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1st JAN 2008

Volume 1, Issue 9

Wealth Incorporation - A CCIM Finance Club Initiative Presents

CHAANAKYA
..Tracking the Economy Issue Attractions
National Headlines International Headline Article Quiz Student Editorial Pearls of Wisdom+ Buzz Word + Tag Lines 1 1 2 2 3 4

Do more than is required. What is the distance between someone who achieves their goals consistently and those who spend their lives and careers merely following? The extra mile.Gary Ryan Blair

National Headlines
SBI may merge its four listed banks with itself in early 2008. Reliance Communications completed the acquisition of US-based Yipes Holdings for Rs. 1200 crore. Banking sector pays record tax, second to only the cash rich oil sector. SBI alone paid Rs. 1088 crore becoming the second highest tax payer in the country. UTI Mutual Fund has announced the launch of UTI-Long Term Advantage Fund Series II. India bulls group to de-merge its stock broking business from the groups financial services arm The National Bank of Pakistan is set to open its first branch in India. Oberois own 3 of worlds top 6 hotels: Udaivillas (Rank 2), Vanyavills (Rank 3) and Amarvillas (Rank 6) as per the ranking by Conde Nast Traveler.

Inflation 3.45% ,IIP11.8%


15 days Movements

International Headlines
Merrill Lynch, hit by huge subprime losses, will boost its capital by selling upto $6.2 billion worth of discounted new stock to Tamasek Holdings and Davis Selected Advisers Arcelor-Mittal announced the acquisition of Cinter SA, a stainless steel tube producer in Uruguay, and Eisen Wagner GMBH, an Austrian steel distribution company State Bank of Mauritius eyes stake in Centrum Capital Goldman Sachs capped another record-breaking year with strong fourth-quarter results, as the investment bank benefited from bearish bets on housing, allowing it to avoid the subprime-related damage many rivals have seen Rollercoaster Asian stocks set to rise in 2008: High Forex reserves and huge infrastructure spending put continent in a favourable spot. UBS announced further write-downs of around $10 billion this month, bringing the total to around $14 billion and making it one of the most prominent victims of the credit crisis among banks so far

People are definitely a companys greatest asset. It doesn't make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps. . Mary Kay

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Reasons for the Sub-Prime crisis in a nutshell

By : Gnana Devi

The subprime crisis arose primarily because funds were loaned to people who were not creditworthy. By creditworthy we mean that they cannot repay or service their loans. Interest rates on loans were low in order to increase consumption in the economy. Interest is nothing but the compensation for money used. Three factors influencing interest: Inflation- State of rising prices, Propensity to Consume- Urge to spend, Credit default. Banks converted sub-prime (non-creditworthy) customers to prime (creditworthy) customers firstly by elongating repayment period. And secondly by Differential EMI (Equated Monthly Instalments). EMIs were low in the first few years and then assuming that incomes would rise, EMIs were raised later .These rates are called Teaser Rates. Securitization is the sale of assets. Bonds are issued by selling assets through a Special Purpose Vehicle (SPV) to: Mutual Funds, Trusts, Hedge Funds, Endowment Funds, Pension Funds, High Network Institutions. They invested as they thought that the security was high and the interest rate was high too.

Time Management - some tips

By : Gnana Devi

There are no time management tools that will work for everyone all of the time. Yet, some of the following tips may help you in your search for tools. These are as follows:

1. Learn to say no. 2. When feasible, delegate. 3. Do not let paperwork pile up. 4. Ask yourself, What is my objective or goal? 5. Think of your effectiveness first, your efficiency second. 6. Break a job into bite-sized pieces. Do not procrastinate because it cannot all be done at once. 7. Identify your time wasters and resolve to eliminate them. 8. Add times for relaxation and recreation into your schedule. 9. Identify and make use of your personal biorhythms, or up time and down time.

Quiz

Identify the Personalities ( Answers in the same issue)

1 Answers to the previous issue 1. UBS

2 2. Infrastructure Finance Co Ltd

3 3. Jet Blue Airways

4. Tata Communications Ltd, Tata

5. Symex International

Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious
choice, and discipline . Jim Collins

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As Indian Companies Unfurl Their Acquisition Plans, Here Are a Few Mistakes They Should Avoid
In yet another demonstration of India's growing buying power, the Tata Group is vying to acquire Jaguar and Land Rover from Ford Motors. If the deal were to close in the next couple of weeks, it would cap 10 months of record deal-making this year by corporate India. In the first 10 months of 2007 Indian firms have already spent a record $31.7 billion acquiring companies abroad. With 2006 witnessing only $9.9 billion outbound acquisitions, this has been a trend-setting year for Indian firms.
Acquisitions, outbound or not, have one common feature. The buyer pays the target firm a premium above its current market value. Underlying this willingness to pay a premium is the belief that the target would be worth more if it were owned by the buyer. This increase can arise from a reduction in combined costs (cost synergies) or an increase in combined sales (revenue synergies) due to the acquisition. A key tenet for financial success in acquisitions is, "Do not overpay." In other words, the price paid for the target should not exceed the value of the target to the buyer. When it comes to affecting the value of the target to the buyer, cost synergies and revenue synergies are very different. Most changes required to realize cost synergies are internal to the firm, so they tend to be realized faster -- often within a year or two. Since cost synergies essentially come from replacing one firm's method of producing by another's, it might entail some political resistance, especially in cross-border deals. Many company owners -- and politicians -- would be hesitant to agree to an acquisition by an international firm if this meant that their workers would be laid off and replaced by lowercost workers elsewhere. Revenue synergies, in contrast, depend not only on internal factors but also on the reactions of several players outside the firm, such as competitors and customers. They consequently take time, often longer than three years, to truly take effect. Beliefs about potential revenue growth also tend to fall short of expectations because they are affected by the actions that competitors take in response to the merger. Many acquirers, when they estimate the increases in sales due to the acquisition, assume the competitors will remain as they are today. Revenue synergies also require a greater level of integration between the merged firms. Often this is a process fraught with the potential cultural conflict between the two organizations. Such cultural conflicts make the process of integration difficult. Often the conflict between divisions is so high that liberation turns out to be a better option than integration. Is the Price Right? To buy a company at the right -- or the lowest price -- it helps to be the only interested buyer. If possible, avoid competition. The best tactic for this is to think differently. Doing so makes it more likely that you will be the only one approaching a target. Private targets have another advantage. Since owners of private firms typically have a large part of their wealth in the firm, they are less diversified and value their firm less than a diversified owner might. For a diversified firm, this creates a greater possibility of paying a reasonable premium to the seller and still not overpaying. If a buyer does get into a competitive environment, the discipline to walk away at a pre-determined threshold price is critical. Companies sometimes also underestimate the importance of non-price dimensions in a merger. This is especially the case in cross-border deals. The support of workers and other non-shareholder groups is critical in cross-border deals. These groups support firms that have a good track record with respect to social factors. Mittal Steel benefited from their factory safety record in gathering support from the labor unions in France. This was an important ingredient in the outcome of the bidding war. Indian companies that are prowling for targets to take over would do well to understanding these basic issues, because it can help them avoid the single biggest mistake that many new acquirers make -- overpayment. The old saying "caveat emptor" -let the buyer beware -- applies as much to a merger as it does to any other kind of purchase.

Did you Know? Google - a deliberate misspelling of the word googol, reflecting the companys mission to organize the immense amount of information Apple for the favorite fruit of cofounder Steve Jobs and/or for the time he worked at an apple orchard. Apple wanted to distance itself from t h e c o l d , unapproachable, complicated imagery created by other computer companies at the time.

Hotmail - Founder Jack Smith got the idea of accessing email via the web from a computer anywhere in the world. When Sabeer Bhatia came up with the business plan for the mail service he tried all kinds of names ending in mail and finally settled for Hotmail as it included the letters HTML the markup language used to write web pages.

Personalities

1. Paul Allen , Co Founder Microsoft 2. Michael Bloomberg 3. Comrad Hilton

Many great ideas go unexecuted, and many great executioners are without ideas. One without the other is worthless. Tim Blixseth

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Tag Lines:
Talk. Theyll Listen - Philip Morris All The News Thats Fit To Print - The New York Times Enjoy The Ride - Nissan Something Special In The Air - American Airlines Higher Standards - Bank Of America

a. b. c. d. e. f.

Adelaide Bank Barclays The Royal Bank Of Scotland Group Reliable Insurance Trusted Choice IRDA

Pearls Of Wisdom
Name: Mohd. Ansar Nalakath (mohdansar@gmail.com) Designation: Functional Trainee at Assistant Managerial level Company: GE Money Profile: Works under the division of India Bank Cards of GE Money which manages the SBI card collections Handles the agency which has 10-12 field staff, a team leader and its proprietor reporting to him. Ensures the performance of agency in the form of collection of payments. A total in house, challenging job filled with high pressure which gives you high learning and market exposure

How to prepare: Be strong with your basic calculations and show the negotiation skills you have to the interviewer.

There will be a case study to be solved on collections on which the Group Discussion will take place. Remember to focus on right solutions in case study. This is an elimination round. There will be a personal interview which is the final round on which one will be tested in areas of specialization and also on negotiation skills. Be sure of what you say and make sure you know it better.

You should show the flexibility in your preference towards location to the interviewer.

As collections is in news its better to update oneself about the recent happenings.

Buzz Word
Caveat Emptor - Another way to say, "let the buyer beware." Agflation - An increase in the price of food that occurs as a result of increased demand from human consumption and use as an alternative energy resource. The term is derived from a combination of the words "agriculture" and "inflation". Dog Eat Dog - When the market for a good or service is ruthlessly competitive. Electronics retail is often thought to be a dog eat dog market. Blockbuster sales every weekend, bashing competitor products, and "lowest price guaranteed" tactics are characteristics of dog eat dog competition. Power Ratio - Measures a media company's revenue performance in comparison to the audience share it controls. You need to know three numbers in order to make this calculation work: Total market revenue, The company's revenue, The audience share Maple Bond - A Canadian dollar denominated bond that is sold in Canada by foreign financial institutions and companies. Similar to other foreign bonds (such as the bulldog bond, samurai bond and the matilda bond), the maple bond gives domestic investors (in this case, Canadian investors) the opportunity to invest in foreign companies

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

Contributions made by :
(First Year Students)
Anoop Rajan Dennis Abraham Fouzia Taranum Gnana Devi Lavanya.S Nikhil Mehta Sukrutha Selvarajan

(Second Year Students)


Ajay Dhuvri Anshu Awasthi Bhavana Kataruka Gopal Pai M Mathew A Thomas Sindhu B Navali