and was listed in the New York stock exchange. In the late 1990s, the semiconductor industry faced a slowdown which resulted in Monsanto Electronic Material Company (MEMC) facing heavy losses. Reviving from the setback under the leadersh

-Swarupa Roy

leadership of CEO Nabeel Gareeb, the enterprise again started to make profits in the early 2000s where it also entered the renewable energy sector via the solar energy industry. The venture witnessed tie-up with entities like Suntech Power, Gintech Energy, Conergy and Tainergy Tech. In less than a decade Monsanto Electronic Material Company (MEMC) had successfully entered the solar market. The major achievement came in the year 2009, when it acquired the SunEdison LLC and became North America‘s biggest solar energy provider. Its further expansion plan included several more acquisitions and associations in the coming years. Some of which were a joint venture with Samung Fine Chemicals, acquisition of California based company Solaicx, Axio Power and more. In the year 2013, Monsanto Electronic Material Company (MEMC) opted for the name ‗SunEdison Inc.‘ indicating its full inclination and involvement in the solar energy industry. A year later, with a new subsidiary of TerraForm Power, the company set its foot into the wind energy market and went to acquire U.S based First Wind. With a strong hold in both solar energy and wind energy market, SunEdison became the foremost company in the renewable energy industry.

Currently, SunEdison has plant and offices set up in 30 locations in different part of North America, Asia and Europe. Headquarters of the company are situated in Missouri, Belmont, Maryland Heights, Madrid and Chennai. The vast portfolio of the company includes plants and services of solar power and 23

and wind energy along with manufacturing of not only solar energy systems, solar module racking system and solar module but it also produces polysilicon and silicon ingots and wafer. Until June 2016, the CEO of SunEdison was Ahmad Chatila.

The fall of SunEdison and Bankruptcy While SunEdison‗s growth and expansion plans made it the leading global company, it also came with a price that resulted in the company being bankrupt. Over the years of acquisitions and new setups, SunEdison build up huge debt and on April 2016 it had to file for the Chapter 11 Bankruptcy Protection.

The stock prices of the company which were around $33.44 in July 2015 drastically came down to 34 cents during the last trade and the shares of SunEdison were pulled up.

According to a CNBC report, the balance sheet of the enterprise as of September 30th 2015 showed assets worth $20.7 billion while liabilities of $16.1 billion. Given the downfall, longtime CEO of SunEdison Ahmad Chatila also resigned on June 2016.

SunEdison has been facing debt issues since last couple of years but the crucial one started when it announced one of the biggest deals with the Vivint Solar in 2015. The deal was estimated to be of $2.2 billion at that time but

by March 2016, the entire venture fell through when SunEdison failed to meet the acquisition. More troubles stirred up for the company after the pull out of Vivint Solar.

Currently, SunEdison is under investigation

by United States Securities and Exchange Commission and United States Department of Justice. Also, two dozen and more claims have been drawn up against the company mostly by shareholders for failing to present the

the true financial position in front of them.

The prominent shareholders of SunEdison are Oppenheimer Funders, BlackRick Inc, Adage Capital Partners and Vanguard group who are in for maximum loss considering the current state of the company. Presently, SunEdison under Chapter 11 Bankruptcy protection plans to continue to operate and minimize the debt by selling of its non-core assets and services in Latin America, India and United States.

Impact on India India is ranked 3rd in Renewable Energy Country Attractiveness Index (RECAI). India is a major market for SunEdison with nearly 700 megawatt (MW) of solar capacity commissioned along with another 1.7 gigawatt (GW) of solar capacity being developed in the country. In light of the events, the company is set to sell its investments in India which incorporates both commissioned and working units including a 500 MW)unit plant in Andhra Pradesh.

While SunEdison was a prominent player in the market, there are others for whom this strikes as an opportunity. India‘s Adani Group, Japan‘s SoftBank, Taiwan‘s Focxonn Technology, Finland‘s Fortum Finnsurya have already started picking and biding for solar projects in the country including SunEdison‘s assets. The Indian government has also stepped up with the aim to boost up the sector and attract more potential investments. While currently the market of the solar industry in India might have taken a hit due to many reasons the interest of other global companies in this sector will soon led to positive results and more development in world‘s one of the fastest growing solar market.

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VRIDDHI RESEARCH TATA POWER

-Shomil Sanchawat

Industry at a glance

Porter’s Five Forces

• India is the third largest producer of electricity in the world. Electricity production in India stood at 1,048.7 BU in FY15, a 8.4 per cent growth over the previous fiscal.

Threats of New Entrants: Given the capital intensive nature of the industry and economies of scale, threat of new entrants continues to be low in the Power industry.

• Over FY10–15, electricity production expanded at a CAGR of 6.3 per cent.

• Electricity production in India reached 654.5 BU during April -October 2015.

• Renewable energy is fast emerging as a major source of power in India.

• Wind energy is the largest source of renewable energy in India. It accounts for an estimated 60 per cent of total installed capacity (21.1GW). There are plans to double wind power generation capacity to 20GW by 2022.

• India has also raised the solar power generation capacity addition target by five times to 100GW by 2022.

• For the 12th Five-Year Plan, a total of 88.5 GW of power capacity addition is targeted; of which, 72.3 GW constitutes thermal power, 10.8GW hydro power and 5.3 GW nuclear power • The Government of India has been supportive to growth in the power sector. It has de-licensed the electrical machinery industry and also allowed 100 per cent Foreign Direct Investment (FDI) in the sector.

Threats of Substitutes: Agreements with various countries for nuclear collaboration will give major impetus to Nuclear power plants. Although demand for power outstrips its supply, going forward, thermal power plant companies have threat from non-thermal power generators.

Bargaining Power of Suppliers: Coal is majorly used as a feed for generating power.

The supply of coal in India is limited and hence coal players are in dominant position.

Bargaining Power of Customers: Industrial consumers have huge demand for power.

Their bargaining power is medium in India as the number of power companies to buy from is limited in number. Hence power companies are in better position.

Competitive Rivalry: Power equipment market - Market leader like BHEL is facing tough competition from other companies and most importantly Chinese suppliers. Major orders of Boiler, Turbine and Generator grabbed by Chinese suppliers from most of the private sector clients. So overall the intensity of competitive rivalry is medium.

Company Analysis Tata Power is India's largest integrated power company with a significant international presence 25

presence. The Company has an installed generation capacity of 9183 MW in India and a presence in all the segments of the power sector viz Generation (thermal, hydro, solar and wind), Transmission, Distribution and Trading. It has successful public-private partner ships in Generation, Transmission and Distribution in India namely "Tata Power Delhi Distribution Limited" with Delhi Vidyut Board for distribution in North Delhi, 'Powerlinks Transmission Ltd.' with Power Grid Corporation of India Ltd. for evacuation of Power from Tala hydro plant in Bhutan to Delhi and 'Maithon Power Ltd.' with Damodar Valley Corporation for a 1050 MW Mega Power Project at Jharkhand. It is one of the largest renewable energy players in India has developed country's first 4000 MW Ultra Mega Power Project at Mundra (Gujarat) based on super-critical technology.

Customer Base TATA Power is supplying over 2 million customers across the country.

Mumbai Distribution: Tata Power has a customer base of over 6 lakh direct customers in Mumbai and on an average about 6,500 million units (MU) are sold in a year. Some of its bulk customers include BEST, Railways, Port Trust, BARC, Refineries and other important installations in Mumbai.

Delhi Distribution: The Company‘s partnership for distribution with the State Government of Delhi for its North Delhi customers, Tata Power Delhi Distribution Limited is the only success story of privatisation in India. This company serves over 1.4 million customers (from a population of 4.5 million) spread over in an area of 510 sq. kms and has a peak load of 1704 MW.

Potential Future Growth Areas: India • 1600 MW Coastal Maharashtra, Dehrand: During the year, the Company has successfully completed acquisition and possession of private land for the project.

All statutory approvals required to start the project are in place. Clearance by Government of Maharashtra for transfer of Government land to Maharashtra Industrial Development Corporation for Tata Power is in final stages.

• 380 MW Dugar Hydroelectric JV Project: The site investigations and development of the Detailed Project Report are under progress through its SPV, Dugar Hydro Power Ltd. • 1980 MW Tiruldih Power Project: The Company has acquired around 40% of the required land. Water allocation for the project has been obtained. Environment Clearance (EC) is being discussed at level of EAC (Expert Appraisal Committee) in MoEF. Post deallocation of Tubed coal block, further action on EC is contingent on obtaining a firm coal linkage for the project.

• Odisha Projects: Naraj Marthapur was originally envisaged as an end use plant for Mandakini coal block. Due to the proximity to the wild life sanctuary, the Company is exploring all options including an alternate site for location of the thermal power project and associated coal linkage.

• Tata Power Renewable Energy Limited: The Company is developing over 200 MW of wind power projects in India. It has agreement 26

• acquired land in the state of Gujarat and in Rajasthan for future solar based projects.

• Their ROE has been decreasing which is not a good sign.

• Ideal Energy Projects Limited (IEPL): The Company signed a Share Purchase Agreement (SPA) with Ideal Energy Projects Ltd. (IEPL), promoted by IRB group, for acquisition of 100% of shares in the 270 MW power project located near Nagpur, Maharashtra. Currently, both sides are working towards completing the Conditions Precedent to the transaction.

• Total Debt / Equity was on increasing trend because company needs more funding for their Mumbai business.

Financials • Company is on the rising trend in terms of EBITDA that shows they are able to manage their operations well. Also, the lower depreciation was due to change in the rate of depreciation as per new companies act and lower depreciation in coal companies.

• Their EBIT is also on a rising trend even though the industry as a whole is not doing well in india.

• The PAT is increased by 6% in Mar 2015 this was mainly due to the higher dividends income and interest.

• The increasing in revenue is because of the favourable ATE. • Their other income has increased by 56% in the year 2015 due to higher dividend income from subsidiaries, higher interest charge on subordinated loans given to subsidiary companies and higher treasury income.

• Their standalone revenue from operations has increased as compared to previous year.

• EPS of the company has fallen so much in the preceding years.

• Their interest coverage has been on a decreasing trend as company is more dependent on external funding both long term as well as short term.

• The company has been paying good amount of dividends regularly.

• In the balance sheet of the company we can see that the company is having Trade receivables of around 19% of their sales which is mainly due to outstanding receivables from Mumbai operations.

• The company has lower liquidity ratio as a percentage of capital employed.

• The trade receivables are higher in percentage and are at increasing trend.

• Debt in the company has gone till 71% and still rising as a percentage of the capital employed.

• Current Liabilities is on the constant increase and is higher as compared to percentage of current assets.

Seeing the technical charts the stock is currently trading at 70 levels and the RSI indicator show that the stock is currently at 50 levels therefore proving an optimum time to buy the stock at the current price levels.

Looking at the 6 months candle stick chart we can expect the stock to head downwards till expect 27

the resistance level of Rs. 66. However fundamentals of the stock can affect the stock to move upwards from here on.

Verdict Seeing the current bullish market conditions this stock is showing can be entered at a price of Rs. 66 with the short term target of Rs. 83 within the time span of 2 months (for sentimental gains only). The stock is currently at 70 levels therefore, seeing the future projects and growth prospects of the company we can expect the company to give high returns with the holding period of around 2 yrs. and expect the target price of 144.

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FINANCIAL TRIVIA The Amsterdam stock exchange first listed shares in 1602. The first stock to be traded was that of the Dutch East India Company, a multinational mega-corporation granted a monopoly by the Dutch government to conduct trade with Asia. The company operated for almost two centuries, paying out an 18% annual dividend for almost the entire time.

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Reliability and Responsibility for sources of data for the articles vests with the respective authors. Please feel free to drop in your suggestions or any feedback at editor.ibstimes@gmail.com Š IBS Times – FinStreet, The Official Capital Markets Club of IBS Hyderabad.

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