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16th NOV 2007

Volume 1, Issue 6

Wealth Incorporation - A CCIM Finance Club Initiative Presents

CHAANAKYA
..Tracking the Economy
Issue Attractions

National Headlines International Headline Corporate Interview Quiz Guest Editorial Student Editorial Pearls of Wisdom

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Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall. Stephen R Covey

National Headlines
Undeterred by violent protests against its project, POSCO hopes to begin work on its 12 million steel capacity project in Orissa by April next year. Foreign funds may soon flood Bond market as the current limit on foreign participation will move away as the market develops, says Sebi Chief. Canara Bank has gone on an aggressive restructuring exercise prunning both its asset and deposit portfolios as it plans to check its cost of deposits and improve its yields on advances. Unitech is learnt to have closed the countrys largest single land deal by buying a 1,750 acre plot in Vizag from APIIC( Andhra Pradesh Infrastructure & Industrial Corporation) for Rs. 3,328 crores. Bharti Airtel clocked a 73% increase in its second quarter net profit at Rs.1,617 cr . The companys EBITDA has grown by 59% to Rs. 2,709.7 cr.

15 days Movements

International Headlines
US federal reserve likely to cut interest rates, with soaring oil prices and sinking housing market Petrochina surged past ExxonMobil to become world's first company to worth more than $1 trillion following its IPO Chrysler to axe 12000 jobs ahead of slow growing rate of demand for vehicles Google enters into mobile industry hoping to bring internet access to masses. Three biggest banks in US, Bank of America, Citigroup And JPMorgan Chase Agree To Set Up $75-Billion Fund To Stabilize Credit Markets IMF has cautioned India the curbing capital too much could undermine confidence in country's very brilliant economy with congregates beyond itself VISA hopes raising $10 billion in what would be the second largest initial public offering of stock in US history US banks including Citigroup, Morgan Stanley, Merill Lynch is booking losses in subprime mortgage related assets

Great companies in the way they work, start with great leaders . Steve Ballmer

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Excerpts of Warren Buffets Interview

Contdfrom last

You often talk about the importance of investing only with people you like, trust and admire. However, you've bought companies only days after you became aware of them. How do you evaluate the owners and managers of a company before investing?
After mentioning that hes actually bought companies after only brief telephone conversations, Mr. Buffett admitted that every now and then you miss, but added that its better than the odds of marriage. He went on to say that sometimes you size up people better with more time, but he didnt sound like he needed much time to recognize the type of character he looks for. The key question for him when evaluating the management of a potential acquisition target is do they love the money or the business. His concern is that he monetizes the owner/managers wealth and that may cause the latter, if he doesnt truly love the business, not to work as hard after hes sold out to Berkshire. He said he looks for the obvious cases of owners who truly love their businesses and added that hes mostly been successful (has had a good batting average) in identifying them. For those owners, their businesses are their lifes work, which Mr. Buffett compared to a painting: You spent all your life painting this painting. You can sell it to us and see it hanging in a place of honor in a museum. Or you can sell it to an LBO operator and see it hanging in a porn shop. I once bought a jewelry business over the phone. I could tell that the current owner was the right type of person. The owners great grandfather had started the company and I could tell that the owner really loved the business. Mr. Buffett said that he can usually "size someone up in less than a day". The most import question he poses in buying a business and looking at management is, do they love the business? He phrased it in this way: If you spend your whole life painting a picture would you rather have that painting on exhibit at the Metropolitan Museum of Art, or would you rather earn 5% more on the sale of the painting and have it hanging in a porn shop? He has had a great batting average in picking companies and people. But he says that we cant tell with everyone and once in a while we make a mistake.

On his fears about US dollar weakness:


The dollar is not overvalued on a purchasing power basis. Macroeconomics is not our usual game, however if some economic facts are screaming at us, we jump on them. We don't usually do junk bonds, however if you cast your eye about, you can always find deals. I don't feel like doing macro bets as much with other people's money as my own. We work with big currencies-- eight of them. I don't have a view about which will move most against the dollar. My view is that the dollar will weaken. Countries support their own currency-- Japan wanted to keep their currency down which kept the US currency up. I don't know if China or HK will decouple their currency from the US. I like to have earnings in other currencies because they convert into more dollars, however I keep most of our cash in dollars. Contd. To next issue)

Quiz
1. Who was the two CEOs to lose their job recently due to the sub prime reason?
2.

Andrew Cuomo, New York Attorney General sued First American Corp, the largest US Title Insurer for allegedly inflating home values under pressure from ______________.

3. After signing an agreement with Renault, Indias second largest motorcycle maker Bajaj Auto has picked up 14.5% stake in________.

4. A weather based crop insurance scheme (WBCIS) is being launched in various states through Agriculture C/O, ICICI Lombard General Insurance and ____________.
5.

The first Scrip to be banned from Nifty Futures Trading is


(Answers will be published in the next issue) 2. Reebok 3. NYSE 4. FIDO 5. Priyanka Gandhi

Answers to the previous issue 1. Sony

Wall street people learn nothing and forget everything . Benjamin Graham

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Four Ways To Create Savings

Did you Know?

Contd .. from last

By Mathew A Thomas
Savings Creator #1: Pay Yourself First, Savings Creator #2: Your Future in a Peanut Can
Savings Creator #3: Spend Your Way to Wealth Many people fail to save because they simply dont want to stop spending. Fine. Keep spending. In fact, Just change what you spend your money on: Instead of buying a bottle of ketchup, buy Heinz stock. Instead of buying a gallon of gas, buy stock in Reliance gas. Instead of a six-pack of soda, buy shares of Coca-Cola. That new brand of clothes? Try stock in Arvind Mills instead. So go ahead and spend your money. But instead of buying things that later will have no value (like an empty ketchup bottle or a vacation), or virtually no value (like costume jewelry, clothing, or furniture), make sure the things you buy will retain and even grow in value. Remember: Life is a series of choices. Im not telling you to stop spending money, merely to choose how you spend it Savings Creator #4: The Right Way to Use Supermarket Coupons If youre like most people, you clip coupons. And you redeem them at your local supermarket. And if youre like most people, youre doing it wrong. Think about it: The coupon in your pocket says SAVE ONE DOLLAR. Maybe you dont get my point. Say youre headed to the grocery store to buy $50 worth of food and household goods. You have $50 in your pocket, along with a dollar off coupon that you can redeem against an item you need to buy. When you leave the store, you will have either: fifty dollars worth of items, and one dollar in your pocket or $51 worth of stuff, and no

$26.8 billion (Rs. 1.10 lakh crores) was the inward remittances from Indians working overseas in 2006-2007, up from $2.1 billion in 1990-91.

Did you Know?

In 1976, 14 banks merged to form a bank credit card called Mastercharge. This was later renamed to Mastercard.

Did you Know?


An ATM was set up at McMurdo Station in Antarctica in 1997. It was installed using satellite communications.

money left because you spent it all!


Although the former is how youre supposed to handle coupons, the latter is more likely how you are handling them. If youre smart, youll spend $49 and SAVE ONE DOLLAR by placing it into your peanut can before you even leave for the store! (See Savings Creator #1.)

The original name of Bank of America was Bank of Italy. Over 100,000: The number of dollar millionaires in India.

Was the timing right ?

By Gopal Pai M
The entire financial sector of India was looking at October 30th as to what will come out of the RBIs kitty i.e. its monetary policy. The market affected by slowing demand in the

Stock Ratnas housing, automobile and electronics expected to maintain the status quo or else give them respite by a rate cut, but the RBI had something else in mind. The Governor responded by a 50 basis point increase in CRR. The banks which expected a rate cut have already reduced rates across its portfolio of loans but they will now be forced the do the reverse. The RBI says that it did it to contain inflation, reduces effect of a expected rate cut by fed and Chinese inflation. In return it has offered is offering corporate with hedging options and introducing new instruments for managing inflows. In all this what can be said is that the people who will be affected is the persons who were waiting for a rate cut to buy a house or a car. The corporate results of Q2 which showed strong upward rise might be affected by a dip in demand which the corporates had managed to avoid in this quarter. So this might dampen the corporate results. The
STERLITE INDUSTRIES, BSE-500900 , NSE STER CMP- Rs.991.65 TARGET PRICE- Rs.1209 DLF, BSE-532868 , NSE DLF CMP- Rs.927.9 TARGET PRICE- Rs.990 PARADYNE INFOTECH, BSE-532672, NSE PARADYNE CMP- Rs.267.3 TARGET PRICE- Rs.352 BHEL, BSE-500103, NSE BHEL CMP- Rs.2724 TARGET PRICE- Rs.3117

question is if the Fed decreases the rate was the decision right? Well that has to be seen in the coming days.

(CMP Current Market Price)

I would like to tell people that all of our products and business will go through three phases. Theres vision, patience, and execution Steve Ballmer

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Recognise these People:

(Answer will be published in the next issue)

a. Budapest Bank b. China Mobile c. Bank of New York d. NABARD e. Reuters f. I gate g. Centurion Bank

Pearls Of Wisdom
Suresh K Company: Pipal research Designation: Research trainee Profile: Business Analyst Engages in company specific analysis as requested by the client ,collecting information from various sources and analyse it to generate the report

How to prepare for Pipal Research? 1) Preliminary screening done by the Pipal team based on resume and academics. 2) Three rounds of interview-comprises 2 tech interview 3rd Being HR which tours the stability of candidate Suggestion Choose company profile based on area of interest.

Buzz Word
Corner the act of securing enough controlling interest or ownership within a single security so that manipulation of price can occur. Froth Market conditions preceding an actual market bubble where asset prices become detached from their underlying intrinsic values as demand for those assets drives their prices to unsustainable levels. Market froth marks the beginning of unsustainable rates of asset price inflation. Grinder A slang term for a person who works in the investment industry and makes small amounts of money at a time on small investments, over and over again.

Book Quotes:
If you want your organization to make quantum leaps in progress, you should establish focused teams toward well-defined goals, and cultivate the spirit in these teams to the max! (Book: The Quantum Leap Strategy)

When confronted with a problem: don't get paranoid, but analyze the gist of it, and tackle it systematically. Problems are the forebears of change, and change is inevitable, remember? (Book: Zap the Gaps)

Please mail your valuable feedbacks, reviews at chaanakya.ccim@gmail.com

Contributions made by :
Usha V Murthy Bhavana Kataruka Anshu Awasthi Simi Thomas Lohit G Eric Anand Neeraj Ajay Dhuvri Gopal Pai M Ritesh Verma Diwakar Grover (1st yr) Manish Sinha (1st yr) Mathew A Thomas