finxpress_17_february_2013

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February 17, 2013

Company In Focus: AgustaWestland

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Term of t

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Cover Sto

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Fun Corner

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Term of the Week: Market Capitalization

INSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD

Cover Story : The Business of Sports

EDITORIAL

Dear Readers, Greetings from FinNiche!

Team FinNiche brings to you an inter B-school competition FinVictus'13 which would test your

intellectual skills. The team which would use their speed and accuracy efficiently and prove their mettle

would be declared FinVictorious. Please visit our FB page www.facebook.com/FinNiche for further

updates.

In this edition of FinXpress, we have AgustaWestland as the ‘Company in Focus’. The ‘Term of the Week’ would cover Market Capitalization. In the special page we will present views on the topic “The business of Sports”. 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

February 17, 2013 PAGE 1 http://www.imtgfinxpress.co.cc

COMPANY IN FOCUS: AgustaWestland

AgustaWestland NV is an Anglo-Italian multinational helicopter design and manufacturing company, and a

wholly owned subsidiary of Finmeccanica. It was formed in July 2000 when Finmeccanica and GKN merged

their respective helicopter subsidiaries (Agusta and Westland Helicopters) to form AgustaWestland, with

each holding a 50% share. Finmeccanica acquired GKN's stake in AgustaWestland in 2004.

The Italy-based Finmeccanica and the United Kingdom-based GKN first announced their intention to

merge their respective helicopter subsidiaries, Agusta and Westland Helicopters, in March

1999. Finmeccanica and GKN announced finalized terms for the merger in July 2000, which included a

50:50 ownership structure, and the payment of top-up fees to GKN to compensate for a disparity in profit

levels between Agusta and Westland.

In January 2002, AgustaWestland announced that it would be cutting a total of 950 jobs in the United

Kingdom and closing its factory in Weston-super-Mare, which carried out customer support work, as

activity was concentrated at its main site in Yeovil.

On 26 May 2004, GKN confirmed that it had agreed to sell its share of AgustaWestland to Finmeccanica for

£1.06 billion. The sale was approved by the British government in October 2004.

AgustaWestland opened offices in Philadelphia in 2005, and won a contract to build the new presidential

helicopter Marine One over the U.S. manufacturer Sikorsky Aircraft, but this program was cancelled in

2009. In November 2005 it was announced that AgustaWestland had agreed to acquire Bell Helicopter's

25 per cent interest in the AB139 medium twin helicopter program, and to increase its interest in the

BA609 civil tilt rotor aircraft from 25 per cent to 40 per cent.


In June 2008, AgustaWestland and the Russia-based helicopter manufacturer Russian Helicopters agreed

to form a new joint venture company to assemble AW139 helicopters in Russia. Construction of a $50

million helicopter assembly facility in the town of Tomilino near Moscow began in June 2010.

In early 2010, AgustaWestland acquired PZL-Świdnik, a Polish helicopter manufacturer.

In September 2012, AgustaWestland and Northrop Grumman announced the signing of a comprehensive

teaming agreement under which the companies will jointly bid for contracts to build the U.S. Air Force

Combat Rescue helicopter and U.S. Navy's new "Marine One" presidential helicopter.

In 2011 Giuseppe Orsi was appointed Chief Executive Officer and Chairman of Finmeccanica SpA. He has

been recently held on charges of bribing Indian officials to the tune of $670 million to swing the Indian

government's purchase deal of 12 Augusta Westland Helicopters. Orsi was arrested by Italian police in

February 2013 on bribery allegations. He allegedly was involved in paying bribes to secure the sale of 12

helicopters to India when he was head of the group's AgustaWestland unit.


TERM OF THE WEEK : Market Capitalization

Calculating Market Cap Market capitalization is just a fancy name for a straightforward concept: it is the market value of a company's outstanding shares. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding.

Why It's Important A common misconception is that the higher the stock price, the larger the company. Stock price, however, may misrepresent a company's actual worth. The classification of companies into different caps also allows investors to gauge the growth versus risk potential. Historically, large caps have experienced slower growth with lower risk. Meanwhile, small caps have experienced higher growth potential, but with higher risk.

Understanding the market cap is not just important if you're investing directly in stocks. It is also useful for mutual fund investors, as many funds will list the 'average' or 'median' market capitalization of its holdings. As the name suggests, this gives the middle ground of the fund's equity investments, letting investors know if the fund primarily invests in large-, mid- or small-cap stocks.

Different Types of Capitalization

While there isn't one set framework for defining the different market caps, here are the widely published standards for each capitalization:

Mega cap - This group includes companies that have a market cap of $200 billion and greater. They are the largest publicly traded companies like Exxon. Not many companies fit in this category, and those that do are typically the leaders of their industries.

Big/large cap - These companies have a market cap between $10 billion and $200 billion. Many well-known companies fall into this category like Microsoft, Walmart, General Electric, and IBM. Typically, large-cap stocks are considered to be relatively stable and secure. Both mega and large cap stocks are often referred to as blue chips.

Mid cap - Ranging from $2 billion to $10 billion, this group of companies is considered to be more volatile than the large- and mega-cap companies. Growth stocks represent a significant portion of the mid caps. Some of the companies might not be industry leaders, but they are well on their way to becoming one.

Small cap - Typically new or relatively young companies, small caps have a market cap between $300 million and $2 billion. Although their track records won't be as lengthy as those of the mid to mega caps, small caps do present the possibility of greater capital appreciation - but at the cost of greater risk.

Micro cap - Mainly consisting of penny stocks, this category denotes market capitalizations between $50 million and $300 million fall into this category. The upward potential of these companies is similar to the downside potential, so they do not offer the safest investment, and a great deal of research should be done before entering into such a position.

Nano cap - Companies having market caps below $50 million are nano caps. These companies are the most risky, and the potential for gain is often relatively small. These stocks typically trade on the pink sheets or OTCBB.


MARKET THIS WEEK

SENSEX

SENSEX fell by 0.10% from last week and ended at 19468.15 this week.

Simple Moving Averages

Returns – BSE Sensex

NIFTY

The Nifty fell by 0.3% from last week and ended at 5887.40 this week.

YTD : 25.97% 1 Week -0.10% 1 Month: -2.60% 3 Months: 5.40%

6 Months: 10.30% 1 Year : 7.00% 2 Year : 6.50% 3 Year : 21.40%

MARKET THIS WEEK


30 Days 50 Days 150 Days 200 Days

19,792.17 19,647.62 18,646.93 18,158.91

Simple Moving Averages

Returns – NSE Nifty

Overview: The BSE benchmark Sensex extended losses for the third consecutive week by slipping 27 points to end at 19,468.15 due to persistent selling pressure from operators in view of fall in industrial output and rise in retail inflation. Dismal corporate earnings by some blue chip companies also dented the market sentiment. Shares of realty, capital goods, power, metal and consumer durable declined sharply on heavy selling pressure.

The BSE benchmark Sensex resumed higher at 19,517.59 and moved in a range of 19,723.01 and

19,381.82 before ending at 19,468.15, a loss of 26.62 points, or 0.14 per cent. The 30-issue index has lost

635.38 points, or 3.16 per cent, in the last three weeks. The NSE 50-share Nifty also declined by 16.10

points, or 0.27 per cent, to settle at 2013's lowest closing level of 5,887.40. The benchmark has lost 187.25

points, or 3.08 per cent, in the last three weeks. Brokers said the broader market continued to remain in

the negative territory with second-line stocks attracting profit-booking by retail investors ahead of the

Budget. Foreign Institutional Investors (FIIs) continued their buying spree during the week, pumping in a

net Rs 2,567.30 crore in Indian equity markets.

Major gainers included Tata Motors, which firmed up by 6.48 per cent followed by Sun Pharma (5.66 per

cent), HDFC Bank (3.88 per cent), Coal India (3.10 per cent), ONGC (2.66 per cent), HUL (2.01 per cent),

M&M (1.64 per cent), NTPC (1.36 per cent) and TCS gained 1.26 per cent. The total turnover at BSE and

NSE fell to Rs 10,144.22 crore and Rs 53,329.49 crore, respectively from the last weekend level of Rs

11,279.44 crore and 57,529.99 crore.


YTD : 27.31% 1 Week: -0.30% 1 Month: -2.80% 3 Months: 4.60%

6 Months: 9.80% 1 Year : 6.40% 2 Year : 7.40% 3 Year : 22.60%

RESERVE RATIOS

CRR 4.00%

SLR 23.0%

POLICY RATIOS

Bank Rate 8.75%

Repo Rate 7.75%

Reverse Repo rate 6.75%

Marginal Standing 8.75%

LENDING DEPOSIT RATE

Base Rate 9.75%-10.50%

Savings Deposit Rate 4.00%

Term Deposit Rate 7.50%-9.00%

EXCHANGE RATES vs. INR

Currency Symbol Rates % Change

US Dollar $ 53.98 0.75%

Euro € 72.22 0.88%

Dirham AED 14.7 0.753%

Japanese Yen ¥ 0.58 0%

Chinese Yuan CNY 8.66 0.67%

Commodities Unit Rs. / Unit % Change

Gold 10gms. 30197 -2.0%

Silver 1 Kg. 56083 -3.73%

Crude Oil 1 BBL 5213 1.22 %

30 Days 50 Days 150 Days 200 Days

5,994.80 5,960.83 5,658.40 5,508.91

NEWS OF THE WEEK

Diesel Prices Hiked by 45 paisa per litre, Petrol to Cost Rs 1.50 More

Petrol price was on Friday hiked by Rs 1.50 per litre and diesel by 45 paise as state-owned oil companies exercised newly bestowed pricing freedom. The first hike in petrol price in over three-and-a-half months and the second rise in diesel rates in one month exclude local sales tax or VAT and the increase for consumers at petrol pumps would be higher.

Indian Oil Corporation announced the increase in petrol price as international benchmark oil prices climbed 7.5 per cent. The diesel rate was raised in line with last month's government decision to allow oil firms to raise prices in small dozes every month till over Rs 10 a litre loss on sale of India's most consumed fuel is totally eliminated. Even after the increase and a similar hike effected on January 18, oil firms will continue to lose Rs 10.27 a litre on diesel as cost of raw material has risen by 4 per cent to USD 113.24 per barrel. MCX-SX Starts Trading The MCX Stock Exchange (MCX-SX) benchmark index SX40 went live with its equity trading platform on both equities and equity derivatives on Monday. MCX-SX became the third full-fledged equity bourse after BSE and NSE in the country. The bourse was formally launched by Finance Minister Chidambaram on last Saturday. SX40 is a free-float based index of large-cap and liquid stocks, representing diverse sectors. The base value will be 10,000 with a base date of March 31, 2010. The benchmark includes companies that have a minimum free float of 10 per cent and is within the top 100 liquid companies.

The value of shares traded on the MCX-SX in its first day was just Rs 6.9 million. Brokers are cheering on MCX-SX, in the hope it will push down trading costs and drive development of trading products. Although trading volumes are expected to rise in line with the government's goal of bringing more retail investors into stocks, exchanges face a gruelling battle for market share.

American Airlines, US Airways Announce $11 billion Merger

American Airlines and US Airways have agreed to merge in an $11 billion deal that would create the world's biggest airline. The new airline will take the American Airlines name, helping to buoy a company that has been in bankruptcy for more than a year. US Airways CEO Doug Parker will run it, with AMR CEO Tom Horton serving as chairman until its first shareholder meeting, likely in mid-2014.

Four airlines - the new American, United, Delta and Southwest - would now have control over 70 percent of the U.S. market and analysts have warned that ticket prices could rise as a result. The airlines said they expect $1 billion in combined benefits from the merger. They also anticipate cost savings of roughly $150 million.

The new American would have more than 900 planes, 3,200 daily flights and about 95,000 employees, not counting regional affiliates. It will be slightly bigger than United Airlines by passenger traffic, not counting regional affiliate airlines. The new airline will keep all of American's and US Airways' hubs.


Berkshire Hathaway, 3G Capital to Buy Heinz for $28 billion

Warren Buffett's Berkshire Hathaway Inc and 3G Capital will buy ketchup maker H.J. Heinz Co for $72.50 a share, or $23.2 billion in cash. Including debt assumption, Heinz valued the deal at $28 billion, which it called the largest in food industry history.

For Buffett, the deal represents an unusual teaming with private equity for a major acquisition. Buffett said that Berkshire's piece of the Heinz purchase was $12 billion to $13 billion cash, for a mix of common and preferred equity. Heinz said the deal would be financed with cash from Berkshire and 3G, debt rollover and debt financing from JP Morgan and Wells Fargo. The price represents a premium of 19 percent to Heinz's all-time high, and the stock actually rose above $72.50 in premarket trading. Heinz's shares soared 20% to $72.59 in premarket trading on the New York Stock Exchange.

SEBI Freezes Sahara Bank Accounts, Attaches Assets

The Securities and Exchange Board of India (SEBI) has ordered the freezing of bank accounts of two Sahara Group companies: Sahara India Real Estate Corporation Ltd., and Sahara Housing Investment Corporation Ltd. The freezing of bank accounts comes into effect immediately. The market regulator has also ordered the attachment of properties of the two companies, their top executives, including the Group Chairman Subrata Roy. The ‘end game’ for the Sahara Group in the case relating to the non-refund of Rs.24,000 crore deposits to the investing public was scripted last week when the Supreme Court gave SEBI the leeway to freeze accounts, and attach properties of defaulting Sahara Group. The SEBI has also asked the two Sahara firms to furnish within 21 days details of their investments not enumerated in its order. Following the order, Sahara India Estate Corporation also can’t operate demat accounts, and redeem mutual fund units held by it. Further, it is prohibited from transferring any shares held by it in any company to anybody.

Government Clears 4 Single-Brand FDI Proposals Worth Rs 750cr

The government on Wednesday cleared four foreign direct investment proposals for single-brand retail worth about 750 crore. The Foreign Investment Promotion Board (FIPB), which approves proposals that require government permission, cleared the applications of US-based Fossil Inc and French retailers Le Creuset and Decathlon for 100% FDI and a joint venture proposal by French fashion house Promod SA.

India recently allowed 100% foreign direct investment in single-brand retail and 51% in multi-brand retail, a move aimed at attracting funds to bridge its record high current account deficit and spur growth that is projected to drop to a decade-low of 5% this fiscal. In September, after a lackluster response to the opening of the single-brand retailing sector to 100% foreign direct investment, the government sugarcoated the policy by diluting some riders that retailers had identified as irritants. For instance, it changed its stance on mandatory 30% local sourcing to "preferably" buying of merchandise from domestic SMEs.

February 17 2013 PAGE 8 http://www.imtgfinxpress.co.cc

COVER STORY : The Business of Sports

With an estimated sum of US$620 billion spent on merchandising, media rights and sponsorships in the sports industry globally each year, sport is big business. That’s good for the economy, naturally, but you might be surprised to know that a good economy can also produce great sporting performance. A number of theories explaining successful sporting performance have been postulated in the past: for instance, countries performing at the highest levels are those with large economies, rich natural resources, a huge population and significant cultural and social resources. But why, then, does African minnow Kenya consistently produce podium-placed middle and long-distance runners, and why is Africa’s ‘bread basket’ and economic engine, South Africa, home to one of the continent’s most woeful football teams? In a new study by the University of Cape Town's Graduate School of Business in association with the University of the Witwatersrand in South Africa, the findings point to a complex interplay of factors. It’s not only physiology but fiscal policy that may well determine the winners. Gross domestic product (GDP) plays a role, but it also matters where the money is being invested. And it is not always about investing directly in sporting facilities. It appears sporting performance depends largely on the level of investment in health and education: which contributes to greater national wellbeing and overall prosperity. Sport and recreation have a significant effect on a country's economy in terms of employment, revenue from events, consumables and taxation. In fact, sport can be considered a valuable composite sector that has a knock-on effect on industries such as hospitality and tourism, the textile industry through the manufacture of sports clothing, and to employee productivity through activity and health. But just as sport uplifts the economy, the economy uplifts sport: success boils down to the interplay between several variables, namely the GDP per capita, population, the nature of polity, cultural and social resources, home advantage and the level of urbanisation.


Considering the influence sport can have on a country’s economy, it certainly makes sense to investigate what kind of support can drive higher sporting performance. In this particular study, four models were explored. These models represented the Olympic Games, the FIFA World Cup football rankings, a separate subsection of African countries, and the All Africa Games. The models were then measured to find what influenced high performance in different areas. Across all four models, the influence of the dependent variables differed. For example, it was only in the Olympics that population size and the existence of elite sports facilities seemed to have a major impact on performance, whereas the influence of climate was negligible. In contrast, when it came to FIFA countries, GDP, climate and health spending all appeared to be important. However, this changed when one isolated the participating African countries – there, only GDP had a significant influence. And, looking at the All Africa Games, in addition to climate and GDP, education had a significant role to play. Economic factors not directly linked to sports are harder to quantify. Does population size influence sporting performance, for instance? Certainly, the larger a country's population, the broader its talent pool when it comes to picking sports teams. Moreover, it may be easier for larger populations to share costs. But India, with its population of 1.5 billion, has seldom put on an impressive showing at the Olympics, suggesting perhaps that size is a concern only for relatively wealthy countries that can allocate more resources to sports development. According to the study, however, a country's performance in sport is not dependent only on financial resources but also on the level of investment in health, education and infrastructure. While the availability of organisational sport, research institutes, experienced coaches and parental support are assets, it is critical that the correct structure, systems, policies and politics are in place. The question, then, is whether funds should be allocated directly to sports performance, or whether the government should rather concentrate on improving economic growth, education and health – which may, in the long run, promote both a more prosperous economy and better sporting performance. Source: Forbes India


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finxpress_17_february_2013

Documents

agustawestland editorial

share of agustawestland

manufacturing company

westland helicopters

italybased finmeccanica

united kingdombased

bell helicopters

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