finxpress_13_jan_2013

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January 13, 2013

Company In Focus

Editoria

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Company in

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Term of t

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Mark

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News of t

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Cover Sto

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Fun Corner

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Term of the Week TANGIBLE NETWORTH

INSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD

Cover Story

Will EURO again rise back as a Super Power?

EDITORIAL

Dear Readers,

Greetings from FinNiche!

So finally after a week’s long chilling winter and nearly zero degree temperature, the weather has

again become pleasant. However the exam days are approaching for the juniors, so the pleasant

weather is not going to last very long for them.

In this edition of FinXpress, we have Baxter Healthcare as the ‘Company in Focus’. The ‘Term of

the Week’ would cover Tangible Net worth. In the special page we will present views on the topic

“Will Euro again rise back as a super power”.

We sincerely hope that the readers will find the content engaging. We would appreciate feedback

and suggestions for improvement. We hope to bring to you more information in the future thus

keeping you updated and adding to your knowledge base. Till then, “Enjoy

Reading”!

Yours Sincerely,

The Editorial Board

FinXpress

January 13, 2013 PAGE 1 http://www.imtgfinxpress.co.cc

COMPANY IN FOCUS

COMPANY OVERVIEW

Baxter International Inc. (NYSE:BAX), through its subsidiaries, develops, manufactures and market products that save

and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and

other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique

combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance

patient care worldwide. Baxter had 2011 sales of $13.9 billion and has approximately 48,500 employees.

HISTORY

Baxter International was founded in 1931 by Donald Baxter, a medical doctor, as a manufacturer and distributor

of intravenous therapy solutions. Baxter's interest was bought out in 1935 by Ralph Falk, who established a research

and development function. In 1939 the company developed a vacuum-type collection container, extending the shelf

life of blood from hours to weeks. In 1953 William Graham became the company's chief executive officer, and in

1954 expanded operations outside of the United States by opening an office in Belgium. In 1956 Baxter International

introduced the first functioning artificial kidney, and in 1971 became a member of the Fortune 500. Vernon Loucks

became president and CEO in 1980; throughout the 1980s and 1990s the company expanded to deliver a wider

variety of products and services (including vaccines, a greater variety of blood products) through acquisitions of

various companies. Sales and production facilities also expanded throughout the world. In 1993 the company pled

guilty to a felony in relation to an anti-boycott law in the United States and in 1996, the company entered into a

four-way, $640 million settlement with hemophiliacs 1999 in relation to blood clotting concentrates that were

infected with HIV. Under pressure from shareholders due to poor performance and an unsuccessful merger, Loucks

was forced to resign and was replaced by Harry Kraemer, who was replaced by Robert Parkinson in 2004. Baxter

acquired medical device firm Baxa on November 10, 2011. In 2011, Hikma Pharmaceuticals PLC completed the

acquisition of Baxter Healthcare Corporation's US generic injectables business (Multi-Source Injectables or MSI).

BAXTER INTERNATIONAL BY BUSINESS LINE

COMPANY SALES 2011 - $7.8 Billion

Name Focus

BioScience

Hemophilia therapy; antibody therapy; critical care therapy; pulmonology therapy; regenerative

medicine; vaccines

Medical

Products

IV solutions, premixed drugs, infusion pumps and administration sets; parenteral

nutrition products; anesthesia; drug formulation and pharma partnering; peritoneal

dialysis products; hemodialysis products; continuous renal replacement therapy


http://en.wikipedia.org/wiki/Anesthesia

TERM OF THE WEEK : TANGIBLE NETWORTH

A measure of the physical worth of a company, which does not include any value derived from intangible assets such

as copyrights, patents and intellectual property. Tangible net worth is calculated by taking a firm's total assets and

subtracting the value of all liabilities and intangible assets.

Tangible Net Worth = Total Assets – Liabilities – Intangible Assets

In terms of a consumer, tangible net worth is the sum of all your tangible assets (cash, home, cars, etc) less any

liabilities you may have. In the financial markets, tangible net worth represents the amount of physical assets a

company has net of its liabilities. Thus, it represents the supposed liquidation proceeds a company would fetch if its

operations were to cease immediately and the firm was sold off.

How to calculate Tangible Net Worth of a Company?

Step 1: Look at the balance sheet.

Step 2: Look at total assets.

From total assets subtract goodwill and intangible assets.

Step 3: Subtract total liabilities.

Now, where a lender wishes to lend money to a company, he would invariably look at the net worth of the company.

He would be happy lending such an amount to a company which is not more than the net worth of the company. This

would provide the lender sufficient coverage for his loan. Net worth, however, is not the sole parameter for

evaluating the credit worthiness of a company. In reality, lenders are happy to lend, say, upto 3-5 times the net worth

of the company if the company satisfies their other parameters of credit worthiness. These other parameters, for

example, include nature of business, estimated growth during the loan servicing period, debt servicing ability etc.

If a company defaults on the loan, the recourse for the lender is the assets of the company. The lender can sell the

assets of the company and recover his dues. However, the lender is not the only one to have claim on the assets.

There are others. It is therefore the value of the assets that remain with the company after these others are paid off

that the lender is interested in. This value is the net worth of the company. But the lender would like to take

additional precaution. The lender would also like to remove those assets which are conventionally understood to be

not easily saleable. For example, not many in the market would be willing to buy goodwill, unless they buy the

company outright. In other words, lenders believe that intangible assets cannot be disposed off or sold as easily as

tangible assets. And that it may even be difficult to realize the book value in some cases. Hence they prefer to use

tangible net worth rather than total net worth of a company.


MARKET THIS WEEK

SENSEX

Sensex gained by 1.20% from last week and ended the week at 19663.64

Simple Moving Averages

Returns – BSE Sensex

NIFTY

Nifty gained 0.6% from last week and ended the week at 5943.4

Simple Moving Averages

30 Days 50 Days 150 Days 200 Days

19463.84 19130.46 18190.67 17841.23

MARKET THIS WEEK

30 Days 50 Days 150 Days 200 Days

5918.34 5817.65 5521.64 5415.31


YTD 27.23% 1 Week -0.60% 1 Month 1.40% 3 Months 4.60%

6 Months 12.40% 1 Year 21.60% 2 Year 2.40% 3 Year 12.20%

Returns – NSE Nifty

Overview

The market has started attracting retail investors after a long time. It is good time to invest into the

stocks. Infosys stock saw a steep rise of 16% after the results of Q3 were announced on Friday. NSE is

predicted to grow to 6250 by march end.

Exchange Rates vs. INR

Currency Symbol Rates % Change

US Dollar $ 54.76 0.53%

Euro € 73.19 0.88%

Dirham AED 15.09 0.4%

Japanese Yen

¥ 0.6141 -1%

Chinese Yuan

CNY 8.9 0.678%

Commodities Unit Rs. / Unit % Change

Gold 10gms. 30792 -0.89%

Silver 1 Kg. 58173 1.12%

Crude Oil 1 BBL 5134 1.18 %

RESERVE RATIOS

CRR 4.25%

SLR 23.0%

LENDING DEPOSIT RATE

Base Rate 9.75%-10.50%

Savings Deposit Rate 4.00%

Term Deposit Rate 8.50%-9.00%

POLICY RATIOS

Bank Rate 9.00%

Repo Rate 8.00%

Reverse Repo rate 7.00%

Marginal Standing 9.00%


YTD 28.73% 1 Week -1.10% 1 Month 0.90% 3 Months 4.30%

6 Months 12.20% 1 Year 22.40% 2 Year 3.40% 3 Year 13.40%

NEWS OF THE WEEK

Global Regulators Agree On Bank Asset Rules

International banking regulators agreed last week on global rules meant to ensure banks keep enough cash in hand to

survive future market crises, and gave banks until 2019 to comply fully. The rules will require banks in future to hold

enough cash, and assets such as equities, corporate and government bonds that can easily be sold, to tide them over

during an acute 30-day crisis.

The body that oversees the Basel Committee on Banking Supervision, which sets international rules, said that they will

have to hold 60 per cent of that amount when the rules start being phased in on Jan. 1, 2015; that will increase by 10

percentage points every year until the standards take full effect at the beginning of 2019. The rules are part of wider

efforts to prevent another shock to the financial system like that prompted by Lehman Brothers' 2008 collapse, which

led to taxpayer-funded bailouts of banks in the US and Europe. They are part of the so-called Basel III package of

reforms. That package will require lenders to increase their highest-quality capital such as equity and cash reserves,

gradually from 2 per cent of the risky assets they hold to 7 per cent by 2019.

SEBI to Ask Diageo to Rework on Clauses in United Breweries Group Agreement, Says It Violates

Local Rules

The Securities & Exchange Board of India may ask Diageo to rework certain clauses in the agreement with the United

Breweries Group as they do not comply with local regulations. The capital markets regulator is not in favour of a put

option in the agreement as it is akin to a forward contract and a violation of Indian laws, a person with knowledge of

the discussions said. The regulator will also ask Diageo's merchant bankers to explain how a clause in the share

purchase agreement dealing with the sale of assets of United Spirits complies with the takeover regulations. The UB

Group signed an agreement with Diageo last year to sell a portion of its stake in United Spirits, the maker of McDowell

brandy and Bagpiper whisky. The sale was structured in two stages. The UB Group sold about 19.3% in USL to Diageo

at 1,440 per share. USL was to follow it up with a preferential allotment of shares, taking the stake of the British drinks

giant in the company to about 25%. USL received shareholder approval for the preferential allotment last month.

But the agreement also contains a clause giving the UB Group the right to sell all or a part of its stake in USL at 1,440

per share. The put option can be exercised by the UB Group within a period of seven years from the time Diageo's

stake in the company crosses 50.1%. A put option gives the option-holder the right, but not the obligation, to sell his

shares back to the company. A contract for the purchase and sale of shares in future at a specified price amounts to a

forward contract and has been deemed illegal by the markets regulator. Forward sale of shares by companies outside

stock exchanges is prohibited by the Securities Contract Regulation Act (SCRA).

Reliance General Insurance Launches First-Of-Its-Kind Facility for Payment Using Mobile Phone

as POS

Reliance General Insurance (RGI), part of Reliance Capital Limited, on Monday launched India's first-of-its-kind point of

sales service using mobile phones - Mobile Point of Sales (MPOS) - which allows its customers to pay premium using a

mobile phone. The launch was announced by Mr Rakesh Jain, Chief Executive Officer and Executive Director, Reliance

General Insurance. The new facility allows immediate payment of premium by customers and eliminates payment-

related delays, errors and frauds.

MPOS ensures higher level of security and transparency in premium payments with instant confirmation about the

transactions through SMS and email. It also offers faster turnaround in policy issuance and stricter controls on

customers' details. Reliance General Insurance aims at significantly reducing paper transactions of over one lakh

policies annually with the use of mobile POS.


Air India to Save Rs 500 Cr by Clearing Bills, Sourcing 80% ATF from IOC

State-owned Air India will gain Rs 500 crore a year from higher discounts on jet fuel as the debt-laden carrier has

agreed to the oil ministry's demand of clearing past bills of Rs 4,235 crore by April next year and buy 80% of its fuel

from Indian Oil Corporation. At present, Air India gets a discount of a little over Rs 2,000/kilolitre of jet fuel, or ATF

(aviation turbine fuel), whereas Jet Airways, for instance gets double that amount at Rs 5,000/kilolitre. Oil Minister

Veerappa Moily took the decision last month after Civil Aviation Minister Ajit Singh raised the issue of discrimination.

Air India has a colossal debt of Rs 47,000 crore with accumulated losses of Rs 20,300 crore.

Infosys May Have Surprised With Its Q3 Earnings; However, a Lot Needs To Be Scaled Up

For India's second-largest IT services exporter Infosys, the quarter to December 2012 was the least profitable in at

least last six years, with operating margin falling below 26 per cent. This was despite a decent 1.8 per cent sequential

increase in billing rates. The company also failed to show any improvement in its employee attrition rate, which

continued to remain above 15 per cent. Employee utilisation, an indicator of how well human resources are put to

generate revenue, remained at close to 70 per cent, far below the historical range of 76-78 per cent. Its business

volumes, measured in terms of billed human hours, grew at a modest rate of 1.5 per cent excluding the impact of the

recent acquisition of Lodestone.

Yet, on Friday, Infosys gained 17 per cent on the bourses, its highest daily gain on a results day in at least 28 quarters,

as investors, rather than getting bogged down by the company's lacklustre performance on several financial and

functional parameters, bought heavily into the stock. This investor behaviour has its roots in the way the company

has managed the expectation of Dalal Street over the years. Another surprise was that the company managed to

ramp up as many as eight projects during the quarter, boosting its organic revenue. To top it up, Infosys also

escalated its FY13 revenue growth guidance to 6.5 per cent from 5 per cent it had anticipated three months ago.

Cabinet approves Rs 12,517 crore bank recapitalisation plan

The government on Thursday approved a proposal to inject Rs 12,517 crore in public sector banks to help them

enhance the lending activity and meet the capital adequacy norms. 9-10 public sector banks will benefit from the

capital infusion programme. The amount of capital infusion and the terms and conditions would be decided after

consultation with each bank. The exercise was aimed at helping them meet stricter Basel-III norms relating to capital

adequacy.

The funds would be disbursed before March to these public sector banks. The government had already earmarked

the amount in the Budget for the current fiscal. The government has been infusing funds in the public sector banks in

the last couple of years to strengthen their finances. It has injected about Rs 32,000 crore in the previous two

financial years. The implementation of the capital adequacy guidelines based on the Basel III capital regulations was

to begin from January 1, 2013. However, RBI recently deferred it by another three months.

Vibrant Gujarat Summit 2013: Ports and Tourism Sectors Bag Rs 1 Lakh Crore Investments on

First Day of Summit

Ports and tourism sectors together bagged investments of around Rs 1 lakh crore on the first day of the Vibrant

Gujarat 2013 summit that saw chief minister Narendra Modi laying emphasis on small & medium industries sector.

Water management attracted Rs 61,000-crore projects while the petroleum, chemicals and petrochemicals

investment region at Dahej saw 30 companies committing Rs 30,000 crore.

The textile sector, which employs most people after agriculture, attracted Rs 23,000-crore proposals on the first day.

Modi who has drawn flak from critics for inflated investment figures, tried to prove them wrong by releasing a book

on 60 successful projects that were realised through the summits. Close to 18,000 MoUs are expected over the next

two days.


LPG cap saves government Rs 764 crore

The government's efforts to check diversion of cheap cooking gas cylinders and prune freebies by capping supplies

are paying off by saving approximately Rs 764 crore in subsidy outgo in the four months since the limit came into

effect in September. Figures for the September-December 2012 period showed that growth rate of domestic cylinder

sales dived into negative territory at -5 % since the supply of subsidized cylinders was capped at six per year for each

household. Another indication of the annual cap's success is the sale of auto LPG (cooking gas sold as automotive fuel

at market rate by fuel retailers), which recorded a growth of 4% against less than 3% previously. There was huge

diversion of subsidized cylinders meant for domestic use. The diversion ranged from local tea shops to small

industries. Even a lot of genuine consumers were using subsidized cylinders to run cars.

The oil ministry has projected a subsidy loss of Rs 37,411 crore on cooking gas in 2012-13 at Rs 520.50 per cylinder.

Officials reckon that going by the saving in just four months, the saving would be even higher since there have been

no claimant for over one crore connections during the recent customer verification drive.

Exports Dip 1.9 Per Cent in December to $24.88 Billion

India's exports fell for eight month running in December, worsening the trade deficit as imports continued to rise at a

steady pace, but the government hoped that shipments would improve in the last quarter of the financial

year. Exports contracted 1.9% in December from a year ago to 24.8 billion while imports rose to 6.3% to $42.5 billion,

data released by commerce ministry on Friday showed, yielding a trade deficit of $17.6 billion. The rise in imports

was primarily due to 23.5% jump in oil imports. Non-oil imports fell 0.87% to $28.1 billion in keeping with the slow

pace of growth. The government is looking to raise fuel prices to curb demand and also take steps to

discourage gold imports in an attempt to lower imports growth to bring down deficit.

Lenders to Suzlon Demand to Raise Equity of Rs 5,000 Crore Or Sell Repower

Lenders to Suzlon Energy are demanding that the company raise equity of 5,000 crore or sell its 'crown jewel'

REpower before any loan. The lenders will agree to lower interest rates and extend the tenure of the loans to ease

pressure on the company's finances only if the wind power equipment maker sheds some assets. Suzlon owes

lenders 14,000 crore.

Suzlon says it won't sell a stake in REpower that it took control of before the 2008 credit crisis and by paying over the

odds. The proposed recast package for Suzlon stipulates that the borrower invest Rs 250 crore immediately, and Rs

500 crore more over 18 months. Lenders have agreed to lower the interest rate to 11%, from 14-15%. If the

restructuring happens, banks would reinstate the working capital limit of Rs 1,500 crore, which was blocked earlier.

In turn, Suzlon would be required to consolidate by selling some of its overseas subsidiaries and open an escrow

account with the lead bank, State Bank of India. Lenders have in principal approved the debt recast package but the

management of each bank will have to give written consent.


http://economictimes.indiatimes.com/topic/LPG

COVER STORY

The euro rose to its highest level since April against the dollar on Friday in the wake of encouraging remarks from the head of the European Central Bank. As stocks and the euro gained appeal, investors trimmed back their safe-haven holdings of U.S. and German government debt before a late wave of buying emerged. "The world economy seems to be in the beginning of a cyclical upturn. That's going to benefit economic sensitive sectors," said David Joy, chief market strategist at Columbia Management Advisors in Boston. While Japan aims to jumpstart its economy, U.S. and European central bankers have talked up their economies' prospects over the past 24 hours. In the currency market, the euro extended Thursday's rally against the dollar, rising 0.54 percent to $1.3340 after touching $1.3365 earlier, its highest point since April. The euro was on track for its strongest weekly gain against the dollar in nearly four months. Back in the United States, a surprise widening of the trade gap in November revived worries about the U.S. economy losing steam at the end of 2012, although some analysts downplayed the figure and focused on the rise in imports as a sign of American spending remaining resilient. "Today's number was a wake-up call for some people, but the market is holding up so I guess that's a good sign," said Phil Orlando, chief equity market strategist at Federated Investors in New York. In the commodities markets, oil prices fell on data showing China's annual consumer inflation accelerated to a seven-month high of 2.5 percent in December. The news dampened demand as it reduced the chances the central bank easing monetary policy to boost the economy. Expectations of higher U.S. gasoline imports also dampened prices. Brent crude futures settled $1.25, or 1.12 percent, lower at 110.64 a barrel, while U.S. oil futures shed 26 cents, or 0.28 percent, to $93.56.On the week, Brent recorded its first decline in five weeks, losing 0.6 percent, while U.S. oil futures clung to a modest 0.5 percent gain. Gold prices fell 0.78 percent at $1,661.49 an ounce as the firmer tone to the dollar prompted some buyers to cash in gains after the metal's biggest one-day rise so far this year. On the week, bullion managed a rise of 0.32 percent.

Will EURO again rise back as a Super Power?


CAN YOU SOLVE IT?

**Rush in your entries to : [email protected]

The right entries will get their name featured in the next issue of FinXpress. So hit the quiz fast & get yourself visible among 1000 odd in the campus.

Feel free to write to us at : [email protected]

Drop in your suggestions to the editorial team :

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LAST WEEK’S ANSWERS:

1. Last week of February

2. Faster , Sustainable and more inclusive

growth

3. SCORES

4. 49%

5. 100 Crores

Winner : Vishal Shah

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CARTOONS:

FinQuiz

Match the Following


World Bank

European Central Bank

European Commission

World Trade Organization

United Nations Conference on Trade & Development (UNCTAD)

Pascal Lamy

Supachai Panitchpakdi

Mario Draghi

Jim Yong Kim

Jose Manuel Barroso

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