January 16, 2011

VOLUME 4.20
ISSUE 82

The whole of the global economy is based on supplying

the cravings of two per cent of the world’s population
-Bill Bryson
Rates 01

Graphs 02

News 03
National & International events in the world
of finance
Contemporary Articles
Analysis of Jalan’s report 04
Soaring oil prices 07

Scam and Frauds 09

Citi Group Fraud: A berif story

Stock Watch 10
ABG Shipyard Limited

Book Review 12
The little book that makes you rich

Alumni Speak 14
A peek into the corporate world through
our Alumni’s experience

Investor’s Focus 16
Technical and fundamental analysis of
VIP Industries

Buzz Words 17
Fincopedia

Quiz & Crosswords 18

Check your Financial Quotient
 Rates

Repo 6.25 %
Reverse Repo 5.25 %
Call rate 4.00%-6.40%
Inflation (as on 14 Jan.) +8.43%
Forex Reserve $ 297.334 billion
(as on 31st Dec. 2010)
91 day T-Bill 7.1443%
IIP (for November) +9.2%
6.90 GS 2019 8.0907-8.0907%

Student’s cartoon
By- Md. Zafar Iqbal, I MBA M

01
 GRAPHS
Rs/$

46

45.5

45

44.5

44
3-Jan 6-Jan 9-Jan 12-Jan 15-Jan

Gold(per 10 gram)
19300

19200

19100

19000

18900
03-Jan 06-Jan 09-Jan 12-Jan 15-Jan

Oil(per bbl)
100

98

96

94

92

90
03-Jan 06-Jan 09-Jan 12-Jan 15-Jan

future rates open interest

6200 21000000

6000 20500000

5800 20000000

5600 19500000
03-Jan 06-Jan 09-Jan 12-Jan 15-Jan

sensex nifty

20,600.00 6200

20,200.00
6000

19,800.00

5800
19,400.00

19,000.00 5600
03-Jan 06-Jan 09-Jan 12-Jan 15-Jan

02
 international news
By- Vaibhav Nagar, I MBA L

• Welspun buys 35% stake in Australian Leighton group’s Indian subsidiary, Leighton
Contractors for ` 470 Crore.
• Bridgestone corp. plans to invest `170 crore in India by setting up a factory in Indore
• Banon Automotive Inc. of New York in suing Mahindra Reva Electric Vehicle Pvt. Ltd
for $25 million.
• American and Chinese energy companies will sign several commercial agreements next
week during Chinese President Hu Jintao’s state visit to Washington.
• U.S.-China relations are at a critical juncture and a summit between their leaders next
week must produce “real action, on real issues” such as trade, climate change and North
Korean nuclear proliferation.

national news
• The Securities and Exchange Board of India (SEBI) on January 14,2011 said billion-
aire Anil Ambani cannot invest in publicly-listed securities until the end of this year,
and barred two of his companies from such investments until the end of 2012.
• TATA power terminates deal with Olympus due to the regulatory issues which have led
to a scrapping of agreement to sell 15% stake in two special purpose vehicles.
• Indigo Airlines places order for 180 Airbus A320s.
• World bank announced $1.73 billion in loans to India, including $1.5 billion to fund a
central project to build 24000 km of rural road.
• The industrial output growth plunged to an 18-month low of 2.7% in November,
prompting Finance Minister Pranab Mukherjee to call the dip ‘worrying’.
• Shriram group plans to divest around 20 percent in its financial services business hold-
ing company, Shriram Capital, for around ` 900 crore ($200 million) in favour of South
African insurance group Sanlam.
• Allahabad Bank is planning to raise ` 1,400 crore as tier-II capital in the January-
March quarter of 2010-11 to fund its expansion plans and to strengthen its capital ad-
equacy ratio.
• Edelweiss Tokio Life Insurance gets initial approval from IRDA.

03
 Analysis of Jalan Report
By- Cymy P. Varghese, I MBA M

A committee as appointed by SEBI, under

the under the chairmanship of former RBI
governor Mr. Bimal Jalan to recommend
changes in the ownership and governance
of stock exchanges, depositories and clear-
ing corporation. The report was submitted on
Nov. 22, 2010. This report has been put up
for public discussion on the SEBI’s website
for feedback and any recommendations will
be acted upon.

The committee met stakeholders during the

process of report writing and participated in
public meetings. Although revision of the
report is not possible, but the public discus-
sion gave a chance for the committee to explain the rationale behind the report scheme.

It is commendable that the activities are made transparent considering the fact that reports
in the past have a tendency of being buried and the fact that it from the government, is
praise worthy.

Dr. Jalan’s letter to SEBI also asks that a fresh look be taken after five years by a new com-
mittee at all the recommendations of his committee. This sums up the positives, of the Jalan
report.

As far as the substantive recommendations are concerned, there are many qualms among
the stakeholders of capital markets. The report has disturbed many people and there has
already been some visible disturbance and protests in the press.

The two most debatable recommendations related to:

1. Prohibition on listing of stock exchanges and
2. Restriction on ownership of stock exchanges.

Both these will have an effect on the valuation of the stock exchange in the country, which
have been waiting eagerly for some action. The capital market is the most opportune field
in India because of the huge untapped potential and any restriction on the entry will have
an effect on the entrants and the industry in general.

Why has the Jalan Committee perceive these as roadblocks?

The backdrop for the two controversial recommendations is that the committee views stock
exchanges as market infrastructure institutions (MIIs), which need a special treatment.

04
This is because presumably MIIs are systemically important, are public utilities, are natural
monopolies and enjoy economies of scale.

Unfortunately, each of these characterisation can be applied to various other financial or

even non-financial institutions, which are not subject to the same recommendations as the
Jalan Committee ones.

For instance electricity and telecom are

considered public utilities, and even con-
sidered natural monopolies. But we have
long given up the notion that they should
be purely publicly owned, or that they
should not be listed.

We allow unlimited free entry, even when

some people despair of the overcrowding
that competition entails. Besides, techno-
logical change constantly challenges what
is considered a natural monopoly or not.

SEs performs the role of price discovery and capital allocation. A stable, well-governed and
trustworthy SE attracts companies as well as investors, traders and speculators providing
greater liquidity and lower impact of individual trades on price. This provides a natural
monopoly since more the participants, better the liquidity and price discovery.

But a single SE cannot be expected to be the source for all innovations in the time to come.
Otherwise NASDAQ or the NSE would never have been born. Hence, without competition
from other SEs or new entrants, the SE may become complacent and begin to exploit its
monopoly status.

Electronics, telecommunication and inter-connectedness remove the possibility of price

arbitrage between multiple exchanges. This means that efficient price discovery no longer
requires a single giant SE.

To be fair, on competition, the Jalan Committee has been open about the exact number. It
has left to SEBI to decide what should be the appropriate number of SEs to license. The
number should be definitely greater than two, but less than 24. But as shown by telecoms,
there is a need to be skeptical about conventional wisdom. In the era of electronic ex-
changes with ever-tightening oversight of the regulator, a new entrant can only compete
on technology and costs. Hence free entry, or the fear of free entry, is essential to keep the
stock market deepening and expanding.

05
However Jalan Committee did not kept the openness about number of competitors with re-
gard to the listing option. Prohibiting listing would mean that newer exchanges have to attract
investors with alternative paths for value-creation. Considering that new exchanges will have
to invest heavily in technology, or invest considerably in reaching out to “tier two and three”
level investors and geographies they will need risk capital.

Small exchanges catering to niche segments like SME risk capital may need to come up. This
capital would require means to create value and not just through a dividend flow. Prohibiting
the listing option is cutting off flow of potential risk capital into stock exchanges.

On governance and ownership, the committee takes a stand that no one entity can own more
than 5 per cent of the exchange from day one. The exceptions to this are institutional investors
like banks. But, a diffused ownership might lead to an overpowering management or disinter-
ested investors, or worse, both.

Lack of a passionate entrepreneur in the initial years might define an SE’s fate. Many feel, Dr.
Jalan could have borrowed from guidelines on new entrants into banking, who are typically
given a seven-to-ten year road map for dilution.

Given that the Jalan Committee was not supposed to produce a stunning success that would
address all issues like financial inclusion, SME access to capital and funds or capital market
deepening. But nevertheless, the road map that it has given to ensure sound governance and
healthy competition is too rigid, and likely to scare off new entrants or new developments.

Reserve Bank of India acted as banker for

about 7 years for Burma, from 1937 to 1942
and 1945 to 1947

5 CHAANAKYA VOL 4_13 06

 Soaring oil prices
By- Mandeep Kaur, I MBA N

As per the reports, stronger-than-anticipated global demand apparently is the main reason why
crude oil prices began to rise late in 2010. Figures say that the crude oil prices have climbed by
$200 billion to $790 billion by year end 2010. The trend toward higher prices emphasizes the need
for consuming countries to increase the efforts to reduce the amount of oil they use, particularly
for transportation.

There are several factors that contribute to the rising oil prices. Contributing factors include a
cold winter in the United States, and increased demand in China from diesel use restricting grid
generation. Economies also are recov-
ering worldwide, and demand also has
been strong domestically. Lost produc-
tion from the Gulf of Mexico following
the Apr. 20, Macondo well accident and
subsequent oil spill also contributed to
increase prices of oil. Other factors are
also equally important. US President,
Barack Obama, came into office with
prices around $70/bbl, and his years
in office gave the people a break from
oil price pressure. Certainly, everyone
wants the economy to recover, but it will
put more pressure on oil prices.

IEA Chief Economist, Fatih Birol, warned that a recovering global economy faces a threat from
rising crude prices. “Oil prices are entering a dangerous zone for the global economy” Birol said.
“The oil import bills are becoming a threat to the economic recovery. This is a wake-up call to the
oil-consuming countries and to the oil producers.”

As per research it has been noted that China did not feel the recession as much as the rest of the
world did and it began to recover sooner. US has used monetary policy to make the dollar more
liquid, which has reduced its global purchasing power. Thus China, which is not tied to the US
dollar, could buy the same amount of oil for less.

Oil markets also are not certain about Iraq’s production prospects, particularly since production
there has not been much change in the last 5 years and we need stability in Iraq to have stability
in the oil markets. The Organization of Petroleum Exporting Countries (OPEC) is being chaired
by Iran at the moment. And Iran thinks the run-up of the price of crude to over $90 a barrel is just
dandy and requires no new OPEC meetings or adjustment of production quotas among members.
Meanwhile, the US is back, consuming 20 million barrels a day of petroleum, an increase of 4.4
percent over last year this time. The US nearly uses a fourth of the world’s daily petroleum pro-
duction despite having only a twentieth of the world’s population. Increased US demand, along
with rapidly growing demand in Asia, helps account for the relatively high petroleum prices.

It is very difficult to state that any single force was responsible for increase in oil prices in 2010.

07
The simplest explanation is that global oil demand grew by more than 2.5 million b/d, which can
be considered as “a huge climb.” Fed is “closely watching” gasoline prices and said higher prices
could hurt economic growth. Gasoline prices have increased 15% in the last 12 months, with a
gallon of regular gasoline costing $3.07, up from $2.67 this time last year, according to the Energy
Information Administration. Americans used about 313 million gallons of regular gasoline a day
in 2009, which means the recent increase drained about $45.7 billion from consumers’ pockets in
the last year.

People, who thought things would be tight around 2015 at the beginning of 2010, now see a year’s
faster-than-expected growth in demand. OPEC can produce the oil, but in the next 5 years, the
world will need Iraq’s capacity to grow to keep OPEC’s spare capacity from shrinking.

China was the first country to use paper money. (Kuan)

08
 Citi Group Fraud: A brief Story
By- Chinmay Jethwa, I MBA L

The India arm of the US-based banking major Citigroup is currently at the centre of a ` 400 crore
fraud allegedly perpetrated by a relationship manager Mr. Shivraj Puri at the Gurgaon branch of
the bank.

A multi-pronged probe involving the police, banking regulator RBI and capital markets watchdog
SEBI is currently underway in the fraud case involving Citibank employee Mr. Shivraj Puri. The
fraud apparently came to light after the bank received complaints from a customer that he had
invested in a scheme floated by Mr. Puri promising high returns. Subsequently, the bank lodged a
complaint with the police and also informed RBI and SEBI about the fraud.

The police have esti-

mated the size of the
fraud at ` 400 crore
and said Mr. Puri di-
verted funds of com-
panies and individuals
into an account jointly
held by his relatives and friends. The entities whose funds were diverted by Puri into the account
of his relatives include Hero Corporate Services (` 13.75 cr), OKS Sapantak (` 2 cr) and Satyam
Auto (` 25 cr). They also include Mayar Infratech (` 24 crore), Spaid (` 62 crore), Karopat Pad
(` 8 crore), Sunil Kant and Sons (` 3 crore) Aero Infratec (` 25 crore), Hero Exports (` 97 crore),
Rekha Munjal (` 5 crore), Munjal Investments (` 2.5 crore) and Munab Braej (` 71 crore).

How he managed to do it?

Mr. Puri used a forged SEBI letter to attract high net worth individual clients to invest in unau-
thorized schemes. These HNI clients have invested in these schemes and transferred the money
with the promise of getting those extra benefits and higher returns. This money of the clients was
then transferred into three CitiBank accounts under the name of Sheela Premnath, Diksha Puri
and Premnath. The same clients money was then further allegedly transferred to a few Delhi
based stock brokers and these Delhi based stock brokers allegedly invested this money into the
stock markets.

Police also alleged that Mr. Puri used to give fake receipts and bank statements to his clients to
mislead the investors. The police report said that Mr. Puri used to divert money belonging to enti-
ties into the demat accounts held by his relatives in brokerage firms like Religare and Bonanza.

The recovery of files from his personal computer, office computer and iPad will reveal more de-
tails about the fraud. This fraud also took the senior officials under its grab including CEO Vikram
Pandit and few other officials.

Though the police and SEBI has assured to return money to investors of this account on their de-
mand, the pooling back of funds will be a tedious job for the agencies.

09
 Stock Watch: ABG Shipyard Limited
By- Gaurav Jain, I MBA M

About the Company:

ABG Shipyard Ltd., The flagship company of ABG group was incorporated in the year
1985 as Magdalla Shipyard Pvt. Ltd. with the main objects of carrying Shipbuilding and
Ship Repair business

• Largest Private Sector Shipbuilding Yard in India Certified by DNV for ISO 9001 -
2000.
• Delivered 104 specialized and sophisticated vessels.
• 90% of the vessels built in last two years were exported.
• State of the art manufacturing facilities
• Competitiveness in the Global markets in terms of Price, Quality and Delivery.
• Order in hand over `12,500 crores.

About the stock:

The stock has risen 5% in December and has been a very good gainer in year 2010 with
98% rise. This stock faced healthy correction after making top at ` 498 in early November.
Once again it has broken out above down trend line on daily charts as shown in graph and
more rally can be expected in this stock

Fundamentals:
D i v
Market B o o k Price/
EPS (TTM) P/E P/C Div (%) Y i e l d
Cap Value Book
(%)
1864.25 45.13 8.11 6.94 211.24 1.73 40.00% 1.09

Charts:

10
Our Recommendation:

RECOMMENDATION: BUY

PRICE: 367

STOPLOSS: 330

TARGET: 458

TIMEPERIOD: 90 DAYS

• The word millionaire was first used by Benjamin Disraeli in his 1826
novel Vivian Grey.

• Most people think the symbol for the US dollar is derived from the
initials U and S superimposed on each other. Well this is false. It’s
from the Spanish dollar sign. The US decided in 1782 that its basic
unit of currency would be the Spanish dollar or peso. Its symbol was
even then written as $, which was supposedly an ancient Phoenician
sign indicating strength and sovereignty.

• TIP is the acronym for “To Insure Promptness.”

• Small-time gamblers who place small bet in order to prolong the

excitement of a game are called “dead fish” by game operators be-
cause the longer the playing time, the greater the chances of losing.

• Annual global spending on education is $1.1 trillion. Annual global

spending on military is $1.3 trillion (45% by USA).

• Money notes are not made from paper, it is made mostly from a
special blend of cotton and linen.

11
 Book Review : the little book that makes you rich

By- Amit Prakash, I MBA L

ABOUT THE AUTHOR
The author Louis Navellier is a money manager. He
manages mutual funds and wrap accounts with few
billion dollars under management. He also publishes
four investment newsletters: Blue Chip Growth,
Emerging Growth, Quantum Growth, and Global
Growth, which cost from a low of $149 a year for
Blue Chip Growth, to a high of $5,000 a year each
for Quantum Growth and Global Growth.

Navellier advocates in this book the strategy of

investing in growth companies. He describes how he
does it. He evaluates stocks by the eight “tried-and-
true key fundamental factors that drive stellar stock
price performance”. He has pulled impressive profits
from the stock market for over 27 years, he has also
helped investors beat the market.

REVIEW:
Growth investing which aims to produce capital gains rather than income is one of the
best way to invest for success. Navelliar has created a proven and easy to follow approach
to growth investing that offers you a rare opportunity to outperform the market without
taking on excessive risk.

He has analyzed the eight key factors that drives the performance and these are:
1. Positive earnings revisions: When Wall Street analysts indicate that business is even
better than anticipated.

2. Positive earnings surprises: Announced corporate earnings that re higher than analysts
expected.

3. Increasing sales growth: Continuous rapid sales growth of a company’s products.

4. Expanding operating margins: Corporate profit margins that are expanding.

5. Strong cash flow: A company’s ability to generate free cash flow after expenses.

6. Earnings growth: Sustained earnings growth quarter to quarter.

7. Positive earnings momentum: Earnings that are accelerated year over year.

8. High return on equity: High overall corporate profitability

12
Growth investing is not the only way to go either. Growth involves much more focus
than other types of stock investing, but it also has potential for the largest gains too. The
other types of stock investing are Value Investing- investing in stocks that are seen as
undervalued and have the most long term potential and Balanced Investing.

Some of the recommendations given to the analysts and investors:-

• Growth can be measured. Count on it.
Go by statistical and quantitative analysis and not just by listening to stories.

• The market does not care what you think.

Go by fundamentals and not by emotions.

• Changing minds leads to changing prices.

If you are going to be wrong, be too low rather than too high in guesses.

• The unexpected can be quite profitable.

• To get growth someone has to sell something.

The surest and truest way of measuring real growth is to identify whether the company
is selling more-this year over the prior year and how much more.

• A steady stream of cash leads to a steady stream of profits.

• It takes precision tuning to target today’s best stocks.

The first five key variables critical to helping you uncover today’s best growth stocks.
• Know your Alpha and Beta.

• Don’t be a deviant.
Deviance is no more appreciated in the stock market than anywhere else in life.

• Go in different directions to stay on the profit track.

• Real life events can help us find real profits.

• Be aware of the market cycles and trends that can affect the portfolios.

• The world is global. Investing should be as well.

• At the end of the day its earnings that matter.

13
 Alumni speak
By- Manan Dutt, I MBA M

In this edition, we have Mr. Philip Mathen, to give us insights on “Managing your Trea-
sures...”

Name: Philip Mathen

Organisation: The South Indian Bank Ltd.
Designation: Assistant Manager
Qualifications: B.Com, PGDM
Batch: 2009
E-mail ID: philip.mathen@gmail.com

Chaanakya: Your role as a treasurer in the bank?

Mr. Mathen: My role involves deal confirmations with counter parties; monitoring and
executing payments, receipts and deal settlements. In addition to this, I am also involved
in providing rates for high value deposits, and monthly/ quarterly reporting for compli-
ance.

Chaanakya: How do you supervise the procurement and investing of company funds to
ensure proper financial planning?
Mr. Mathen: Mainly, by proper monitoring and planning of inflows and outflows. The
information about future outflows is mostly available, and hence re-pricing can be done,
which will offer better returns. Asset Liability Management also has a role to play in this,
and the funds are managed on a long term/ short term and daily basis. The daily fund man-
agement also involves monitoring of intra- day liquidity changes.

Chaanakya: Tell us about your own portfolio. What is your investment strategy?
Mr. Mathen: The IPO market saw some very interesting issues in the past one year, which
has offered great listing gains and has guaranteed long term returns, including Coal India,
which the Chanakya has already reviewed in an earlier issue. So, the strategy for the past
year has been to invest primarily in IPOs, given a varied range of sectors such as Banking,
Mining and Waste Management, etc. The rationale being that there were certain stocks
whose issue price offered scope for significant gains and more importantly, a relatively
inexpensive entry into the sector (compared to existing stocks). Coal India for example,
was one such issue which was very attractively priced given the scale of operations, and
the huge reserves of coal the company owned when compared to other companies in the
same sector.

Chaanakya: What has been by far been the most challenging task of your job?
Mr. Mathen: The need to ensure speed and accuracy in every aspect, as there are very
specific timelines when it comes to reporting and daily transactions, with practically no
room for errors.

14
Chaanakya: Why treasury bills are issued on discount basis?
Mr. Mathen: Treasury bills are offered at a discount primarily as this creates a positive
yield to maturity for the investor. These bills offer relatively lower re- investment risk, and
in a long run, these can be used to offset the impact of interest rate changes in a portfolio
of investments.

Chaanakya: What qualities do you think are important for banking industry?
Mr. Mathen: Innovation, adaptability and most importantly, a strong ethical character.

Chaanakya: A public sector bank is always underrated in comparison to its private coun-
terparts. Your take..
Mr. Mathen: This is not the case anymore. The PSU banks have seen sustained inves-
tor interest over the course of the past years, owing to their inherent strength and security
compared to their global peers, who have failed spectacularly. In addition to this, almost
all the PSU banks have either completed, or are in the process of completing the roll out of
CBS across their branches. This has levelled the playing field in terms of technology and
services offered to customers. Also, it has enabled them to ensure proper NPA identifica-
tion and classification.

Chaanakya: Any advice for our future managers?

Mr. Mathen: I would say that adaptability and innovation is the key. Also, confidence is
very important. In addition, constantly updating one’s knowledge about work related and
general issues is imperative. Finally, a thorough knowledge about the fundamentals is a
must. This provides a strong base that you can build on, no matter what area of finance you
plan to branch out into.

15
 Investor focus
By- Madhukar Das, I MBA G

VIP Industries
The markets fell sharply for past 2 weeks with benchmark indices losing nearly 8% and
dropping to the 4 month low. The trigger came from rising inflation, dismal IIP for No-
vember and fear of rate hike. The indices are tottering to find support.
Other Picks
Fundamentally Speaking
VIP Industries manufactures luggage products and accessories in India and interna- BUY :
tionally and commands 60% market share in the organized market. The company owns
Subex
brands such as VIP, Aristocrat, Alpha, Skybags, Delsey and Footloose. They have mas-
sive presence in Asia and Europe and owns international brand Carlton which produces CMP—`72.15
footwear apart from luggage products. VIP industries has presence in moulded furni-
ture business. The market share is small however they have a huge potential in that Target—`79
business. Stop Loss—`68.50
The company witnessed a rise of 17.03% in revenue for Q2. Last year sales soared 49%
in Q3 as compared to Q2 owing to increased sales during Diwali and New Year season Sell :
therefore similar increase can be expected this year because of the market presence VIP JM Financial
brands have which cater to all price ranges. With the growth of travel industry, the de-
mand for luggage products and accessories are bound to increase and thus growth will CMP—`30.50
be sustainable. Rakesh Jhunjhunwala bought an additional 375,000 shares of VIP In- Target—`27.50
dustries on 21st June 2010 taking his total holding in the company up to 5.81%.
Stop Loss—`32
At current market price the stock is trading at 24.16 times of trailing twelve months
earnings and about 22.1 times FY11 earnings per share. In financial year 2009-10 debt
was reduced from 136 crores to 87 crores and debt to market capitalization stands at Chettinad Cement
0.05 therefore it is a relatively debt free company. P/B ratio stands at 9.86. The sales
CMP—`514
have been growing at a CAGR of14.66% since FY06 whereas the growth YoY from
FY09 is 22.35% therefore the growth is accelerating. Target—`460
Stop Loss—`540

Technically Speaking

The stock price has been
pushed down by the sell off
across the breadth of the
market. However there is an
indication of reversal and
support in last couple of
sessions.
The stochastic oscillator
suggests that stock has
reached short term oversold
state and is staging a re-
bound.
The commodity channel
index chart also suggests
recovery of stock prices
Special points of
interest:
Since we are look-
ing at a trading
horizon of 15-30
days, we shall give
more weightage to
The volume trend shows that technical analysis
increased volumes are sup- and price trend of
porting the stock price to go the stock.
higher. Opportune moment
We shall also
for bulls to enter and the his-
study the funda-
torical trend will continue. mental aspects of a
company to avoid
getting into loss
Recommendation : BUY making trade posi-
CMP : `587.45 tions in case of
movement of mar-
Target Price : `635 ket in direction
Stop loss : `565 opposite to that of
my prediction.

16
 BUZZ WORDS

Alligator Property
In real estate, when the cost of mortgage payments, property taxes, insurance and mainte-
nance on a rental property is greater than the income it brings in. If this situation is not cor-
rected, it will eat up all of the owner’s profit, leaving him or her with negative cash flow.

Altman Z-Score
This model combines five different financial ratios to determine the likelihood of bank-
ruptcy amongst companies.
T1 = Working Capital / Total Assets. .
T2 = Retained Earnings / Total Assets.
T3 = Earnings Before Interest and Taxes / Total Assets.
T4 = Market Value of Equity / Book Value of Total Liabilities
T5 = Sales / Total Assets.

Kiwi Bond
Kiwi bonds are denominated in new Zealand dollars, with a fixed interest rate that is
paid quarterly in arrears. Kiwi bonds are redeemable on maturity or at the option of the
bondholder and are issued in six-month, one-year and two-year maturities. The minimum
investment is $1,000 New Zealand dollars, with a maximum investment of $500,000 on
any single issue.

Private Sector Adjustment Factor - PSAF

It is a method used by the Federal Reserve Board for calculating the costs of Federal Re-
serve banks providing services to depository institutions. The services provided include
checks, Automated Clearing House, Fedwire funds and Fedwire securities.

Revenue per Available Seat Mile

It is a unit of measurement that is used to compare the efficiency of various airlines. It is
obtained by dividing operating income by available seat miles (ASM).Higher the RASM,
the more profitable the airline in question.

Buck the Trend

It is a situation when a security or a class of assets sees its market-driven price move in
the opposite direction of the broad market or its competition. The move could be in either
direction, but generally occurs as a result of good performance in the face of negative
broad market performance.

17
 Fin-o-humour
Hello Readers,
We at Chaanakya, are always aiming towards a value addition and
knowledge gain. In our constant attempts, from this issue we are
awarding our readers with cash prizes and gifts.

So get ready for a thrilling experience and answer our quiz and cross-
wards and win amazing prices and gifts*.
Quiz `200/- Cash and complimentary gifts*.
Crossword `100/- Cash and complimentary gifts*.

Send us your entries at: chaanakya@mba.christuniversity.in within 7

days with subject line: Fin-o-humour.
Quiz
By- Abhijeet Singh, I MBA G

1. World Bank recently lends $_____ bn for building roads, in rural area.
a. 1.7 b. 1.2 c. 2 d. 1.5

2. SEBI has recently barred which Indian business tycoon from investing in listed shares until
December 2011?
a. Ratan Tata b. Mukesh Ambani c. Anil Ambani d. Aditya Birla

3. ICICI Bank has entered into an agreement with which mobile service provider to offer mo-
bile banking?
a. Airtel b.Vodafone c. Tata Docoma d. Aircel

4. JP Mogan Chase and Co.’s Fourth quarter profit jumped to

a. 33% b. 25% c. 50% d. 47%

5. Coffee chain Starbucks Coffee Co. has signed a memorandum of understanding with which
Indian coffee bean provider?
a. Tata Coffee Ltd. b. Lochan Tea c. Godrej Group d. Unilever Ltd.

6. What was the wholesale price inflation rate in December?

a. 7.50% b. 8.00% c. 8.43% d. 9.00%

7. Hyundai Motor Group has signed a preliminary agreement to buy Hyundai Engineering &
Construction Co. in a deal worth upto________.
a. $ 3.10 billion b. $ 4.50 billion c. $ 4.72 billion d. $ 5.33 billion

18
 Crosswords
By- Naveen Kulkarni, I MBA N

Across

3. The higher officia in the bank

who was also involved is

4. The spill that did not affect the

crude oil price

6. Which commodity has speculat-

ed for another global recession

8. The trade deficit of which

country will get affected due to high oil
prices

Down

1. The people who constituted the customers for the scheme are mainly

2. The account that is used by Shivaraj Puri to divert money is called

5. Which regulatory authority letter did the culprit of citi bank case use to attract the custom-
ers

7. Whose mission is "to unify the petroleum policies of Member Countries and ensure the sta-
bilization of oil markets in order to secure an efficient, economic and regular supply of petroleum
to consumers"

19
 TEAM Chaanakya 2010-2012

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Akshat Malik, Apurva Gupta & Pragathi P.

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