December 8, 2013

Volume 20

FinXpress Special Edition

Continuing from what was started during summer internship , the editorial

team brings forward a special edition of FinXpress geared towards concise

company and financial knowledge to assist the seniors in their final place-

ments and wish them luck . As a result, various on campus visiting companies

have been covered and important insights on various on going financial hap-

penings have been published.

A number of significant events occurred during past few months as well various

companies and their JD’s to help seniors n deciding about the various job op-

portunities offered to them. Do look over the ‘News of the Week’ section for

further noteworthy news. The ‘Market of the Week’ covers the latest trends in

the market this preceding week.

We hope you enjoy the various articles in this edition of FinXpress. We look

forward to your comments, acknowledgements and your criticisms regarding

our online magazine. Do let us know if you want to have any additional section

(s) in our special editions of Finxpress.

Happy Reading!!!

Regards,

The Editorial Team

FinNiche Club

From The Editorial FinXpress

Volume 20

Dec 8, 2013

FinXpress

Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.

FinNiche

December 2013 Page 1

CONTENTS

From The Editorial

ICICI Bank

Wipro

TE Connectivity

Mind Tree

Accenture

HSBC

Gartner

Michelin

Axis Bank

Cognizant

Deloitte

Mu Sigma

In focus

News

Page 2

Companies

ICICI Bank is India's largest private

sector bank with total assets of Rs.

5,367.95 billion (US$ 99 billion) at

March 31, 2013 and profit after tax Rs.

83.25 billion (US$ 1,533 million) for the

year ended March 31, 2013. The Bank

has a network of 3,536 branches and

11,162 ATMs in India, and has a

presence in India and 19 countries in

the form of subsidiaries in the United

Kingdom, Russia and Canada, branches

in United States, Singapore etc.

Main groups in which ICICI is operating

are Retail Banking, Wholesale Banking,

SMEAG, Operations Group, Rural &

Inclusive Banking.

Awards:(2013)

ICIC Bank has been one of the

rec ip ien ts o f the Corporate

Governance Asia Annual Recognition

Awards 2013

ICICI Bank won 'Best Banker -

Efficiency & Profitability' by the

Sunday Standard Best Bankers

Awards 2013.

ICICI Bank won the Asian Banking &

Finance Retail Banking Award 2013

for the Online Banking Initiative of

the Year

ICICI Bank wins awards under the

categories of 'Most Innovative Bank'

and 'Most Innovative use of Multi-

Channel Infrastructure' at the Indian

Bank's Association's BANCON

Innovation Awards 2013.

For the 4th consecutive year, ICICI

Bank won the Celent Model Bank for

the next generation technology

oriented banking solutions.

ICICI Bank was awarded a "Special IT

Innovation Award" by Lenovo -

NASSCOM and CNBC-TV18.

ICICI Bank was the winner of "6th

Loyalty Awards" for My Savings

Rewards.

Key Drivers :

Technology Capital: Investments in

technology, Focus on customer

convenience

Human Capital : Attract the best

talent, Build a meritocracy based

system, Grooming potential leaders

Speed Capital :Strategic agility,

Institutionalize speed of response,

Develop innovative products and

services

Culture & Organisational Structure:

Continuous re-evaluation to meet

business objectives in a flexible

structure

Key Milestones:

2000: ICICI Bank becomes first

Indian bank to list on NYSE; acquires

Bank of Madura

2000: Entry into insurance

2002: Merger of ICICI and ICICI

Bank

2003: Beginning of international

scale-up: first overseas branch in

Singapore

2007: Acquisition of Sangli Bank

2010: Merger with Bank of

Rajasthan

2012: Roll out of twenty five 24x7

Electronic Branches across 18

locations

FinNiche

ICICI BANK

December 2013

Page 3

Companies

Corporate Social Responsibilities:

In the words of KV Kamath, Chairman

of ICICI Bank

“At ICICI group we strive to ensure that

India’s growth is inclusive not just in

the communities it touches but in the

diversity of opportunities it offers”

Elementary Education:

Work to improve the quality of schooling

processes and outcomes in the public

education system in India.

School and teacher education reform

programme in Rajasthan

Chhattisgarh Curriculum and

Textbook Development

Sustainable Livelihood:

India has an urgent need to create

employment opportunities for those

below the poverty line. The Foundation’s

first steps in its sustainable livelihood

initiative will be to strengthen two Rural

Self-Employment Training Institutes

(RSETIs) in Udaipur and Jodhpur, run

by ICICI Bank.

Primary Health:

Goal is to improve the delivery of health

services to remotely located and low-

income individuals and families.

Strengthening Convergent Action for

Reducing Child Under nutrition

Nutrition Security Innovations

Programme

Finance :

Goal is to ensure universal financial

inclusion.

Universal Access to Finance

Effective and Affordable Risk

Management Solutions

Poverty alleviation through ICICI

Group companies

Future Plans:

In the month of Jan 2013

"Under the bank's foreign expansion

plans, we will open branches in

Australia, South Africa and Mauritius.

We have sought Reserve Bank of India's

(RBI) clearance and the same is

awaited," as said by Managing Director

and Chief Executive Officer Chanda

Kochhar at the bank's Annual General

Meeting on Monday. The bank will also

open a full-fledged branch in China,

where it already has a representative

office

In the December 2012

Unlike other banks which use Facebook

only for promoting their products, ICICI

Bank is looking at social mediums, such

as Facebook as engagement platforms.

The basic objective is to take

convenience to a new level by allowing

customers to avail a host of banking

services on Facebook itself while

socializing. With a fan following of over

9.5 lakh within 10 months and a couple

of nice innovations on the social

platform, India’s most technology savvy

bank, ICICI Bank is showing other

banks and companies how relationships

can truly be built using the new world of

social media.

Recent News:

Buy ICICI Bank, Axis Bank; sell ITC:

Rahul Mohinder, of viratechindia.com

recommends buying ICICI Bank with

a target of Rs 1205 and Axis Bank

with a target of Rs 1310

ICICI Bank may touch Rs 1190:

Mayuresh Joshi Mayuresh Joshi of

Angel Broking is of the view that

ICICI Bank may touch Rs 1190 and

Tata Steel may go upto Rs 440.

L&T, Maruti, ICICI Bank top 2014

bets: Sandip Sabharwal, Market

expert

FinNiche

December 2013

Page 4

Companies

Wipro Limited (formerly known as

Western India Products Limited) is

an Indian multinational information

technology ,consulting as well as an

o u t s o u r c i n g s e rv i c e c o mp an y

headquartered in Bangalore, Karnataka

in India. The company today has

147,000 employees serving over 900

clients with the presence spread across

57 countries. Wipro is the third largest

IT services company in India. It helps

customers to do their businesses better

by leveraging the industry-wide

experience, deep technology expertise,

comprehensive portfolio of services and

a vertically aligned business model.

On 31 March 2013, its market

capitalization was 1.07 trillion ($19.8

billion), making it as India's 13th largest

publicly traded company. Azim Premji is

the major shareholder in Wipro with

over 50% of shareholding.

Wipro is globally recognized for its

innovative approach towards delivering

the business value as well as its

commitment to sustainability. Wipro

champions focus on optimum utilization

of natural resources, capital and talent

for the best results. Today they are a

trusted partner of choice for global

businesses looking to ‘differentiate at

the front’ and ‘standardize at the core’

through technology interventions.

In today’s world, Wipro is well

positioned to be a partner and co-

innovator to businesses in their

transformation journey, help identify

new growth opportunities and facilitate

the foray into new attractive investible

sectors and markets.

Milestones

Wipro, one of the world's most trusted

brands, is a name with a long history.

Here's a snapshot of Wipro’s journey up

to date:

Established in 1945 as Western

India Vegetable Products Limited in

Amalner, Maharashtra

IPO for capital in February 1946

Ventured in to the fledgling IT

industry in 1981

Established software products and

exports subsidiary, Wipro Systems

Ltd. in 1983

Pioneers in marketing indigenous

Personal Computers in 1985

Established a Joint venture with GE

in 1989

Entered IT services in the 1990s -

we were among the pioneers in

developing the ODC (Offshore

Development Center) concept

Software business assessed at SEI-

CMM Level 5 in 1998

Listed on NYSE in 2000 (NYSE:WIT)

The first company in the world to be

assessed at PCMM Level 5 in 2001

Entered the BPO business in 2002

Entered the Eco-energy business in

2008

Spirit of Wipro

The Spirit of Wipro is the core of Wipro.

It is rooted in its current reality, but it

also represents what Wipro aspires to be

thus making it future active. The Spirit

is an indivisible synthesis of all three

statements. It means manifesting

Intensity to Win, acting with sensitivity

and being unyielding on integrity.

FinNiche

Wipro Limited

December 2013

Page 5

Companies

TE Connectivity, Ltd. designs and

manufactures highly engineered

solutions that connect and protect data

and power. The company serves

customers in more than 150 countries

in a variety of industries including

automotive, data communication

systems, consumer e lectronics,

telecommunications, aerospace, defense

and marine, medical, energy and

lighting.

HISTORY

O n J u n e 2 9 , 2 0 0 7 , T y c o

International was split and Tyco

Electronics, along with Covidien,

became separate, independently-traded

public companies. The new independent

company was known as Tyco Electronics

Ltd. On March 10, 2011, the company

c h a n g e d i t s n a m e t o T E

Connectivity which the company says it

feels is more relevant to its position as a

component and communications

manufacturer. On February 16, 2006, a

group of institutional investors, part of

an existing lawsuit against Tyco

International, sued the company to stop

its proposed breakup plan.

STRUCTURE

As an independent company, TE

Connectivity serves four major markets

(as of 2011):

Automotive (31%)

Broadband Connectivity (26%)

Energy and Industrial (29%)

Consumer (14%)

Sales by region (as of 2011) were:

Europe/Middle East/Africa (35%),

Americas (32%), Asia—excluding China

(18%), China (15%).

VISION

E L I V E R I N G C O N N E C T I V I T Y

INNOVATION

Demonstrating strategic vision and

pragmatism, our leadership team drives

TE to become the company customers

turn to first to meet their connectivity

needs. Their forward thinking focuses

on the important global trends that

count on connectivity—and will be

accelerated by it.

BUILDING A GREAT COMPANY WITH

STRONG VALUES

We believe there is more to building a

g r e a t c o m p a n y t h a n s t r o n g

performance. It takes an unwavering

commitment to core values and the

highest standards of ethics and

integrity. At TE Connectivity, we are

dedicated to four key values.

INTEGRITY

We must demand of ourselves and of each other the highest standards of individual and corporate integrity. We safeguard company assets. We comply with

all laws and company policies. We are dedicated to diversity, fair treatment, mutual respect and trust.

ACCOUNTABILITY

We honor the commitments we make, and take personal responsibility for all actions and results. We create an operating discipline of continuous improve-

ment that is an integral part of our culture.

TEAMWORK

We foster an environment that encourages innovation, creativity, excellence and results through teamwork. We practice leadership that teaches, inspires

and promotes full participation and career development. We encourage open and effective communication and interaction.

INNOVATION

We recognize that innovation is the foundation of our business. We challenge ourselves to develop new and improved ideas for all that we do. We encour-

age, expect and value creativity, openness to change and fresh approaches.

FinNiche

TE Connectivity

December 2013

Page 6

Companies

In August 1999, Mindtree was co-

founded by ten IT industry experts

f r o m C a m b r i d g e T e c h n o l o g y

Partners , Lucent Technologies,

a n d W i p r o . M i n d t r e e i s a

global information technology solutions

company with corporate headquarters in

New Jersey, USA and Bangalore, India.

The company has 28 offices located in

USA, Sweden, UK, Germany, France, Sw

itzerland, Belgium, Australia, Singapore,

China, UAE and India. With 12,000+

expert engineers, the company is earning

revenues over USD 430 million.

The economic downturn after the dot-

com bubble burst made the company to

expand its offerings into information

technology services It provides

consulting-driven technology solutions

to help businesses and societies flourish

which makes it a strategic partner to

over 40 Fortune 500 enterprises. The

company is listed on Bombay Stock

Exchange and National Stock Exchange,

currently trading at 1372.80 on BSE (as

on December,5, 1 PM) with revenues

over $436 million USD (Sept, 2013)

Mindtree and its employees (Mindtree

Minds) are guided by its values:

collaborative spiri t , unrelenting

dedication and expert thinking which

helps to see possibilities where others

see a full stop.

The company has flourished under the

leadership of Krishnakumar Natarajan,

MD and CEO who received the

Bloomberg UTV, CEO of the year, under

the emerging companies category in

2011. To add to its honour, the company

has been selected by Forbes Asia as one

of the ‘200 Best Under A Billion

companies’ of 2012, Ranked 19 in the

list of top 25 best employers in India and

ranked second among the IT companies

by AON Hewitt best employers' survey

2011. Best corporate governance in

India for 2012 by the World Finance

magazine.

Mindtree caters to broad range of

industries which includes, banking,

capital markets, consumers and

communications, consumer packaged

goods, independent software vendors,

insurance, manufacturing, media and

entertainment, retail and travel and

transportation.

Its services includes, analytics and

information management, application

development and maintenance, EAI

BPM, consulting, cloud, digital business,

engineering research and development,

independent testing, infrastructure

management services, mainframe and

midrange, mobility, SAP services and

technologies.

IT Services

Mindtree has helped global organizations

gain competitive edge by leveraging the

right mix of technology, people, and

processes to achieve strategic objectives.

Its team of business, process and

product experts ensures that IT

initiatives are tied to business

imperatives through quantifiable

metrics. Its approach is consultative and

business-led: first understand the

business challenges and define the

goals, then identify and implement the

appropriate technology solution.

Solutions provided by Mindtree to

various industries are: Bluetooth,

corporate lending, digital video

surveillance, MindTest, mKonnect,

mPromo, mSales, MWatch, secondary

sales platform, store portal and

VMUnify.

FinNiche

Mindtree

December 2013

Page 7

Companies

A c c e n t u r e p l c i s

a m u l t i n a t i o n a l m a n a g e m e n t

c o n s u l t i n g , t e c h n o l o g y

services and outsourcing company

headquartered in Dublin, Republic of

I r e l a n d . I t i s t h e w o r l d ' s

largest consulting firm measured by

revenues[2] and is a constituent of

the Fortune Global 500 list. As of 31

August 2013, the company did a

revenue o f $28.6 Bi l l ion with

approximately 266,000 employees

serving clients in more than 120

countries.

Combining a solid understanding of

business processes with deep industry

knowledge and implementation rigor,

Accenture Technology Consulting gives

IT leaders practical solutions tailored to

address their most crucial business

challenges. Accenture common equity is

listed on the New York Stock Exchange.

Accenture helps its clients create value

and architect change through unique

spectrum of management consulting

services: Analytics, Business Process

Management, Cloud, Risk Management,

Mobility, Operations, Smart Grid,

Strategy etc.

Accenture has wide spread presence

across all industries including,

aerospace and defense, agribusiness,

banking, automotive, capital markets,

chemicals, communications, health,

retail, travel etc.

IT Strategy

The company’s comprehensive IT

strategy services help organizations

shape the direction of IT over the next

three to five years to maximize

shareholder and business value. It assist

organizations in developing:

A comprehensive IT strategy,

including IT opportunity assessment,

shareholder value diagnosis and IT

investment prioritization

IT s t rategy for mergers and

acquisitions, due diligence, divestitures

and carve-outs

Strategies for all key components of IT,

including information strategy, IT

sourcing strategy, IT systems strategy

and IT infrastructure strategy

Information and Data Strategy

It help its clients to build the foundation

for effective decision making by first

identifying the critical information

needed to run and grow the business;

and then by de ve l op ing and

implementing a strategy, architecture

and processes for sourcing, managing,

governing and securing that information,

both within and outside the firewall

Enterpr ise Arch i tecture and

Application Strategy

Through Enterprise Architecture and

Application Strategy services, the

company creates a flexible and

actionable road map that guides the

selection, deployment, operation and

refresh of a company’s application and

technology landscape.

Whether overhauling a single business

system or defining an entirely new IT

solution and service architecture, our

comprehensive approach provides

practical and industry-specific

roadmaps that can help your businesses

grow and achieve cost-effective IT agility.

Key elements of this work consist of

enterprise architecture planning,

governance, operating models, industry-

specific architectures, and both custom

and framework-based enterprise

architecture development.

FinNiche

Accenture

December 2013

Page 8

Companies

HSBC Global Technology (GLT) is part

o f H S B C , h e a d q u a r t e r e d

in London, United Kingdom. The GLT

network is spread across 6 offices in 5

countries.

The first GLT was set up in April 2002

in Pune, India with a mandate to

develop software for the company. The

main purpose of GLT is to provide

technology solutions and services to a

large spectrum of customers spreading

across multiple business functions and

geographies

In their strategy, they outline their

vision – to be the world’s leading

financial services company. They want

to be the first choice of their customers

and for their employees. If HSBC can be

the best place to bank, and the best

place to work , they will have built a

sustainable business that will deliver for

the long term for their customers,

colleagues, shareholders, and society at

large. They take great care when hiring

new people because they know that the

talent, creativity and dedication of our

employees drive our success.

Their Core values

Dependable – do the right

thing

Open – to different

ideas and cultures

Connected – to customers,

community, regulators and each other

HSBC has its set up for analytics team

in Mumbai. This is in addition to

expanding its investment banking and

equity broking team.

The new analytics team, which started

operations in 2004, supports the

group's global investment banking

operations.

Currently, the group's analytics teams

are based out of New York, Mexico City,

London, Paris, Dusseldorf, Hong Kong

and Tokyo in addition to India.

Analytics in HSBC

Analytics involves data analysis,

s t r a t e g y d e v e l o p m e n t a n d

implementation, forecasting and

reporting. It forms the information basis

for strategic planning by the senior

management for businesses and enables

effective decision making to satisfy

business needs and requirements, along

with addressing unforeseen challenges

The HSBC Analytics Business service

provides an opportunity to work on

advance analytics offerings globally,

covering multiple aspects of banking

such as:

Advanced Data Mining and Modeling

M a r k e t i n g a n d C u s t o m e r

Development Strategy

Risk and Fraud Management

Strategies

Product and Portfolio Management

Business Analysis, Reporting and

Insights

Information Management

M a r k e t i n g a n d C a m p a i g n

Management

Operations Analytics

FinNiche

HSBC Analytics

December 2013

Page 9

Companies

HSBC, with its headquarters in London,

is one of the largest banking and

financial services organizations in the

world. HSBC's international network

includes about 9,500 offices in 86

countries in Europe, the Asia Pacific,

the Americas, the Middle East and

Africa. Within this, the lender has 16mn

customers and 1,240 branches in the

UK. With listings on the London, Hong

Kong, New York, Paris and Bermuda

stock exchanges, shares in HSBC

Holdings are held by around 200,000

shareholders in 100 countries.

HSBC is also aiming to become the

leading provider of exchange-traded

funds (ETF) in the short term, and

launched over 30 ETFs in 2010. In

February 2010, HSBC Global Asset

Management announced it was to

launch two ETFs following Chinese and

BRIC indices, with the possibility of an

additional ETF tracking a Japanese

index.

SWOT Analysis

Strengths

Europe's largest banking group

Hong Kong and the UK's largest bank

One of the most highly capitalized

banking groups in the world

Large geographical and market reach

Weaknesses

HSBC was at the forefront of the US

subprime crisis as a leading subprime

lender in the market before the crash

and has suffered during the economic

crisis

Facing potential claims over a number

of charges that it engaged in

fraudulent behavior

Opportunities

Post-crisis strategy is to concentrate

on emerging markets

The group is looking to become a

leading provider of exchange traded

funds

Profit before tax rose by 15% y-o-y in

2011

Threats

Impairment charges have remained a

threat, weighing down on capital

Divestment drive could lower

earnings in the short-term

Total operating expense rose by 10%

y-o-y in 2011

IB at HSBC - STG

Global Banking and Markets is the

investment banking arm of HSBC. It

provides investment banking and

financing solutions for corporate and

institutional clients, including:

Investment banking

Corporate banking

Capital markets

Trade services

Payments and cash management

Leveraged acquisition finance

It provides services in equities, credit

and rates, foreign exchange, money

markets and securities services, in

addition to asset management services.

Global Banking and Markets has offices

in more than 60 countries and

territories worldwide, and describes

itself as "emerging markets-led and

financing-focused"

The Strategic Transactions Group

(“STG” or “The team”) is a team of highly

qualified professionals providing

advisory services on critical transactions

to its major corporate clients worldwide

by collaborating with, and supporting

the global advisory team across regions

(EMEA, Asia-Pacific and Americas).

FinNiche

HSBC IB

December 2013

Page 10

Companies

Gartner, Inc. founded in 1979, is an

American information technology

r e s e a r c h a n d a d v i s o r y f i r m

h e a d q u a r t e r e d

in Stamford, Connecticut, United States.

It was known as Gartner Group,

Inc until 2001.

Gartner, Inc. (NYSE: IT) is the world's

leading information technology research

and advisory company. They deliver the

technology-related insight necessary for

their clients to make the right decisions,

every day. From CIOs and senior IT

leaders in corporations and government

agencies, to business leaders in high-

tech and telecom enterprises and

professional services f irms, to

technology investors, they are the

valuable partner to clients in over

13,000 distinct organizations. Through

the resources of Gartner Research,

Gartner Executive Programs, Gartner

Consulting and Gartner Events, they

work with every client to research,

analyze and interpret the business of IT

within the context of their individual

role. It has 5,700 associates, including

more than 1,435 research analysts and

consultants, and clients in 85 countries.

Originally a private company, the

Gartner Group was launched publicly in

the 1980s, then acquired by Saatchi &

Saatchi, a London-based advertising

agency, and then acquired in 1990 by

some of its executives, with funding

from Bain Capital and Dun &

Bradstreet. In 2001 the name was

simplified to Gartner.

In the course of its growth, Gartner has

acquired numerous companies

p r o v i d i n g r e l a t e d s e r v i c e s ,

including Real Decisions (which

became Gartner Measurement, now part

of Gartner's consulting division),

and Gartner Dataquest (Gartner's

market research firm). It has also

acqui red a number o f d i rec t

competitors, including NewScience in

the late 1990s, Meta Group in 2005

and AMR Research and Burton Group

in early 2010.

Gartner offers world-class, objective

insight on virtually any area of IT.

More than 900 expert analysts cover

1,200 topics across the IT landscape

Gartner analysts are based in 26

countries and speak 47 languages

Gartner analysts have an average of

12 years experience in their specific

field

Gartner insights are drawn from a

critical fact-base not available anywhere

else.

Each year Gartner manages:

Interactions with clients in 12,400

distinct organizations world-wide

319,000 one-on-one client discussions

12,000 vendor briefings

FinNiche

Gartner

December 2013

Page 11

Companies

Gartner’s rigorous research process and

proven methodologies provide the

foundation for unbiased, pragmatic and

actionable insight.

Gartner can be the difference between

success and failure in the outcome of

their clients critical IT initiatives

Gartner can helps clients save

thousands or millions of dollars on

purchase decisions and operating

budgets

Gartner is the key to their clients

success in IT

Gartner bring together Research insight,

Benchmarking data, problem-solving

methodologies and hands on experience

to improve the return on their client’s IT

investment. They follow three methods

for that

UNDERSTANDING: We know the

issues you face

80% of the Fortune 500 use Gartner

for their key technology initiatives

We deliver business value in over

1500 high-impact initiatives a year

CAPABILITIES: the data, tools and

capabilities to help

Gartner solutions address the

specific needs of each industry

Every solution makes use of our

performance benchmarking data

We employ seasoned consultants,

with an average of 15 years experience

EXPERIENCE: we help you deliver tangible re-

sults

Our clients spend 38% less than their peers

for the same workload

Gartner Contract Optimization

services help our clients realize hundreds of

millions of dollars of real and

measured savings annually

Consulting engagements help clients improve

performance and reduce risk

FinNiche

Gartner

December 2013

Page 12

Companies

Michelin is a Tire manufacturer based

i n C l e r m o n t - F e r r a n d i n

the Auvergne region of France. It is one

of the two largest Tire manufacturers in

the world along with Bridgestone. In

addition to the Michelin brand, it also

owns the BFGoodrich, Kleber, Tigar,

Riken, Kormoran and Uniroyal (in North

America) Tire brands. Michelin is also

notable for its Red and Green travel

guides, its roadmaps, the Michelin

stars that the Red Guide awards to

restaurants for their cooking, and for its

company mascot Bibendum, colloquially

known as the Michelin Man. Among

Michelin's numerous inventions, there is

the removable tire, the pneurail (a tire

for trains made to run on rails) and the

radial tire technology now used in

modern "green tires" that reduce fuel

consumption.

Since the early days of MICHELIN

brand, we have been following a unique

concept in research and development –

to develop and produce tires with

outstanding overall performances. We

won’t improve one key performance

without improving simultaneously all

others. MICHELIN tires, therefore, are a

blend of high performance, combining

with no sacrifice the fundamental

benefits of every MICHELIN tire: High

Safety,More Mileage, Fuel saving

Michelin have always been the high

running company with 1,13,400

employees as on December 31, 2012

dedicated to the growth of the

organization. From its inception till

now Michelin has produced 166 million

tires, close to 10 million maps and

guides have been sold, 970 itineraries

have been calculated by ViaMichelin. It

has recorded net sales of € 21.5 billion

which shows that why it is the second

best tyre manufacturer. It has a Global

presence with 69 production facilities

in 18 countries on December 31, 2012.

It has marketing operation in more

than 170 countries.

Its global market share is 14.6%

recorded in 2012. It is at the No.1

position in the world in energy-efficient

tires. Its share is 52% in the

consolidated net sales. It is No.1 in the

world in radial tires as well as

retreading. Its share is 31% of the

consolidated net sales. It is also No.1 in

the world for Agricultural, Aircraft and

Earthmover radial tires. MICHELIN

travel partner is No.1 in Europe for

maps, guides and digital travel-support

services. MICHELIN Lifestyle has sold

more that 15 million licensed products.

Its share is 17% of the consolidated net

sales.

Michelin came to India almost a decade

ago and today markets its range of

tubeless car radial , tubeless and tube

type bus and truck radial tires. Michelin

in India offers Product for India Market

for Passenger Cars, Truck & Bus, Two

Wheeler & OTR (Off the Road).

FinNiche

Michelin

December 2013

Page 13

Companies

Axis Bank is the third largest private

bank in India and offers an entire

spectrum of financial services to

customer segments covering the large

and small corporate, MSME, Retail and

Agri business. It is first new generation

banks to begun its operations in the

year 1994 promoted by UTI, LIC, GIC,

NIC ltd. A brief review of each vertical

under which the Bank operates is given

below:

RETAIL BANKING: It is a key driver for

Bank’s growth strategy and it offers

retail loans and accepts deposits which

have seen a healthy CAGR of 26.3% over

last five years. Added to this, it is also

the largest issuer of debit cards in the

country by making it a key player in the

ever increasing card market. Travel

Currency cards & Portfolio Investment

Schemes (PIS) are some of the attractive

offers rolled out to lure the NRI

consumers. Along with this Axis Bank

Privee caters to the HNI with its advisory

services and personalized investment

needs.

BUSINESS BANKING: Cross-sell of

transactional banking products, product

innovation and a customer-centric

approach have succeeded in growing

current account balances and

realisation of transaction banking fees.

It is also an SEBI registered custodian

which offers custodial services to both

domestic and offshore customers.

CORPORATE CREDIT: It has pioneered

a unique model of cross selling products

to the corporate like loan syndicate,

trade finance & treasury business. Keep

in mind the weak macroeconomic

indicators; Bank confined its exposure

only with positive outlook industries and

positive credit rating.

TREASURY: Bank continued to be a

dominant player in placement and

syndication of Rupee denominated debt.

During the year, the Bank arranged

debt aggregating to Rs. 145,461 crore

and retained its top position in

arranging Rupee denominated debt for

the fifth consecutive calendar year

FINANCIAL INCLUSION: Initiatives like

opening no frills account, micro

deposits, Chhota-deposits and micro

insurance, besides being an active

player in the remittances market. It is

also playing an important role in the

direct benefit transfer and disbursal for

various government schemes.

C O R P O R A T E S O C I A L

RESPONSBILITY: Bank’s initiative of

“Reduce, Reuse & Recycle” was able to

reduce wastage and able to recycle

almost 8.7Tonnes of paper since its

inception. Besides this Bank also

manages a Foundation which is funded

by 1% of bank’s profits and in turn

helping around 17 NGO’s to provide

sustainable livelihood. Along with this

foundation also deliver in various

initiatives like education, poverty

elimination & health care.

FinNiche

AXIS BANK

December 2013

Page 14

Companies

Cognizant is a member of NASDAQ 100,

S&P 500 and is ranked among the top

performing and fastest growing

companies of the world. It is a leading

prov ide r o f Bus iness process

outsourcing, Information Technology

and Consulting services. Cognizant

enables its clients to make their current

operations as efficient and effective as

possible and also by making them invest

in innovation.

Originally founded as an in-house

technology unit of Dun & Bradstreet in

1994, Cognizant started serving external

c l i en ts in 1996 and now i s

headquartered at Teaneck, Bergen

County, New Jersey, USA. The latest

innovation is coined as SMAC (i.e.

Social, Mobile, Analytics and Cloud)

which is now being increasingly

embedded into the IT architecture of its

c l ients. Taken together, these

technologies can enable the creation of

hyper intelligent software platforms that

address myriad issues, from sales to

customer service to the design of new

products to the management process.

Cognizant Business Consulting (CBC)

provides strategic and operational

consulting services and drives business

solutions for clients. Currently this

profile is operating under the following

verticals as mentioned below

BANKING FINANCIAL SERVICES

Financial Services business segment

serves leading financial institutions

throughout the world. Its clients include

banks, investment firms and insurance

companies. In 2012, this segment

represented approximately 41.3% of our

total revenues. They primarily cater to

the following segments

BANKING services by assisting the

clients areas like Retail Banking,

Wholesale Banking, Consumer Lending,

Cards and Payments, Risk Management,

Investment Banking and Brokerage,

Asset and Wealth Management, and

Securities Service. In addition to

A p p l i c a t i on De ve l o p me n t an d

Maintenance, the services increasingly

in demand in this sector include EIM,

Testing, Customer Relationship

Management, or CRM, Enterprise

Resource Planning, or ERP, BPO, IT IS,

and Business and Technology

Consulting.

INSURANCE services are catered to

clients through operations likes

B u s i n e s s A c q u i s i t i o n , P o l i c y

Administration, Claims Processing,

Management Reporting, Regulatory

Compliance and Reinsurance. We strive

to improve the sales and marketing

process, both by deepening direct retail

c u s t o m e r r e l a t i o n s h i p s a n d

strengthening interactions with

networks of independent and captive

insurance agents, often through the use

of social and mobile technologies.

HEALTH CARE

For the year 2012 Cognizant’s

h e a l t h c a r e b u s i n e s s s e g me n t

represented approximately 26.3% of its

total revenues. The following are the

industries which are served by

Cognizant

FinNiche

COGNIZANT TECHNOLOGIES

December 2013

Page 15

Companies

HEALTH CARE work with many leading

global healthcare organizations,

including healthcare payers, providers

and pharmacy benefit managers. This

industry today faces the dual challenge

of improving the quality of care while

lowering the cost of care and making

healthcare affordable to a larger

population which is driving their

business. They partner with clients to

enable their systems and processes to

deal with the retail orientation of health

care, such as the support of individual

mandates and the adoption of mobile

and analytics solutions to improve

access to health information and

decision making by end consumers.

LIFE SCIENCES division assists its

clients by driving their innovation and

virtualization in growing their business.

Life Sciences solutions help transform

many of the business processes in the

life sciences value chain (Research,

Clinical Development, Manufacturing

and Supply Chain, Sales and

Marketing) as well as regulatory and

administrative functions and general IT.

MANUFACTURING/RETAIL

This segment represented approximately

20.4% of total revenues by catering to

the following industries.

MANUFACTURING/LOGISTICS division

caters to needs of clients by making

them more productive, competitive and

cost effective. Its service areas include

service areas include Warehouse and

Yard Management, Transportation

Asset Management, Transportation

Network Design, Global Trade

Management and Analytics. Power

generation sector, industry trends

include the continued drive toward

energy conservation, including “smart

meter” installations, the need for better

grid reliability and security, regulatory

changes.

RETAIL/TRAVEL/HOSPITALITY caters

to growing needs of the retailers by

making them a provision for multi

channel models and impact of SMAC on

consumer interaction.

CONSUMER GOODS segment is

propelled with the need of consumer

goods companies to accelerate product

innovation to remain competitive and

deliver top-line growth, the continuing

drive to optimize global sourcing and

supply chain management.

OTHER SEGMENTS

This comprises of the Communications,

information, media & entertainment as

sub segments and accounts to 10% of

company’s net revenue.

COMMUNICATION segments address its

clients to keep pace with the change in

technology by introducing new products

and services, and improving the

customer satisfaction and service.

I N F O R M A T I O N / M E D I A /

ENTERTAINMENT is enabling its clients

to transform their business by means of

the digital platform. Services are

provided in critical areas such as the

Digital Content Supply Chain and

Media Asset Management. Digital

Distribution, Workflow. Automation;

Intellectual Property Management, Anti-

Piracy Initiatives; and Operational

Systems

FinNiche

December 2013

Page 16

Companies

About Deloitte

“Deloitte” is the brand under which tens

of thousands of dedicated professionals

in independent firms throughout the

world collaborate to provide audit,

consulting, financial advisory, risk

management, and tax services to

selected clients. These firms are

members of Deloitte Touche Tohmatsu

Limited (DTTL), a UK private company

limited by guarantee. Each member firm

provides services in a particular

geographic area and is subject to the

laws and professional regulations of the

particular country or countries in which

it operates. DTTL and each DTTL

member firm are separate and distinct

legal entities. Each DTTL member firm

is structured differently in accordance

with national laws, regulations,

customary practice, and other factors

and may secure the provision of

professional services in their territories

through subsidiaries, affiliates, and/or

other entities.

Financial Advisory Sercvices(FAS):

Deloitte has a Financial Advisory

Services (FAS) function which provide a

focused set of valuation consulting

services to clients covering a wide range

of industry segments. Specific areas of

focus include business & intangible

asset valuation, cost segregation,

machinery & equipment valuation,

construction advisory, real estate

financial advisory, and lease advisory

services.

Timely strategic financial advice is the

linchpin of all transactions that take

place in today’s rapidly evolving

c o m p e t i t i v e l a n d s c a p e .

Deloitte understand this and assist in

identifying opportunities for, or risks to,

our clients' interests, which accompany

most F inanc i a l adv i so ry ( FA )

engagements.

Their FA practice takes on an industry

vertical approach. It draws upon its pool

of experts both in India and abroad

specializing in various industries and

integrates this with its global knowledge

base thereby delivering strategic and

financial solutions to assist clients

through every phase of the economic

cycle.

Their integrated approach which

involves combining skills to develop well

-rounded solutions based on a full

understanding of their cl ients ’

ambitions, business and environment

extends a clear commercial advantage.

Our edge lies in our ability to formulate

multi-disciplinary teams and deploy the

same at short notice to deliver results.

Their clients include corporate, large

national enterprises, public institutions,

and successful, fast-growing companies.

They offer services in a number of

industry verticals ranging from

corporate finance, transactions,

valuations, forensic & dispute resolution

and reorganization with a focus on

helping their clients increase value.

Inside Financial advisory the main areas

are:

Corporate Finance Advisory

Forensic and dispute advisory

M&A Transaction services

Reorganization services

Valuation services

FinNiche

Deloitte

December 2013

Page 17

Companies

Mu Sigma is an analytics services

provider. The firm’s name is derived

from the statistical terms “Mu (μ)” and

“Sigma (σ)” which symbolize the mean

and the standard deviation respectively

of a probability distribution. The

company is ISO 27001 certified. Mu

Sigma is headquartered in Chicago,

Illinois, with its main delivery centre in

Bangalore. Mu Sigma provides services

to more than 75 fortune 500 clients in

several distinct industries.

Mu Sigma was founded by Dhiraj C

Rajaram, a former strategy consultant

f o r B o o z A l l e n

Hamilton and PricewaterhouseCoopers,

in 2004. In 2008, Mu Sigma raised its

first institutional investment round of

$30 million from FTVentures (now FTV

Capital). In April 2011, the company

raised an additional $25 million

from Sequoia Capital. In December

2011, the company announced a $108

million round of financing from Sequoia

and private equity investor General

Atlantic.[4] In February 2013, Mu Sigma

received an investment of $45 million

from MasterCard, which placed the

company over the $1 billion (Rs. 5,400

crore) milestone.

The vision of the company is to —

”Enable businesses to institutionalize

data-driven decision making”

Analytics and data-driven decision

making have been well recognized as a

distinctive competitive advantage in a

world of Big Data and increasing

business complexi ty . However ,

organizations are challenged with

scaling the use of analytics and making

it an integral part of all business

decisions. Mu Sigma addresses this

critical need and enables organizations

to institutionalize analytics and Decision

Sciences in a sustainable manner.

Mu Sigma solutions are divided into

various horizontals and verticals.

Some of the verticals are:

Banking, Financial Services and

Insurance

CPG and Retail

Pharmaceuticals

Healthcare

Technology, Media& Telecom

Mu Sigma works with multiple business

functions including Marketing, Risk and

Supply Chain. Horizontals include:

Marketing Analytics

Supply Chain Analytics

Risk Analytics

FinNiche

Mu Sigma

December 2013

Page 18

In Focus

Indian policymakers have concluded that

the worst of India's economic woes are

behind us. One only wonders where such

optimism stems from. When the economy

started to weaken in 2011, policymakers

persuaded us that India had seen much

worse and told us not to self-flagellate.

However, when things began to look

considerably worse than expected,

policymakers convinced us that things are

so bad that they could only get better.

Optimism of this nature has allowed

policymakers to postpone solving many of

India's long-term challenges. The financing

of our current account deficit (CAD) via

foreign equity inflows is a classic case in

point. Policymakers today believe the

financing of India's CAD through foreign

equity inflows is a safe option. They

corroborate this belief in two ways.

First, the value of foreign equity holdings in

Indian companies between September 2007

and September 2013 has been on a gradual

uptrend, pointing to stability of holdings.

Second, concentration levels of foreign

equity holdings (85% of foreign equity

holdings are in only 50 companies) have

remained consistent over this period. This

led policymakers to conclude that foreign

equity investors are deeply in love with

Indian equities which they will hold in

perpetuity.

A deeper analysis, however, reveals some

interesting facts. Foreign holdings in "core

sectors" (telecom, power, engineering, PSU

banks) have declined by $48 billion as the

profitability of several companies has

slowed in line with India's economic growth.

Fortunately, this capital hasn't left the

country given holdings have increased by a

similar amount in "islands of

excellence" (sectors such as consumer

goods, IT, pharma and private sector banks)

which have been relatively immune from

several macroeconomic pressure points.

From these actions, it would be safe to

conclude that foreign equity investors buy

companies that compound earnings and

dump those companies that don't. The fact

that a company is incorporated and listed

in a growth market like India appears to be

completely incidental. Now, it is well

understood that one of the key reasons why

foreigners have invested heavily in Indian

equities is because of the high return on

equity (ROE) Indian companies generate.

The ROE of Indian companies has started

to decline, however, due to the decline in

the ROE of "core sectors". It is interesting to

study what impact this has had on the

currency, given higher ROEs is the key

reason why foreigners have chosen to invest

in India in the first place. Actually, a cause

and effect relationship has repeated itself in

all emerging markets globally irrespective of

the size of a country's' CAD.

Thus far, foreign investors have been — and

are likely to be — patient for good reasons.

Every time the economy hiccupped and

foreign investors sold the "islands of

excellence", they ended up buying these

stocks back at a significant multiple to the

price they sold them at.

The lord of one of these "islands of

excellence" — who also happens to be the

CEO of HDFC Bank — has often reminded

foreign investors of their follies. His

expositions detailing the stupidity of foreign

investors have served as a reminder that

well-managed Indian companies can

withstand several years of serious policy

mismanagement.

FinNiche

Why Foreign Investors Are Staying The Course

December 2013

Rudy Gopalakrishnan

Economic Times 5 Dec, 2013,

04.27AM IST

Page 19

In Focus

In the last two decades, there has been

much written and said about "two Indias" -

called India 1 and India 2 in the new

millennium, and EMT and HMT India

(English- and Hindi-medium) in the 1990s.

One India was largely in the metros and

large towns - the entry point for most

multinational brands, and where the early

adopters of new products were located. The

second India was where the early majority

of the market exists, and the markets

where scale could be achieved. India 2 was

always seen to be looking up to India 1 and

adopting things a 'bit' later. However, mixes

needed to be somewhat adapted for the

local conditions and communication needed

to go beyond the brand to layers of emotion.

However, Amartya Sen and Jean Dreze's

book India: An Uncertain Glory reveals the

emergence of an interesting phenomenon.

At one level, the greatest optimist about

India's development can get depressed

reading the book, as it reveals the economic

and social inequality the growth model has

bred. It clearly questions the 'Gujarat'

model of development. That is something

government and economists need to

consider as they plan for the nation in the

years ahead. However, a second interesting

facet is hidden within the numbers, and

that is worth pursuing. A new "two Indias"

is emerging.

Nandan Nilekani did hint at this in his book

Imagining India when he pointed out a

double hump - a camel in India's

demographics. He said: "By 2025, North

India's population will be very young with a

median age of just 26; but the median age

in South India would be 34 - similar to

Europe's in the late 1980s."

The statistics in An Uncertain Glory make

for interesting observations. Just as an

indication, let's compare numbers for the

four "Bimaru" states (Bihar, Madhya

Pradesh, Rajasthan and Uttar Pradesh)

representing North India and the four

South Indian states of Andhra Pradesh,

Karnataka, Kerala and Tamil Nadu. The

Bimaru states account for about 450

million people, and the four South Indian

states, about 250 mn.

Let's first look at affluence levels. The

average monthly per-capita household

expenditure for North India across the

states in both urban and rural regions is

much lower than the India average of Rs

1,984 and Rs 1,054 respectively, while for

the four southern states, it's largely higher.

The same is true about the penetration of

consumer items like televisions and two-

wheelers - and for latrines within the

premises too. The average South Indian

family has a better quality of life than its

Northern counterpart.

The difference on social indicators is just as

stark. The fertility rate in 2011 - births per

woman - on an all India basis is 2.4. For

the northern states, it's between three and

3.6; for the southern states it's 1.7 to 1.9 -

perhaps explaining Nandan Nilekani's age

divide observation for 2025. The percentage

of women in the 20-24 age bracket married

by 18 in India overall was 47.4 per cent in

2005-06. The comparative rates for the four

north Indian states range from 57 to 69,

and for the south Indian states 15.4 to 54.8

(the highest is for Andhra Pradesh). The

same story emerges if one looked at

indicators like female labour force

participation and proportion of women

among organised sector employees. Even

when it comes to the female-to-male ratio in

the 0-6 year age group, Rajasthan and

Uttar Pradesh are well below the national

average, while all the southern states are

well ahead. The story is the same across

literacy, education, health and other public

services indicators.

FinNiche

The New "Two Indias"

December 2013

Madhukar Sabnavis

Business Standard 5 Dec, 2013 9:50

PM IST

Page 20

In Focus

The numbers may not be definitive but

indicate that the North and South are

evolving as two different economies, and

could be treated as different countries. It's

already well known that modern trade is

more evolved in the South than the North.

And basic infrastructure is also superior in

South India versus the North. Marketers

have been historically sensitive to the

cultural difference between the two regions.

And mixes have often been adapted for the

same - from language to caste to modifying

rituals in advertising and even products to

suit local tastes and needs. Mass media has

evolved in an isolatable manner and so

made the creation of distinct

communication easy.

However, as we move forward, this new

dimension to the "two Indias" story could

provoke fresh, fundamental thinking in

marketing. It would be facile to say that

more evolved market mixes would suit the

South and that of more developing markets

be adapted for the North, based on the

indicators mentioned at the start of this

piece. These numbers just indicate that the

South is ahead of the development curve

compared to the North, and is growing

older.

However, it may be interesting to consider

different tasks in these markets and

develop both marketing mixes and

communication palettes accordingly. This

recognises that the two markets could be at

different stages of evolution for the same

category. There could be a penetration task

in the North and a consumption task in the

South; it could be a transactional task in

the North and brand affinity-building in the

South.

Even the tonality of communication and the

role of larger purposes assigned to brands

could be different. As the South is older,

brands should be less irreverent, yet able to

stand for larger purposes including social

causes given the market is more evolved,

especially educationally. Some brand

stances that work in the West today could

be more easily used in the South for brands

and categories that are more evolved in

those markets; the North may still need

some basic market development concepts.

The greater presence of modern trade in the

South means different shopper behaviour,

at least for a core segment, and hence

different media opportunities to drive brand

-building.

This thinking is still nascent and could take

firmer shape in the times to come. The

evolution of India's demographic, economic

and social indicators shows that there is

another way to unbundle India in the

future to extract greater value for brands

and businesses. Something worth thinking

about.

FinNiche

December 2013

Page 2 1

In Focus

Pick-up in exports and decline in gold

imports are likely to keep the country’s

current account deficit lower during the

rest of the fiscal compared to the same

period last year, India Ratings today said in

a research report.

“We expect the CAD to be lower in the

remaining quarters of the FY’14 than the

corresponding quarters in FY’13 in view of a

pick-up in exports and a significant drop in

gold imports,” it said.

In the July-September quarter, CAD

narrowed to $5.2 billion or 1.2 per cent of

GDP against $21 billion or 5 per cent of

GDP in the same period last fiscal.

Gold imports in Q2, 2013-14 dropped to

$3.6 billion from $16.4 billion in April-June

quarter due to hike in duties and other

measures taken by the government to curb

the inward shipments of the commodity,

the report said.

The report believes that despite the uneven

global recovery, the momentum witnessed

in export growth will continue in the near

term as there are signs of improvement in

both the US and the core economies of euro

zone.

According to a recent estimate by the

International Monetary Fund, the US

economy is expected to grow at 1.6 per cent

in 2013, while Germany and France are

expected to grow at 0.5 per cent and 0.2 per

cent, respectively.

“An improvement in the demand conditions

in advanced economies coupled with rupee

depreciation is helping merchandise

exports,” the report said.

Merchandise exports increased 11.9 per

cent to $81.2 billion in Q2 FY’14 from $73.9

billion in the first quarter.

Depreciation of the rupee has improved the

competitiveness of Indian exports,

particularly of textiles and textile products,

leather and leather products and

chemicals, the report added.

It further said that though some increase in

import growth in the second half of this

fiscal is expected, it will be limited due to

stable crude prices and lower gold imports.

However, the report said that due to the

nuclear deal with Iran, tensions in West

Asia are likely to ease leading to reduced

volatility in crude prices.

FinNiche

CAD likely to remain lower in Q3 and Q4: India Ratings PTI

December 4

December 2013

Page 2 2

In Focus

Our Nation over the years has been fed with

the theory that PPP model is some kind of a

magic wand which will solve all issues of

infrastructure deficiency plaguing our

country. My own experience tells me that

this notion is far removed from reality.

Across sectors we are seeing slow and

steady demise of this once celebrated

model.

Before we examine reasons for this sorry

state of affairs it may not be out of place to

mention the various Models in Vogue:

Design–Build (DB) – The Private Sector

designs and builds infrastructure to meet

Public Sector Performance Specifications.

The cost overruns are transferred to the

Private Sector.

Operations and Maintenance (O & M) – in

this model the Private Sector operates

publicly owned assets for a specified period.

Build Own Operate (BOO) – The Private

Sector finances, builds owns and operates a

facility for Public Sector.

Build Own Operate and Transfer (BOOT) –

The Private Sector finances, builds,

operates and transfers the asset to Public

Sector after a specified period.

Why PPP?

To my mind the basic reason why our

policy makers over the years pushed for

PPP model was to tap the efficiency and

management skills of the Private Sector.

The other fundamental reason was to cut

red tape and improve flexibility.

Government bodies are bound by inflexible

rules and regulations which makes decision

making very difficult. The PPP model was

supposed to change the rules of the game

ensuring speed of implementation and

avoiding cost overruns. In addition to

maximising efficiencies and innovations of

Private Enterprise PPPs can provide much

needed Capital to finance Government

Programs and Projects, thereby freeing

public funds for core Economic and Social

Sector.

Inspite of all these noble intentions and so

called support from policy makers why is

this proving to be a failure? The Private

sector is now no longer as enthusiastic as it

was in being a “Partner in Progress”.

Surface transport Ministry is giving PPP

model a decent burial and reverting to EPC

contract. We keep reading about the

struggles of Reliance pertaining to Gas

Exploration. The fate of Power Sector is well

documented. The success stories, can be

counted on finger tips.

The Public Private Partnership (PPP) model

was supposed to be a collaborative model

between Govt. Agency and the Private

Sector. It is anything but that. The

Governmental entity arrogates to itself the

power of Auditor and Investigative Agency

all rolled into one. The Poor Private Sector

partner is treated as trash and is left

wondering whether it was a crime to bid in

the first place.

The atmosphere of distrust prevailing in the

country has further aggravated the

situation. The Babus are religiously

refraining from taking any decision. They

smell a rat where none exists. Talk to any

senior bureaucrat and the standard refrain

is – why take decisions which will be

questioned at a later date. We have been

taught “Not taking a decision is a bigger

crime than taking a wrong decision‟. The

opposite seems to be true as far as Govt.

bodies are concerned. We have never seen

any „Babu‟ being penalised for not taking

decisions. On the other hand you have

countless cases of bureaucrats facing wrath

of Investigative agencies. Even officers, long

FinNiche

Is PPP a failed model? Atul Chaturvedi

Economic Times 2 Dec, 2013, 11:02 AM IST

November 2013

Page 2 3

In Focus

retired are questioned. K. C. Parakh,

Shyamal Ghosh are some names which

readily come to mind. I am sure they must

be ruing the day they decided to join the

Govt. service.

The inflexibility of the Govt. partner in a

PPP model can go to silly extremes, A few

years back someone narrated an interesting

incident. As part of the PPP Service

Agreement the Private Party was supposed

to provide a certain quantity of assets. As

the project progressed it was realised that

the contracted quantity of fixed assets

would not be required for the next five

years. The Private Party requested the Govt.

Agency to give them authority to defer the

purchase at it would amount to locking

Capital. The Private party went to the

extent of suggesting that they are willing to

securitise the Govt. Agency in the

intervening period and procure the asset

when required. Not only was this simple

request not accepted but the private party

was levied penalty and the project

completion certificate was withheld. If this

be the attitude how can this model survive

in the long run.

The PPP model in its current ‘avatar’ needs

to be given a decent burial or suitably

tweaked to respond to changing Economic

& Political environment of our country.

Govt. Agency and the Private Sector have to

be partners in progress and not

adversaries. The bureaucrats manning the

Govt. Agencies need to get down from their

high horses and should be equally made

accountable for the success or failure of the

Projects. If Private Sector can fire executives

for non-performance what stops Govt. from

demanding same from its officers. All this

requires a change in mindset.

It’s high time we woke up from our slumber

or our Infrastructure would remain frozen

in time.

FinNiche

November 2013

PAGE 24

NEWS

TO become rich, poor countries must

enlarge their productive powers,

mobilising workers, absorbing new

technology and accumulating capital.

They must expand what economists call

the “supply side” of the economy, which

determines how much a country can

produce, and therefore how much it can

earn and spend.

The other side of the economy—

demand—can also intrude on the story. In

the course of development, poor countries

often struggle to keep spending in check.

They are prone to inflation and trade

deficits, which must be financed by foreign

borrowing. Sometimes these excesses

result in a financial crisis that leaves

demand in the dumps and supply in

disarray. Simply put, successful

development entails expanding supply as

quickly as possible without allowing

demand to grow even faster.

China’s policymakers fret a great deal

about the supply side of their country’s

e c o n om y . T h e y wo r r y a b o u t

accommodating the flow of rural migrants

to the cities, amassing the physical

infrastructure appropriate to their

ambitions, and upgrading the country’s

technology. Such concerns fill their five-

year plans and 60-point plenary

resolutions.

Critics of China’s growth model, in

contrast, tend to focus on the demand

side. This is not because China’s

spending is too strong. On the contrary,

China’s domestic demand has fallen short

of supply in 22 out of the last 23 years,

and inflation last year averaged under 3%.

China’s critics worry instead about the

composition of China’s demand.

Household consumption accounts for too

small a share and investment looms too

large. If this imbalance is not corrected,

they argue, China may eventually suffer

from an investment bust, causing a sharp

slowdown in spending—perhaps even a

contraction.

Among the most prominent critics of

China’s economy is Michael Pettis of the

Guanghua School of Management at

Peking University. Investment, he points

out, accounts for a dizzying 48% of

China’s spending Investment plays a dual

role in development, adding both to

demand and, when projects reach fruition,

to supply. But China’s high rates of

investment are nothing to celebrate, Mr

Pettis argues in a recent book. They are

both excessive and misdirected. As a

consequence China is misallocating

capital on a grand scale.

Much of the investment is financed by

bank loans and other kinds of debt. In

principle, it should create useful assets

that have a higher economic value than

the liabilities incurred to finance them. But

if the investment is misconceived, the

debts will prove difficult to repay. Perhaps

four or five years from now, Mr Pettis

believes, China will reach the limits of its

“debt capacity” and suffer a sharp

slowdown in capital expenditure.

Consumption will not be able to

compensate for this drop-off in

investment, Mr Pettis argues. Household

spending accounts for only about 35% of

China’s demand. Thus even if it were to

grow by about 10% a year, it would

contribute only 3.5 percentage points to

China’s growth. This simple arithmetic

once prompted Mr Pettis to predict that

China’s “average growth in this decade

will barely break 3%”. He was even

prepared to bet on it, entering into a

lighthearted wager with our Free

FinNiche

China’s investment binge : unsustainable?

DECEMBER 2013

—- The Economist

Page 25

NEWS

Consumption is suppressed by a variety of

mechanisms that deprive households of

income and transfer it to corporate

borrowers. The most powerful, in Mr

Pettis’s opinion, is the cap the government

places on the interest earned by

household deposits in banks. One might

think that low interest rates would

encourage consumption by reducing the

reward for saving. But the evidence

suggests that Chinese households save to

meet certain goals, such as making a

down-payment on a home. If saving yields

little, they simply do more of it.

Mr Pettis thinks of this “financial

repression” as an invisible tax on

household saving, which might amount to

as much as 8% of GDP. In a thought

experiment, Mr Pettis imagines China’s

government taxing half of household

income to build bridges to nowhere. This,

he rightly points out, would be unfair to

households and a colossal waste of

resources. But it would not lead to

unsustainable debts, as he claims, since

the bridges are financed with taxes, not by

debt.

China’s investment binge can endure

because the saving that China taxes

exceeds the investment it subsidises.

Many of China’s companies are heavily in

debt. But as a country, China consistently

spends less than it earns, generating a

current-account surplus and adding to its

foreign assets.

China is, then, living within its means. And

those means are now considerable. It

produces over $8 trillion-worth of goods

and services, without undue strain on its

capacity. There is little question that

capital does not always go to the most

deserving investment, and that the lives of

China’s citizens would be more

comfortable if consumption played a

bigger part in the economy. But China’s

capital stock still seems more productive

than Thailand’s or South Korea’s. And

even if investment is stripped from the

figures and countries are ranked solely by

the remaining components of GDP

(namely consumption and net exports),

China is still the world’s second-biggest

economy.

Whatever its flaws, the development of

China’s supply side is undoubtedly

impressive. It boasts an industrious,

m o b i l e w o r k f o r c e , i n g e n i o u s

entrepreneurs eager to absorb new tricks

and serviceable, even occasionally lavish,

infrastructure. The demand side of its

economy, if China’s critics are to be

believed, is more precarious. But it is hard

to think of a developing economy that has

been held back for long by a shortage of

demand.

FinNiche

DECEMBER 2013

PAGE 26

NEWS

The current account deficit for the three month period of July to September 2013 has come in at $5.2 billion or 1.2% of the gross domestic product (GDP). This number is so good that it prompted the Reserve Bank of India(RBI) to release the numbers a month earlier than scheduled. In technical terms, the current account deficit is the difference between total value of imports and the sum of the total value of its exports and net foreign remittances. Or to put it in simpler terms, it is the difference between outflow (through imports) and inflow (through imports and foreign remittances) of foreign exchange . The current account deficit for the April to June 2013 period had stood at 4.9% of GDP, whereas for the July to September 2012 period it had stood at 5% of GDP. Also, this is the lowest current account deficit that the country has seen since the period of three months ending June 2009. A high current account deficit is not deemed to be good for a country primarily because it means that the outflow of foreign exchange is much greater than its inflow. So in India's case it means that the outflow of dollars is much greater than the inflow of dollars. This means a greater demand for dollars than supply. Hence, those who need dollars sell rupees to buy them. This leads to a situation where the value of the rupee falls against the dollar. This is precisely what happened between May and August 2013, when the rupee went from around 54 to a dollar to almost 69 to a dollar. When this happened, Indian importers had to pay a significantly higher amount in rupee terms, for what they were importing. India produces very little oil and imports nearly 80% of its requirement. Hence, the oil marketing companies had to pay a higher amount for the oil that was being imported. But these companies are not allowed to sell cooking gas, diesel and

kerosene at a price which is greater than the cost price. The government subsidies them for this under-recovery. This adds to the expenditure of the government and hence, leads to the fiscal deficit going up, which has its own set of problems. Fiscal deficit is the difference between what a government spends and what it earns. There are two ways of controlling the current account deficit. One is to ensure that the country earns more foreign exchange than it was doing in the past. The other is to clamp down on the demand for foreign exchange. For a government it is always easier to clamp down. Hence, the government went about increasing the import duty on gold. The duty is now at 10% in comparison to 2% earlier. Another rule, which required a gold importer to re-export 20% of all the gold that he imported, was also introduced by the government. These two significant changes ensured that gold imports came down dramatically. Gold imports during the June to September 2013 period stood at $3.9 billion, down nearly 65% from the same period in 2012, when it had stood at $11.1 billion. In the period of April to June 2013, the gold imports had stood at $16.4 billion. This dramatic fall in gold imports is a major reason behind this fall in current account deficit. In absolute terms the fall in gold imports has been $12.5 billion($16.4 billion - $3.9 billion) between the three month period ending in June 2013 and the three month period ending in September 2013. The current account deficit for the April to June 2013 period was $21.8 billion. For the period July to September 2013 period, it has come in at $5.2 billion. The absolute difference is $16.6 billion. Of this nearly $12.5 billion or nearly three fourths of the fall has been because of lower gold imports. A fall in the value of the rupee

FinNiche

Is the fall in CAD a fall in the Gold Demand?

DECEMBER 2013

—- Vivek Kaul, FirstPost

PAGE 27

NEWS

products. The major fall in current account deficit has been because of a massive fall in gold imports. And this has meant that the demand for dollars to buy gold has gone down dramatically as well. This has been one of the major reasons for the rupee increasing in value from around 69 to a dollar in end August to around 62.4 to a dollar currently. The current account deficit was around $87 billion last year. With the clamp down on gold imports, the finance minister P Chidambaram has said in the recent past that he expects the current account deficit to be less than $56 billion in the financial year ending March 2014. Does a fall in gold imports also mean a fall in demand for gold? India produces almost no gold of its own. But things are not as simple as that. It is worth remembering here that gold imports were banned in India until 1990. At that point of time, gold smuggling was a fairly lucrative operation. As a recent article in The Economist points out “India consumed only 65 tonnes in 1982. Until 1990 imports were all but banned. Bullion had to be smuggled in and its price within India was about 50% higher than outside it.” Gold smugglers are also using neighbouring countries to get gold into India. A November 17, 2013, report in The Times of India points out “In the past few months, over 50kg of gold worth more than Rs 15 crore has been smuggled across the Indo-Bangladesh border alone. Sources in Directorate of Revenue Intelligence (DRI) said Nepal too has come up on the radar with some recent seizures on the border. Sources said this was only a fraction of what was being smuggled through these borders.” A report in the DNA quotes Somasundaram P R, managing director

(India), of the World Gold Council as saying “ demand in neighbouring countries such as Thailand has increased and some of this may be because of India demand.” The point is that a clamp down on gold imports leading to a major fall in gold imports doesn't necessarily mean a fall in gold demand. These are two difference things. An increase in gold smuggling has huge social implications. It is worth remembering that some of the biggest mafia dons of Mumbai in the seventies and the eighties started as gold smugglers before getting into other illegal activities. That apart, there are financial implications to this as well. A major reason why Indians buy gold is to protect themselves from inflation. Over the last few years the consumer price inflation(CPI) has been higher than the interest being paid on fixed deposits and other fixed income instruments. In this environment, gold has looked like a good bet given that it has given positive returns in each of the years between 2002 and 2011. Hence, buying gold was a perfectly rational thing to do at an individual level. The Indian financial system is rigged towards helping the government borrow money at low interest rates (You can read the complete argument here). Given this, it is not surprising that Indians are fascinated by gold at an individual level. Though at an aggregate level it has led to major problems. One of the problems has been the weak deposit growth of banks. This basically means that deposits have been growing at a much slower pace than loans being given by banks, due to the fact that people have been diverting their savings into gold and real estate, in the hope of beating inflation. And this in turn has led to higher interest rates. With the government clamping down on gold imports, the hope was that it would lead to people saving more money in bank and other fixed income deposits. But is that

FinNiche

DECEMBER 2013

PAGE 28

NEWS

A recovery in the rupee is giving Finance Minister P Chidambaram rare relief in his battle against a threatened credit rating downgrade to junk status by reducing pressure on the government's subsidy bill. Still, the minister can only meet his fiscal deficit target of 4.8 percent of GDP by rolling over a substantial amount of subsidy spending into next year's budget and by finding big savings elsewhere, two senior finance ministry officials said. ‘ But a 10 percent rise in the rupee - which slumped to a record low late in August - means Chidambaram can at least reduce the amount of subsidy spending that gets pushed into next year's budget to $12 billion from a previous estimate of $15 billion, these officials said. Other budget headaches mean he will have to find about $8 billion in savings from budgeted spending plans to meet the deficit target, they said. The sources, who have direct knowledge of the budget issues or have been briefed on them, declined to be identified because the revised budget numbers are not yet public. Chidambaram wants to put the house in order before the 2014 election campaign kicks off and the U.S. Federal Reserve begins cutting its monetary stimulus. National elections have to be called by May 2014 and emerging markets are on edge as investors speculate on when the U.S. central bank might reduce its economic stimulus, which could prompt capital to shift into U.S. assets. Chidambaram has said the fiscal deficit target is a line that will not be crossed as he seeks to fend off the threat from Standard & Poor's to downgrade India's sovereign credit rating, currently clinging to the bottom rung of investment grade. The budget is under pressure on a number of fronts; subsidy spending on

fuel, food and fertiliser has blown out, economic growth has slumped to its weakest level in a decade and a programme to sell state assets is in tatters. The government had initially budgeted spending of about $36 billion for subsidies, but that swelled to $52 billion when the rupee hit its record low. Reflecting the economy's weakness, net tax receipts in the first seven months of the fiscal year are about 7 percent higher than the year-earlier period, the slowest pace in four years and well below the full-year budget target of 19 percent. This could create a budget hole of some $2.4 billion. We will need savings of up to 50,000 crore if the shortfall in tax receipts is between 10-15,000 crore. Expected income of $8.8 billion from the sale of government stakes in state-run companies looks increasingly out of reach. Based on the sales price and oversubscription, the sale will raise around $270 million, which would take the total amount raised so far from state asset sales this fiscal year to about $500 million. The government still hopes to bring in nearly $3.5 billion more by selling its remaining stake in Hindustan Zinc Ltd and Bharat Aluminium Co (BALCO) before the end of the fiscal year. Chidambaram also hopes to make savings by strictly implementing rules on allocating funds to other ministries, which will slow down how quickly they receive the money. The revenue position will be clearer by the end of December, by which time Indian companies will have deposited their advance tax payments for the third quarter. The government expects major savings from ministries like drinking water and sanitation, rural development, defence, trade, communications, power

FinNiche

Rupee recovery gives rare relief to FM

DECEMBER 2013

—- Reuters