a finanial newsletter july issue(1).pdf · fdi in collaborations and joint ventures in other areas...
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NishkaNishkaNishka A FINANCIAL NEWSLETTER
Infrastructure
financing
July 2014, Volume V, Issue 48
Christ University Institute of Management, Kengeri
Cementing the Future
Upasana Gurung, F1 & George P. Job, F2
Infrastructure financing, though unglamorous, is very crucial for the development and growth of a
nation. Infrastructure funding could include funding projects of generation/transmission of power, develop-
ing roadways, seaports and airports, laying/maintaining pipelines for gas, setting up industrial parks, tele-
communication services, irrigation projects, etc.
These infrastructure projects are the backbone of any economy, and a growing economy needs to
supply the ever growing need for infrastructure, and therefore the need for funding infrastructure creation.
India, being a developing nation, has a huge need for infrastructure financing. According to the esti-
mates made by the planning commission in March 2010, and after taking into account the recent trends in
different sources of infrastructure financing, the funding gap in the infrastructure sector during the last two
years of the Eleventh Five year plan is likely to be Rs 1, 27,570 Crores, which is around 18 percent of the
total estimated requirement.
In a visibly weak macroeconomic setting, a well planned economic revival policy focused on infra-
structure development is expected to guide the economy back to a robust growth path.
Usually, funds for infrastructure projects are financed by the government through cash/ guarantees.
But this support is no longer sustainable due to the significant deficiency of funds and high sovereign debt
levels in developed countries. Furthermore, infrastructure stimulus packages will likely reverse as govern-
ments look to bring their finances under control.
The maximum tenor for infrastructure funding is 20 years. Funds for the project can be availed in
domestic as well as in foreign currency. The World Bank, export credit agencies and other multilateral
agencies, along with state-owned infrastructure banks, play an important role in financing infrastructure
projects. Private investment will also need to grow, which could prove to be really important.
In India, private participation in the process of infrastructure development has received a lackluster
response. The PPP (Public-Private Partnership) constitutes only a miniscule share in overall infrastructure
building despite initiation of various policy adjustments and sector-specific reform programs. The key to
successfully raising enough investment for the much needed tomorrow’s essential infrastructure will rest in
finding the optimum balance between public and private money.
Given that infrastructure financing is falling out of favor with banks, the question is, if other inves-
tors can fill the gap. If yes, who and in what form?
http://www.economist.com/news/finance-and-economics/21599394-world-needs-more-infrastructure-how-will-it-pay-it-long-and-winding
http://www.assocham.org/events/recent/event_835/Arun-Jain-overseas-listing.pdf
http://www.deloitte.com/assets/Dcom-India/Local%20Assets/Documents/Thoughtware/Funding_the_InfrastructureInvestment_Gap.pdf
http://www.rbi.org.in/scripts/BS_VIEWContent.aspx?ID=1912
Financing of Infrastructure Projects
Niharika Shadra, F1 & Purnima Singh, F2
Infrastructure financing has been a pivotal issue in a developing economy like India. The need has
been more pronounced by the fact that Banks have to implement Basel III norms, which would steer banks
away from long-term loans of 20 years, as it is normal for infrastructure projects to have long gestation pe-
riods which may result into NPAs if in the long run, the situations may change. Government is also tight
stringed with huge inflation bills and is therefore not in the position to take on very large infrastructure
funding commitments. This is creating a need, and opportunity, for new entrants. Long-term investors such
as Insurance companies and Pension Funds are eager to put money into infrastructure, as are endowments
and sovereign-wealth funds. This would ease the pressure on the traditional commercial banks as these
players have a huge funding base to commit to infrastructure commitments for longer gestation periods. As
equity markets are not favorably inclined towards financing projects because of uncertainties in the global
economy, and due to present regulatory requirements limiting exit options, which hinder possibilities of
equity infusion. Other measures that could be taken are the development of a vibrant debt market. Insur-
ance and pension fund companies are using the instrument of Infrastructure Debt Funds, which essentially
act as vehicles for refinancing existing debt of infrastructure companies, thereby creating fresh headroom
for banks to lend to fresh infrastructure projects, a part of which again qualify for refinancing. IDF-NBFCs
would take over loans extended to infrastructure projects that are created through the Public Private Part-
nership (PPP) route.
The government in its latest move has also allowed the infrastructure finance companies to issue
secured debentures with tenure of up to 30 years. This move is expected to help raise long term funds for
this sector. IDF-NBFC’s have also been allowed to issue similar instruments. The infrastructure investment
that is currently required by our reeling economy during the current Five year Plan (2012-17) is about US $
1 trillion. The way of raising this amount is either through PPP or directly through the private sector route.
The first of the two options seem more viable. Though the government spending in this sector is at the top
of the agenda, the need for the private sector to step in is still high. The role of IDF’s is therefore becom-
ing increasingly important. India Infra-debt is India’s first infrastructure debt fund under
the NBFC structure. It is a strategic alliance between ICICI Bank, Bank of Baroda, Citicorp Finance and
Life Insurance Corporation of India. It has successfully raised Rs 300 Crores and plans to raise another Rs
3,000 Crores in the next two years. A key point here is that income from IDF-NBFC’s is exempt from tax.
Tax levied on interest income of IDF-NBFC’s of foreign investors stand significantly lower at 5% com-
pared to a 20% rate for other debt funds. IDF can surely provide the much needed relief to this sector as
they meet two of the most basic requirements of this sector- low cost of funds & long term sourcing. But
we need to see how the sluggish Indian economy taps this source in the future.
http://www.rbi.org.in/SCRIPTs/FAQView.aspx?Id=90
FDI and PPP: Welcoming steps for Indian Railways
Challapalli Kalyana Karthik and Pawanpreet Kaur, F2
FDI:
In January 2014, the Ministry of Home Affairs gave in-principle approval for Foreign Direct Invest-
ment (FDI) in Railway infrastructure. The Cabinet Committee on Economic Affairs (CCEA), however, is
yet to consider the proposal. According to Department of Industrial Policy and Promotion (DIPP), 100%
FDI could be allowed in dedicated freight corridors and high speed railway networks while allowing a 74%
FDI in collaborations and joint ventures in other areas which can help Indian Railways perform better.
PPP:
Several policies have also been announced in the past to attract private investment but most of them
have fallen flat. The main reason for the failure is that these policies did not convert to time-bound projects
and Railway Ministry wants operation, con-
trol and management in their hands which is
unacceptable to the private investors.
Railway ministry managed to attract a
lot of private players for rail port connectivity
projects after incorporation in participative
policies for an amount of about Rs. 38 billion.
The automobile freight train operator scheme
showed some success in the past year with
railway wagons of higher capacity being manufactured for transporting vehicles of Maruti Suzuki. About
18 logistics companies including Concor, Pristine logistics came up with proposals for freight terminals and
about 23 firms including Lloyd Steel and Tata Steel did show interest in developing brown field freight ter-
minals.
PPP model has been successful in Rail Port connectivity projects. Till date, four projects have been
completed through PPP model with a total investment of Rs 16.11 billion, of which, the private sector con-
tribution was around 24%.
At present three PPP rail port connectivity projects are under construction which involves a total
investment of Rs. 34.29 billion, of which, private investment is Rs. 5.62 billion. These projects are ex-
pected to be completed in the next five to six years. Several railway projects worth over Rs. 1,000 billion
are in the pipeline which are planned to be undertaken on PPP basis.
Over the last decade, the private investment in this sector has witnessed growth of less than 1% in
tenth five year plan (2002-2007) to 4% in eleventh five year plan (2007-2012). Clearly, PPPs have proceed-
ed very slowly but during the 12th plan, investment of about Rs. 8.69 billion has been mobilized through
extra budgetary resources including PPPs until December 2013 against the five year plan target of Rs.
2,200 billion.
The government should liberalize policies to encourage more private investment in the Indian Rail-
ways.
Source: Indian Infrastructure Volume 16.
It is commonly believed
that the economy of India is on the
threshold of achieving significant
growth in the coming years. The
availability of adequate infrastruc-
ture facility will play a key role in
realizing this growth potential. To
accelerate the process of creating
infrastructure capacity, the Gov-
ernment of India has opened up
many infrastructure projects to the
private sector. Making available
international airport facilities is an
important component of the new
infrastructure development policy.
This case study presents the initial
development and financing of the
Kempegowda International Air-
port Limited (KIAL), a major pri-
vate sector airport in India. In ret-
rospect, it is generally felt that
KIAL is an important milestone in
the privatization of airports in In-
dia. The blueprint for the Green-
field PPP (Public-Private Partner-
ship) airport in Hyderabad was
closely modeled on the KIAL pro-
ject. The experience gained in the
development of KIAL also played
a major role in subsequent Brown-
field PPP airport expansion pro-
jects in Mumbai and Delhi.
Structuring:
Though the concessionaire
for the Bangalore airport is a pri-
vate limited company, the Govern-
ment through its agencies and in-
termediaries, holds 26% share-
holding (13% held by the AAI and
the remaining 13% by the State
Government). This 26% share-
holding ensures that the Govern-
ment is able to veto certain funda-
mental resolutions which as per
the Indian Companies Act, require
a minimum of 75% shareholders
vote like issuance of new shares;
change of directors; change of au-
ditors etc., Hence, the Government
does not give away complete con-
trol to the private entity. Amongst
the private players in the Banga-
lore airport project, Siemens of
Germany has the majority 40%
with Zurich airport holding 17%.
Description of the project:
The site is situated about
29 km from Bangalore and covers
about 4,300 acres. The airport de-
sign allows a second runway to
come up in the near future with a
separation distance of about 2 km
between the two run ways. The
run way would be approximately
4,000 meters in length with a
width of 60 meters. The airport
would be on par with any world
class international airport.
A significant part of the
project is permissible for "Non-
Airport" activities. The conces-
sionaire can develop up to 300
acres of land commercially for any
activity not connected with the
airport. In these 300 acres, the
concessionaire is free to set up not
only hotels or malls, it can even go
for Special Economic Zones, man-
ufacturing factories, country clubs,
golf courses, power plant etc. Con-
sidering that this huge chunk of
prime land comes to the conces-
sionaire on a long term lease, vir-
tually free of cost, it is easy to im-
agine that this would be the com-
mercial backbone of the project.
Nature of the concession:
Basically the concession is
for development, construction, op-
eration & maintenance of the air-
port. The agreement allows the
concessionaire to develop, con-
struct, operate and maintain the
Bangalore International Airport
for a period of 30 years, extenda-
ble at its sole option for another 30
years (i.e. total 60 years). The land
for the same is leased by the State
Government. The concessionaire
has the burden to independently
evaluate the scope of the project
and be responsible for all risks
which may exist in relation there-
to. It is obliged to follow good in-
dustry practices and all applicable
laws. The Government on the oth-
er hand, undertakes to support the
project.
To conclude, India is firm-
ly on the path of privatization in
the aviation sector. However, the
Concession Agreements do need a
further in-depth look. Hopefully,
there would be a Model Conces-
sion agreement in the near future
which would bring uniformity and
address some of the issues which
need a second look.
Greenfield Airports In India – An Infrastructural financing Case Study of the Kempe-
gowda (Bengaluru) International Airport
Sudeshna Bhattacharya, F1 & Srijita Mukherjee, F2
Project cost:
The KIAL airport was ini-
tially planned for a passenger ca-
pacity of 8 to 10 million per year.
The capacity of the airport was
increased, by Airport Authority of
India (AAI) to 12 million in antic-
ipation of enhanced future air
traffic. This has resulted in in-
crease of the project cost from US
$389 million to US $495.6 mil-
lion. The cost over-run was due to
scope change introduced by pub-
lic agency AAI. The user tariffs
are to be fixed based on the final
audited report on project cost on
completion. Since project cost
was not frozen initially, it is diffi-
cult to explicitly say anything
about the cost efficiency achieved
in the project.
Challenges for Infrastruc-
ture Financing
Aswathy Edison, F1
Infrastructure is the basic
need of all countries. Infrastruc-
ture provides the path for devel-
opment of a country. In India,
lack of quality infrastructure is a
major issue which retards the de-
velopment of the country. The
major requirement for an infra-
structure project is adequate sus-
tainable funding. In India, the in-
frastructure projects are either
publicly funded or in the form of
Public Private Partnerships. A
major drawback in India is the
delay in the completion of infra-
structure projects. The initial ap-
proval process and notably land
acquisition and resettlement is-
sues gets embroiled in protracted
litigations leading to delays in the
development of the projects. A
country needs adequate infra-
structure to support the business,
citizens and the country itself.
What are the challenges
for Infrastructure Financing in
India?
Funding Gap: Funding Gap
is a major challenge facing
the sector. The inability to
access reasonably priced
funds is an issue that needs
attention. Commercial Banks
hesitate in lending to infra-
structure projects because the
funds get locked up for a
longer period. They also fear
widening of an already ad-
verse Asset Liability Mis-
match. The other avenues of
funding are Equity, FDI, and
ECB etc.
Fiscal Deficit: Besides the
private players, the onus is on
Government to finance the
infrastructure projects in In-
dia. The fund available to the
Government needs to be even-
ly distributed for investing in
other areas such as Education,
Health, and others. This re-
stricts the availability of funds
for infrastructure financing.
Insurance and Pension
Funds: From the point of
view of asset-liability mis-
matches, insurance and pen-
sion funds are one of the best
suited institutions to invest in
the infrastructure sector. In
contrast to the commercial
banks, these institutions lever-
age on long-term liabilities.
They face a major constraint
in the form of mandatory in-
vestment in Government se-
curities. This facilitates the
financing of gross fiscal defi-
cit of the Central Government
and hence enables the Central
Government to make more
investments in multiple com-
peting sectors including the
infrastructure sector. Howev-
er, this limits the direct in-
vestment of these institutions
in the infrastructure sector.
Insufficient User Charges:
The user charges/toll fees lev-
ied on availing the services
are not sufficient for infra-
structure companies to service
their debt obligations. These
user charges are essential for
generating operating cash
flows. These projects are
heavily dependent on such
cash flows to pay off their
debts.
Need for a dynamic bond market: As
expressed by Shri Harun R Khan, Depu-
ty Governor of RBI, there is a need for
development of a vibrant and robust
bond market in India to fund infrastruc-
ture projects. In his opinion, the bond
market could be a major avenue for
funding but the bond market in India is
in its nascent stages and needs to grow
further.
Political Issues: In a country like India, getting infrastructure projects started is an overwhelming task.
The major reason is the rift between the political parties. When one party decides to float a proposal,
the opposition blocks the idea and declares it as a bane for the country. After prolonged slugfest, the
proposal gets approved only to see more delay through ill planned implementation. A project expected
to be completed within 3 years eventually is completed in 10 years or more.
Conclusion
Shri Narendra Modi said ―Economy is bleak without Infrastructure. Hence, the prime focus of my
government should be infrastructure‖. As promised by his government, there has been a series of infra-
structure projects lined up such as Diamond Quadrilateral high speed trains, freight corridors, 100 smart
cities etc. These projects need the adequate financing and implementation within the proposed time. Let us
hope to see India setting up adequate world class infrastructure that it requires, in the near future.
Sources:
Rbi.org.in
The Hindu
Corporate Column
Sai Nanthini. R.K, F2
To gain insights on Infrastructure Financing, we interviewed Mr Murali, Finance Head, L&T Ge-
ostructure LLP based out of Chennai.
1. Your view on Infrastructure financing in India.
A: There is always a connection between Infrastructure and economic development. While infrastructure
facilitates economic growth; economic growth increases the demand for infrastructure. Therefore devel-
opment of adequate and quality infrastructure is a necessity. Hence the success of it will depend on effi-
cient financing model. As we all know, building infrastructure is a capital intensive process with large
initial costs and low operating costs. It requires long term finance involving long gestation periods. As
the infra projects are mostly done on SPV basis, this makes the financing of these projects more complex.
In India, we also need a setup which regulates financing for infra projects.
2. What makes this infrastructure sector distinct and separate from other projects?
A: It is worthwhile to know what makes it distinct from other projects. The construction period and initial
start-up period for any project would run into years, as they are generally huge, involving the coordina-
tion of a variety of agencies. Hence these projects tend to have large capital costs and long gestation peri-
ods. This is one of the reasons why banks are reluctant to finance this sector.
3. What are the issues faced in Infrastructure Financing?
A: Funding Gap is the most important issue that we face on this front. According to the estimates made
by the Planning Commission, after taking into account the recent trends in different sources of infrastruc-
ture financing, the funding gap in the infrastructure sector during the last two years was around 18 per
cent of the total estimated requirement. Demand continues to outpace supply in all sectors of infrastruc-
ture in India. Also factors like fiscal burden, asset liability mismatch of commercial banks are hurting
lending to the infrastructure sector. We also have a great need for an efficient and vibrant corporate bond
market and PPP projects in infra sector. Huge sunk costs and longer gestation period are the reasons why
banks have been shying away from financing the infrastructure projects.
4. What more needs to be done to encourage more infrastructure financing?
Making the infrastructure projects commercially viable.
Encouraging participation in Private Public Partnership market.
Credit enhancement.
Simplification of procedures - enabling single window clearance.
These are the things which they must concentrate more to encourage infra financing.
Two important steps are required for Indian Infrastructure sector. First, we need to setup an independ-
ent regulatory body like SEBI for infrastructure. The primary role of this body would be to attract private
investments and protect the investor for various risks. Second, we need to have an authority which should
take care of sovereign obstacles. The basic role of this body will be to remove the obstacles for public
projects and monitor the development of the project.
The new PPP (Public Private Partnership) model has a lot of potential to carry out various infrastruc-
ture projects and provide a better infrastructure for each sector. Success stories of Gujarat Solar innova-
tive project, Delhi Metro Rail Project showcase the power of PPP.
5. Can you give some insights on PPP projects?
A: Public Private Partnership projects have to be encouraged by government importantly. PPP Projects
take more time, more effort, and are also – prima-facie – costlier but it has some positive points like:
Improvement in levels of service to users.
Innovation in designs, project management and implementation of projects.
Long-term operations and maintenance of assets.
Focus on service to users – not just asset creation. This mechanism actually provides built in credit en-
hancement by improving project viability by way of payback guarantee, substitution rights for lenders
etc.
Stock Market Analysis
Anwesh Jain & Sooraj Kumar C, F1
The Indian Stock market’s benchmark index Sensex increased to 25099.92 points in June from
24217.34 points in May, 2014. The Sensex aver-
aged 6219.74 points since its inception in 1979,
reaching an all-time high of 25583.69 points in
June 2014.
The key BSE and Nifty indices are ex-
pected to gain further this week adding to the
gains made last week. Expectations from the Un-
ion budget, which would be presented by Finance
Minister Arun Jaitley on July 10th, are increasing
the chances of a pre-budget rally, but analysis of
prior budgets going back to the early 1990’s
shows higher instances of a pre-budget pullback
and even higher counts of post- budget weakness.
The top gainers in S&P BSE Sensex were
GAIL (20.92%), Bajaj Auto Ltd. (18.20%), Cipla
(13.84%), Hero Motocorp (11.93%), TCS (11.86%) followed by HDFC, Infosys and Tata steel.
The top Losers for the month were ITC with a 6.34 % reduction from its previous month close,
Mahindra & Mahindra dipped by 6.23 %, Reliance Industries 4.89%, NTPC 4.54%, Bharti Airtel 3.60%
followed by ICICI 2.37% and Tata Power 0.05%.
Market volatility will be higher as the nation is moving closer to the budget day. Investors might
reallocate portfolios ahead of the budget and fresh buying could emerge in infrastructure, power and capital
goods stocks keeping in mind the added attention given to the Infra sector by the Narendra Modi led NDA
government.
Stock of the Month- GAIL
Face value: 10
Traded Volume: 18, 92,941
Market cap (Rs. Crores): 21, 239, 23
Recent News:
Jan 29, 2014: GAIL to import 32-33 LNG cargoes in 2014-15- Chairman. (Closing Price: 346.30)
May 26, 2014: GAIL plans more LNG deals with U.S. (Closing Price: 410.05)
May 27, 2014: India’s GAIL shares fall after earnings miss estimates. (Closing Price: 379.05)
June 20, 2014: Investors switching to Cairn India from GAIL. (Closing Price: 439.40)
Economic Rollers
Simmy Kumari, F2
Source: Finance Ministry, Office of Economic Advisory, HDFC Securities Report, Ministry Of Commerce,
RBI, http://www.tradingeconomics.com/india/
Rates Rates as on 1st June, 2013 Rates as on 1st July, 2014
Repo Rate 7.25% 8%
Reverse Repo Rate 6.25% 7%
CRR 4% 4%
SLR 23% 22.5%
MSF 8.25% 9%
Base Rate 9.70/10.25% 10.00/10.25%
Call Money Rate (Weighted average) 7.25% 8%
91 days T-Bill (Primary) Yield 7.48% 8.56%
364 days T-Bill (Primary) Yield 7.41% 8.60%
10 years Govt. Securities Yield 7.31% 8.59%
WPI 5.47% 5.20%
CPI 6.70% 6.01%
CBLO 8.87% 7.87%
Food Inflation 8.64% 9.50%
Forex Reserves US $ 296370.6 Million US $ 313,536.6 Million
Finance Buzz
Vyom Goel, F2
Infrastructure Trust: A type of income trust that exists to finance, construct, own, operate and maintain
different infrastructure projects in a given region or operating area. The infrastructure trust will also
provide distribution payments to unit holders on a periodic basis.
Private Finance Initiative – PFI: A method of providing funds for major capital investments where pri-
vate firms are contracted to complete and manage public projects. Under a private finance initiative, the
private company, instead of the government, handles the up-front costs. The project is then leased to the
public, and the government authority makes annual payments to the private company.
"A" Round Financing: The first major round of business financing by private equity investors or venture
capitalists. An "A" round by external investors generally takes place after the founders have used their
seed money to provide a "proof of concept" demonstrating that their business concept is a viable - and
eventually profitable - one.
Super Sinker: Bond with long-term coupons but short maturity, usually a home financing bond. Super
sinker bonds are sometimes used when some of the mortgages backing the bond get prepaid, and so the
bond is likely to be paid off quite soon. The bond holder is uncertain as to when exactly the pay-
off may occur, but the annual return on these bonds works out quite high over the short-to-medium-
term holding period.
Housing Bonds: Debt securities issued by state or local governments to raise money for affordable housing
development. Housing bonds sometimes require voter approval and are repaid out of the government's
general tax fund or from an increase in the sales tax rate, income tax rate or property tax rate.
Direct Bidder: An entity that purchases Treasury securities at auction for a house account rather than on
behalf of another party. Direct bidders include primary dealers, non-primary dealers, hedge funds, pen-
sion funds, mutual funds, insurers, banks, governments and individuals.
RBI Column
Pawanpreet Kaur, F2 RBI issues additional guidelines for banks giving GMLs (Gold Metal Loans):
The central bank has asked the lenders to check the track record and credit worthiness of borrow-
ers, collateral securities against the loan as well as the trade cycle of the manufacturing activity before
sanctioning GMLs. The central bank has clarified that such loans can be availed only by those who
manufacture gold jewelry themselves. Other
steps being taken are as follows:
Carrying out proper quality check of
the gold stock and verifying the in-
surance cover.
Detailed credit appraisal to mitigate
the risk of misuse. A Stand-by Letter
of Credit or a Bank Guarantee by the
issuing bank will serve as proof.
Inspection of stocks, quality check of
the gold stock, verification of insur-
ance cover, etc may be undertaken
jointly or on rotation basis by the
GML providing bank and the bank
issuing the Stand-by LC/BG.
These activities will bring more transpar-
ency; RBI can also monitor the final use of
gold and enforce its maxim on 20% export of finished goods.
RBI to tweak bonds linked to inflation:
The RBI will modify its retail bonds linked to consumer prices as its first attempt to insulate inves-
tors from price rises. This measure was taken after Central Bank adopted Consumer Price Index as the
key measure of inflation instead of the Wholesale Price Index, to which more weightage was given.
This instrument is being used to bring savings back into financial instruments rather than investing in
gold, real estate or any other physical asset. Advantages investors will get on investment in financial
instruments are:
Tax benefits
RBI monetary policy review: Key Takeaways
RBI leaves repo rate unchanged at 8.00 per cent.
RBI cuts banks' SLR requirement by 50 bps to 22.5 % of deposits w.e.f June 14th.
RBI reiterates CPI inflation target of 8 % by January 2015 and 6 % by 2016.
RBI sees marginal improvement in economic growth to 5-6% in FY15.
Cash reserve ratio was kept unchanged at 4 per cent.
The decrease in SLR is expected to result in additional cash of Rs. 40,000 Crores with banks. RBI
is providing more liquidity to banks with an intention to encourage banks to lend more, but banks are un-
der no obligation to lend it to customers or corporate. They can invest the surplus, say in mutual funds.
Market Round Up
K. Alekhya, F2 & B. Suma Sravya, F1
Foreign investors can now hedge currency risk: To enhance the depth of the foreign exchange market,
the Reserve Bank on (20/06/2014) allowed foreign portfolio investors to participate in the domestic ex-
change-traded currency derivatives. It is also expected to reduce volumes in the NFD markets. –
21/06/2014 (ET).
Rupee falls to 7-week low as oil prices rise on Iraq unrest: The rupee fell 36 paisa to end at an over sev-
en-week low of 60.39 against the US dollar as growing unrest in Iraq pushed up crude and caution pre-
vailed in the currency markets ahead of the outcome of US Fed meeting – 21/06/2014 (Times of India).
First bitter pill by Modi Government: Rail passenger fare raised by 14.2%, freight charge by 6.5%
ahead of Budget – 20/06/2014 (BS).
SEBI proposal on PSU Stake cut to spur $10 billion in share sales: The government should dilute its
stake in listed public-sector companies over the next three years and cap it at 75 per cent; a recommen-
dation, if taken forward would lead to at least $10 billion worth of PSU share sales – 19/06/2014(ET).
Foreign investors pour Rs 26,000-crore in Indian market in June primarily on account of oriented deci-
sions taken by the new government. Net investment into equity markets stood at Rs 10,359 Crores,
while in debt market it was Rs 15,806 Crores – 15/06/2014(ET).
Government imposes $300/tonne minimum export price on onion exports to curb exports as retail pric-
es had shot up to as high as Rs 100 per kg in major parts of the country. Rising prices of essential food
items like vegetables, fruits and cereals, pushed up wholesale price index based inflation to five-month
high of 6.01 per cent in May – 17/06/2014(ET).
Factory output rises 3.4% in April: Raising hopes of recovery, industrial production grew at 3.4 per cent
in April after contracting for two months in a row, mainly due to improved performance of manufactur-
ing, mining and power sectors and higher output of capital goods – 12/06/2014 (The Hindu).
Siemens AG is in talks with Mitsubishi Heavy Industries Ltd about a joint bid to acquire Alstom SA’s
energy business and counter a $17 billion offer by General Electric Co -11/06/ 2014 (GE)( Live mint).
The World Bank lowered India’s gross domestic product (GDP) growth forecast for 2014 to 5.5% from
6.2% estimated in January – 11/06/2014 (Live mint)
France has proposed to give India a 1 billion euro ($1.4 billion) credit line to fund sustainable in-
frastructure and urban development projects, Foreign Minister Laurent Fabius said on Tuesday.
Finance Quiz
Samyuktha Reddy, F2
1. For how many years has the government allowed infrastructure companies to issue secured debenture
bonds?
2. India’s second largest software exporter Infosys Ltd has named former SAP AG global product
head ___________ as its first non-founder chief executive.
3. _____________ has named Kaustubh Kulkarni as its head of India investment banking to replace Rohit
Chatterji, who will become head of the bank's emerging Asia mergers and acquisitions business.
4. ________India’s third largest wireless service operator will issue 51 million equity shares, aggregating
to approximately Rs.750 Crores on a preferential basis to Axiata Investments.
5. Which Bank had raised Rs 4,000 Crores from QIP/FPO in June?
6. Which company has roped the former Mphasis Vice President Ganesh Murthy as CFO?
7. ______________ was unanimously elected as the speaker of the 16th Lok Sabha, becoming the second
woman presiding officer of the lower House after her predecessor Meira Kumar.
8. Which is the world’s first Central Bank to use negative rate on deposits i.e. reduced the deposit rate
from 0% to -0.10%?
9. Which e-commerce website hired ex-IBM executive Craig Hayman to head Enterprise division?
10. Which company in Iraq has shut down its oil refinery operations recently?
An
swers:
1.
30 y
ears
2.
Vish
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3.
JP M
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an C
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4.
Idea C
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5.
IDB
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k
6.
Dell S
ervices
7.
Sum
itra Mah
ajan
8.
EC
B(E
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9.
e-Bay
10. B
aiji
Crossword
Srinivas Rahul Chaganti, F2
1.
1.
4.
5. 2.
7.
3.
6.
8. 10.
9.
Horizontal:
1. -------------- the country's first infrastructure debt fund ( IDF) under the NB structure, is a joint ven-
ture among ICICI Bank, Bank of Baroda, Citicorp Finance and Life Insurance Corporation of India
2. These investments are into new projects that have yet to be constructed that will not generate cash
flow until completed. Often these investments include design and build risk, as well as operating
risk.
3. Which states, Finance Minister, O Pannerselvam has recently mooted to the Centre such a line
of credit to States to provide ―long-term finance‖ for 12 years and more to help execute mega
infrastructure projects in the public-private partnership (PPP) mode
4. ----------- which country's unemployment insurance fund FGTS reassigned US$4.45bn in debt from
federal savings bank Caixa Economica Federal to finance waterworks, housing and urban mobility
projects throughout the country.
5. The Narendra Modi government has cleared ---- how many big-ticket investment projects worth
Rs 21,000 Crores, some of whom have been held up for decades, because of hurdles ranging from envi-
ronmental issues to financing problems.
Vertical:
6. ------- Pvt. Ltd on Thursday launched the S&P BSE India Infrastructure Index that comprises the top
30 companies based on market capitalization from five sectors—energy, transportation, non-banking
financial institutions, telecommunications and utilities.
7. Which book written by RAHUL SARAOGI The apathy of the previous government that ruled India for
almost a decade and the myriad corruption scandals that have plagued the country resulted in a state of
policy paralysis that scuttled almost all large infrastructure projects in India.
8. This international institution on Thursday said that projects worth Rs US$ 500 million are in pipeline in
Northeast India. These projects encompass different sectors including healthcare, e-governance, infra-
structure, water management and inland waterways
9. ---- an SPV, was incorporated in Jan, 2006,by the Central Government for providing long term loans
for financing infrastructure projects providing financial assistance up to 20%of the project costs, both
through direct lending to project companies and by refinancing banks and financial institutions.
10. World Bank Country Director ------ suggested short and medium-term priorities that could help India
return to growth and further reduce poverty. The report says growth in India is projected to rise to
5.5% in FY 2014-15, accelerating to 6.3% in 2015-16 and 6.6% in 2016-17.
An
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1.
Ind
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2.
Gre
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3.
Tamil n
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4.
Brazil's
5.
Seven
6.
Asia In
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7.
Investi
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Ind
ia
8.
Wo
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ank
9.
IIFCL
10
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PhotoFind Answers:
1. Gautam Adani, the first generation Indian entrepreneur who is the Chairman and founder of Adani
Group. He founded The Adani Group in 1988 and today it is a globally integrated infrastructure player
with businesses spanning coal trading, coal mining, oil & gas exploration, ports, multi-modal logistics,
power generation,etc.
2. Dr. Rajiv B. Lall is the Managing Director and Vice Chairman of Infrastructure Development Fi-
nance Company (IDFC), India's leading integrated infrastructure finance player providing end to end
infrastructure financing and project implementation services.
3. Logo of Infrastructure Leasing & Financial Services Limited (IL&FS), an Indian infrastructure de-
velopment and finance company.
4. Grandhi Mallikarjuna Rao, a mechanical engineer and the founder chairman of GMR Group, a
global infrastructure developer and operator based in India. Started in 1978, GMR Group is now pre-
sent in 7 countries, active in Energy, Highways, Large Urban Development and Airports sectors,
known for building and operating world class national assets.
5. Piyush Goyal, the Hon’ble Minister of State with Independent Charge for Power, Coal and New &
Renewable Energy in the Government of India. He is currently a Member of Parliament (Rajya Sabha)
and was earlier the National Treasurer of the Bharatiya Janata Party (BJP).
6. Logo of IIFCL (India Infrastructure Finance Company Ltd.), a wholly-owned Government of In-
dia company aimed to provide long term finance to viable infrastructure projects through the Scheme
for Financing Viable Infrastructure Projects.
NISHKA TEAMNISHKA TEAMNISHKA TEAM
Nishka is a monthly finance magazine brought by the students of the finance club of
Christ University Institute of Management, Kengeri Campus. The idea behind coining this
issue of the magazine is to establish a learning among the students, which helps them to
gain an insight about the world of finance.
Faculty Coordinator
Prof. Shrikant Rao
Coordinators
Niharika Shadra, F1
Niken Jain, F2
Editor
George P Job, F2
Neha Mishra , F2
Introduction
Upasana Gurung, F1
Article coordinators
Ashwathy Edison, F1
Sudeshna Bhattacharya,
F1
Article writing
Kalyana KarthiK, F2
Purnima Singh, F2
Srijita Mukherjee, F2
RBI Column
Pawanpreet Kaur, F2
Finance Buzz
Vyom Goel, F2
Market Round-Up
B.S Sravya, F1
Katepalli Alekhya, F2
Economic Rollers
Simmy Kumari, F2
Stock Analysis
Sooraj Kumar, F1
Anwesh Jain, F1
Crossword
Samyuktha Reddy, F2
Quiz
Rahul Srinivas, F2
Photofind
Nilanjana Chatterjee, F2
Corporate interview
Sai Nanthini, F2
Designing
Krishnendu Kundu, F2
Niken Jain, F2
CHRIST UNIVERSITY INSTITTUTE OF MANAGEMENT, KENGERI CAMPUS
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