EDITORIAL

I S S U E 5 SEPTEMBER 29, 2015 Placement Week - SIP for batch of 2015-17

CONTENT The Summer Placement Week for the batch of 2015-2017 began in the last week of September. The campus saw some high profile corporates and esteemed companies visiting. World Bank Chief praises PM Modi | 2 With almost half the batch placed, the placement scenario looks good and hope for remaining students is on high as many important companies are lined up for the following Emission norms in week. Club FinNiche appreciates the work done by Placement Committee and congratulates | 3 all placed students. Effect of European Refugee Crisis on Prior to the placement week, the campus also witnessed a couple of pre-placement lectures Global economy | 5 which were not only helpful for the placement preparations but also were quite informative

Future of Japan and its about the current trends and challenges being faced by respective industries. The Student growth | 7 Affairs and Welfare Committee of IMT has organized Cyclothon'15 - a social initiative to raise awareness about the Environmental Sustainability in Delhi. This campaign saw more 300 TRENDING NEWS | 9 enthusiastic people cycle on a beautiful Sunday morning on Oct 13th. We also wish good luck MARKET | 10 to all the teams participating in the prestigious Inter B-School fest hosted by college -

FIN-WORD | 11 PASSION after the scintillating inauguration ceremony. Passion is a 3 day event starting Oct 9th and ending Oct 11th. May the odds be ever in your favour. Do take part in passion to PERSONALITY | 13 unleash your passion.

As always we are ready with insightful national and international articles and much more at your disposal. Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas.

Happy Reading!

Regards The Editorial Team Club FinNiche

P A G E 1 NATIONAL

BY ABHISHEK GUPTA World Bank Chief praises PM Modi

SNIPPETS World Bank President Jim Young Kim has coming up of Goods and Services Tax (GST) praised the Indian Prime Minister Narendra legislation things will get even  Jim Young Modi for all the reforms initiated by the NDA better. World Bank is keen on supporting the Kim all hail for Indian Government in the past 1 Year. He said that projects for Indian Railways, 100 Smart Cities Reforms the reforms have had a huge impact on the way and Skilling India. India is looked at by the world. He She raised the fact that for prosperity to  World Bank acknowledged the fact that the kind of happen involvement of women at the MD hopes of reforms happening in India were a lot different workplace still holds a key. She was India to be a economic from what is happening around the world. concerned regarding the lower employment of powerhouse Reforms such as the ‘CLEAN GANGA’ and women despite the rise in education level for ‘SWACHH BHARAT’ have gathered women all over India. India is been  GDP growth appreciation from all over the world and the recognized as a key partner in ending poverty rate expected to be 7% world bank stands as an important partner in globally, thus to support the cause these programme. International Development Association (IDA) ‘Swachh Bharat’ campaign was launched on Oc- deputies have provided Transitional IDA funds tober 2 last year to cover 4041 statutory worth $3.4 billion for the next three years. For towns, to clean the streets, roads and International Bank for Reconstruction and infrastructure of the country. ‘Clean Ganga’ Development (IBRD) lending, the single programme was launched for rejuvenating and borrower limit for India has recently been making the river Ganga pollution-free. Clean increased to $20 billion from $17.5 billion, and Ganga programme aims to generate 175 the Government of India agreement to gigawatts of renewable energy. purchase Special Private Placement Bonds of up to $4.3 billion - all geared to help create Momentum on Reforms additional borrowing options for India. World Bank Managing Director Sri Mulyani World Bank in India Indrawati was on a 3 day visit to India and she World Bank assistance to India during the also said that the global slowdown is not going period from June’14 to June’15 amounted to to impact the Indian Economy and India will $3.8 Billion. As of June’15 total World Bank surely become a economic powerhouse if it commitments amounted to $24.9 Billion across keeps coming up with reforms for the 86 projects. This figure is expected to increase prosperity of poor people. She emphasized that with time as the credibility for India will surely achieve the growth rate of 7 Indian projects grows worldwide. percent for the next financial year and with the P A G E 2 NATIONAL

BY NISHANT RATHI Emission Norms in India

SNIPPETS Volkswagen’s diesel emissions fraud highlights debilitates the working of particulate

 Over the last 18 how India trails developed countries in filters, catalytic converters and other months, while emission norms. Volkswagen is looking at a pollution-treatment devices in automobiles. the Indian fine of around $18 Billion as it did not meet No wonder World Health Organization crude basket the stringent US regulations for cases as back says India ranks among the world's worst has fallen as year 2009. On the contrary, VW cars are for its polluted air. Out of the 20 around 23% in still satisfying all the emission norms most polluted cities in the world, 13 are dollar terms, prescribed in India. in India. Report submitted by Saumitra local petrol prices have come down only by 4%

 Air pollution leads to around 620,000 early deaths in India

 Capital expenditure of Rs 80,000 crore is required for implementation of BS V Current Scenario Chaudhuri called for a Sulphur cess of 75  Penetration of Most of India still use Bharat Stage III diesel paise per Litre on diesel/petrol to meet the BS-IV petrol in and petrol norms, with Sulphur content as estimated capital expenditure of Rs 80,000 the domestic high as 500 parts per million (ppm) which crore over a five year period. With the fall market is just is 10 times the cap achieved 10 years ago in global oil prices the government can 24% in mature markets. It has already missed step up the cess and supply the entire the 2014 timeline for rollout of BS IV and nation with BS V quality fuel by the year has extended it to the year 2017. The 2017. In parallel, the rules in the Motor norm in major cities is BS IV, with Sulphur Vehicles Act can also be suitably amended capped at 50 ppm. But BS V or Sulphur of to make it mandatory for commercial 10 ppm is planned no earlier than 2020 and vehicles to retro-fit catalytic converters BS VI only by 2024. and particulate filters within 24 months. The high Sulphur content in BS III diesel P A G E 3

Taxation Scenario on Petrol and BS5 quality fuels. BS-4 vehicles and fuel are Diesel more expensive than BS3. Hence, public Excise duty on Petrol and Diesel including buys BS3 vehicles and fuels from peripheral

Education Cess as on September 2015 is Rs towns to evade registration taxes. Also

17.46 and Rs 10.26 respectively. Excise duty diesel to petrol usage ratio in India is almost

was Rs 9.20 on Petrol and Rs 3.46 on Diesel (4.5): 1 hence there is more pollution. on 1st November 2014 which has been increased gradually and are now almost 90% However, this increase in private cost is higher for Petrol and 200% higher for offset by savings in health costs for the Diesel. This cess can be used for meeting public, as there is lesser amount of disease the capital expenditure requirement for fast causing particulate matter and pollution in forwarding to ultra low-sulphur fuel to the air. Exposure to air pollution can lead to hugely reduce vehicular pollution of nitrogen respiratory and cardiovascular diseases, oxides and particulate matter. which is estimated to be the cause for 620,000 early deaths in 2010, and the health Bharat Standard : Limitation cost of air pollution in India has been Four refineries in the North East- Guwahati, assessed at 3 per cent of its GDP. So faster Digboi, Numaligarh and Bongaigaon - their rollout of stringent emission standards has equipment outdated, cannot produce BS4, became the need of the day.

P A G E 4 INTERNATIONAL

BY BHAGIRADH SISTA

The European Refugee Crisis - its effect on Global Economy

SNIPPETS In the summer of 2015, Europe million have fled the country. The vast experienced the highest influx of refugees majority of them reside now in the camps  Over 4 million since the second world war. Why? The in neighboring countries, who are taking Syrians have fled the country main reason is that Syria has become the care of the 95% of the refugees, while the world’s top source of refugees. Syria is Arab states of the Persian Gulf (Saudi  New opportunity located in the Middle East, an ancient Arabia, Kuwait etc.) together have for ISIS for fertile land settled for at least 10,000 years. accepted “0” Syrian refugees which has creating political Since, the 1960’s it has been led by the been called shameful by Amnesty chaos in Arab regimes al-Assad family, who have ruled it as International. quasi-dictators until the Arab Spring that Even the UN and World Food Program  Fears in the happened in 2011, a revolutionary wave of were not prepared for a refugee crisis on Western World protests and conflicts in the Arab World this scale. As a result many refugee camps that the immigrant that toppled many of the authoritarian are crowded and undersupplied, subjecting population might regimes. But the Assads refused to step people to cold, hunger and disease. The dominate the down and started a brutal civil war. Syrians lost their hope completely. So they native population New opportunity for ISIS decided to seek asylum in Europe.

 The refugees ISIS, a militaristic jihadist group used the Between 2007-2014 European Union had start contributing opportunity and entered the chaos with invested about 2 billion € in defences, high to the state’s the goal to build a totalitarian Islamic tech security and border patrols but not a GDP as soon as Caliphate. Very quickly it became one of lot in preparation of influx in they are the most successful and violent extremist refugees. So it was badly prepared for the integrated to the organizations on Earth. All sides storm of asylum seekers. In the EU, a workforce committed horrible war crimes, using refugee has to stay in the state they chemical weapons, mass executions, arrived in first, which put enormous torture on a large scale and deadly attacks pressure on the border states that were on civilians. The Syrian population was already in trouble. Greece had its own trapped between the regime, rebel groups problems of economic crisis. This lead to and the religious extremists. terrible scenes of desperate, hungry A third of the Syrian people has people on islands usually reserved for been displaced within Syria while over 4 tourists. Instead of coming together, the

P A G E 5 World has become divided. Many states expected to be as low as 1.4% in the downright refused to take in any refugees 2020-2030 decade. leaving the border states in trouble. In 2014, UK lobbied to stop a huge Contribution to the Economy search-and-rescue operation called Mare Most Syrian refugees are already well Nostrum that was designed to stop the educated. Refugees who become asylum seekers from drowning in the immigrants are less likely to commit seas. But of-course in reality UK did not crimes than the native population. When succeed in this. The perception of the allowed to work, they tend to start their crisis around the world suddenly changed won businesses and integrate themselves when photos circulated of dead boy from into the workforce as soon as possible Syria found on a beach in Turkey. paying more into the social systems than Germany announced that it will accept all they extract that from. Syrians coming to Syrian refugees and in 2015 it’s preparing the west are potential professional to take 8 lac people-more than the entire workers desperately needed to sustain EU in 2014. The support for the Asylum Europe’s aging population. Social media seekers has majorly come from the and internet has become a vital part of citizens but not from the politicians. being a refugee. They used social networks, GPS and all technologies that Fears in Western World helped them to migrate. This proves that There are fears in the western world these people are just like us. The EU is that Islam, high birthrates, crime and the wealthiest bunch of economies on collapse of social systems. But the facts Earth. It can handle the challenge of are here. Even if EU were to accept all refugee crisis if it wants to. The same the 4 million refugees and 100% of them with Western World too. While tiny are Muslims, the percentage of Muslims Jordan has taken over 6 lac refugees, the in EU would only rise from 4% to 5%. UK which has 78 times the GDP of This is not a drastic change and certainly Jordan has only said it would allow will not convert Europe as a Muslim 20,000 Syrians across its borders over continent. A Muslim minority here is the next five years. The US 10,000 and neither new nor a reason to be afraid. Australia 12,000 people. Overall things Birthrates in many parts of western are slowly getting better but not fast world are low, so some fear asylum enough. By accepting them into the seekers might overtake the native countries and integrating to the societies population in a few decades. But the they have much to gain. The productivity studies show that though the birthrates of the immigrants will translate to the of Muslims is high they adjust to the increase in GDP of all the refugee standard of living and become low. accepting nations there by fostering their Muslim population growth rate is economies.

P A G E 6 INTERNATIONAL

BY ARAVIND KUMAR Future of Japan and its Growth

SNIPPETS Through the span of two agonizing "lost present there is a considerable and decades," Japan has lost much of its organizations in Japan is 23 rate percentage  The working age competitive edge. Its economy keeps on points below the performance of equivalent population is shrinking and working underneath its potential. US corporations. Japan is on pace for expected to be Profitability has consistently reduced in languid yearly GDP development of only 1.3 71 million by each area including its signature advanced percent through 2025 if these patterns 2020 manufacturing industries. Policy changes can proceed. Be that as it may, there is still time

 Labor make the right conditions for reigniting to take off this result. Productivity has development, yet Japan needs to remained concentrate incredibly on what individual One more decade of sluggish development underneath 2% organizations can do quickly. would do little to help household purchasing for past two power. Much all the more ominously, it would decades A demographic challenge of historic extents constrain the resources available for social  The current has landed on Japan's doorstep. Its security and health care just as demand for annual GDP working-age populace will decrease from 79 them intensifies. growth is 1.3% million in 2012 to 71 million in 20 extending but it could boost gap between Japan and other major On the off chance that Japan can twofold its it up to 3% propelled economies. Capital productivity rate of development, with an engaged  The following has correspondingly disintegrated: the methodology on expanding quality included decade offers a return on investment created by recorded and also lessening expenses, it could boost window of chance non-financial 25, and its dependency ratio is annual GDP growth to approximately for Japan to shift set to take off from 0.60 to 0.73 over the 3 percent. This would increase Japan's GDP by its trajectory, to same period. With its workforce up to 30 percent over the present trajectory a limited extent by capitalizing on contracting, Japan needs to by 2025 and enhance its monetary viewpoint. immense flows of predominantly depend on enhancing its Some $1.4 trillion in GDP development is in global trade. productivity as an essential impetus for question in 2025 alone. This vision is development. exceedingly optimistic, however Japan can start to move in this direction. Rather than Japan's labor productivity growth has settling for 1.3 percent yearly GDP remained underneath 2 percent for a great development, Japan could develop by a normal part of the previous two decades, and at of nearly 3 percent through 2025.

P A G E 7 This would lift Japan's projected annual by and by outpace the world in efficiency GDP in 2025 by just about 20 to 30 and quality, developing as a worldwide percent over current patterns. pioneer in fields, for example, advanced materials, 3D manufacturing, and the life Japan’s productivity growth has been sciences. hobbled by inadequate competitive pressures and a rigid labor market. As one of the most rapidly aging, Executing efficiency upgrades, for urbanized, globally connected, and example, expanded automation will technologically advanced societies on the influence occupations in numerous planet, Japan stands smack in the industries. Be that as it may, the quest forefront of a global wave of disruption. for new development markets and an These trends present both pressures and anticipated 3.7 percent decrease in incentives to act. Japan can turn the Japan's work power by 2025 can cushion current wave of global disruption into the net effect on employment. The public opportunity. and private sectors will have to work together to create the right environment The following decade offers a window of for growth, focusing on talent and skills chance for Japan to shift its trajectory, to development, labor market frameworks, a limited extent by capitalizing on entrepreneurship, innovation, immense flows of global trade, the ascent competition, and infrastructure of billions of new urban consumers in the productivity. emerging world, and innovation leaps forward. However, the new worldwide The act of consistently catching new economy is not just realigning; it is profitability improvements grows likewise accelerating. The time is ideal for troublesome over time, yet it is Japan to attempt bolder moves, greater achievable, especially if Japan steps to investments, and more profound changes. make new aggressive progress crosswise Decades ago, Japanese manufacturers over entire industries. This effort goes famously introduced the world to “lean” past expense cutting; it is about spurring practices. Today businesses throughout growth and increasing value added by the Japanese economy can apply these launching business lines, pushing the concepts to new industries and use boundaries of innovation, and entering digital technologies to take them to the new markets. Private-sector initiative and next level. Focusing on the priorities drive will be key to the resurgence of discussed here can help to address Japan. persistent legacy issues and put Japan on a faster track toward recovery and Be that as it may, Japan has a window of renewal. chance to make a different outcome - to

P A G E 8 TRENDING NEWS

B Y T U L I K A

India lays MAT controversy to women’s doubles title of the year at rest Guangzhou on 26 sept against Xu Shilin and Foreign companies with no permanent You Xiaodi 6-3, 6-1. The dynamic duo have

establishment in India have been relieved by been on a winning spree across the world the GOI from payment of Minimum since coming together in march 2015. Alternate Tax or MAT. MAT is levied on Together they have a win loss record of profit making entities that do not pay any 42-7. corporate tax because of exemptions and reliefs bestowed by the Income Tax Act. Temporary workers protest at GOI will now amend sec115JB of the Manesar Plant Income Tax Act to ensure that MAT Maruti plant at Manesar is amid controversy provisions are not applicable to Foreign once again with the temporary workers Portfolio Investors as well as foreign protesting once again for a salary hike. The companies with no permanent establishment situation got a bit out of hand and Police in the country and who are a resident of a intervention was solicited. This protest nation having Double Taxation Avoidance came up just two days after the salary hike Agreement with India. This amendment will that Maruti Suzuki announced for its 13000 have a retrospective effect from April 2001. permanent factory workers by Rs.16,800 a month. Temporary workers draws a salary Sania Mirza-Martina Hingis win of around Rs.15,000 pm as against a salary Guangzhou Open title of Rs.38,000 - 40,000 for a permanent The world number one team of Sania Mirza worker and unlike the permanent workers and Martina Hingis continued their their wages are increased once every three dominating run by winning their sixth years.

P A G E 9 MARKET

INDIAN MARKETS Indian stock markets experienced a further slump this week. Most of the industries have been reporting a weak growth for quite a while and that has attributed to the fall. Raghuram Rajan is expected to come up with some reforms in the next RBI policy meeting as the federal reserve didn’t change the interest rate in this month’s meet. The policies might bring some

good news for the investors and we may see the stock market booming. 3 B E S T PERFORMERS Open High Low Close

SENSEX 26,218.91 26,218.91 25,651.84 25,863.50  LUPIN LTD NIFTY 7,981.90 7,981.90 7,812.00 7,868.50

 MARUTI BSE SENSEX SUZUKI

 INFOSYS LTD

3 W O R S T PERFORMERS

 TATA MOTORS

 COAL INDIA CNX NIFTY

 BHARTI AIRTEL

P A G E 1 0 FINWORD

B Y T U L I K A Trading on Equity

SNIPPETS Companies raise capital through two sources, debt when the amount of borrowings are relatively large which is borrowed capital and equity which is in relation to capital stock, the company is said to

owner’s capital. Both forms have their own merits be ‘trading on this equity’.  Trading on and demerits. Generally there is no hard and fast Feasibility Equity occurs rule as to when a company should go in for raising Companies can take advantage of this situation and when a capital through either of the means but in certain maximize returns on equity only when its return company uses situations companies prefer debt over the equity on investment (ROI) is greater then the rate of fixed rate of return bearing component in order to increase shareholder’s interest on borrowed capital, otherwise not. securities return i.e. Earning Per Share (EPS).  ROI > Interest Increase in debt will increase returns to  Companies can shareholder’s . take advantage of this situation  ROI = Interest and maximize Company is indifferent.. It may or may not returns on increase it’s debt component. equity only  ROI < Interest when its return Increase in debt component will lead to on investment (ROI) is greater decrease in returns to shareholder’s because of then the rate of increased pressure by the fixed interest the interest on Trading on Equity occurs when a company uses company would have to bear on it’s low borrowed fixed rate of return bearing securities like bonds, earnings. capital debentures, long term loans, etc. to increase it’s Trading on Equity is only feasible in it’s truest earnings on common stock i.e. to increase returns form in the first scenario only. It is here that to the equity shareholders. The term owes its the company can take advantage of the tax name to the fact that the creditors are willing to shield provided by the interest component and advance funds on the strength of the equity magnify its EPS. supplied by the owners. In the third scenario the chances of the company Trading feature here simply signifies taking going bust or bankrupt are high. Rather than advantage of the permanent stock investment to acting as a financial leverage the debt borrow funds at reasonable terms. Therefore, component with its fixed interest payments will

P A G E 1 1 increase the company’s financial risk. capital structure wherein more of debt is Taking a very basic example let us see how employed as against equity because the cost increase in debt component when ROI is of raising debt is only 10% whereas returns more than the interest liability the company’s on capital employed is 24%. EPS changes. Things to look out for Raising capital through debt not only

Proposal Proposal provides financial leverage as discussed Capital A B earlier it also keeps the control in the hands of the management. Unlike equity

Equity 400,000 200,000 shareholders who have a right to vote and as owners also have a stake in the profits

of the company debt holders or the 10% Debt 100,000 300,000 lenders have no such rights making the debt component all the more a lucrative Total 500,000 500,000 option. No. of Equity But at the same time we also need to keep shares 40,000 20,000 in mind that raising more of debt even with a high ROI may not always be the best ROI 24% 24% option. Proposal Proposal  Equity holders may not be ready to Particulars A B bear the added risks associated with the use of leverage. EBIT 120,000 120,000  Higher leverage=Higher cost of capital

Equity holders may ask for more returns Less: Interest 10,000 30,000 for bearing these extra risks which otherwise the company had hoped to

EBT 110,000 90,000 plough back and reinvest in future ventures.

 In case the returns are fluctuating in Taxes-50% 55,000 45,000 nature then also it is highly unprofitable

for the company to go in for debt. EAIT 55,000 45,000 Therefore, it must keep into account the projected level of earnings based on EPS 1.38 2.25 past trends and future projections As can be observed the company’s EPS before taking any rash decisions just for increases when debt component increases as the sake of increasing EPS in the short a proportion to equity. Therefore in this case run. it beneficial for the company to have such a

P A G E 1 2 PERSONALITY

BY SHILPA KUMARI Jagmohan Dalmiya

Mr. Jagmohan Dalmiya who has been became the first non cricketer and first Asian nicknamed in media as the “Machiavelli of at the helm of ICC. Dalmiya was described Indian cricket” has contributed towards as a total control freak who knew how to commercializing cricket. He was elected as win the board room battles through his the president of Board of Control for amazing words. In 1996, Cricket in India (BCCI) initially in 2001 and Dalmiya was described to be among world’s then again on 2nd March,2015. After he has top 6 sports executives. In the realm of his been reappointed, his health was administrative excellence in global sport he deteriorating and was admitted to a was awarded with the Sports Achievement hospital in after a cardiac attack on award in 2005. 17th September,2015. He died three days later on 20th September. He was also a businessman brought up in the city of Kolkata and was born into a Marwari family of the Baniya caste. Started his career as a wicketkeeper and also became the Co owner of the firm M.L. Dalmiya & Co. at the age of 19 after the death of his father. His played a major role in securing the rights Jagmohan Dalmiya has helped BCCI attain to host the 1987 World Cup and then again position in the global market and has also in 1996. In the year 1996 for the election of helped in revenue generation for BCCI. the Chairman of the After having done so much he died this International Cricket Council, he secured 23 September on 20th due to his illness and votes to 13 votes of Australian Malcolm after his death his eyes were donated to Gray but could not win the election as he Vanmukta Eye Bank in Kolkata. The next day could not attain two thirds majority as per his body was taken from his house in the ICC Constitution. He was elected as the to where several dignitaries President of the ICC in 1997 wherein he arrived including to pay their held the position for 3 years and last respect to him.

P A G E 1 3