02-Jan-2012

FINVEST TIMES
HAPPY NEW YEAR

Issue 8

Special new year edition Interview with Dr. A K Puri (Director general ) Interview with Dr. Sapna Rakesh (Director management)

Inside this issue: IFRS: Challenging, Inter- 4 esting and Rewarding India government bonds 7 rating outlook stable Gold eases as Fitch downgrade warning India's April-November fiscal deficit at $66.3 8

TCS overtakes RIL as 10 India's most valued firm Market Watch 11

Terminology

12

Success story

13

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There is no substitute and shortcut to Hard work Dr A K Puri

We would like to know your views about FINVEST TIMES? Congratulations, Great work and nice efforts. Ive been reading FINVEST TIMES from past few months and I really like the content of FINVEST TIMES.
Dr. A K Puri (Director General) I.T.S Ghaziabad

is at forefront in this sector from last two decades, Thanks to the spirit of entrepreneurship shown by visionaries In addition to PGDM what do you think would make a student industry ready? There is no substitute and shortcut There work. to Hard work My Advice to all Management students is to learn, learn and learn. From an attitude of learning will emerge an ability to grasp, ability to interpret and analyse the possibilities & the training to take decisive action which will produce result for becoming expert Please provide your suggestions for FINVEST TIMES on how we can make it better? I believe that the design and visual can be worked on to make it more easily readable. Your message to students. Put your soul in what you do be focused create passion and devotion for work Innovate on what you do, Utilize all the opportunities to learn about latest happenings in business developing skill through application of concept what matters is action

How do you look at current economic scenario and the job market? Though there have been small setback in rupee and inflation, I strongly believe that India is a land of opportunity and our business leaders have skills to streamline their business enterprise in terms of growth. Large segment of young population is adding up skills and manpower. India is making great heights in technology and leaving global imprints, 2012 is going to be the year of growth and prosperity for all. It will increase opening in all streams of business there has been renewed requirement of additional manpower in sectors like Banking, Healthcare, Infrastructure, Higher Education, Entertainment, Hospitality, FMCG and Industrial Production. As students of management which are the sectors we should focus on for growth prospective in the current economic scenario? Management students can succeed in any sphere of their choice what they need is Entrepreneurship, India

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When you understand life you become better manager Dr. Sapna Rakesh

Dr. Sapna Rakesh (Director Management) I.T.S Ghaziabad

We would like to know your views about FINVEST TIMES? Good initiative taken up by students of finance club. It is a tribute to students for creating wonderful newsletter. It can be expanded in different sectors of Finance How do you look at Current Economic Scenario and the job market? Job market is going to be tough for both premier and tier 2 institutes. Companies have become more selective because of less demand for candidates number of offers to institutes is going to get reduced. Companies are not expanding their operations and hiring only for maintaining relations. As students of management which are the sectors we should focus on for growth prospective in current environment? Your focus should be on any sector which excites you. It could be on Social sector, academics or any other sector where you could de-

velop your strengths. It is the time to discover what do you like, capitalize on the skills you have. In addition to PGDM what do you think would make a student industry ready? PGDM itself is sufficient, education is boundary less go in depth of concepts stretch oneself. One should be curious and oriented to learn, understand basics of life. Business is all about common sense and no book or curriculum can teach that. When you understand life you become better manager. Please provide your suggestion for FINVEST TIMES on how we can make it better? Increase your readership and share FINVEST TIMES with different institutes also, Add finance club activities Your message to students Work hard Work hard and Work hard.

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IFRS: Challenging, Interesting and Rewarding

Background International Financial Reporting Standards (IFRS) convergence, in recent years, has gained momentum all over the world. As the capital markets become increasingly global in nature, more and more investors see the need for a common set of accounting standards. India being one of the key global players, migration to IFRS will enable Indian entities to have access to international capital markets without having to go through the cumbersome conversion and filing process. It will lower the cost of raising funds, reduce accountants' fees and enable faster access to all major capital markets. Furthermore, it will facilitate companies to set targets and milestones based on a global business environment, rather than an inward perspective. Furthermore, convergence to IFRS, by various group entities, will enable management to bring all components of the group into a single financial reporting platform. This will eliminate the need for multiple reports and significant adjustment for preparing consolidated financial statements or filing financial statements in different stock exchanges. What is IFRS? The term IFRS has both, a narrow and a broad meaning. Narrowly, IFRS refers to the new numbered series of pronouncements that the IASB is issuing, as distinct from the IAS series issued by its predecessor IASC. More broadly, IFRS refers to the entire body of IASB pronouncements, including Standards and Interpretation approved by the IASB, IASC, and SIC. IFRS is principle based Standards, drafted lucidly and easy to understand and apply. However, the application of IFRS requires an increased use of fair values for measurement of assets and liabilities. The focus in IFRS is more towards getting the balance sheet right and hence brings significant volatility in the income statement. Objectives behind IFRSs To develop a single set of high quality, understandable and enforceable global accounting standards that will form the stable platform for international accounting. The correct adoption of IFRSs will bring more transparency and a higher degree of comparability, both of which promise many benefits for the organizations as well as economies. Convergence with IFRS: Indian Scenarionario Since Indian accounting standards are based on IFRSs; Indian companies have been experiencing lesser difficulties to tap the capital markets of foreign countries. In India, the Accounting Standards Board (ASB) of ICAI, while formulating accounting standards in India considers the IFRSs and tries to integrate them, to the extent possible, in the light of the laws, customs, practices and business environment prevailing in India. Issues & Challenges in Convergence IFRSswith IFRSs Awareness need to brought about extensively throughout the organization Understand impact on financial position & performance External evaluation agencies must also understand IFRS Manage transition & dual reporting Fair market values will be in demand but are scarce today Changing ERP, SAP and other softwares will be required Impact on financial position & performance as a consequence of IFRS Convergence would need to be understood by the organizations well in advance Manage transition & dual reporting Aligning different policies, practices and system across the group having presence in multiple jurisdictions and having different reporting requirements including tax and statutory reporting Conforming accounting with changes in business Lack of availability of appropriately

skilled resources in the market at present India and IFRS India, there will be two set of Accounting Standards 1. The existing Indian Accounting Standards (IAS) will be applicable to all companies which are not required to adopt IFRS converged standards. 2. Indian Accounting Standards, as converged with IFRS (Ind-AS) It is applicable to companies operating in India in phased manner beginning from April 1, 2011. In the first phase companies forming part of stock exchange index and those with net worth of above approx 250 million USD will be required to present their financial statements as per Ind-AS. There are conceptual differences between IAS and IFRS. Keeping in view the extent of gap between IAS, Ind-AS and the corresponding IFRSs conversion process would need careful handling. By introducing a new company law, the Indian Government has initiated the process to amend the legal and regulatory framework. The conversion would involve, Impact Assessment, Revisiting Accounting Policies and thereafter changing the Accounting & Operational Systems (including ERP) in order to be fully compliant with Ind AS or IFRS. prospectFuture prospectThe above is only a glimpse and basic differentiating point between the IFRS and Indian Accounting Standards. As we go into the depth of each of the IFRS, there is plethora of changes and differentiating aspects that would need special efforts to recognize them and account them. As has been the scenario for ages, any new initiation is not devoid of controversies. As such the convergence to IFRS in India has also received a lot of flack from the Indian trade and industry and the professional bodies with many arguments going against the IFRS convergence. Nonetheless, IFRS is definitely need of the hour to create better platforms for Indian companies to tap the Foreign Investors interest and boost its expansion plans

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Comparison chart for Indian GAAP and corresponding IFRS

Particulars Revenue Recognition

Indian GAAP
Revenues are recognized when all significant risks and rewards of ownership are transferred or on a Percentage of completion basis. No Detailed industry specific guidelines. Conforms to statute and captions are in the following order : --Equity and reserves --Debt --Fixed assets --Investments --Net current assets --Deferred expenditure and --Accumulated losses Required only for the current year With the prior year comparatives

IFRS
Revenues are recognized when all significant risks and rewards of Ownership is transferred

Balance sheet

Balance sheet captions are presented in the inverse order of liquidity i.e. illiquid items appear Earlier. Requires disclosure of either changes in equity or changes in equity other than those arising from capital transactions with owners and Distribution of owners

Correction of fundamental errors

Include effect in current year income Statement. Include cumulative effect in current year income statement. For material items, restate Comparatives. No definitive standard yet. New standard on Except, ineffectiveness of non-derivatives recogfinancial instruments: Recognition and Measure- nized in equity. ment is Presently under formulation No standards not required Option to present a statement that shows all changes or only those changes in equity that did not arise from capital transactions with owners or Distributions to owners. Similar to US GAAP. Gains/losses on hedge instrument used to hedge Forecast transaction, included in the cost of asset/liability (basis adjustment). Business combinations under IFRS should be accounted for as an Acquisition (purchase method). Where an acquirer cannot be identified then the pooling of Interests method should be adopted. Mandatory for all entities.

Derivative and other financial instrumentMeasurement of hedges of foreign entity investments Comprehensive income

Derivatives and other Financial instruments measurement of derivative instruments Business Combinations

No definitive standard yet. New Standard on financial instruments: Recognition and Measurement is Presently under formulation. Restricts the use of pooling of interest method to circumstances which meet the criteria listed for an amalgamation in the nature of a Merger. In all other cases, the purchase method is used Mandatory only for listed. Companies and companies meeting certain turnover conditions.

Cash Flow Statement Accounting for Foreign Currency Transactions

Exchange differences on foreign currency trans- All exchange differences are included in deteractions are recognized in the profit and loss acmining net income for the period in which differcount with the exception that exchange differences arise. ences related to the acquisition of fixed assets adjusted to the carrying cost of the relevant fixed asset. Goodwill is capitalized and tested for impairment Goodwill is amortized to expense on a systemannually. Except for goodwill from amalgamaatic basis over its useful life with a maximum of tion, which is amortized over 3-5 years. twenty years. The straight line method should be adopted unless the use of any other method can be justified.

Goodwill

Source: ICAI

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SETS OF FINANCIAL STATEMENTS UNDER IFRS AND AS The basic and prime difference in the Indian Accounting Standards and the IFRS would begin with the requirements of the Financial Statements required to be prepared by the entity for presenting its financial performance. A complete set of financial statements comprises: IFRS AS

(a) Statement of financial position as at the end of the pe- Balance sheet as per schedule VI of riod; Companies Act, 1956. Minimum items on the face of the statement of financial position (b) a statement of comprehensive income for the period: Profit & loss account Comprehensive income for a period includes profit or loss for that period plus other comprehensive income recognized in that period, where other Comprehensive income statement include Changes in revaluation surplus / Actuarial gains or losses for defined benefit plan / Gains or losses on translation (effect of foreign exchange rates) / Gains or losses on remeasuring the available for sale financial assets / Gains or losses on hedging instrument in cash flow hedge.

(c) a statement of changes in equity for the period; Presentation for dividend distribution & earning per share should be shown in a statement of changes in equity or in the notes. (d) a statement of cash flows for the period as per IAS - 7

No separate statement

Only if applicable

(e) notes, comprising a summary of significant accounting policies and other explanatory information; and

Same as IFRS

(f) a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.

No separate statement

Source: ICAI

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NEWS WATCH
India government bonds rating outlook stable, fiscal deficit weighs: Moodys
Ratings agency Moody's on Wednesday unified India 's local and foreign currency bond ratings at Baa3, keeping a stable outlook for Asia 's thirdlargest economy. "The credit rating incorporates the credit strengths such as a large, diversified economy, robust medium term growth prospects and a strong domestic savings pool that facilitates the financing and refinancing of the government's relatively high debt burden," Moody's said in a report. India 's foreign currency bond ceiling is unchanged at Baa2, and the foreign currency bank deposit ceiling is now Baa3. The local currency bond and bank deposit ceilings are unified at A1. In addition, the Indian government's local currency short-term rating has been changed to P-3, from NP. The report also highlights credit challenges such as wide and persistent current account, fiscal deficits, a policy log jam, susceptibility to inflationary pressures and the limitations that poor social and physical infrastructure place on growth. Moody's expects India 's growth downturn to persist for the next two quarters but highlights the GDP growth rate achieved will be above average with respect to similarly rated peers. In the month of November government data indicated, growth rate in India 's GDP or the value of goods and services produced, dipped to 6.9% in the three months to September compared with 8.4% in the year -ago quarter, as rising interest rates and stubborn inflation crimped demand, the weakest expansion since the second quarter of 2009. Output growth in eight core industries, including steel, cement and coal, dropped to near -zero in October, a sharp decline from 7.2% a year ago, signaling the possibility of a sharp deceleration in industrial growth, given their more than one-third weight in the Index of Industrial Production, or IIP. "Fiscal deficit for the first seven months of the year has reached 75% of the full-year estimate, adding to the gloom. Economists warned about a further slowdown," according to an ET report. Moody's says, India's structural strengths such as its diverse sources of economic growth and its private sector's productivity will help revive investment growth over the next 12 to 18 months, if, as expected, inflationary pressures recede and domestic interest rates ease. The rating agency however raised concerns over recent rupee depreciation. Earlier in the months, the rupee slipped to its record low of 54.30 to the dollar. According to analyst the rupee could test 55 in the short term. It has raised India 's local currency debt rating by one notch to Baa3, matching it with the country's foreign currency bond grade. With the upgrade, India 's local currency bonds have now become investment grade. Baa3 rating is the lowest investment grade. The rupee has weakened over 15% so far in 2011 against the dollar and is among the worst performing currency in Asia . "The rupee depreciation will raise foreign debt repayment costs for individual firms, it could also help boost export competitiveness and soften import demand, thereby narrowing the current account deficit over the next year," said the Moody's report.

With the upgrade, India 's local currency bonds have now become investment grade. Baa3 rating is the lowest investment grade.

No need to worry over fall in rupee:N R Narayana Murthy

Terming falling value of rupee as a general phenomenon, IT major Infosys' founder N R Narayana Murthy said it should not be seen with pessimism. "Value of rupee keeps fluctuating. This is normal. At some point of time value of Rupee was at 39 against a dollar ...," Murthy said. Murthy added that global economic scenario is not in good shape as developed economies are not performing well. However, India should not worry due to these immediate global trend as the country has potential to grow at rate of 7-7.5 per cent. "We need to work hard and take decision fast," he said. When asked that government is facing difficulty in making decisions, the IT veteran said, "We have to look towards future and realise the seriousness of making quick decision. But this is not applicable on government alone. It applies on Infosys, local authorities of Indore and from Karnataka government to United Nations," Murthy said.

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Gold eases as Fitch downgrade warning hurts euro

Gold prices eased, extending the previous week's hefty losses, as a warning from Fitch Ratings that it may downgrade France and six other euro zone countries hurt stocks and the euro and fuelled a dash to the dollar. Spot gold was down 0.3 per cent at $1,594.39 an ounce The precious metal posted its biggest one-week loss since late September last week, falling to a near 12-week low as concerns over the euro zone debt crisis intensified, boosting the dollar at others assets' expense. Investors' thirst for the US currency, often seen as a haven from risk, is weighing on dollarpriced gold, which becomes more expensive for holders of other currencies as the unit appreciates. "You're looking at euro weakness, rather than anything else, as the driving force behind the sell-off," said David Jollie, an analyst at Mitsui & Co Precious Metals. "You've got a stronger dollar and that will tend to lead to lower prices." Traders with an eye on the end of the year are likely to be loath to add to long positions at this stage, whatever their view of gold prices' longer-term direction, he added. "Whatever your view, you have to ask what the chances are of making money by the end of the year," he said. "That says to a lot of people that this is not a market to get longer in." The euro eased towards an 11month low on concerns that the euro zone sovereign debt crisis would damage global growth, while the dollar also got support on uncertainty after the death of North Korean leader Kim Jong-il. Though the gold market barely reacted to Kim Jong Il's death, it is sensitive to moves in the wider markets. Gold in recent months has been closely correlated to riskier assets as the funding squeeze forces investors to dump gold to cover losses elsewhere. The euro was under pressure after Fitch's warning late Friday that it could downgrade France and six other euro zone countries as it believes that a comprehensive solution to the region's debt crisis is "technically and politically beyond reach". European shares fell, meanwhile, while safe-haven German government bonds rose in early trade.

Spot gold was down 0.3 per cent at $1,594.39 an ounce The precious metal posted its biggest oneweek loss since late September

Lava mobile to invest $5 million in Nigeria

It will invest $5 million in the coming fiscal to develop service centres and brand building in Nigeria, where it sells nearly 50,000 units per month.

Mobile handset manufacturer Lava Thursday said that it will invest $5 million in the coming fiscal to develop service centres and brand building in Nigeria, where it sells nearly 50,000 units per month. "We will go ahead and invest $5 million to develop the service centre and brand building in Nigeria. This investment will also benefit our operations in Ghana, as it sources a lot of content from Nigeria," Sunil Raina, chief marketing officer

of Lava International, told media. According to Raina, the company's phones have been very well received in the African country. "Consumer wants in India and these markets are very similar and we are focusing on providing products which have long battery life with standard features," he said. The company said that it will tweak a couple of features like language options from English-

to-French for luring more customers. Raina added that Lava is targeting 10 per cent of handset market share in the African country where it started offering mobile phones some four months ago. "It's a 20 lakh to 25 lakh per month market... we are targeting nearly 10 per cent of the total market share in the coming quarter," he said.

GVK planning to sell Australian unit GVK Hancock stake to raise up to $500 mn: Sources
GVK Power and Infrastructure is looking to sell a minority holding in its Australian unit, GVK Hancock, to raise funds to retire part of its debt and fund operations, three sources with direct knowledge of the matter told Reuters. The Indian power and infrastructure firm hired Citigroup and Macquarie to raise funds between $300 miilion and $500 million, said the sources, who declined to be named as they were not authorised the speak before a public announcement. A GVK spokesman said the information was speculative and declined to comment, while Macquarie declined to comment.

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Ajay Piramal has got tons of cash but nowhere to invest

Ajay Piramal is sitting on a mountain of cash. Yet the billionaire Indian tycoon, working in one of the world's fastest growing economies, is struggling to figure out what to do with the money. Many of the men who made their billions here are saying maybe it's time to quit India. It's got to be easier to do business elsewhere. The problem isn't opportunity, he says. It's India. "Every large investment, there was no transparency," he said. His dilemma is a worrying sign for India. With the country mired in corruption, bureaucratic red tape and unclear and changing government policies, many of the men who made their billions here are saying maybe it's time to quit India. It's got to be easier to do business elsewhere. In May last year, Piramal's healthcare business sold its generic drug operations to U.S. pharmaceutical giant Abbott Laboratories for $3.8 billion. Piramal, a tall big man in a country that still measures prosperity by girth, was eager to set that cash pile to work. He wanted to expand one of his chemical plants, but was told it would take five years. "The same plant could be set up in China in two years," he said. "I love India, but my customer is not going to wait." India, still a beacon of relatively fast growth despite a troubled world economy, should be a magnet for capital. Instead, since the beginning of 2010, the amount that Indians have invested in businesses overseas has exceeded the amount foreigners are investing in India, according to central bank figures. In part this reflects the confidence and aptitude of India's maturing companies and the current malaise in the global economy and financial markets. But it also reflects deep problems at home. India's big coporations may be cash rich but the failure to invest that money domestically is bad news for a developing country that needs capital to build the roads, power plants and food warehouses that could help lift hundreds of millions out of dire poverty. The frustration of India's business elite with corruption, political paralysis, log-jammed approvals, regulatory flip-flops, lack of access to natural resources and land acquisition battles - to pick a few of the top complaints - has reached a pitch perhaps not heard since India began liberalizing its economy in the early 1990s. "If you are an honest businessman in India, it's very difficult to start up anything," said Jamshyd Godrej, chairman of manufacturing giant Godrej & Boyce. "Companies are going to operate where they see the best opportunities and efficiency for their capital." Increasingly, that's outside India. In 2008, foreigners poured roughly twice as much direct investment into India - $33 billion - as Indians plowed into businesses overseas. By 2010, that had reversed: Indians invested $40 billion abroad twice as much as foreigners invested in India - a trend that's continued this year. There is another, unspoken element to all the complaints. To the extent that business in India ran on corruption, some of the old, dirty ways of doing things are being disrupted, freezing India's already glacial bureaucracy, business leaders say.

India's April-November fiscal deficit at $66.3 billion: Report

New Delhi has admitted meeting the fiscal gap target would be a "great challenge", but officials said they would try to keep the deficit under 5 percent of GDP by pruning expenditure

India's fiscal deficit during April to November was 3.53 trillion rupees ($66.3 billion), or 85.6 percent of the full-year target, government data showed on Friday. In the same period last fiscal year, fiscal deficit was 48.9 percent of the budgeted target. Net tax receipts were 3.2 trillion rupees and total expendi-

ture was 7.61 trillion rupees for the April-November period. The government has budgeted a fiscal deficit of 4.6 percent of gross domestic product (GDP) for the fiscal year 2011/12 in February, but many private economists see the deficit for the year overshooting by a full percentage point on slowing growth and weak federal fi-

nances. New Delhi has admitted meeting the fiscal gap target would be a "great challenge", but officials said they would try to keep the deficit under 5 percent of GDP by pruning expenditure. Any slippage on the fiscal gap target could force a cashstrapped government to borrow more from the market

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TCS overtakes RIL as India's most valued firm

Reliance Industries lost its position of the country's most valued company to Tata group firm TCS this afternoon, as the shares of billionaire Mukesh Ambani-led corporate giant fell sharply in a weak market. At 1450 hours, Reliance Industries (RIL) commanded a market value of Rs 2,27,083 crore, a shade below Tata Consultancy Services' Rs 2,28,153 crore. RIL has been the country's most valued company for many years, except for a brief period in August this year, when it first lost its top slot to Coal India Ltd, then regained it and was again overtaken by another state-run firm ONGC. While RIL shares were down 2.72 per cent to Rs 693.50, its lowest level in more than a year, TCS was trading with a modest gain of 0.03 per cent at Rs 1165.70. The benchmark Sensex was 93.57 points down at 15,450.36 at that time. The marketmen were keeping an eye on the two stocks to know whether TCS would be able to retain its lead till the end of the trade today, which incidentally happens to be the last trading session of the year 2011. Earlier this month, RIL also lost its tag of the country's most influential stock to another IT firm Infosys, as measured by their weightage on the stock market barometer Sensex. RIL first slipped below Infosys in terms of Sensex weightage on December 12, and thereafter, a situation similar to game of musical chairs has been on display between the two, as they have overtaken each other on various occasions. Currently, Infosys commands a higher weight than RIL. Earlier on August 17, Coal India had toppled RIL as the country's most valued company, while the polyster-to-energy- retail conglomerate had slipped to third position below ONGC two days later on August 19. About a week later, RIL had regained its top slot on August 23, while CIL had slipped to third position. But, ONGC rose to the top slot on August 26, pushing RIL to second position. A few days later, RIL again rose to the pole position on August 29, and had mostly remained there since then. ONGC is currently ranked third with a market cap of Rs 2,19,362 crore, while CIL is fourth at Rs 1,90,659 crore.

RIL has been the country's most valued company for many years, except for a brief period in August this year, when it first lost its top slot to Coal India Ltd

Parallel economy in Mumbai's Dharavi slums: output estimated to be more than $1 billion
At the edge of India's greatest slum, Shaikh Mobin's decrepit shanty is cleaved like a wedding cake, four layers high and sliced down the middle. The missing half has been demolished. What remains appears ready for demolition, too, with temporary walls and a rickety corrugated roof. Yet inside, carpenters are assembling furniture on the ground floor. One floor up, men are busily cutting and stitching blue jeans. Upstairs from them, workers are crouched over sewing machines, making blouses. And at the top, still more workers are fashioning men's suits and wedding apparel. One crumbling shanty. Four businesses. In the labyrinthine slum known as Dharavi are 60,000 structures, many of them shanties, and as many as 1 million people living and working on a triangle of land barely two-thirds the size of Central Park in Manhattan. Dharavi is one of the world's most infamous slums. It is also a churning hive of workshops with an annual economic output estimated to be $600 million to more than $1 billion. "This is a parallel economy," said Mobin, whose family is involved in several businesses in Dharavi. "In most developed countries, there is only one economy. But in India, there are two." India is a rising economic power, even as huge portions of its economy operate in the shadows. Its "formal" economy consists of businesses that pay taxes, adhere to labor regulations. India's "informal" economy is everything else: the hundreds of millions of shopkeepers, farmers, construction workers, taxi drivers, street vendors, rag pickers, tailors, repairmen, middlemen, black marketeers and more. This divide exists in other developing countries: Experts estimate that the informal sector is responsible for the overwhelming majority of India's annual economic growth and as much as 90 per cent of all employment. The informal economy exists largely outside government oversight and, in the case of slums like Dharavi, without government help or encouragement. For years, the government has tried with mixed success to increase industrial output by developing special economic zones to lure major manufacturers. Dharavi, by contrast, could be called a self-created special economic zone for the poor. It underscores the determination of those migrants to come anyway.

In the labyrinthine slum known as Dharavi are 60,000 structures, many of them shanties, and as many as 1 million people living and working on a triangle of land twobarely two-thirds the size of Central Park in Manhattan.

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MARKET WATCH
16200

BSE SENSEX

16000 15800 15600 15400 Open 15200 15000 14800 14600 Close

CURRENCY RBI RATES

BANK RATE

6%

REPO RATE

8.50

REVERSE REPO RATE CRR SLR

7.50 6% 24%

1 USD

Rs 53.1400

1 POUND

Rs83.0844

100 YEN

Rs 69.3100

1 EURO

Rs 69.2485

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Terminology
bankInvestment bank-

TOON-VEST

An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. Capital rationingrationingCapital budgeting decisions involve huge outlay of funds. Funds available for projects may be Limited. Therefore, a firm has to prioritize the projects on the basis of availability of funds and economic compulsion of the firm. It is not possible for a company to take up all the projects at a time. There is the need to rank them on the basis of strategic compulsion and funds availability. Since companies will have to choose one from among many competing investment proposal the need to develop criteria for Capital rationing cannot be ignored. The companies may have many Profitable and viable proposals but cannot execute because of shortage of funds. Another Constraint is that the firms may not be able t o generate additional funds for the execution of all the projects. When a firm imposes constraints

on the total size of firms capital budget, it is requires Capital Rationing. When Capital is rationed there is a need to develop a method of selecting the projects that could be executed with the companys resources yet give the highest possible net present value. LeverageLeverageThe degree to which an investor or business is utilizing borrowed money. Companies that are highly leveraged may be at risk of bankruptcy if they are unable to make payments on their debt; they may also be unable to find new lenders in the future. Leverage is not always bad, however; it can increase the shareholders' return on investment and often there are tax advantages associated with borrowing also called financial leverage. Mortgage Market The term mortgage has acted as a boost to the housing market over the world. Mortgage can be defined as a method of having property instead of paying the total value of the property. It simply means as making a loan while an individual or business owns a real estate. In the mortgage practices, there are mainly two parties involved. One is called mortgagor who borrows and the mortgagee is lender. The mortgage types among the countries over the world can be of different types depending upon the kind of property, lands and other conditions.

. Commodity Trading Commodities are products that are found naturally or are grown. Gold, lumber, cattle, platinum, wheat, cotton, orange juice, oil, sugar and pork bellies are all commodities. Commodities trading are a sophisticated form of investing. It is similar to stock trading but instead of buying and selling shares of companies, an investor buys and sells commodities. Like stocks, commodities are traded on exchanges where buyers and sellers can work together to either get the products they need or to make a profit from the fluctuating prices. Many industries need commodities to run their business and buy and sell commodities in the marketplace. For example, clothing manufacturers need cotton, builders need lumber, and restaurants and supermarkets need beef. merger:Vertical merger:It is a combination of two or more firms involved in different stages of production or distribution of the same product. For example, joining of a TV manufacturing (assembling) company and a TV marketing company or joining of a spinning company and a weaving company. Vertical merger may take the form of forward or backward merger. When a company combines with the supplier of material, it is called backward merger and when it combines with the customer, it is known as forward merger

Sabeer Bhatia
Born: 1969 One of the co-founders of Hotmail; Named by TIME as one of the "People to Watch" in International Business(2002) Sabeer Bhatia is one of the poster boys of Indian success story at Silicon Valley. He is better known as the man who cofounded Hotmail. He later sold it to Microsoft for $400 million and today Hotmail is the world's largest e-mail provider, with over 50 million registered users. Sabeer Bhatia was born in 1969 at Chandigarh. He comes from a humble background. His father was an army officer and his mother worked with the Central Bank of India. Sabeer Bhatia had his earlier schooling at Bishop Cotton's School in Pune and later on at St Joseph's College in Bangalore. After passing out from school he joined the Birla Institute of Technology (BITS) at Pilani. At Pilani, he qualified to try for a transfer scholarship at Cal Tech, considered to be the world's most competitive scholarship. Sabeer Bhatia was the only applicant in the entire world in 1988 to get a passing score of 62. In 1988 Sabeer Bhatia came to America and completed his B.Sc. with honours and earned a master's degree in electrical engineering from Stanford University. In 1992, while working on his Ph.D., Sabeer dropped out and joined Apple Computers as a systems integrator. He worked for Apple Computer for a year. Then he worked for another startup, Firepower Systems Inc. In 1995, Sabir Bhatia cofounded Hotmail Corporation along with Jack Smith, a colleague at Apple Computers. They launched pioneering webbased e-mail service Hotmail. At the end of 1997, he sold Hotmail to Microsoft for $400 million. Sabeer Bhatia worked for Microsoft for a year until March of 1999, and then in the middle of 1999 he founded Arzoo.com. Arzoo.com was supposed to be a real-time marketplace for technology related solutions and support. It was envisaged as a platform that would enable engineers, developers and scientists from around the world to monetise their expertise on the one hand, and enable corporations to improve the productivity of their employees on the other. Sabeer Bhatia's vision was to make Arzoo.com, the world's largest human network of intellectual capital. But Arzoo.com failed with the burst of dotcom bubble. In 2006 Sabeer Bhatia relaunched Arzoo as a travel portal. Sabeer Bhatia has also started a new venture called BlogEverywhere with co-founders Shiraz Kanga and Viraf Zack. Sabeer Bhatia has won several honors and awards. These include: "Entrepreneur of the Year," award by the venture capital firm Draper Fisher Jurvetson (1997); and "TR100" award, presented by MIT to 100 young innovators who are expected to have the greatest impact on technology in the next few years. He was named by TIME as one of the "People to Watch" in International Business (2002).

FINVEST
INSTITUTE OF TECHNOLOGY & SCIENCE Mohan nagar Ghaziabad

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Editors: Article & Terminology:- Shiv News:- Akhil Lakhani, Nikita Pathak Editing: - Akhil , Nikita

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