The IBS Times_122nd Issue
Content
ISSUE - 122
11th AUGUST [THURSDAY]
EDITOR’S DESK
- TANIYA BANERJEE
Every speculation came to an end when S&P downgraded US‟s AAA+ rating. This single incident sent shock waves all across the world as markets felt its after effects. Loss of investors‟ trust in one of the most secure form of investments led to a feeling of uncertainty. Will the US head for a double dip recession? Get answers to such question s in our Cover Story this week. Eastern Africa is facing the worst drought it has seen in the last 60 years. Had it been that timely rescue operations were started the death toll could have been reduced? With almost 11 million people depending on international food aid the situation needs more attention and help from the countries world over. Get our writer‟s opinion on this, this week. We are covering DIESEL ISLAND in our Brand Track this week. A relatively new brand with just 20 years of existence, it has indeed created a niche for itself amongst the youth. As our Focus Of The Week we have British bonds consols this week. Started in 1751 for the first time by the British government, they make coupon payments quarterly which is a distinct feature. Moreover we have our regular sections News @IBS, Fast Track, Quick Bites, Market Watch and Jargons for adding more onto your knowledge. Cheers, Taniya Banerjee
EDITOR COVER FAST-TRACK
1 OPINION 2 BRAND 3 QUICK BITES
5 FOCUS 6 NEWS @ IBS 7 MARKET
8 9 10
COVER STORY– UNITED STATES LOSES ITS ’AAA’ RATING!
THE IBS TIMES
- AVINASH ROY The buzz that had been in news throughout the global financial market for the last few months finally became the headlines for almost every major newspaper this Saturday. In an unprecedented move, Credit Rated Agency Standard & Poor‟s (S&P) downgraded the US government‟s „AAA‟ sovereign credit rating to „AA+‟ and confirmed the „A-1+‟ short term rating. The rating is actually a development which raises concerns that investors will lose confidence in its economy. US stocks closed out their worst week in more than 2 years on Friday in a volatile session that saw major indices whip back and forth before S&P 500 ended down less than a point. The credit agency (S&P) commented that the downgrade actually reflects the agency‟s opinion that the fiscal consolidation plan which Congress and the administration recently agreed to falls short of what in their view would be necessary to stabilize the government‟s medium term debt dynamics. It also reflects the agency‟s views that the effectiveness, level of stability and predictability of American policy making have weakened at The Wall Street Journal a time of ongoing fiscal and economic challenges to a degree more than they expected when they assigned a termed the event as negative outlook to the rating on April 18, 2011. ‘Shaking of the global financial system’. This is The Wall Street Journal termed the event as „Shaking of the global financial system‟. This is the first time that the first time that the US the US has been downgraded since it received AAA rating from S&P in 1941. Now that it has finally haphas been downgraded since pened, the very next thing that comes to everyone‟s mind is „what next‟. Immediate impact that US will have it received AAA rating to bear is fall in dollar value as the foreign investors will move to countries like UK, Germany, France and from S&P in 1941. Canada who still have their AAA rating intact. Interest rates are bound to rise long term because what the government pays on debt is the base of all other interest rates in the country. With asset price falling a few more banks will fail. US exporters will earn more as the dollar falls whereas imports will become dearer. New innovators will replace incumbents who cannot readjust. This would somehow be the scenario for the US in near future. But what about the rest of the world, how will this event affect the global financial market is what we should be specifically concerned about. Global financial markets will reopen on Monday to a changed reality. USA who was the epicenter of the global financial meltdown in 2008 has again regained its role and chances are high that it may once again emit circular destruction all around the globe.
While inflation is inching up across the emerging economies, interest rate hikes is the immediate recourse that regulators have opted to, leaving the currency dollar to swing as per market‟s evaluation of the scenario. The emerging economies have been relatively stronger vis-à-vis the dollar, so far. But now dollar will weaken owing to the rating downgrade and the perceived riskiness in the US. China, a substantial investor in the US Treasuries might consider diversifying its reserves which would mean a further pressure on the dollar. While the oil price rally is on a pause for now, gold prices have been increasing steeply and will continue to be so pertaining to the risk involved with dollar. This scenario spells trouble for India, where inflation has pushed the RBI to hike interest rates 11 times since March 2010. Adding to it, investor flows will see major reallocating owing to the rating downward. So for India, there are a couple of pain points. The dollar losing its fundamental strength would mean a stronger Rupee. At a time when GDP growth rate has exhibited slowing trend and also where the RBI does not mind growth –inflation trade off, exports would take a hit whereas on import side a stronger rupee would widen the current account deficit. Though majority of Indian economists and financial tycoons all around the globe are pretty much confident that Indian economic growth will not be affected by the US rating downgrade, other than temporary „market jitters‟, yet the chances of being hit cannot be neglected. It is high time for Indian government to be prepared for the worst with a proper backup plan. With an optimistic view, let us all hope that proper monetary tightening by India and China will bring back global growth rate to more sensible levels soon.
But what about the rest of the world, how will this event affect the global financial market is what we should be specifically concerned about
1 2 3 4 5 6 7 8 9 10 11
FAST-TRACK NEWS
THE IBS TIMES
-GAURAV MALIK & POOJA DALAL
Congress president recovers from an underground surgery
Congress President Sonia Gandhi went through a successful surgery in USA without disclosing anything even to the close party allies. It was kept a complete private affair with only four party members and family members knowing about the 64 year old president‟s surgery. The information about the success of the surgery was conveyed by party spokesperson Mr. Janardhan Diwedi. He also informed that only Rahul Gandhi, Priyanka Vadra and Robert Vadra accompanied her for support.
Raju and 7 others accused in Satyam fiasco denied Bail
The apex court of Andhra Pradesh had denied bail to Ramalinga Raju and seven others involved in the Satyam fraud case which has been the biggest business fraud case ever happened. that the proceedings or the trial has been nearing completion ,the original date of the completion of the trial was July 31 so keeping that in mind the court has refused to grant a bail,the bail was asked mainly seeing the cooperation shown with the investigative agencies Also the bail was demanded on the basis of the appropriate behaviour of Raju and others but due to the way case is preceding, it was denied.
Andy Briant – From CEO to Vice-chairman
Intel Corp. On July 26 said that Andy Bryant, Intel's chief administrative officer, was elected to the new position of vice chairman of the board of directors in preparation for him to be elected the company's next chairman following Intel's annual stockholder meeting in May 2012. Bryant joined Intel in 1981 and served as the company's chief financial officer from 1994 to 2007. Bryant become the second Intel executive to serve on the company's current board, joining Intel President and CEO Paul Otellini.
McAfee discloses biggest-ever series of cyber attacks
Cyber attacks and infiltration in networks of 72 organizations including UN, governments & companies around the world has been discovered. They have found series of cyber attacks and this involves infiltration of networks of more than 72 organisations that include United Nations, governments and large companies. Experts are also of the opinion that all these attacks have originated from the same country but declined to name it. But much evidence points towards China. The long list of victims in the five-year long campaign include the governments of the United States, Taiwan, India, South Korea, Vietnam and Canada; the Association of Southeast Asian Nations (ASEAN); the International Olympic Committee (IOC) etc.
Union Bank raises lending rates by 50 bps
After RBI raised its key rates by 50 base points as a measure to curb inflation, many commercial banks have followed suit. Union bank has revised its base rate, the minimum lending rate, by 50 basis points to 10.75 percent, effective from Monday. However, the bank has only increased the lending rate under the old BPLR (benchmark prime lending rate) scheme by 25 bps to 14.50 per cent.
Karnataka Finds its new Chief Minister
Karnataka finally rose from the Yeddyurapa fiasco as the „State of Gardens‟ welcomed its new chief minister Mr Sadanand Gowda. “The stress would be more on effective implementation of the welfare programmes already launched by the BS Yeddyurappa government, than launching new programmes. ", he commented. He believes in transparency in the Government as any officer of the state can directly contact and tell him about his /her problems. He listed drinking water, roads, sanitation, housing a energy as his priority sectors.
Kraft foods to split into 2 units
It plans to split into two publically traded companies, one focussing on snacks business (like Oreo cookies, Trident gum and Cadbury chocolates) and the other on grocery business (that include Kraft cheese and Maxwell House coffee). According to its Chairman and CEO Irene Rosenfeld "Simply put, we have now reached a stage in our development with a global snacks and grocery business in North America in which each benefit from standing on their own and focusing on their unique drivers of success".
Bulldog Market– The term Bulldog market was used in business slang but has become widely accepted, much like the "Yankee market" refers to U.S. markets and "samurai market" refers to the market in Japan. Bulldog market is unrelated to the term "bull market" which describes a market on the rise.
1 2 3 4 5 6 7 8 9 10 11
THE IBS TIMES
Wokhardt’s nutrition business on sale
Wokhardt plans to sell its nutrition business to Danone. Drug major filed an application on Wednesday in the Bombay high court seeking approval for divestment of its nutrition business to Danone even as a clutch of investors expressed doubts over the completion of the deal. It is basically a move under its new debt restructuring scheme and thus company will receive the much needed cash to pay off its bondholder‟s thereby reducing its debt. This will bring down its debt-equity ratio from 6 to 3. But the court approval will be necessary as the company defaulted on redemption of $110 million worth of bonds in October 2009.
NASA aims for the biggest planet
NASA has launched a 2.7-billion km voyage to Jupiter. Its main aim is to study how our solar system was created, alongside studying the mysteries of the biggest planet of our solar system. The unmanned $1.1 billion Juno spacecraft took off from Cape Canaveral, Florida, at 11.25 am on Friday. The spacecraft will arrive at Jupiter in 2016. It will then study the planet's core, atmosphere, magnetic field and auroras. It is undoubtedly one of NASA's most ambitious missions till date.
ONGC to start production from KG basin in a month
After having some technical issues with the Australian contractor Cough Engineering (who quit the project ultimately), ONGC is all set to start production from the Kaveri Godavari basin, in a month and start pumping hydrocarbons from another block in the offshore region next May, top company officials said. It did alter its original plans of production from G1 and G15 blocks, which hold 21 million tonne oil and gas. "We were earlier planning to begin production from the GS 15 block in the KG basin by July-end , but now it might take another 2-3 weeks as we need to sort out some technical issues," said AK Hazarika , chairman ONGC. Hence the production is now going to commence by May 2012.
Senate passes US debt plan to avoid defaulting
After weeks of political battle and debate, both the Senate and House of Representatives, which voted Monday night, easily adopted the plan that raises the current $14.3 trillion cap on US borrowing, which expires at midnight. With less than 12 hours to go before the deadline, President Barack Obama promised to sign the measure immediately. Keeping into calculation the increased borrowing limit, legislators approved more than $2 trillion of budget cuts over the coming decade.
Bresnan Shines as Britain rules over India once again
Although England had many match winners in their side queuing up to snatch the victory laps but the final punch came from the unexpected hero Tim Bresnan, who ripped through the Indian side by taking 5 wickets for 48 runs after delivering with the bat by adding 82 valuable runs with Stuart Broad at a run rate of 6.30 and conforming a lead of 2-0 for the hosts at Trent Bridge. It was a battering for the Indians at the hands of the hosts as England registered a massive victory margin of 319 runs which was the only time in test cricket history that such a huge victory was achieved after conceding a first innings lead.
Sharapova remains Unchallenged as the Costliest paid athlete for 7th lucky time
She may not have won grand slam, but the Russian tennis player , Maria Sharapova remains unchallenged as the world's highest paid woman in professional sports. She has again topped the list that is published by Forbes, and her earnings that are to the tune of $25 million are mostly accrued to off-court endorsements and are twice as much as her nearest rival, Denmark's Caroline Wozniacki, the current women's world number one player. American racing driver Danica Patrick is third with $12 million followed by tennis players Venus Williams, Belgium's Kim Clijsters and Serena Williams.
Tiger woods returns with a bang after a three month lay off
“I‟m good to go,” Tiger Woods commented on being asked about his return, claiming he had shaken off any rust from a three-month absence due to knee and Achilles tendon problems. His followers seem just as excited to see him back, with most wishing him good luck in the comments section of the website. Surely Woods will find some of their words inspirational as he returns this week to try salvaging a season on the brink of slipping away.
Zero Coupon Mortgages- Zero-Coupon Mortgages are especially useful for commercial projects where cash flows to service debt may not be available until the project nears completion. As total interest plus principal repayment is only received by the lender when the loan matures, the credit risk is significantly higher than with a conventional loan. As such, lenders may only offer this form of financing to established commercial borrowers with pristine credit records.
1 2 3 4 5 6 7 8 9 10 11
OPINION FORUM– HOW THE CRADLE OF LIFE TURNED INTO JAWS OF DEATH
THE IBS TIMES
-ANKIT SHARMA
While the whole world is busy debating about the US debt crisis and whether or not US should have a AAA rating, people are dying in Africa, the so called cradle of life, what makes it worse is that nobody is bothered. Horn of Africa is suffering from the worst ever famine in the history of Africa. This draught is being considered worse than the Ethiopian famine of 1984 where 40,000 to 80,000 people lost their lives. African horn which includes countries like Somalia, Ethiopia, Dijbouti, Eriteria are going through, what can possibly be called the worst calamity in the history of these countries. With close to 11.9 million people affected, 30,000 children below the age of 5 already dead and another 90,000 expected to die in the next 3 month, it is the most terrible famine ever. People from draught affected areas are travelling miles on foot to reach the Kenyan refugee camp of Dadaab in search of food, water and medicines. Situation in Dadaab is no better, with 390,000 refugees already present; lack of infrastructure combined with poor healthcare facilities is making it difficult for doctors to ease the suffering of the refugees. Lack of rainfall combined with the Somalian civil war is being seen as the primary cause of this famine. African politicians on the other hand cannot be less bothered, they recently postponed a fund raising meeting which has to be held from 5th August in Addis Abba to 26th August , saying that one week was too short a time period to mobilize any funds and that they needed more time to get the funds in place. What is more appalling, is the fact that even though the combined GDP of African Union (AU) is £1.3 trillion the relief fund for a population of 922 million consists of a meager £350,000 which is significantly less than what Angelina Jolie spends on her facial treatment in an year. However all is not lost the World Bank has sanctioned a relief fund of £310 million for the African crisis, which was welcomed by all. Individuals too have donated generously, telephone operators in Kenya raised more than 500,000 pounds in less than a week to donate to the relief operations. Despite these efforts, relief has still eluded a majority of refugees due to excessive Red tapism and the ongoing civil war in the heart of Somalia.
However all is not lost the World Bank has sanctioned a relief fund of £310 million for the African crisis, which was welcomed by all.
The . African horn which includes countries like Somalia, Ethiopia, Dijbouti, Eriteria are going through, what can possibly be called the worst calamity in the history of these countries.
It takes anywhere between 3 to 15 days for a container to get clearance from the port of Mombasa in Kenya. Something that nobody in Africa seems to realize is that the precious time that is being wasted in paper work, can actually be utilized to save millions of lives. Moreover those shipments that do clear the formalities then face another road block, namely the rebels. These rebels claim that they are fighting for Somali people‟s rights, but for some reason these rebels would not let the aid get to the same people. Amidst so much hypocrisy and apathy, let us just hope that good sense prevails and the crisis is dealt with as efficiently as possible. I pray to God that he gives people the courage to deal with such a catastrophe.
the bond. An airport revenue bond is tax-exempt and is typically issued when a municipality or airport is looking to expand its facilities or pay for upgrades. Because this debt is issued by a municipality or airport authority it is more likely to have a lower interest rate, making the longterm financing costs for the airport lower.
Air Port Revenue Bond- A bond issued by a municipality or airport authority that uses the revenues of the airport facility to back
1 2 3 4 5 6 7 8 9 10 11
BRAND TRACK—DIESEL: FUEL YOURSELF
THE IBS TIMES
-LISA.T.SAMUEL
Diesel, which itself has an exaggeration of being an innovative international design company, offers you all that you need to flaunt well in your day to day life.
An island with a magnificent collection to quench your desires of the most breath taking clothes, bags, accessories, denims, fragrances, eyewear, helmets, footwear and the list goes on. The brand Diesel was born more than 20 years ago at Molvena, Italy and is today an innovative international design company, manufacturing jeans and casual clothing and accessories. Ever since it was established by Renzo Rosso in 1978, it has been producing dynamic and imaginative line of clothing to contribute to the fashion industry. It is present in over 80 countries with 10,000 points of sale and almost 50 company -owned stores. Diesel, which itself has a label of being an innovative international design company, offers you all that you need to flaunt well in your day to day life. The very unorthodox design method of the company has helped it to develop a reputation for the off-beat and has proved to be immensely appealing to the youth market across the globe. The Diesel line of clothing was different – when once out was wit introduced the worn out denims, prewashed with some holes in them, but little did the people realized that it was the intended look being offered to them. Diesel's innovative approach to marketing has let it to be perhaps the first clothing company to market their clothing in video games, and has also developed innovative approaches to fashion shows. In recent years the company has driven its attention to endorsing young creativity by sponsoring several projects such as the Diesel-U-Music Contest and also partnering with International Talent Support in its various forms. Diesel, always remaining in controversies by its antiestablishmentarian ads, has emphasized its image intentionally to mock the young people as well as glorify them with their very open ad campaigns. Diesel became the right clothing choice because it represented an alternative, rebellious lifestyle. Proved to be the follower of his words, Rosso totally applies to what he stated “What is really important to me is that we do something special, be it clothes, a window display, an ad campaign. It‟s really not important to me to make big sales” as this was the time when his brand was turning in 3 million Euro; a testimony to how fearless passion can lead to growth. The company took care to separate its new line, which was nonetheless sold in its retail stores and in-store boutiques, from its youth market Diesel line seen as a necessary move to preserve the company's trendsetter status among its core youth market. It is a company of awards for its explicit products and advertisements including the “Premio Rislutat” award in 1996 from the Bocconi Institute in Milan for “Best Italian Company of the Year”. The company has been spread internationally, boosting its presence to some 40 countries with its scales almost topping. Facing tough competition from the leading brand Levis, it was very obvious and boldly planned marketing that the consumers made a note. Indeed we are all shaped and fashioned by what we love, so hunger for the best international brand would definitely cease here. Flaunt the very different look you carry with the “Be stupid”, “Black Gold” “55DSL” collections. Locate your store right now. Indulge yourself in the best Fashion Fiesta.
Diesel, always remaining in controversies by its anti -establishmentarian ads, has emphasized its image intentionally to mock the young people as well as glorify them with their very open ad campaigns.
1 2 3 4 5 6 7 8 9 10 11
QUICK BITES- NEWS THAT CAN’T BE MISSED !
Big Shots…
THE IBS TIMES
- AVLEEN KAUR & KRISHNA DESHMUKH
Central Board of Direct Taxes appoints MC Joshi as new chairman. Rahul Gupta appointed as Ambit deputy group CEO. Joono Simon joins Ogilvy Bangalore as executive creative department.
Company Talks…
Essar to invest $750 mn to revive Zimbabwe Iron& Steel company. In Mobi acquires US based sprout in cash and stock deal. Android conquers 50% Global Smartphone market. Lehman Brothers holdings inc settled $20 Bn of intercompany claim with liquidators. Kraft Foods Inc plans to spin off North American grocery business. Ranbaxy Laboratories net down by 25%, share prices fall. Genpact Q2 net up by 40% at 39 Mn. First Source solutions raised 180 Mn by international loans. India Innovational Fund to invest 10crore in Sure Waves Media Technology. L Capital may take 14.5% more stake in Genesis Luxury. IIFCL may raise 3500crores via Infra Bonds in FY12. Mphasis buys US based solution provider-Wyde. Infra company‟s brace for margin sqeeze after rate hike. DLF to sell 2 non-core assets to cut debt in Q2. Adani Power‟s profit up by 54%. Cox& Kings allowed to step up foreign equity to 53.94%. Toyota raises profit forecast 39% on quicker recovery. Maruti FY12 sales growth in single digit. IFC to invest $1 Bn in India in 2011-12. Vizag steel sales turnover up by 57%.
Economy Speaks…
Food inflation measured by whole sale price (WPI) index to 8.04% from 7.33% in the previous week. India & Japan begin to implement Comprehensive Economic Partnership Agreement (CEPA) where in Japan abolish import duties on almost 90% of products traded from India. Gold gained 1.4% to $1669.35 an ounce while other commodities such as crude and copper declined. Standard & Poor‟s on Friday lowered United States Credit Rating by one notch „AAA‟ to „AA‟. SEBI setup regulations for Alternative Investment Funds (AIFs) that will cover the Funds. Karnataka Lokayukta has accused SESA Goa, NMDC a port operator, Adani Enterprises and steel maker JSW Steel of indulging illegal business practices resulting in an estimated loss of Rs.12,222crores. US raises debt ceiling by $2.8 trillion and make $ 1 trillion spending cuts. Farm output in country to get affected due to “below normal” seasonal monsoons in August & September India‟s foreign exchange reserves rises by $2.3 billion to $319 billion. Outward FDI‟s decline 27% in June. Further hike in interest rates by RBI will lead to more Non-performing Assets.
.
The Captains of the Ships..
Thai Prime Minister- Ying Luck Karnataka Chief Minister- Sadananda Gowda Veteran Investor-Rakesh Jhunjhunwala Foreign secretary-Ranjan Mathai
1 2 3 4 5 6 7 8 9 10 11
FOCUS OF THE WEEK– BRITISH BONDS CONSOLS
THE IBS TIMES
- APOORVA HARIHARAN
Consol, the short form for consolidated securities is a bond which is issued by the British government.
HISTORY OF BRITISH CONSOL BONDS
Consols were issued by the British government after the Napoleonic Wars in an attempt to stabilize the finances. It was first issued in the year 1751 and is one of the rare perpetual bonds. Perpetual bonds are those which pay the coupon rates perpetually. In this there is a continuous inflow of cash in the form of coupons. In the year 1752, the Chancellor of the Exchequer along with the Prime Minister, Sir Henery Pelham converted all the outstanding bonds into one consolidated stock which gave a coupon rate of 3.5%. In the year 1757, the coupon rate was reduced to 3 % and remained constant till 1888. Subsequently, the Coupon rate was decreased over a period of time. As per the Consolidated Stock under the National Debt (Conversion) Act 1888, the coupon rate came down to 2.5% and was first time redeemed on 5th April, 1923. From the year 1752 to 1813, the consols were not having much market demand. The various wars with America, France and the loss of 13 colonies resulted in the accumulation of the debt. The amount of 3% debt which was outstanding was of £ 8,200,000.After the American war, the outstanding debt suddenly increased from £ 8,200,000 to £ 107,400,000. As a result of which, the prices rose and fell due to the change in the military and political scenario.
Consols were issued by the British government after the Napoleonic Wars in an attempt to stabilize the finances.
CURRENT SCENARIO
Consols still exist today and are very much a part of the British government portfolio. Most of the government bonds pay coupons semi-annually. Consols pay a coupon on a quarterly basis due to their nature of perpetuity. There is no maturity value in case of these bonds and hence the question of the principal payment does not arise. They are basically traded in an organized market. An organized market is an exchange or a bourse where various tradable securities, commodities, foreign exchange, future and option contracts are bought and sold. At a point of time, they were the only securities for which an organized market existed. The concept of perpetuity seems to be a bit illogical, but it does seem to have a finite present value. In short Consols are the securities which represent the debt of the British Government. They are generally quoted in the financial columns of the newspaper. The way in which it is stated is as follows "Consols are unchanged at 92% for cash and 92 8/8 for August settlement." The word settlement is used as we would use the word account. On the London Stock Exchange there is special settling days for securities of all sorts, including transactions in foreign exchange. By "August settlement" it is understood that the consols are to be paid for on the August settling day. The Consol is often referred as “the premier security of the world”.
Most of the government bonds pay coupons semiannually. Consols pay a coupon on a quarterly basis due to their nature of perpetuity.
Inflation Hedge- An investment that is considered to provide protection against the decreased value of a currency. An inflation hedge
typically involves investing in an asset that is expected to maintain or increase its value over a specified period of time. Alternatively, the hedge could involve taking a higher position in assets which may decrease in value less rapidly than the value of the currency.
1 2 3 4 5 6 7 8 9 10 11
NEWS @ IBS– ALL HAPPENINGS IN IBS HYDERABAD!
THE IBS TIMES
- KRITIKA SETHI
To end a humdrum and quotidian week the list of spunky events were lined up. We observed a cocktail of events which included brain storming, stress busters and fun filled games. “Week ended on a high note”.
STOCKYARD-“INVESTOPRESTO-BID TO WIN”:
Stockyard organised a strategic management game-“INVESTO PRESTO” at 6:30 P.M on August 5, 2011 .The game was all about bidding and market simulation. It was divided in three rounds which were general awareness, bidding and divestment respectively. The response from all the IBSites was overwhelming with eight teams of five participants each. All the participants got the insight of the real market scenario, proving to be a learning experience for the beginners. All this culminated into a successful event.
KAIZEN-“CHARLIE’S ANGELS”:
Kaizen organised a fun-filled game called “CHARLIE‟S ANGELS” on August 5, 2011, 6:30 P.M in the seminar hall. The event was based on operational background and emphasised on memory, creativity and knowledge. The event was sure – fire with 21 teams registering for the first round, an inter section competition called “CHARLIE‟S MEMORY”. Teams of three girls and one boy were formed. Round two: “CAT-E-GORIES” was based on creativity where participants were asked to use paper. The final Round was “BOSLEY-BACHAO” where six teams were the finalists.
ECOBIZZ-“BLITZ AND KRIEG”:
The event was organised on Friday 6:00 P.M. in the Auditorium. It was strategic game which was divided in three rounds. Round one was the elimination round in which jumbled paragraph was given and words had to be identified. In round two which consisted of twenty different streams were allotted to twenty different teams. Round three: “BIZZ RACE” where the teams had to bid for five sectors. The event was a triple crown.
V.A.P.S-“GALLI CRICKET”:
V.A.P.S our official sports club organised a frivolous event which was spread throughout the weekend on 5th, 6th and 7th August 2011. The fervour and the zeal of the game was evident in our campus, with sixteen teams playing the “KNOCK OUT ROUND” of six over‟s on Friday and Saturday. Quarter finals were played on Saturday, semifinals and finals on Sunday with 12 over‟s on the last day. The Spirit of the game was celebrated here at IBS Hyderabad. ”IBS CHAMPS” were the winners of the event.
SAMAVESH- “SPIC MACAY”:
Honourable “VIDUSHI AVSARALA KANYAKUMARI”- CARNATIC MUSIC VIIOLINIST graced the occasion with her presence, who has mastered her arena from the age of fourteen years. The event was organised on Saturday at 6:45 pm. She played three ragas for the audience and played four others of their choice. Entire audience was enchanted by her performance.
SUBIR GOKARN’S VISIT TO IBS:
Friday, the 5th marked the presence of Deputy Governor of RBI “SUBIR GOKARN”. He enlightened the students of IBS by delivering a lecture on “MONETARY POLICY, BUSINESS ENVIRONMENT AND CORPORATE GROWTH”. He pointed out that the growth in food and energy prices were responsible for the current surge in inflation. We are grateful to him for sparing his valuable time and sharing his views with us.
CONVERGENCE-“BLOCK AND TACKLE:
The event had five rounds of elimination. Participants had to pick up chits with topics written on them. They were given two mins to think about the topic. There were paired into teams of two. If one spoke for the topic for one minute the other speaks against it for a minute and then the other speaks for it for a minute and the first person speaks against it. The time given to think and the time given to speak went on reducing. Two of our HR faculty were the judges. Based on the performance, teams were eliminated and finally three people were chosen and there was a face-off. The topics were very interesting including politics to size zero to mobile hacking to CSR.
1 2 3 4 5 6 7 8 9 10 11
THE IBS TIMES
MARKET WATCH
- SWATI VERMA The past week was an eventful one for India Inc. owing to the euphoria over the US debt deal that gave way to concerns about the health of the global economy. The market sentiment remained edgy with investors being worried about the effect that the 50 basis points will have on the entire economy. The markets touched a one year low as SENSEX crashed 576 points to reach 16,990 on Friday before recovering and ending the week on 17,305 while NIFTY lost 120 points on Friday to end at 5,211. Moving on to the performance of sectoral indices, all performed rather disappointingly this week. Stocks from the Realty and Metal space were the worst hit. Among other stocks that were at the receiving end, IT stocks were particularly hit hard on fears of the US economy slowing down. PSU stocks and those from the Oil & Gas sector managed to contain losses as they were most resilient on Friday. Falling crude oil prices helped the Oil & Gas stocks during the week. The Movers & Shakers of the Week
SURGES
ONGC HNDALCO CIPLA
%Change
1.08 0.77 0.73
DOWNFALLS
REL. INFRA REL COMM STERLITE IND.
%Change
7.43 7.16 6.22
Diesel engines manufacturer Cummins India is setting up a global technology centre in Pune for their research and development projects which will accommodate over 2500 engineers. The company is investing around Rs.337Cr for this centre. Tata Steel is also planning to invest 7mn pounds (over Rs.500Cr) at its Hartlepool mill in the United Kingdom to enhance the welding and material handling capability. The Reserve Bank of India (RBI) on Tuesday tightened its rules on sales of derivative products, in a move aimed at preventing the mis-selling of these complex products to local firms. The new rules prevent foreign banks from being market makers in a product if they can‟t price it locally. Global Cues: US equities dropped sharply by 6% reflecting investor worries after a statement came from the chief of the European Central Bank (ECB) on downside risks. The fall in US was the worse one since the recession hit the country in 2008 signaling the country might be on the verge of another recession and that Europe's sovereign debt crisis is at nowhere to end. The improvement in the unemployment data did inject some positivity in the market but the sentiments are still low. Japanese stocks were further weighed down by a further export-sapping appreciation in the yen despite Thursday's intervention in the markets by the Japanese government to weaken the currency.
1 2 3 4 5 6 7 8 9 10 11
THE IBS TIMES
MARKET WATCH
Sensex Nifty DJIA HangSeng FTSE100 Gold ($/oz.) Crude($/bl) INR v/s USD INR v/s EURO 1 AUGUST 2011 18314.33 5516.8 12132.49 22663.37 5795.33 1619.70 113.57 43.8550 63.1100 2 AUGUST 2011 18109.89 5456.55 11866.62 22421.46 5718.39 1658.40 111.85 44.1901 63.4062 3 AUGUST 2011 17940.55 5404.8 11896.44 21992.72 5584.51 1661.10 110.55 44.4289 63.1992 4 AUGUST 2011 17693.18 5331.8 11383.68 21884.74 5393.14 1648.80 107.48 44.5296 63.4774 5 AUGUST 2011 17305.87 5211.25 11444.61 20,946.14 5,246.99 1663.40 44.6898 63.6499
Temporary Default- A bond rating that suggests the issuer might not make all of the required interest payments, but is taking actions
to avoid a full default. Temporary default describes the credit worthiness of a debt issuer that has a high likelihood of defaulting on the debt, but is working to meet the payment obligations in the contract. This situation indicates a potential default of principal, interest or both. Investors in these bonds might only see a delay in payment.
BUSINESS JARGONS BY– KISLAY KUMAR
Contact Us & Post Articles at— [email protected] Join Us & Get E-copies at—
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.
http://bit.ly/ibstimesgooglegroup http://bit.ly/ibstimesyahoogroup
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 TEAMAPOORVA HARIHARAN, ANKIT SHARMA, AVINASH ROY, AVLEEN KAUR, GAURAV MALIK, KISLAY KUMAR, KRISHNA DESHMUKH, KRITIKA SETHI, LISA.T.SAMUEL, POOJA DALAL, SWATI VERMA.
1 2 3 4 5 6 7 8 9 10 11
11th AUGUST [THURSDAY]
EDITOR’S DESK
- TANIYA BANERJEE
Every speculation came to an end when S&P downgraded US‟s AAA+ rating. This single incident sent shock waves all across the world as markets felt its after effects. Loss of investors‟ trust in one of the most secure form of investments led to a feeling of uncertainty. Will the US head for a double dip recession? Get answers to such question s in our Cover Story this week. Eastern Africa is facing the worst drought it has seen in the last 60 years. Had it been that timely rescue operations were started the death toll could have been reduced? With almost 11 million people depending on international food aid the situation needs more attention and help from the countries world over. Get our writer‟s opinion on this, this week. We are covering DIESEL ISLAND in our Brand Track this week. A relatively new brand with just 20 years of existence, it has indeed created a niche for itself amongst the youth. As our Focus Of The Week we have British bonds consols this week. Started in 1751 for the first time by the British government, they make coupon payments quarterly which is a distinct feature. Moreover we have our regular sections News @IBS, Fast Track, Quick Bites, Market Watch and Jargons for adding more onto your knowledge. Cheers, Taniya Banerjee
EDITOR COVER FAST-TRACK
1 OPINION 2 BRAND 3 QUICK BITES
5 FOCUS 6 NEWS @ IBS 7 MARKET
8 9 10
COVER STORY– UNITED STATES LOSES ITS ’AAA’ RATING!
THE IBS TIMES
- AVINASH ROY The buzz that had been in news throughout the global financial market for the last few months finally became the headlines for almost every major newspaper this Saturday. In an unprecedented move, Credit Rated Agency Standard & Poor‟s (S&P) downgraded the US government‟s „AAA‟ sovereign credit rating to „AA+‟ and confirmed the „A-1+‟ short term rating. The rating is actually a development which raises concerns that investors will lose confidence in its economy. US stocks closed out their worst week in more than 2 years on Friday in a volatile session that saw major indices whip back and forth before S&P 500 ended down less than a point. The credit agency (S&P) commented that the downgrade actually reflects the agency‟s opinion that the fiscal consolidation plan which Congress and the administration recently agreed to falls short of what in their view would be necessary to stabilize the government‟s medium term debt dynamics. It also reflects the agency‟s views that the effectiveness, level of stability and predictability of American policy making have weakened at The Wall Street Journal a time of ongoing fiscal and economic challenges to a degree more than they expected when they assigned a termed the event as negative outlook to the rating on April 18, 2011. ‘Shaking of the global financial system’. This is The Wall Street Journal termed the event as „Shaking of the global financial system‟. This is the first time that the first time that the US the US has been downgraded since it received AAA rating from S&P in 1941. Now that it has finally haphas been downgraded since pened, the very next thing that comes to everyone‟s mind is „what next‟. Immediate impact that US will have it received AAA rating to bear is fall in dollar value as the foreign investors will move to countries like UK, Germany, France and from S&P in 1941. Canada who still have their AAA rating intact. Interest rates are bound to rise long term because what the government pays on debt is the base of all other interest rates in the country. With asset price falling a few more banks will fail. US exporters will earn more as the dollar falls whereas imports will become dearer. New innovators will replace incumbents who cannot readjust. This would somehow be the scenario for the US in near future. But what about the rest of the world, how will this event affect the global financial market is what we should be specifically concerned about. Global financial markets will reopen on Monday to a changed reality. USA who was the epicenter of the global financial meltdown in 2008 has again regained its role and chances are high that it may once again emit circular destruction all around the globe.
While inflation is inching up across the emerging economies, interest rate hikes is the immediate recourse that regulators have opted to, leaving the currency dollar to swing as per market‟s evaluation of the scenario. The emerging economies have been relatively stronger vis-à-vis the dollar, so far. But now dollar will weaken owing to the rating downgrade and the perceived riskiness in the US. China, a substantial investor in the US Treasuries might consider diversifying its reserves which would mean a further pressure on the dollar. While the oil price rally is on a pause for now, gold prices have been increasing steeply and will continue to be so pertaining to the risk involved with dollar. This scenario spells trouble for India, where inflation has pushed the RBI to hike interest rates 11 times since March 2010. Adding to it, investor flows will see major reallocating owing to the rating downward. So for India, there are a couple of pain points. The dollar losing its fundamental strength would mean a stronger Rupee. At a time when GDP growth rate has exhibited slowing trend and also where the RBI does not mind growth –inflation trade off, exports would take a hit whereas on import side a stronger rupee would widen the current account deficit. Though majority of Indian economists and financial tycoons all around the globe are pretty much confident that Indian economic growth will not be affected by the US rating downgrade, other than temporary „market jitters‟, yet the chances of being hit cannot be neglected. It is high time for Indian government to be prepared for the worst with a proper backup plan. With an optimistic view, let us all hope that proper monetary tightening by India and China will bring back global growth rate to more sensible levels soon.
But what about the rest of the world, how will this event affect the global financial market is what we should be specifically concerned about
1 2 3 4 5 6 7 8 9 10 11
FAST-TRACK NEWS
THE IBS TIMES
-GAURAV MALIK & POOJA DALAL
Congress president recovers from an underground surgery
Congress President Sonia Gandhi went through a successful surgery in USA without disclosing anything even to the close party allies. It was kept a complete private affair with only four party members and family members knowing about the 64 year old president‟s surgery. The information about the success of the surgery was conveyed by party spokesperson Mr. Janardhan Diwedi. He also informed that only Rahul Gandhi, Priyanka Vadra and Robert Vadra accompanied her for support.
Raju and 7 others accused in Satyam fiasco denied Bail
The apex court of Andhra Pradesh had denied bail to Ramalinga Raju and seven others involved in the Satyam fraud case which has been the biggest business fraud case ever happened. that the proceedings or the trial has been nearing completion ,the original date of the completion of the trial was July 31 so keeping that in mind the court has refused to grant a bail,the bail was asked mainly seeing the cooperation shown with the investigative agencies Also the bail was demanded on the basis of the appropriate behaviour of Raju and others but due to the way case is preceding, it was denied.
Andy Briant – From CEO to Vice-chairman
Intel Corp. On July 26 said that Andy Bryant, Intel's chief administrative officer, was elected to the new position of vice chairman of the board of directors in preparation for him to be elected the company's next chairman following Intel's annual stockholder meeting in May 2012. Bryant joined Intel in 1981 and served as the company's chief financial officer from 1994 to 2007. Bryant become the second Intel executive to serve on the company's current board, joining Intel President and CEO Paul Otellini.
McAfee discloses biggest-ever series of cyber attacks
Cyber attacks and infiltration in networks of 72 organizations including UN, governments & companies around the world has been discovered. They have found series of cyber attacks and this involves infiltration of networks of more than 72 organisations that include United Nations, governments and large companies. Experts are also of the opinion that all these attacks have originated from the same country but declined to name it. But much evidence points towards China. The long list of victims in the five-year long campaign include the governments of the United States, Taiwan, India, South Korea, Vietnam and Canada; the Association of Southeast Asian Nations (ASEAN); the International Olympic Committee (IOC) etc.
Union Bank raises lending rates by 50 bps
After RBI raised its key rates by 50 base points as a measure to curb inflation, many commercial banks have followed suit. Union bank has revised its base rate, the minimum lending rate, by 50 basis points to 10.75 percent, effective from Monday. However, the bank has only increased the lending rate under the old BPLR (benchmark prime lending rate) scheme by 25 bps to 14.50 per cent.
Karnataka Finds its new Chief Minister
Karnataka finally rose from the Yeddyurapa fiasco as the „State of Gardens‟ welcomed its new chief minister Mr Sadanand Gowda. “The stress would be more on effective implementation of the welfare programmes already launched by the BS Yeddyurappa government, than launching new programmes. ", he commented. He believes in transparency in the Government as any officer of the state can directly contact and tell him about his /her problems. He listed drinking water, roads, sanitation, housing a energy as his priority sectors.
Kraft foods to split into 2 units
It plans to split into two publically traded companies, one focussing on snacks business (like Oreo cookies, Trident gum and Cadbury chocolates) and the other on grocery business (that include Kraft cheese and Maxwell House coffee). According to its Chairman and CEO Irene Rosenfeld "Simply put, we have now reached a stage in our development with a global snacks and grocery business in North America in which each benefit from standing on their own and focusing on their unique drivers of success".
Bulldog Market– The term Bulldog market was used in business slang but has become widely accepted, much like the "Yankee market" refers to U.S. markets and "samurai market" refers to the market in Japan. Bulldog market is unrelated to the term "bull market" which describes a market on the rise.
1 2 3 4 5 6 7 8 9 10 11
THE IBS TIMES
Wokhardt’s nutrition business on sale
Wokhardt plans to sell its nutrition business to Danone. Drug major filed an application on Wednesday in the Bombay high court seeking approval for divestment of its nutrition business to Danone even as a clutch of investors expressed doubts over the completion of the deal. It is basically a move under its new debt restructuring scheme and thus company will receive the much needed cash to pay off its bondholder‟s thereby reducing its debt. This will bring down its debt-equity ratio from 6 to 3. But the court approval will be necessary as the company defaulted on redemption of $110 million worth of bonds in October 2009.
NASA aims for the biggest planet
NASA has launched a 2.7-billion km voyage to Jupiter. Its main aim is to study how our solar system was created, alongside studying the mysteries of the biggest planet of our solar system. The unmanned $1.1 billion Juno spacecraft took off from Cape Canaveral, Florida, at 11.25 am on Friday. The spacecraft will arrive at Jupiter in 2016. It will then study the planet's core, atmosphere, magnetic field and auroras. It is undoubtedly one of NASA's most ambitious missions till date.
ONGC to start production from KG basin in a month
After having some technical issues with the Australian contractor Cough Engineering (who quit the project ultimately), ONGC is all set to start production from the Kaveri Godavari basin, in a month and start pumping hydrocarbons from another block in the offshore region next May, top company officials said. It did alter its original plans of production from G1 and G15 blocks, which hold 21 million tonne oil and gas. "We were earlier planning to begin production from the GS 15 block in the KG basin by July-end , but now it might take another 2-3 weeks as we need to sort out some technical issues," said AK Hazarika , chairman ONGC. Hence the production is now going to commence by May 2012.
Senate passes US debt plan to avoid defaulting
After weeks of political battle and debate, both the Senate and House of Representatives, which voted Monday night, easily adopted the plan that raises the current $14.3 trillion cap on US borrowing, which expires at midnight. With less than 12 hours to go before the deadline, President Barack Obama promised to sign the measure immediately. Keeping into calculation the increased borrowing limit, legislators approved more than $2 trillion of budget cuts over the coming decade.
Bresnan Shines as Britain rules over India once again
Although England had many match winners in their side queuing up to snatch the victory laps but the final punch came from the unexpected hero Tim Bresnan, who ripped through the Indian side by taking 5 wickets for 48 runs after delivering with the bat by adding 82 valuable runs with Stuart Broad at a run rate of 6.30 and conforming a lead of 2-0 for the hosts at Trent Bridge. It was a battering for the Indians at the hands of the hosts as England registered a massive victory margin of 319 runs which was the only time in test cricket history that such a huge victory was achieved after conceding a first innings lead.
Sharapova remains Unchallenged as the Costliest paid athlete for 7th lucky time
She may not have won grand slam, but the Russian tennis player , Maria Sharapova remains unchallenged as the world's highest paid woman in professional sports. She has again topped the list that is published by Forbes, and her earnings that are to the tune of $25 million are mostly accrued to off-court endorsements and are twice as much as her nearest rival, Denmark's Caroline Wozniacki, the current women's world number one player. American racing driver Danica Patrick is third with $12 million followed by tennis players Venus Williams, Belgium's Kim Clijsters and Serena Williams.
Tiger woods returns with a bang after a three month lay off
“I‟m good to go,” Tiger Woods commented on being asked about his return, claiming he had shaken off any rust from a three-month absence due to knee and Achilles tendon problems. His followers seem just as excited to see him back, with most wishing him good luck in the comments section of the website. Surely Woods will find some of their words inspirational as he returns this week to try salvaging a season on the brink of slipping away.
Zero Coupon Mortgages- Zero-Coupon Mortgages are especially useful for commercial projects where cash flows to service debt may not be available until the project nears completion. As total interest plus principal repayment is only received by the lender when the loan matures, the credit risk is significantly higher than with a conventional loan. As such, lenders may only offer this form of financing to established commercial borrowers with pristine credit records.
1 2 3 4 5 6 7 8 9 10 11
OPINION FORUM– HOW THE CRADLE OF LIFE TURNED INTO JAWS OF DEATH
THE IBS TIMES
-ANKIT SHARMA
While the whole world is busy debating about the US debt crisis and whether or not US should have a AAA rating, people are dying in Africa, the so called cradle of life, what makes it worse is that nobody is bothered. Horn of Africa is suffering from the worst ever famine in the history of Africa. This draught is being considered worse than the Ethiopian famine of 1984 where 40,000 to 80,000 people lost their lives. African horn which includes countries like Somalia, Ethiopia, Dijbouti, Eriteria are going through, what can possibly be called the worst calamity in the history of these countries. With close to 11.9 million people affected, 30,000 children below the age of 5 already dead and another 90,000 expected to die in the next 3 month, it is the most terrible famine ever. People from draught affected areas are travelling miles on foot to reach the Kenyan refugee camp of Dadaab in search of food, water and medicines. Situation in Dadaab is no better, with 390,000 refugees already present; lack of infrastructure combined with poor healthcare facilities is making it difficult for doctors to ease the suffering of the refugees. Lack of rainfall combined with the Somalian civil war is being seen as the primary cause of this famine. African politicians on the other hand cannot be less bothered, they recently postponed a fund raising meeting which has to be held from 5th August in Addis Abba to 26th August , saying that one week was too short a time period to mobilize any funds and that they needed more time to get the funds in place. What is more appalling, is the fact that even though the combined GDP of African Union (AU) is £1.3 trillion the relief fund for a population of 922 million consists of a meager £350,000 which is significantly less than what Angelina Jolie spends on her facial treatment in an year. However all is not lost the World Bank has sanctioned a relief fund of £310 million for the African crisis, which was welcomed by all. Individuals too have donated generously, telephone operators in Kenya raised more than 500,000 pounds in less than a week to donate to the relief operations. Despite these efforts, relief has still eluded a majority of refugees due to excessive Red tapism and the ongoing civil war in the heart of Somalia.
However all is not lost the World Bank has sanctioned a relief fund of £310 million for the African crisis, which was welcomed by all.
The . African horn which includes countries like Somalia, Ethiopia, Dijbouti, Eriteria are going through, what can possibly be called the worst calamity in the history of these countries.
It takes anywhere between 3 to 15 days for a container to get clearance from the port of Mombasa in Kenya. Something that nobody in Africa seems to realize is that the precious time that is being wasted in paper work, can actually be utilized to save millions of lives. Moreover those shipments that do clear the formalities then face another road block, namely the rebels. These rebels claim that they are fighting for Somali people‟s rights, but for some reason these rebels would not let the aid get to the same people. Amidst so much hypocrisy and apathy, let us just hope that good sense prevails and the crisis is dealt with as efficiently as possible. I pray to God that he gives people the courage to deal with such a catastrophe.
the bond. An airport revenue bond is tax-exempt and is typically issued when a municipality or airport is looking to expand its facilities or pay for upgrades. Because this debt is issued by a municipality or airport authority it is more likely to have a lower interest rate, making the longterm financing costs for the airport lower.
Air Port Revenue Bond- A bond issued by a municipality or airport authority that uses the revenues of the airport facility to back
1 2 3 4 5 6 7 8 9 10 11
BRAND TRACK—DIESEL: FUEL YOURSELF
THE IBS TIMES
-LISA.T.SAMUEL
Diesel, which itself has an exaggeration of being an innovative international design company, offers you all that you need to flaunt well in your day to day life.
An island with a magnificent collection to quench your desires of the most breath taking clothes, bags, accessories, denims, fragrances, eyewear, helmets, footwear and the list goes on. The brand Diesel was born more than 20 years ago at Molvena, Italy and is today an innovative international design company, manufacturing jeans and casual clothing and accessories. Ever since it was established by Renzo Rosso in 1978, it has been producing dynamic and imaginative line of clothing to contribute to the fashion industry. It is present in over 80 countries with 10,000 points of sale and almost 50 company -owned stores. Diesel, which itself has a label of being an innovative international design company, offers you all that you need to flaunt well in your day to day life. The very unorthodox design method of the company has helped it to develop a reputation for the off-beat and has proved to be immensely appealing to the youth market across the globe. The Diesel line of clothing was different – when once out was wit introduced the worn out denims, prewashed with some holes in them, but little did the people realized that it was the intended look being offered to them. Diesel's innovative approach to marketing has let it to be perhaps the first clothing company to market their clothing in video games, and has also developed innovative approaches to fashion shows. In recent years the company has driven its attention to endorsing young creativity by sponsoring several projects such as the Diesel-U-Music Contest and also partnering with International Talent Support in its various forms. Diesel, always remaining in controversies by its antiestablishmentarian ads, has emphasized its image intentionally to mock the young people as well as glorify them with their very open ad campaigns. Diesel became the right clothing choice because it represented an alternative, rebellious lifestyle. Proved to be the follower of his words, Rosso totally applies to what he stated “What is really important to me is that we do something special, be it clothes, a window display, an ad campaign. It‟s really not important to me to make big sales” as this was the time when his brand was turning in 3 million Euro; a testimony to how fearless passion can lead to growth. The company took care to separate its new line, which was nonetheless sold in its retail stores and in-store boutiques, from its youth market Diesel line seen as a necessary move to preserve the company's trendsetter status among its core youth market. It is a company of awards for its explicit products and advertisements including the “Premio Rislutat” award in 1996 from the Bocconi Institute in Milan for “Best Italian Company of the Year”. The company has been spread internationally, boosting its presence to some 40 countries with its scales almost topping. Facing tough competition from the leading brand Levis, it was very obvious and boldly planned marketing that the consumers made a note. Indeed we are all shaped and fashioned by what we love, so hunger for the best international brand would definitely cease here. Flaunt the very different look you carry with the “Be stupid”, “Black Gold” “55DSL” collections. Locate your store right now. Indulge yourself in the best Fashion Fiesta.
Diesel, always remaining in controversies by its anti -establishmentarian ads, has emphasized its image intentionally to mock the young people as well as glorify them with their very open ad campaigns.
1 2 3 4 5 6 7 8 9 10 11
QUICK BITES- NEWS THAT CAN’T BE MISSED !
Big Shots…
THE IBS TIMES
- AVLEEN KAUR & KRISHNA DESHMUKH
Central Board of Direct Taxes appoints MC Joshi as new chairman. Rahul Gupta appointed as Ambit deputy group CEO. Joono Simon joins Ogilvy Bangalore as executive creative department.
Company Talks…
Essar to invest $750 mn to revive Zimbabwe Iron& Steel company. In Mobi acquires US based sprout in cash and stock deal. Android conquers 50% Global Smartphone market. Lehman Brothers holdings inc settled $20 Bn of intercompany claim with liquidators. Kraft Foods Inc plans to spin off North American grocery business. Ranbaxy Laboratories net down by 25%, share prices fall. Genpact Q2 net up by 40% at 39 Mn. First Source solutions raised 180 Mn by international loans. India Innovational Fund to invest 10crore in Sure Waves Media Technology. L Capital may take 14.5% more stake in Genesis Luxury. IIFCL may raise 3500crores via Infra Bonds in FY12. Mphasis buys US based solution provider-Wyde. Infra company‟s brace for margin sqeeze after rate hike. DLF to sell 2 non-core assets to cut debt in Q2. Adani Power‟s profit up by 54%. Cox& Kings allowed to step up foreign equity to 53.94%. Toyota raises profit forecast 39% on quicker recovery. Maruti FY12 sales growth in single digit. IFC to invest $1 Bn in India in 2011-12. Vizag steel sales turnover up by 57%.
Economy Speaks…
Food inflation measured by whole sale price (WPI) index to 8.04% from 7.33% in the previous week. India & Japan begin to implement Comprehensive Economic Partnership Agreement (CEPA) where in Japan abolish import duties on almost 90% of products traded from India. Gold gained 1.4% to $1669.35 an ounce while other commodities such as crude and copper declined. Standard & Poor‟s on Friday lowered United States Credit Rating by one notch „AAA‟ to „AA‟. SEBI setup regulations for Alternative Investment Funds (AIFs) that will cover the Funds. Karnataka Lokayukta has accused SESA Goa, NMDC a port operator, Adani Enterprises and steel maker JSW Steel of indulging illegal business practices resulting in an estimated loss of Rs.12,222crores. US raises debt ceiling by $2.8 trillion and make $ 1 trillion spending cuts. Farm output in country to get affected due to “below normal” seasonal monsoons in August & September India‟s foreign exchange reserves rises by $2.3 billion to $319 billion. Outward FDI‟s decline 27% in June. Further hike in interest rates by RBI will lead to more Non-performing Assets.
.
The Captains of the Ships..
Thai Prime Minister- Ying Luck Karnataka Chief Minister- Sadananda Gowda Veteran Investor-Rakesh Jhunjhunwala Foreign secretary-Ranjan Mathai
1 2 3 4 5 6 7 8 9 10 11
FOCUS OF THE WEEK– BRITISH BONDS CONSOLS
THE IBS TIMES
- APOORVA HARIHARAN
Consol, the short form for consolidated securities is a bond which is issued by the British government.
HISTORY OF BRITISH CONSOL BONDS
Consols were issued by the British government after the Napoleonic Wars in an attempt to stabilize the finances. It was first issued in the year 1751 and is one of the rare perpetual bonds. Perpetual bonds are those which pay the coupon rates perpetually. In this there is a continuous inflow of cash in the form of coupons. In the year 1752, the Chancellor of the Exchequer along with the Prime Minister, Sir Henery Pelham converted all the outstanding bonds into one consolidated stock which gave a coupon rate of 3.5%. In the year 1757, the coupon rate was reduced to 3 % and remained constant till 1888. Subsequently, the Coupon rate was decreased over a period of time. As per the Consolidated Stock under the National Debt (Conversion) Act 1888, the coupon rate came down to 2.5% and was first time redeemed on 5th April, 1923. From the year 1752 to 1813, the consols were not having much market demand. The various wars with America, France and the loss of 13 colonies resulted in the accumulation of the debt. The amount of 3% debt which was outstanding was of £ 8,200,000.After the American war, the outstanding debt suddenly increased from £ 8,200,000 to £ 107,400,000. As a result of which, the prices rose and fell due to the change in the military and political scenario.
Consols were issued by the British government after the Napoleonic Wars in an attempt to stabilize the finances.
CURRENT SCENARIO
Consols still exist today and are very much a part of the British government portfolio. Most of the government bonds pay coupons semi-annually. Consols pay a coupon on a quarterly basis due to their nature of perpetuity. There is no maturity value in case of these bonds and hence the question of the principal payment does not arise. They are basically traded in an organized market. An organized market is an exchange or a bourse where various tradable securities, commodities, foreign exchange, future and option contracts are bought and sold. At a point of time, they were the only securities for which an organized market existed. The concept of perpetuity seems to be a bit illogical, but it does seem to have a finite present value. In short Consols are the securities which represent the debt of the British Government. They are generally quoted in the financial columns of the newspaper. The way in which it is stated is as follows "Consols are unchanged at 92% for cash and 92 8/8 for August settlement." The word settlement is used as we would use the word account. On the London Stock Exchange there is special settling days for securities of all sorts, including transactions in foreign exchange. By "August settlement" it is understood that the consols are to be paid for on the August settling day. The Consol is often referred as “the premier security of the world”.
Most of the government bonds pay coupons semiannually. Consols pay a coupon on a quarterly basis due to their nature of perpetuity.
Inflation Hedge- An investment that is considered to provide protection against the decreased value of a currency. An inflation hedge
typically involves investing in an asset that is expected to maintain or increase its value over a specified period of time. Alternatively, the hedge could involve taking a higher position in assets which may decrease in value less rapidly than the value of the currency.
1 2 3 4 5 6 7 8 9 10 11
NEWS @ IBS– ALL HAPPENINGS IN IBS HYDERABAD!
THE IBS TIMES
- KRITIKA SETHI
To end a humdrum and quotidian week the list of spunky events were lined up. We observed a cocktail of events which included brain storming, stress busters and fun filled games. “Week ended on a high note”.
STOCKYARD-“INVESTOPRESTO-BID TO WIN”:
Stockyard organised a strategic management game-“INVESTO PRESTO” at 6:30 P.M on August 5, 2011 .The game was all about bidding and market simulation. It was divided in three rounds which were general awareness, bidding and divestment respectively. The response from all the IBSites was overwhelming with eight teams of five participants each. All the participants got the insight of the real market scenario, proving to be a learning experience for the beginners. All this culminated into a successful event.
KAIZEN-“CHARLIE’S ANGELS”:
Kaizen organised a fun-filled game called “CHARLIE‟S ANGELS” on August 5, 2011, 6:30 P.M in the seminar hall. The event was based on operational background and emphasised on memory, creativity and knowledge. The event was sure – fire with 21 teams registering for the first round, an inter section competition called “CHARLIE‟S MEMORY”. Teams of three girls and one boy were formed. Round two: “CAT-E-GORIES” was based on creativity where participants were asked to use paper. The final Round was “BOSLEY-BACHAO” where six teams were the finalists.
ECOBIZZ-“BLITZ AND KRIEG”:
The event was organised on Friday 6:00 P.M. in the Auditorium. It was strategic game which was divided in three rounds. Round one was the elimination round in which jumbled paragraph was given and words had to be identified. In round two which consisted of twenty different streams were allotted to twenty different teams. Round three: “BIZZ RACE” where the teams had to bid for five sectors. The event was a triple crown.
V.A.P.S-“GALLI CRICKET”:
V.A.P.S our official sports club organised a frivolous event which was spread throughout the weekend on 5th, 6th and 7th August 2011. The fervour and the zeal of the game was evident in our campus, with sixteen teams playing the “KNOCK OUT ROUND” of six over‟s on Friday and Saturday. Quarter finals were played on Saturday, semifinals and finals on Sunday with 12 over‟s on the last day. The Spirit of the game was celebrated here at IBS Hyderabad. ”IBS CHAMPS” were the winners of the event.
SAMAVESH- “SPIC MACAY”:
Honourable “VIDUSHI AVSARALA KANYAKUMARI”- CARNATIC MUSIC VIIOLINIST graced the occasion with her presence, who has mastered her arena from the age of fourteen years. The event was organised on Saturday at 6:45 pm. She played three ragas for the audience and played four others of their choice. Entire audience was enchanted by her performance.
SUBIR GOKARN’S VISIT TO IBS:
Friday, the 5th marked the presence of Deputy Governor of RBI “SUBIR GOKARN”. He enlightened the students of IBS by delivering a lecture on “MONETARY POLICY, BUSINESS ENVIRONMENT AND CORPORATE GROWTH”. He pointed out that the growth in food and energy prices were responsible for the current surge in inflation. We are grateful to him for sparing his valuable time and sharing his views with us.
CONVERGENCE-“BLOCK AND TACKLE:
The event had five rounds of elimination. Participants had to pick up chits with topics written on them. They were given two mins to think about the topic. There were paired into teams of two. If one spoke for the topic for one minute the other speaks against it for a minute and then the other speaks for it for a minute and the first person speaks against it. The time given to think and the time given to speak went on reducing. Two of our HR faculty were the judges. Based on the performance, teams were eliminated and finally three people were chosen and there was a face-off. The topics were very interesting including politics to size zero to mobile hacking to CSR.
1 2 3 4 5 6 7 8 9 10 11
THE IBS TIMES
MARKET WATCH
- SWATI VERMA The past week was an eventful one for India Inc. owing to the euphoria over the US debt deal that gave way to concerns about the health of the global economy. The market sentiment remained edgy with investors being worried about the effect that the 50 basis points will have on the entire economy. The markets touched a one year low as SENSEX crashed 576 points to reach 16,990 on Friday before recovering and ending the week on 17,305 while NIFTY lost 120 points on Friday to end at 5,211. Moving on to the performance of sectoral indices, all performed rather disappointingly this week. Stocks from the Realty and Metal space were the worst hit. Among other stocks that were at the receiving end, IT stocks were particularly hit hard on fears of the US economy slowing down. PSU stocks and those from the Oil & Gas sector managed to contain losses as they were most resilient on Friday. Falling crude oil prices helped the Oil & Gas stocks during the week. The Movers & Shakers of the Week
SURGES
ONGC HNDALCO CIPLA
%Change
1.08 0.77 0.73
DOWNFALLS
REL. INFRA REL COMM STERLITE IND.
%Change
7.43 7.16 6.22
Diesel engines manufacturer Cummins India is setting up a global technology centre in Pune for their research and development projects which will accommodate over 2500 engineers. The company is investing around Rs.337Cr for this centre. Tata Steel is also planning to invest 7mn pounds (over Rs.500Cr) at its Hartlepool mill in the United Kingdom to enhance the welding and material handling capability. The Reserve Bank of India (RBI) on Tuesday tightened its rules on sales of derivative products, in a move aimed at preventing the mis-selling of these complex products to local firms. The new rules prevent foreign banks from being market makers in a product if they can‟t price it locally. Global Cues: US equities dropped sharply by 6% reflecting investor worries after a statement came from the chief of the European Central Bank (ECB) on downside risks. The fall in US was the worse one since the recession hit the country in 2008 signaling the country might be on the verge of another recession and that Europe's sovereign debt crisis is at nowhere to end. The improvement in the unemployment data did inject some positivity in the market but the sentiments are still low. Japanese stocks were further weighed down by a further export-sapping appreciation in the yen despite Thursday's intervention in the markets by the Japanese government to weaken the currency.
1 2 3 4 5 6 7 8 9 10 11
THE IBS TIMES
MARKET WATCH
Sensex Nifty DJIA HangSeng FTSE100 Gold ($/oz.) Crude($/bl) INR v/s USD INR v/s EURO 1 AUGUST 2011 18314.33 5516.8 12132.49 22663.37 5795.33 1619.70 113.57 43.8550 63.1100 2 AUGUST 2011 18109.89 5456.55 11866.62 22421.46 5718.39 1658.40 111.85 44.1901 63.4062 3 AUGUST 2011 17940.55 5404.8 11896.44 21992.72 5584.51 1661.10 110.55 44.4289 63.1992 4 AUGUST 2011 17693.18 5331.8 11383.68 21884.74 5393.14 1648.80 107.48 44.5296 63.4774 5 AUGUST 2011 17305.87 5211.25 11444.61 20,946.14 5,246.99 1663.40 44.6898 63.6499
Temporary Default- A bond rating that suggests the issuer might not make all of the required interest payments, but is taking actions
to avoid a full default. Temporary default describes the credit worthiness of a debt issuer that has a high likelihood of defaulting on the debt, but is working to meet the payment obligations in the contract. This situation indicates a potential default of principal, interest or both. Investors in these bonds might only see a delay in payment.
BUSINESS JARGONS BY– KISLAY KUMAR
Contact Us & Post Articles at— [email protected] Join Us & Get E-copies at—
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.
http://bit.ly/ibstimesgooglegroup http://bit.ly/ibstimesyahoogroup
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 TEAMAPOORVA HARIHARAN, ANKIT SHARMA, AVINASH ROY, AVLEEN KAUR, GAURAV MALIK, KISLAY KUMAR, KRISHNA DESHMUKH, KRITIKA SETHI, LISA.T.SAMUEL, POOJA DALAL, SWATI VERMA.
1 2 3 4 5 6 7 8 9 10 11
