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October 14 ,2012

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Term of the Week :

INSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD

Cover Story : RISCON 2012

Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

US Treasury Securities

October 14, 2012

EDITORIAL

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Dear Readers,

Greetings from FinNiche!

The era of events is all around in IMT. The flagship event of IMT Ghaziabad, “PASSION” has set the stage to fire with more than 600 students coming into our campus to celebrate with IMT. Further Team finNiche is also set with the most awaited event for all financial aspirants, “Riscon ‘12” to be held on 20th and 21st of October. The details for the same is covered in the section of ‘Special Page’

In this edition of FinXpress, we have BASF as the ‘Company in Focus’. The ‘Term of the Week’ would cover United States Treasury Security. We will also cover the ‘Market This Week’ where the Sensex plunged 1.4 percent to close at 18675.15.

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

Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

COMPANY IN FOCUS

BASF SE is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. The

BASF Group comprises subsidiaries and joint ventures in more than 80 countries and operates six integrated production sites and 390 other production sites in Europe, Asia, Australia, Americas and Africa. BASF has customers in over 200 countries and supplies products to a wide variety of industries. At the end of 2010, the company employed more than 111,141 people, with over 50,800 in Germany alone. In 2010, BASF posted sales of €63.87 billion and income from operations before special items of about €8.1 billion. The company is currently expanding its international activities with a particular focus on Asia. Between 1990 and 2005, the company invested €5.6 billion in Asia, for example in sites near Nanjing and Shanghai, China and Mangalore in India.

BASF India Limited is a chemical company. The Company has six segments: Agricultural Solution, which includes agrochemicals. agricultural solution, which is seasonal in nature; Performance Products, which includes tanning agents, leather chemicals, textile chemicals, dispersion chemicals, specialty chemicals and high-value fine chemicals for the food, pharmaceuticals, animal feed and cosmetics industries; Plastics, which include expandable polystyrene (EPS), engineering plastics and polyurethanes; Chemicals, which includes inorganic chemicals, intermediates and petrochemicals; Functional solutions, which includes coatings & construction chemicals, and Others, which include technical and service charges. In January 2011, it completed the merger of BASF Construction Chemicals (India) Private Limited (BCCIPL), BASF Coatings (India) Limited (BCIN) and BASF Polyurethanes India Limited (BPIL).

Key information and statistics

Founded 1865

Headquarters Ludwigshafen, Germany

Key people Eggert Voscherau (Chairman of the supervisory board)

Kurt Bock (CEO and Chairman of the executive board)

Revenue €73.497 billion (2011)

Operating income €8.586 billion (2011)

Profit €6.188 billion (2011)

Total assets €61.175 billion (end 2011)

Total equity €25.385 billion (end 2011)

Employees 111,141

source: wikipedia

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Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

TERM OF THE WEEK : US Treasury Securities

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A United States Treasury security is a government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt. Treasury securities are the debt financing instruments of the United States federal government, and they are often referred to simply as Treasuries. There are four types of marketable treasury securities: Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation Protected Securities (TIPS).

1. TREASURY BILLS: A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks). T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder.

2. TREASURY NOTES: T-Notes mature in two to ten years, have a coupon payment every six months, and have denominations of $1,000. In the basic transaction, one buys a "$1,000" T-Note for say, $950, collects interest over 10 years of say, 3% per year, which comes to $30 yearly, and at the end of the 10 years cashes it in for $1000. So, $950 over the course of 10 years becomes $1300. When buying Treasury notes from the government, you can either put in a competitive or noncompetitive bid. With a competitive bid, you specify the yield you want; however, this does not mean that your bid will be approved. With a noncompetitive bid, you accept whatever yield is determined at auction.

3. TREASURY BONDS: T-Bonds, or the long bond, have the longest maturity, from twenty years to thirty years. They have a coupon payment every six months like T-Notes, and are commonly issued with maturity of thirty years. The secondary market is highly liquid, so the yield on the most recent T-Bond offering was commonly used as a proxy for long-term interest rates in general. This role has largely been taken over by the 10-year note, as the size and frequency of long-term bond issues declined significantly in the 1990s and early 2000s.

4. TIPS: A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. TIPS are considered an extremely low-risk investment since they are backed by the U.S. government and since their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed. Interest on TIPS is paid semiannually. TIPS can be purchased directly from the government through the Treasury Direct system in $100 increments with a minimum investment of $100 and are available with 5-, 10-, and 20-year maturities.

Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

MARKET THIS WEEK

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For the week, the Sensex fell 1.4 percent to close at 18675.15.

Simple Moving Averages

Returns – BSE Sensex

The Nifty fell 1.23% from last week and ended at 5676 this week.

Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

30 Days 50 Days 150 Days 200 Days

18308 18021 17324 17264

YTD 20.84 % 1 Week -1.4 % 1 Month 3.8 % 3 Months 8.40 %

6 Months 7.70 % 1 Year 10.10 % 2 Years -7.6 % 3 Years 9.7 %

Simple Moving Averages

Returns – NSE Nifty

Overview

The BSE Sensex fell 130 points on Friday following bleak outlook presented by Infosys for its full year numbers and on less hopes of rate cut by the Reserve Bank of India (RBI). The index closed at 18,675.18. Software bellwether Infosys' net profit grew by 3.5 percent to Rs 2369 crore, which was in-line with analysts' forecast. But the cut in EPS and dollar revenues guidance for FY13 and bad performance at operating level dampened the mood. The stock plummeted 5.36 percent. Country's largest lenders State Bank of India and ICICI Bank lost 0.8 percent and 1.22 percent, respectively. Housing finance company HDFC was up 1 percent. But HDFC Bank gained 0.94 percent as the bank’s net profit rose by 30 percent year-on-year to Rs 1,560 crore in Q2, driven by a robust loan growth coupled with lower provisions. Top telecom operator Bharti Airtel and state-run power equipment maker BHEL plunged 2.5 percent each. Commercial vehicle maker Tata Motors, state-run oil & gas producer ONGC, drug producers Sun Pharma and Dr Reddy's Labs were down 1 percent each. Software services exporter Wipro fell 2 percent while its rival TCS, which will declare its Q2 numbers next Friday, rose 0.66 percent

Following companies will declare their September quarter results next week: Reliance Industries, Axis Bank, Shree Cements, NIIT Tech, Mindtree, HCL Tech, ACC, Ambuja Cements, ITC, TCS, Bajaj Auto and UltraTech Cement.

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Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

30 Days 50 Days 150 Days 200 Days

5545 5461 5255 5232

YTD 22.74 % 1 Week -1.2 % 1 Month 4.5 % 3 Months 8.4 %

6 Months 7.6 % 1 Year 11.3 % 2 Years -6.80 % 3 Years 12.3 %

Exchange Rates vs. INR

Currency Symbol Rates % Change

US Dollar $ 52.75 -0.57%

Euro € 68.19 0.24%

Dirham AED 14.34 -0.21%

Japanese Yen ¥ 0.67 -0.44%

Chinese Yuan CNY 8.36 0.06%

Commodities Unit Rs. / Unit % Change

Gold 10gms. 31284 0.35 %

Silver 1 Kg. 61196 -10 %

Crude Oil 1 BBL 4862 -3.9 %

NEWS OF THE WEEK

IIFT gets 35 pre-placement offers from Colgate Palmolive, Goldman Sachs & others

Indian Institute of Foreign Trade (IIFT), an autonomous body set up by the government, has received 35 pre-placement offers this year as against 14 offers last year. According to a release issued by IIFT, companies like Colgate Palmolive, Goldman Sachs, GCPl, Flipkart, CEB etc, have already released pre-placement offers. IIFT was set up in 1963 as an autonomous organization to help professionalize the country's foreign trade management and increase exports by developing human resources, generating, analyzing and disseminating data and by conducting research.

DLF paid extra for Robert Vadra's land; company refutes claims: Analysts

DLF, India's largest real estate company, paid almost two times the market price for a plot of land it bought from Robert Vadra's company, Skylight Hospitality, in Gurgaon in 2008-09, claim real estate analysts and property brokers. In a press release issued by DLF on Saturday, the company had said it bought a 3.5-acre plot at village Sikohpur, Gurgaon district at FSI (floor sale index) cost of ` 2,800 per sq ft. It also claimed that the price of this property has significantly appreciated, benefitting both the company and its shareholders. But analysts, property brokers and landowners say that the current price of commercial FSI in the area is ` 2,500 per sq ft, while land touching the highway costs ` 3,000 per sq ft. A DLF spokesman, however, refuted this claim and said the 3.5 acre plot was purchased from Congress President Sonia Gandhi's son-in-law Robert Vadra at the prevailing market price. When asked why the company claimed the price of the property had appreciated significantly if the current market price of the land (` 2,500 per sq ft) was said to be below the price at which DLF bought the plot, the spokesman said even at the FSI cost of ` 2,800 per sq ft, which translates into ` 2,100 per sq ft of saleable price, and after including construction cost, DLF could still make a profit margin of over 50% if it develops the commercial property today.

Non-bailable warrant issued against Vijay Mallya for bounced cheque

A Hyderabad court has issued non-bailable warrants against Kingfisher Airlines Chairman Vijay Mallya and four directors for failing to appear before it in a cheating case filed by airport operator GMR. The metropolitan magistrate court's order was in response to a petition filed by GMR, Hyderabad International Airport, which accused Kingfisher Airlines of dishonoring cheques worth ` 10.5 crore issued towards airport charges. "The counsel for the accused sought exemption on their presence, claiming they were travelling overseas. However, the Kingfisher counsel failed to provide documentary evidence in support of his argument." The GMR counsel said Kingfisher can now move the same court with an application seeking to recall the non-bailable warrants by providing documentary evidence in support of the argument that the top brass of the airline was actually travelling. The GMR counsel said the court has given time till November 5 to execute the warrants.

Infosys announces 6-8% salary hike effective from October

In a welcome move for its employees, Infosys on Friday declared a wage hike for its staff. Infosys CEO, SD Shibulal made the announcement after the company declared its earnings for the second quarter of the current financial year. Infosys raised salaries of its employees by 6-8% and is effective from October. This is in line with hikes given by its rivals. For onsite employees, the hike is 2%. Infosys added 2,610 employees in the second quarter and increased its utilisation rate to 69.6%, compared with 67.2% in the previous quarter. On a like-to-like basis, utilisation rates are lower than the 70.2% clocked in FY 12. During 2009 also, the company deferred hikes and later gave it out in the middle of the year when the business sentiment improved. The IT major on Friday said that its Chief Financial Officer V Balakrishnan has resigned from his post. Rajiv Bansal, currently the Vice-President Finance will take over as the new CFO from November.

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Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

China exports up 9.9% in September to record high

Chinese exports rose 9.9 per cent in September year-on-year to a record high for a single month, the government said Saturday, indicating resilience in the country's trade despite an economic slowdown. The national customs bureau also said the trade surplus of the world's second-biggest economy, a source of friction with China's trading partners, widened to $27.7 billion for the month, up from $26.7 billion in August. Global concern has mounted over a weakening trend in the Chinese economy, an important driver of global growth, as the broader global slowdown and the European debt crisis have recently impacted China's exports. But exports, the key indicator of the health of China's economically vital manufacturing sector, climbed 9.9 percent in September, the General Administration of Customs said. Imports rose 2.4 per cent. Both figures beat the expectations of analysts polled by Dow Jones Newswires, which resulted in a median forecast of 5.0 percent growth for exports and 2.0 percent for imports. The world's largest exporter has been pulled down by weakness in overseas economies including debt-saddled Europe, a major trading partner, as well as a sluggish property market and softening consumer spending.

Microsoft to sue Google with Motorola in German patent row

Microsoft Corp said on Friday it plans to add Google Inc. as a defendant in Germany in one of its patent actions against Google's phone maker, Motorola Mobility, the first time the two tech giants have come into direct legal conflict over Google's Android mobile software. Microsoft contends that Google's Android infringes its software patents but so far has pursued handset makers rather than Google itself for payment of royalties. Many hardware companies have settled with Microsoft over their use of Android, but Motorola -- which Google bought this year -- is fighting a range of patent issues with Microsoft in courts in the United States and Germany. In the latest move, Microsoft said in a court in Munich that it plans to add Google as a defendant in a case in which it claims a mapping feature on Motorola phones infringes one of its patents. The patent in question defines a method for a mobile device to obtain a map from one database, call up resource information such as the location of a hotel from a second database, and overlay the two sets of data. Motorola and Microsoft are engaged in separate patent disputes in courts in Mannheim, Germany and Seattle over Motorola's use of scheduling software and Microsoft's use of some video and wireless technology.

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Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

COVER STORY

FinNiche is organizing RISCON 2012 a two day Finance and Economics convention on 20th and 21st October. Eminent speakers from the industry will share their expert views on current topics such as GAAR, Policies in the insurance sector, FCCBs etc. An engaging panel discussion and an inter B- School event on Structured products will also be held. It is a great opportunity for students to gain a lot of enriching knowledge from speakers who have decades of industry experience.

Session 1: Policies and reforms in the insurance sector

The event will take off on 20th October with Mr. S C Jain Ex-chairman of LIC sharing his views on policies in the insurance sector. The government has recently announced major reforms in the insurance sector including raising the cap on FDI in insurance sector from 26% to 49%. Finance Minister P.Chidambaram has revealed a partial roadmap for insurance liberalization. It included speedier clearance of products, fewer restrictions on distribution, tax benefits for individuals who take insurance cover, and the channelizing of more insurance money into infrastructure projects.

Session 2: Risk Management in the banking sector

This will be followed by a session on the topic Risk Management in the banking sector by Mr. R P Sinha, Ex -DMD SBI and MD - Embee Financial Services Ltd. Risks in the banking sector have been a great cause of concern especially after the subprime lending crisis of 2008-09. Recently renowned financial instutions and banks like Barclays and J P Morgan Chase have been in the news for the wrong reasons. RBI and various global organizations come up with guidelines which are to be followed by banks and financial institutions to manage risk effectively. Basel II and Basel III norms have an important role to play in risk management

Session 3 : Currency Convertible bonds (FCCBs)

The third session on 20th October will be by Mr. Narinder Bhasin, Vice President and Branch Head, Axis Bank. He will be discussing Foreign Currency Convertible bonds (FCCBs). FCCBs are bonds issued by a company to raise money in a foreign currency. Largely, the money raised through FCCBs was used for inorganic growth or expansion. When the markets were at their peak in 2006-2008, FCCBs were the flavor of the season as many companies found it a cheaper way to raise money compared to the domestic market. The companies believed that since their shares would only rise, the bonds would be converted into equity instead of being redeemed. However, things did not turn out this way. Economic conditions weakened and their expansion plans did not play out the way they were expected to. The cash flow from growth plans has been below expectation and these companies now have huge debts. A fall in stock prices means investors will not convert their bonds into equity as shares of most companies are trading well below the agreed conversion price. The result is that the companies will have to redeem the bonds by raising money at the high interest rates prevalent today. In addition, the fall of rupee against the dollar, has made debt more expensive, as companies will have to pay more rupees to buy dollars. Several companies have also started negotiations for refinancing FCCBs expiring in 2012 by several ways such as buying back the bonds before maturity at a discount, selling assets, raising fresh debt or equity and restructuring the bonds.

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Riscon ‘12: National Risk Management Conclave

Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

Session 4: General anti avoidance rules (GAAR) : Concept, Analysis and Impact.

The second day 21st October will begin with a session on General anti avoidance rules (GAAR) by Mr. Amit Agarwal, Tax Director at Ernst and Young Private Limited. Internationally, tax avoidance has been recognized as an area of concern and several countries have expressed concern over tax evasion and avoidance. In India, the proposed Direct Tax Code 2010 seeks to address the issues relating to tax avoidance and evasion by bringing in Concept of General Anti-Avoidance Rules in addition to various transaction-specific Special Anti-Avoidance provisions. Implementation of GAAR provides tremendous powers to income tax authorities to deny tax benefit to an entity if a transaction has been carried with the sole intention of tax avoidance. The recent example being in the case of the purchase of shares by Vodafone International of a foreign company, which held directly/indirectly shares in an Indian company. Also, the FII & FDI money coming to India through Mauritius route could become taxable.

Inter B school event on structured products

An inter B school event on structured products will be held in which teams from premier B-Schools will present their design of a structured product in front of a distinguished panel of judges. It will be a great learning experience for finance students as the intricacies of structured products will be discussed intensively. This session would require the participants not only to prepare the best analysis but also have the ability to convince others of their ideas.

Panel Discussion

The two day finance and economics marathon will come to an end with an engaging and lively panel discussion on the very relevant issue of ‘ Is auction the best way to allocate natural resources ‘. Burning

issues like the 2G scam and the Coalgate scam and the implications of the auction method and viable alternatives will be discussed in depth by highly renowned industry experts in the breezy ambience of IMT’s very own amphitheater.

With so much to offer RISCON 2012 is a must attend event for all the students at IMT. Team FinNiche sincerely hopes that it will be highly enriching and enjoyable experience for all the students.

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Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

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CAN YOU SOLVE IT? Match the following:

CARTOONS:

**Rush in your entries to : finniche.imt@gmail.com

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 : finniche.imt@gmail.com

Drop in your suggestions to the editorial team :

Magazine design/news : himikachaudhary@gmail.com

Articles/quiz : vinita.2188@gmail.com

LAST WEEK’S ANSWERS

1) Michael Page Stephen Ingham

International

2) ITC Y C Deveswar

3) L&T A M Naik

4) Apple Tim Cook

5) J P Morgan Chase Jamie Dimon

& Co.

Winner: Ritesh Jain

We are on the web !

http://www.facebook.com/FinNiche

http://www.imtgfinxpress.co.cc

Manchester United Silvio Berlusconi

Liverpool Qatar Investment Authority

A.C.Milan Sheikh Mansour bin Zayed Al Nahyan

Paris Saint-Germain Glazer family

Manchester City Femway Sports Group

Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012

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Ultimate Touch Beauty Parlor 10/27 Raj Nagar, Near Arun Chaat, Ph. No. 4104320

October 14, 2012