The IBS Times_118th issue

ISSUE - 118 27th JUNE [MONDAY]

EDITOR’S DESK - TANIYA BANERJEE

Do you remember the „Watergate‟ incident from the era of President Nixon? Something on

similar lines seems to be happening on the shores of Indian politics. With the „supposed bug-

ging‟ of the Finance minister‟s office planting seeds of distrust amongst all, only time will tell

how the course of events will take their turn. To throw more light into the matter, this week we

are covering the infamous bugging event in our Cover Story.

Someone has rightly said „Social networks aren‟t about Web sites. They‟re about experience‟.

So is the invincible facebook slowly reaching towards its twilight days? Is it because of the mo-

notony in experience that its target customers have started complaining of or are the much more

innovative competitors like Twitter etc. the reason behind its gradual loss of market share. Get

our writer‟s opinion in on this topic in our opinion forum.

In our Brand Track section, this time we are covering the much loved and famous brand Café

Coffee Day. Since its inception in 1996 CCD had revolutionized the way Indians perceive Café.

Track this space for more updates on the various marketing strategies adopted by it to further

strengthen its foothold in the industry.

As our Focus Of The Week, we have delved into the details of the financial instrument known

as „Embedded Derivatives‟. As a hybrid financial instrument, it also includes a non– derivative

host contract. Get more insights, especially from our writer‟s point of view here this week.

Apart from all these we have regular sections of Fast Track, Quick Bites and Market Watch to

provide news ranging from politics and economics to the ups and downs in the stock market for

all our readers .

Cheers!

Taniya Banerjee

Editor.

EDITOR 1 OPINION 5 FOCUS 8

COVER 2 BRAND 6 MARKET 9

FAST-TRACK 3 QUICK BITES 7

COVER STORY– FINANCE MINISTRY GOT BUGGED!! - ADHIRAJ SOOD During last September 2010, adhesives were found at 16 places in the finance ministry including

the office of Finance Minister Pranab Mukherjee, Advisor Omita Paul and Private Secretary

Manoj Pant – and the two conference rooms used by the minister. India being a democratic

country where everyone is allowed to raise their voice and ask questions from the so called gov-

ernment (which is for the people and by the people) it is very disheartening to know that the peo-

ple were informed nearly 10 months after the incident had taken place.

According to the newspapers that are circulated in India and the news channels that are tele-

casted across the nation, it came to our notice that during the time of the incident only a handful

of people in the country were made aware. It is said, on discovery of the adhesive in the finance

ministry; Mr. Pranab Mukherjee wrote a letter to the Prime Minister of India, Dr. Manmohan

Singh stating that he should look into the matter. After which the Intelligence Bureau (IB) had

made investigation into reported bugging in his offices and found „nothing‟. According to the

reports submitted by IB, during its investigations, it is said to have

found some adhesive type material at few places under the table of

the Finance Minister and wall of the conference room. The adhesive

material was carefully collected for forensic examination after which

it was found that it was nothing other than chewing gum. The IB has

also mentioned in its report that there was no groove or cavity in

places where the chewing gum was spotted. Official sources also

said, adding in one of the places, the adhesive had a paint coating on

it suggesting that it had been there for many months.

The above statements by the IB has led us to a question which they

do need to answer, i.e. Why were not these chewing gums found by

them before, since it is their duty to regularly sweep all offices in the

ministry? Or were there explicit instructions for them to stay away?

The second statement which came as a shock wave to the whole country was that of our very

own Home Minister Mr. P Chidambaram wherein he said, that „it was not a big issue and he

came to know about the whole incident the day media had released it‟.

This leads us to a second question, Why was the Home Ministry not involved? Since, it is their

duty to investigate into such matters. Why do we need private organizations, when we have our

own government bodies? Is there a dispute among the ministries?

I as an Indian would want answers to these questions because it is our fundamental right to do

so. The government is answerable to us. But, before I end this article against the government, I

want to raise another issue, i.e. when would we have a constitutionally sound e-surveillance and

phone tapping law in India? Because there is no provision for judicial scrutiny of e-surveillance

and phone tapping orders in India, which in turn gives a lot of room to the private individuals

who have no authority under law to indulge in illegal e-surveillance and phone tapping activities.

It is high time we wake up, because it is already too late. The Finance Ministry already got

bugged, and soon the PM Office might be as well!!

THE IBS TIMES

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Why were not these chew-

ing gums found by them

before, since it is their

duty to regularly sweep

all offices in the ministry?

Official sources also said,

adding in one of the

places, the adhesive had

a paint coating on it sug-

gesting that it had been

there for many months.

FAST-TRACK NEWS - SHILPA MALHOTRA No one can set deadlines on Parliament to enforce Lokpal Bill, says Pranab Mukherjee The Lokpal Bill movement and debate are now turning out to be a war of words. The Congress has called Anna Hazare an

'unelected dictator' who is raking up issues that are a „threat‟ to democratic institutions. Union Finance Minister Pranab

Mukherjee ticked off Anna saying "nobody can guarantee that the parliament shall pass the Lokpal bill as per the August

15 deadline set by Hazare". Mukherjee made it very loud and clear that Team Anna can give suggestions, not command or

coerce the government through fasts or street-side rabble-rousing agitations.

Credit growth likely to slide says SBI chief The Reserve Bank of India's decision to increase interest rates recently has led to a scenario where credit growth will come

down from the expected 19-22% to 16-19%, State Bank of India Chairman Pratip Chaudhuri said. As a result of the in-

creased interest rates, major corporates are now reconsidering their expansion plans. He said the net interest margin (NIM)

of the bank could increase in the current fiscal from 3.25 percent to 3.5 percent. It would be driven by the discontinuation

of home loans at 8 percent in the first year of loan, hike in base rate from 8.5% to 9.25%.

Notification on Singur Land Bill finally issued A day after West Bengal Governor M.K. Narayanan gave his assent; the State government issued a notification to turn the

Singur Land Rehabilitation and Development Bill into law. The notification would be followed by the framing of rules by

a committee, which would determine the process to return an equivalent portion of land to the „unwilling‟ farmers of Sin-

gur. Their land was acquired by the earlier government for the now abandoned Tata Motors' small car project.

BWA winners pay spectrum fees Pan-India BWA licence-winner Infotel, which was recently acquired by Reliance Industries Ltd., said it had paid its win-

ning bid amount Rs.12,847 crore to the government. Similarly, other players that have won various others telecom circles

have also made their payments including Bharti Airtel (Rs.3,314 crore), Qualcomm (Rs.4,912 crore), MTNL (Rs.4533

crore for Mumbai and Delhi) and Aircel (Rs.3,438 crore). However, payment status of BSNL could not be ascertained. The

state-owned telecom PSU has to pay Rs.8,313 crore for pan-India BWA licence.

Competition Commission of India penalizes NSE to the tune of INR 55.5 crore The CCI has imposed a penalty of Rs 55.5 crore on NSE. The CCI order follows a complaint filed by its rival MCX-SX,

which has accused the NSE of abusing its dominant market position to corner business in the CD (currency derivative)

segment. The NSE has been directed to „cease and desist from unfair pricing, exclusionary conduct and unfairly using its

dominant position in other markets to protect the relevant CD market with immediate effect‟. CCI also asked the NSE to

maintain separate accounts for each segment with effect from April 1, 2012, and modify its zero price policy in the CD

market and levy appropriate transaction costs within 60 days.

Bharti Airtel to merge mobile, DTH & telemedia businesses Bharti Airtel plans to merge its mobile, satellite TV (DTH), fixed-line & broadband telemedia business, which jointly ac-

count for about 90% of the company's revenues and the vast majority of its workforce, into a single entity. The merger is

aimed at cutting costs and boosting efficiency while it will also lead to big job losses estimated above 2,000. The company

said it had pioneered what it called the „strategic outsourcing model‟, in which key functions such as networks, technology

and customer services are managed not by the company, but by specialist vendors.

Nokia unveils new smartphone Nokia unveiled its latest smartphone, N9, at the Nokia Connections 2011. Nokia CEO Stephen Elop said the phone, which

was to be launched later this year, would be based on the Windows Mobile platform. He said the price of the phone would

be revealed closer to the launch. Mr. Elop said Nokia's smartphones would henceforth be based on the Windows Mobile

platform, while the Symbian platform would be used for lower-end phones. The device will have near-field communica-

tion (NFC) capabilities, which will enable the pairing of the device to speakers and other devices.

Three White Soldiers– A bullish candlestick pattern that is used to predict the reversal of the current downtrend.

This pattern consists of three consecutive long-bodied candlesticks that have closed higher than the previous day, with

each session's open occurring within the body of the previous candle.

THE IBS TIMES

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Diesel, cooking gas to cost more as Govt announces bailout package for oil companies Petroleum minister Jaipal Reddy announced a bailout package for oil companies. Customs duty has been cut by 5% on diesel and petrol posing a revenue loss of Rs 26,000 crore, while the cut in excise duty on diesel, from Rs 4.60 per litre to Rs 2 a litre will add a further loss of Rs 23,000 crore leading to a total revenue loss of Rs 49,000 crore for fiscal 2011-12. Meanwhile, the price of diesel has been increased by Rs 3 a litre, PDS kerosene by Rs 2 a litre and domestic LPG by Rs 50 a cylinder. While the steep duty cuts will sharply impact the govern-ment's revenue, consumers will have to pay higher fuel bills which will push inflation further.

Rabobank sells 11 % stake in Yes Bank Dutch lender Rabobank sold about 11% in Yes Bank raising about $218 million. Rabobank, which held about 16% in Yes Bank at end-March, sold roughly about 38 million shares through a series of block deals on the Bombay Stock Exchange and the National Stock Exchange. The bank, as a part of its overall business plan for India, is obliged under the regulations to reduce its shareholding in Yes Bank as there is pending approval of its application for a full banking license in India.

ICICI Bank gets shareholders nod on its proposed merger with Bank of Rajasthan Breaking the long spell, ICICI Bank's general body has approved acquisition of Bank of Rajasthan, which was awaiting a legal clearance. While the shareholders of BoR communicated their decision to the stock exchanges, saying the „scheme of amalgamation has been duly passed by the required majority,‟ BoR officials maintained throughout the day that they would approach stock exchanges only after getting the decision legally validated. The swap ratio has been agreed to one share of ICICI for 4.72 shares of BoR.

Citi customers lose $2.7 million in hack attack Citigroup Inc, the third-largest U.S. bank by assets has told government officials that about 3,400 of the cus-tomers whose credit-card information was hacked have suffered about $2.7 million in losses. The company said a total of 360,083 North American Citigroup credit card accounts were affected by the cyber attack in May, the latest in a spate of attacks in recent months targeting high-profile companies such as Sony Financial Holdings Inc, Google Inc and Lockheed Martin Corp.

Euro zone announces massive bail-out for Greece Eurozone members and the IMF have agreed a 110 billion-euro (£95bn; $146.2bn) three-year bail-out package to rescue Greece's shattered economy. In return for the loans, Greece will make major austerity cuts which Prime Minister George Papandreou said involved „great sacrifices‟. The EU will provide 80 billion in Euros in funding and the rest will come from the International Monetary Fund (IMF). The deal is designed to prevent Greece from defaulting on its massive debt.

India beats West Indies to take 1-0 lead Indian bowlers put up a spirited and disciplined performance to restrict the West Indies to 262 - 63 runs short of the target provided by India to win the first tie of the three-match Test series. And once again like in the first innings, the Indian new ball duo of Praveen Kumar and Ishant Sharma did the maximum damage picking up three wickets each. As a result of the victory, India has now taken a 1-0 lead over the West Indies in the three match series.

Sharapova beats 17-year-old Robson at Wimbledon Maria Sharapova held on to defeat British wild card Laura Robson 7-6 (4), 6-3 on Friday to reach the third

round at Wimbledon. The 2004 champion at the All England Club trailed 4-1 in the first set, and then 4-2 in the

tiebreaker, before rallying for the win against the 17-year-old Robson who won the junior title at Wimbledon in

2008 and earned her first Grand Slam tournament victory in the first round when she had beaten Angelique.

Three Black Crows- A bearish candlestick pattern that is used to predict the reversal of the current uptrend. This pattern

consists of three consecutive long-bodied candlesticks that have closed lower than the previous day with each session's open occur-

ring within the body of the previous candle.

THE IBS TIMES

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OPINION FORUM– HAS FACEBOOK PEAKED? - RAJAT MONGA

„A billion users of facebook‟. That is a dream Mark Zukerberg has for facebook and many believe it will

not be just a dream for a long time. There is no reason not to believe so if you see the growth of the com-

pany over the last few years. So it would be absurd if I ask a question about facebook peaking. But before

I get into this controversial topic let me tell you about a company. This company was a pioneer when

internet was in its nascent stages, companies were lining up to advertise through this company so that

they can reach their target customers. The future looked bright as this company saw unlimited opportuni-

ties in this ever increasing world of internet and then, it all went down! Companies understood a better

way to reach their consumers and this company became irrelevant and has since then never been able to

reclaim its glory. The company that I am talking about is AOL. Once a dominating force it is just surviv-

ing today. Facebook and AOL are same albeit in a different era with facebook being labeled AOL-2 by

some experts. Both of them provided a platform for people to come together and companies paying mil-

lion of dollars to connect to those people. AOL was considered invincible during its hey-days and so is

facebook. It brings me back to the question-has facebook peaked?

Let us look at the numbers. Unofficial count by magazines like Inside

Facebook peg the number of users at 750 million accounts worldwide-

quite a growth as it had 500 million users about a year back. But a closer

look at the numbers reveals something very interesting. Over the last 3

months facebook has been loosing users in its key markets of Canada,

US, UK and Norway– ever since it was opened for the public in 2006.

Growth slowed however, having risen by 13.9 million accounts in April

and then just 11.8 million in May. Typically in the past year it has grown

by 20 million a month. It is not restricted to the mature markets-countries

like Brazil and Mexico, grew at a maximum of 10% over the month. An-

other aspect to this mind boggling numbers is that they do not give a true picture - 750 million accounts

does not translate into 750 million users as a lot of people have multiple accounts so we really do not

know how many people are actually using it.

So why are people leaving this amazing place to socialize and catch-up? Well one of the main reason is

its user‟s privacy policy. The site has been criticized as it relaxes controls it has on data access. This has

been forcing early users and trend setters to move out of facebook. It is also not anymore „cool‟ to be on

facebook as it was when it started. Competitors realised this and have been moving to fill this void. Twit-

ter has emerged as the main competitor to facebook and has carved a niche for it self and it is adding new

features to its platform including photo-uploading. Twitter also recently launched its „follow‟ button,

which when placed alongside Facebook „like‟ buttons, could go a long way in getting people to follow

brands they are interested in and increase user engagement.

So is it time to write an obituary for facebook? The answer is no. Facebook is going to be a part of our

lives in the near future. The company is already looking for ways to enter new markets like China which

have 450 million internet users. But it is the irony of this situation that: as it is expanding in new areas, it

is loosing users in the markets it is already present in. One thing is for sure; as the markets saturate there

will be some order put to the blistering growth the company has experienced over the last few years. This

social media portal will have to evolve if it wants to stay relevant or else it would join a long list of those

companies which were too big to fail. Let us hope it does not come to that!

Dog And Pony Show- A slang term referring to a financial seminar that presents new products or issues of securities to

potential buyers. Also known as a "road show".

THE IBS TIMES

Twitter and YouTube are

giving competition to

Facebook now. Twitter

especially has carved a

niche for itself as an ex-

cellent platform through

which Internet users can

share and consume news.

The share of company in

social media traffic has

also been declining over

the past few months com-

ing down to about 52%

from its peak of 59%.

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BRAND TRACK– A LOT DOES HAPPEN OVER A CUP OF COFFEE -SUPRIYA MAMGAIN

Write and delete, write and delete.

These two steps, took most of my time in writing this article. Dear readers, this was truly a symptom of not

putting my thoughts in paper for a prolonged period of time. Finally, when frustration took its toll on me, I

had to put this two step process (read: write and delete) to rest.

Taking a deep breath, I looked around the place where I was sitting. Interestingly, I noticed that this place

consisted of a mix of people: a middle aged woman in sari sitting with her friends, young couple sitting with

their mother, a group of college students and a not-so-weird writer like me.

After this observation, I wondered what was common between all of these people. Soon, I figured out that

they were all at ease, busy in their own deeds while they sipped their favorite cup of coffee!

“This is it!” I thought to myself as I decided on the brand I would be covering for this issue of The IBS

Times. Café Coffee Day, CCD coffee chain that since its inception in 1996 has revolutionized the Café cul-

ture in India. Café coffee day targeted anybody who is „young or young at heart‟, this theme stood out in its

colour scheme and logo as well. The colours bright red and green are used in its logo. The former stands for

leadership, vitality and passion for coffee while the latter reflects back at the coffee plantations that the com-

pany owns. The stores are well lit with pictures of bright happy faces of people adorning the walls.

The cafe owned by Amalgamated Bean Coffee Trading Co. Ltd. invested

close to Rs. 150 crore in 2010, to redesign the existing stores and open new

stores.

The café has captured the CCD knowing that its major chunk of customers is

in the 15-29 age group offers its products at affordable prices. At first, the café

offered a cup of coffee within the range of Rs.45-Rs.80. The pricing strategy

has not changed much since CCD‟s inception. Though there have been slight

changes in the price owing to government tax policies but you can still enjoy a

nice cuppa with Rs.100 in hand.

The café can be found in Karachi as well as Vienna, the later being the coffee

capital of the world. CCD can be found anywhere where some business can be

generated. With 19 stores abroad, the café founder and owner V.G. Siddhartha

aims to operate at least 250 stores in 10 countries!

Think of the places where you have seen CCD outlets. I am sure these are the few places that came to your

mind: malls, hospitals, petrol stations, market places, educational premises, multiplexes and railway stations.

When it comes to accessibility, the café surely gets an A grade. The customers know that CCD follows any-

where and everywhere format. The brand follows a no segmentation policy as it realises that there are few

people above the age of 29 who flock to its cafes.

The brand has always upgraded itself to cover the zeitgeist of its Indian audience which is under tremendous

social change. The cafes are opened in various formats such as lounge cafes, garden cafes and Xpress cafes.

To keep up with its „young and young at heart‟ customers the cafes provide Wi-Fi connectivity and extensive

merchandise. CCD has restricted itself from exclusive mass media advertising, as most of its promotion is

based on tie-ups with other brands such as Apple, Levi‟s, Sony and Airtel.

Café coffee Day‟s commitment to its brand building activity can be noticed in its new logo which is a shift

from its traditional square box. The new logo designed by Landor Associates is a dialogue box, which de-

notes the shift from telling a product story to a consumer story. The dialogue box emphasizes what café cof-

fee day is all about-a place to relax and have a conversation.

With a catchy tagline, „A Lot Can Happen over Coffee‟ the café lives up to the expectations of its million

customers as it captures their zeitgeist in a country which is going through rapid economic and social

changes.

Oh well, a lot did happen over coffee for me, as I managed to write past my writer‟s block! Now that my

writing cells have been triggered watch this space for more brand stories!

THE IBS TIMES

The brand has always

upgraded itself to cover

the zeitgeist of its Indian

audience which is under

tremendous social change.

The cafes are opened in

various formats such as

lounge cafes, garden cafes

and Xpress cafes.

“This is it!” I thought to

myself as I decided on

the brand I would be cov-

ering for this issue of The

IBS Times. Café Cof-

fee Day, CCD coffee

chain that since its incep-

tion in 1996 has revolu-

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QUICK BITES- NEWS THAT CAN’T BE MISSED ! - NITIKA THAKUR

Big Shots…

Wipro‟s CEO of Infocrossing Martha Bejar the highest paid IT Executive with an annual compensation of 5.5 Cr.

Vinayak Shenvi calls it a day at Citi group Venture capital and joins private equity venture, Exponentia.

S M Krishna, External affairs minister in Myanmar to sign Infrastructure and development project deal

Wipro BPO head Ashutosh Vaidya joins Dell as the head of the BPO business.

Company Talks… Mahindra‟s total holding in M&M stands less than 20%, total promoter holding stands at 26.47% which includes

8.98% held by trust.

Carrefour to offer online shopping in India.

C&J Clarks International plans to open 100 stores by 2012.

Max Healthcare likely to enter into equity cum strategic alliance with global hospital.

Nagarjuna Fertilizers and Chemicals Promoters raise stake by 13% by investing only Rs.30 Cr.

Capgemini and Cognizant in talks for acquisition of Oracle Financial services.

Nokia shifts focus to Asia as Apple and Android gain in US and Europe.

Citi India FY11 profits increases 78% due to increase in revenue and decline in NPA‟s.

Bharti, RCom, BSNL suffer revenue shock although the Telco sector recorded a 12% jump in sales.

ONGC plans to invest $7.7 bn on KG Basin to raise gas output.

TCS, Infosys, HCL Technologies among the potential bidders in acquiring UK based Misys.

ESPN Star sports buys La Liga broadcast rights for Asian markets.

National Mineral Development Corporation (NMDC) is likely to acquire big stake in Russian coal mine.

TACO‟s (Tata Auto Comp Systems) 1100 Cr IPO to hit market in 2-3 weeks.

HSBC India FY11 profits rises 89% to Rs. 1528 Cr.

Raytheon bags a $23 million aero deal with Tatas to automate air traffic management systems.

Lockout at MRF‟s Kottayam Unit over labour issues.

Economy Speaks… Government pushes for Concor, Ircon Divestment to meet its target.

Exporters seek re-introduction of interest rate discount schemes as the cost of export credit is going up as the key

rates increase.

Oil market sees record price gap in variants.

Government will supervise oil fields after the CAG( Comptroller and Auditor General) report says the petroleum

minister Jaipal Reddy.

Supreme Court dismissed Kanimozhi bail plea.

Local Protest halts the land takeover efforts of Orissa government for $12 bn Posco plant.

Consumer inflation rises to 9.63% in May against 9.11% in April.

FDI‟s dip 9% to $6.51 bn in January to April.

World Bank to provide 1100 Cr loan to Tripura Government for improvement of facilities for transmission and

distribution of power in the state.

Adhaar project opens to application developers.

Government plans to set up 2500 Cr state owned company to invest in overseas ports and terminals to boost inter-

national trade.

Single KYC (Know your customer) norms for all the retail investors investing in any product.

The Captains of the Ships… President of Baltic and International Maritime Council – Mr. Varun Khatau

President and chief executive(Lifestyle), Reliance Retail – Mr. Bijou Kurien

Managing Director and CEO, Crisil – Roopa Kudva

THE IBS TIMES

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FOCUS OF THE WEEK– EMBEDDED DERIVATIVES - SAINYAM KUMAR

Greensheet- An information circular prepared by an underwriter that summarizes the main components of a new

issue's prospectus.

THE IBS TIMES

Derivative is a concept that haunts most of the MBA students irrespective of whether he/she is a fi-

nance student or not and when I add the word embedded to it, the complications increase further more.

The word „embedded‟ means something that is enveloped inside the main thing and is the integral part

of it, and „derivative‟ means a financial instrument whose value changes according to the fluctuations

in the value of the underlying asset. Therefore, when a derivative portion/condition/clause is attached to

a non-derivative contract, the derivative portion is known as the embedded and the non-derivative por-

tion is known as the host contract. The host contract can be a sales contract, insurance contract, lease

contract, equity or a bond issue.

The underlying feature of the embedded derivative is that it

causes all or some of the cash flows of the respective entity to

fluctuate as it derives its value from the movement of an exter-

nal stimulus which can be interest rate, exchange rate, inflation

rate, commodity price or any other instrument.

For Eg: Suppose there is a purchase agreement between ABC

India Ltd. and XYZ Ltd. for the latter supplying the power

equipments to the former three months from today. Now, if the

contract says that the price of the equipment is to be decided

based on the gold price on the day of the supply, then this

price discovery formula will be the embedded derivative while

the purchase agreement will be the host contract. The host and

the embedded derivative bundled together are known as the

hybrid contract.

When I first tried to understand the whole concept of embed-

ded derivatives, one question kept on popping up in my mind

and that was how to know whether it is an embedded deriva-

tive or just an inherent condition of the contract. On doing a

further research I found out that even the trained accountants

get stuck in this grey area. To resolve this problem, a Three-

Step method is followed.

When I first tried to understand the whole concept of embed-

ded derivatives, one question kept on popping up in my mind

and that was how to know whether it is an embedded deriva-

tive or just an inherent condition of the contract. On doing a

further research I found out that even the trained accountants

get stuck in this grey area. To resolve this problem, a Three-

Step method is followed.

According to IFRS, it is mandatory to split the host contract and the embedded derivative if the two are

not closely related. The relation i.e. whether they are „closely related‟ or not is decided on the basis of

the economic and risk characteristics of the host and the embedded derivative. If the characteristics are

similar, then they are closely related and should not be segregated. In other words, if the inclusion of

the derivative alters the risk of the contract as a whole, then it‟s regarded as closely related.

This is where the accountants are facing a lot of problems now days as the separation is something that

does not only make it a lot more tedious for them but adds to the chances of falling into the pit.

Therefore, when a de-

rivative portion/condition/

clause is attached to a

non-derivative contract,

the derivative portion is

known as the embedded

and the non-derivative

portion is known as the

host contract.

According to IFRS, it

is mandatory to split the

host contract and the em-

bedded derivative if the

two are not closely re-

lated.

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MARKET WATCH - VASUNDHARA ARORA

The week witnessed Indian government shedding off Rs. 0.5 trillion of its budget deficit accru-

ing from state owned refiners by shooting up diesel (by Rs. 3/litre) and cooking gas (by Rs.

50/14.2kg cylinder) prices. At the same time, a counter-active strategy of reduction in excise

duty on diesel would hit the governmental revenues to the tune of 490 billion.

Interest rate hikes triggered the BSE-Realty Index to be the biggest loser of the week by plung-

ing 4.9%. Also, the issue of pledged shares by promoters of companies made midcap and small-

cap indices take a significant dip. IT sector followed by the banking sector outpaced other sec-

tors and presented a decent rise during the week.

The Movers & Shakers of the Week

Coming to corporate news, NALCO reduced its basic price by INR 5000/tonne falling on slower demand during monsoons. Also,

Sun Pharma received a positive nod from US FDA for marketing „imitrex‟ injection which would help it propel its pressurized

sales due to approval issues faced by its subsidiary, Caraco. Tata Steel declared its proposed increase in the production of auto

grade steel by 20% this fiscal to meet surging demands from auto industry.

Global Cues:

A mixed week for global markets saw Asian markets ending in green cherishing a possible breakthrough for the debt crisis in

Greece and US releasing oil from its startegic reserves to ease out the supply woes. On the other hand, European and American

markets ended in red falling on persisting cautiousness and denial of any further fiscal stimulus by the Fed respectively. It is the 7th

week out of last 8 weeks that the American markets end on a negative score. Japan led the frontrunners of the week surging 3.5%

whereas France exhibited the most dismal performance by dipping 1%.

SURGES %Change DOWNFALLS %Change

BHUSHAN STEEL 9.9 GTL LTD 73

HERO HONDA 7.6 GTL INFRA 49.8

AMBUJA CEMENT 6.5 LANCO INFRATECH 24.7

THE IBS TIMES

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MARKET WATCH

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Disclaimer- This newsletter is just a compilation of news from various sources. Thus, readers are expected to cross-check the facts before

relying upon them. Though much care has been taken to present the facts without error, still if errors creep in, necessary feed

back will be always welcomed. Editors will not be responsible for any undertakings. The newsletter is not meant for sale and

hence, no part of the newsletter should be used without the prior permission of the editorial team.

Sources- The Economics Times, The Hindu Business Line, Times of India, Business Standard, Financial Ex-press, Financial Times,

Business Week, Business World, The Economist, Wall Street Journal, Bloomberg, Reuters, Moneycontrol.com, Vccircle.com,

yahoofinance.com, Business Today, India Today, Investopedia.com, Wikipedia.com, DNA, The Deccan Chronicle, The Hindu,

The Tele-graph.

EDITORIAL TEAM-

ADHIRAJ SOOD, NITIKA THAKUR, NITIN ARORA, RAJAT MONGA, SAINYAM KUMAR, SANDEEP ASRANI, SHILPA MALHOTRA, SUPRIYA MAMGAIN, TANIYA BANERJEE, VASUNDHARA ARORA.

BUSINESS JARGONS BY– NITIN ARORA

20 JUNE 2011

21 JUNE 2011

22 JUNE 2011

23 JUNE 2011

24 JUNE 2011

Sensex 17,506.63 17,560.30 17,550.63 17,727.49 18,240.68

Nifty 5,257.90 5,275.85 5,278.30 5,320.00 5,471.25

DJIA 12,080.38 12190.01 12,109.67 12,050.00 11,934.58

HangSeng 21,599.51 21,850.59 21,859.97 21,759.14 22,171.95

FTSE100 5,693.39 5,775.31 5,772.99 5,674.38 5,697.72

Gold ($/oz.) 1540.50 1,547.20 1,548.00 1520.70 1502.30

Crude($/bl) 107.41 107.82 107.96 106.08 -

INR v/s USD 45.88 45.59 45.517 45.4332 45.53

INR v/s EURO 65.66 65.05 65.366 65.3683 64.91

Flip In Poison Pill - A type of poison pill strategy in which existing shareholders, but not acquiring shareholders, are allowed to pur-

chase shares in the target company at a discount. A flip-in poison pill takeover defense dilutes the value of the shares purchased by the acquiring

company by flooding the market with new shares, while also allowing investors who purchase the new shares to profit instantaneously from the

difference between the discounted purchase price and the market price.

THE IBS TIMES

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