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Management,
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and non-finance topics.

JULY 19, 2015 | A FINNICHE INITIATIVE

Do write to us at:
finniche.imt@gmail.com

In Focus
Opinion

Irans Nuclear
Deal | 2

Term of Week

Grexit Worries | 4

ESOP | 6

Personality
Ravi Venkatesan |11

Tech World
iFusion |12

July 19, 2015 | Volume 40

IMT Ghaziabad will be hosting the launch of Indias most important biggest B school
case study event on 19th July. Club FinNiche would like to take the opportunity to
welcome all the juniors to the clubs and committees in IMT Ghaziabad. It is exciting to
see the flare with which the juniors are taking the new leadership roles and carrying
forward the IMT legacy.
Irans Nuclear Deal

Grexit Worries

ESOP

FinNiche launches yet another edition of FinXpress with the In Focus section putting
light on Irans Nuclear Deal. The Opinion gives an overview of Grexit Worries.
The term of the week describes ESOP", a decision by the board of the directors to
increase the number of outstanding shares by dividing the shares, keeping the total value
of shares same. Do have a look at the revamped market section which has included
international markets and Tech world which brings to you iFusion.
Hope everyone likes the revamped version of magazine. Club FinNiche welcomes any
comments, suggestions or criticism regarding the magazine. Please do write to us and
share your ideas.
Happy Reading!

Ravi Venkatesan

Regards
The Editorial Team
Club FinNiche

iFusion

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

- By Shashwat Shekhar

Deal

has

the

potential

to

Iran reached an historic deal with six major

democratic party will have to vote against the

world powers on Tuesday. The nuclear deal

bill. On the other hand, it is not likely that

ends a decade of tough negotiations.

This

Iran will be able to receive benefits of the deal

change the political landscape

deal has a potential to transform West Asia.

before next year as it needs to be ratified. It is

of Western Asia.

The agreement was reached in Vienna, on the

also required to verify the implementation.

18th day of diplomatic talks. According to the

Israel
deal.

has

condemned

the

deal, the sanctions imposed on Iran by U.S,

Irans National Security Council will also

European Union and the United Nations will

review the deal and if it thinks that the deal is

be lifted and in return Iran will curb its

against national interest then Iran will not go

nuclear programme. The west has always had

ahead with the bill.

its suspicion that Irans nuclear programme

is aimed at making a nuclear bomb. After the

The deal also has a snapback mechanism.

deal, the President of the U.S, Barack Obama

Under this clause, some sanctions can be

said that the deal effectively blocks every path

re-imposed in 65 days if Iran violates the deal.

to a nuclear weapon that Iran can take. The

The ban on Iran for procurement of missile

foreign minister of Iran, Mohammad Javar

technology will remain for next eight years.

Zarif, called deal a win- win. The deal can

Similarly, embargo on weapons is to remain

be seen as a major victory for both U.S

for next five years. On the sidelines of the

President Barack Obama and his Iranian

deal, the International Atomic Energy Agency

counterpart Hassan Rouhani. The latter was

(IAEA) also reached an agreement with Iran

elected two years ago on a promise that he

on

would reduce the diplomatic isolation of

between the two by the end if thus year. The

Iran.\The Prime Minister of Israel, Benajmin

deal with the world powers hinges on the

Netanyahu, termed the deal a mistake of

condition that IAEA will be able to inspect the

historic proportions while the deputy foreign

nuclear sites in Iran. Iran is also expected to

minister of Isreal, Tzipi Hotovely, called the

answer questions of IAEA regarding military

deal historic surrender.

aims of past research.

The U.S congress has 60 days to review the

The fact that the deal can benefit Iran has not

deal and if the congress chooses to reject the

gone down well with allies of U.S in West

deal, the US President, Barack Obama can

Asia. Iran does not officially recognize Israel

exercise his veto power. It would take two

and supports enemies of Israel. Some people

third majority of the lawmakers to override

believe that the reason behind the US

the veto. This means that for the bill to die,

improving its relationship with Iran is the

some fellow members of Obama from the

emergence of a common enemy in Islamic

ways

to

resolve

outstanding

issues

State which has gained ground in Syria and

prices that countries like India will be able to

Iraq.

reap modest benefits of lower oil prices as the

government

Oil prices are likely to drop in

anticipation of excess supply.

Iran has the second highest

gas reserves in the world.

does not fully pass on the

Lifting off sanctions can bring a rapid

benefits to the final consumers. The fall in

economic boon in Iran. The restrictions had

crude oil prices is expected to boost the global

reduced countys oil exports and the economy

economy by

shrunk by approximately 20%. The global oil

and 2016. In the same period Indias GDP is

prices fell at the prospect of Iranian oil

expected to grow by 0.4 and 0.6 percentage

returning to the market. U.S and European

points respectively. This is done mainly by

Union will allow Iran to export oil to any

the government the budget deficit and correct

country and reduce restrictions on trading

the subsidiary burden. Fall in international

other products such as chemicals, natural

prices of crude oil has helped the NDA

gas and refined products. Only Russia holds

government to keep the retail inflation below

more gas reserves than Iran.

5%.

Once the sanctions are removed , it will be

Low crude oil prices has also given countries

easier for India to pay in rupees for the crude

like India an opportunity to re-negotiate the

oil it imports from Iran. The plan of a gas pipe

conditions of imports. India has requested for

line from Iran to India through Pakistan can

a correction in terms and price

also be revived. Iran is also expected to open

Organization of the Petroleum Exporting

its substantial hydrocarbon reserves to Indian

Countries and has asked for abolition of

companies.

something

The prospect of oil production in Iran will put

Abolition of this premium will also help

downward pressure on crude oil prices. It is

Japan, China and Korea along with India.

estimated that crude oil prices will remain

OPEC accounts for 94% and 85% of Indias

below $70 per barrel in both long and

gas and crude oil imports respectively.

one percentage point in 2015

called

Asian

with

premium.

medium term. This will continue to have a

profound effect on Indias import bill.

If the agreement manages to survive it will

be one of the greatest foreign policy successes

Indias energy consumption is 4.4% of total

for

the

President

of

U.S.

Obama

had

global consumption of energy. It comes

personally started the initiative two years ago

behind only U.S, China and Russia in terms

with a call to the Iranian President Hassan

of energy consumption. Consumption of

Rouhani. In 1980, the U.S had cut diplomatic

petroleum products in India grew by 3.14% in

ties with Iran after a group of revolutionaries

the fiscal year 2014-15. IMF has pointed out in

attacked the U.S embassy in Tehran and kept

its report titled Implications of lower oil

hostages for more than year.

- By Gayatri Pandit

Grexit,

an

abbreviation

for

"Greek exit," refers to Greece's

potential

withdrawal

from the Eurozone, after which

it would most likely revert to
using the drachma, its currency
until 2001

In European Union, most political decisions

implementation by Greece calls for another

related to money and migrants rests with 28

bailout

national

packages

governments.

The

tension

of

package

of

comes

130
with

of

billion.

These

conditions

implementation

factors like currency, tax laws has become

structural

acute since 1999 on introduction of the euro,

government assets. It requires deep budget

which now binds 19 nations into single

cuts and tax increase.

reforms,

austerity

on

adjusting the economy according to other

and

measures,

privatization

of

currency which is watched by European

Central Bank. However, it leaves budget

The bailout money was given to let the Greek

decisions and tax policies in the hands of each

economy stabilize its finances and quell the

country. With the beginning of Greece crisis

fears that the EU could break. Though it had

in 2010, many international banks and foreign

helped

investors sold their Greek bonds and holdings

unemployment raised above 25 percent. The

to avoid the repercussions of Greece debt

bailout money mainly goes toward paying off

crisis.

Greeces international loans, rather than

to

reduce

problems

twinned

making out a way for economy to recover.

The Greek government still has debt load

Bailouts to Greece

which could not be paid unless the recovery

After Wall Street imploded in 2008, Greece

takes hold.

announced that it had been understating its

deficit figures for years, which left investors

Very nearly 66% of Greece's obligation,

and

the

around 200 billion euros, is owed to the

soundness of Greek finances. By 2010, Greece

Eurozone bailout fund or other Eurozone

curtailed the borrowings in the financial

nations. Greece does not need to make any

markets which further threatened to set

payments on that obligation until 2023. So

financial crisis. To control this situation, the

while Greece's aggregate obligation is huge as

troika the International Monetary Fund,

much

the European Central Bank and the European

economic outputit may not make any

Commission issued two international bailouts

difference much if the legislature did not have

for Greece, which would eventually total

to make payments for quite a long time to

more than 240 billion euros. In 2010, a 110

come. When the money came due, the Greek

billion bailout loan to rescue Greece from

economy could have sufficiently developed

sovereign default was launched and cover its

that the entirety no more appeared to be

financial needs throughout May 2010 until

daunting. In the short term, however, Greece

June

has

creditors

2013,

questioning

however

about

with

delayed

as

an

twofold

issue

the

nation's

annual

making payments due on

credits from the International Monetary Fund

looking at the current scenario with a very

and on securities held by the European

high debt (177% of its GDP) the solution of

Central Bank. Those commitments add up to

third bailout is a temporary fix as Greece is

more than 24 billion euros through the middle

likely to find it increasingly difficult to meet

of 2018, and it is impossible that either

the revenue and budget deficit targets.

institutions

would

agree

to

delay

the

repayments.

Currently, the Greek parliament has agreed to

European demand of tough new austerity

As said by Paul Krugman, Greek economy can

measures and structural reforms for defusing

recover from the crisis by exiting from EU and

the countrys sovereign crisis. Now here the

launching a new currency. The Greece can

question raises whether the Europe is able to

further devaluate its currency to boost its

deliver the broad-based economic reforms to

exports and the debts can be paid with

stressed countries like Greece. The answer to

cheaper currency.

However, it may have

this question is obvious, in the global

consequences such as the dogma that the EU

economic crisis the outcome of euro zone is

membership would no longer be perceived as

disappointing which is due to the weak

irrevocable, which also led to impact on the

performance of Eurozone as a whole and

austerity measures set by IMF which has

asymmetric outcomes within the Eurozone

contributed to Greek depression. In addition,

countries.

- By Yojana Ranasaria

Employee Stock Ownership Plan or ESOPs is

a type of employee benefit plan which tends

to encourage employees to acquire stock or

A credit default swap is a type

ownership in the company. Certain stocks are

of

given to the employees at no or negligible

contract

guarantee

that

offers

the

costs under these plans and they remain in

non-payment of a loan. In this

against

the ESOP trust fund till the time the employee

agreement, the seller of the

retires or leaves the company and

swap will pay the buyer in the

employee can exercise the rights on such

case of a credit event (default)

shares.

the

by a third-party. If no default
occurs, the seller of the swap

These plans aim to motivate the employees

will have collected a premium

and ensure dedication towards the company

focused on company performance and also

for improvement in work performance and

the appreciation of share prices. It acts as an

also to increase the value of the company by

interest builder to the employee as he will be

offering shares to the employees of the

interested in the performance

company. It is an incentive which is given to

prices

the

encouraging participants to do what is best

from the buyer.

employees

to

create

sense

of

the

of

the

company

commitment towards the company and is

for

shareholders

as

proven to be effective as an appeal to the

themselves are shareholders.

and
the

and stock
will

be

employees

employees. It generally appeals all kind of

employees and the HR need not be in a fix as

Uses of ESOPs :

to what kind of incentives needs to be offered

to the employees: monetary or non-monetary.
ESOPs are often used as a corporate finance

To create an additional employee benefit:

It can be used in conjunction with
employee saving plans

employees with that of the interest of the

To borrow money at a lower after-tax

cost: The ESOP borrows cash which it

organization. ESOPs are considered to be

uses to buy company shares enabling

qualified in the sense that it provides various

company to make interest and principal

tax benefits to the

deductions

strategy and to align the interest of the

company which is

sponsoring ESOPs, the employee and also to

the selling shareholder.

To buy the shares of a departing owner:

Owners of privately held companies can
use ESOPs to create a ready market for

It can be used to keep plan participants

their shares.

INDIAN MARKETS
BSE index ended up 0.06 percent, while the NSE index closed 0.02 percent higher,
marking their highest close since April 16.For the week, the BSE 30-share index gained
2.9 percent and the broader NSE index rose 2.98 percent. Inflation data, Greek developments and companies' quarterly earnings decided the course for the stock markets this
week. Besides, progress of monsoon, investment trend by foreign investors and the
movement of rupee against the dollar also influenced sentiment. Indian markets start
its upward journey on its own merits.

Open

High

Low

Close

SENSEX

28,480.92

28,576.32

28,417.46

28,446.12

NIFTY

8,623.65

8,642.95

8,593.15

8,608.05

BSE SENSEX

CNX NIFTY

COMMODITIES
Commodity

Unit

Rs / Unit

% Change

Gold

10 grams

25498.00

-1.06

Silver

1 kg

34200.00

-0.88

Crude Oil

1 bbl

3208.00

-1.44

EXCHANGE RATES
INR/ 1 USD

63.49

INR /1 EURO

69.14

INR/ 100 JAPAN YEN

51.20

INR / 1 POUND STERLING

99.42

INTERNATIONAL MARKETS
Open

High

Low

Close

NYSE Comp

11,010.84

11,010.84

10,965.67

11,024.87

NASDAQ

5,196.11

5,210.16

5,183.23

5,210.14

S&P 500

2,121.50

2,123.00

2,120.75

2,121.25

FTSE 100

6,796.45

6,799.78

6,764.80

6,775.08

CAC

5,138.98

5,138.98

5,110.48

5,124.39

DAX

11,747.47

11,753.18

11,649.94

11,673.42

NIKKEI 225

20,646.63

20,658.95

20,611.22

20,650.92

SSE 50

2756.87

2834.18

2723.74

2742.85

Hang Seng

25,246.64

25,517.45

25,183.86

25,415.27

Data centres in India Oracle

With the increase in adoption of cloud based applications and solutions as well as increase
in demand from the government segment, Oracle an enterprise software company is now
mulling data centres in India. This will help the software company to host the applications

and some other cloud based solutions within the country. Oracle presently does not have
any data centre India and the potential growth as well as demand are certainly making the
company to think over having some data centres in India. India is the second largest
From merchandised dolls and
board games to reality shows,
amusement park sides and
digital properties, Disney has

employee base for Oracle globally. Recently, Microsoft announced to set up three data
centres in India. Considering data centre in India, Oracle will have 19 cloud data centres in
India. Also the government will be benefitted through the applications and solutions in the
Digital India campaign. Other than public sector, the demand for such solutions is
increasing in the banking, financial services, insurance, telecom and manufacturing sector.

mastered the art of making

movies live forever. The Indian
arm of Disney is even doing the

Declining steel prices are affecting makers of raw materials

same.

The declining steel prices are affecting the makers of pellets, sponge, pig iron units etc. Even
in the last four months, several sponge iron units across the country have shut down , pellet
plants have been unable to sell and the pig iron industry experienced reduction in capacity
utilised. The industry has an annual capacity of 50 million tonnes but currently it is
producing only 17-20 million tonnes, and that is how they are also failing to make money.
Karnataka has experienced significant number of shut downs, 36 out of 66 units have shut
down, 2 are sold and rest are running at the half the capacity.

WPI remains in negative zone for eighth month

Annual wholesale prices continued to decline for the eighth consecutive month. WPI
declined at a faster rate of 2.4% in June year-on-year compared with 2.36% in May. The WPI
inflation in June 2014 was 5.66%. WPI food inflation also came down from 3.80% in the
previous month to 2.88%. However, CPI inflation rose to a nine month high of 5.4% in June.
Considering the difference in the WPI and CPI, economists said that higher margins at retail
levels also led to the divergence between the two inflation numbers especially on food front.

Monsoon session could derail GST deadline

Earlier this year, Finance Minister Arun Jaitley made an impassioned plea in the Lok Sabha
to pass the GST bill. If the House did not pass it, he warned the Constitutional Amendment
Bill would not clear the April 2016 deadline when it must be rolled out. And this fear may

come true. Other competitive political power in Bihar, where an election is yet to happen is
likely to dominate the monsoon session and less amount of business may happen, especially
in the Rajya Sabha. Whereas, other political leaders are also trying to extend the deadline.
The All India Anna Dravida Munnetra Kazhagam (AIADMK) is not in favour of the bill in
terms of its existing principle. On the other side, Congress which has 12 state governments
out of 29, already showed its disagreement with the existing norms. So even after monsoon,
it seems difficult to get the bill cleared having maximum votes in favour.

RBI reverses farm loan norms because of weak rains

Government showed its concern over a week monsoons impact on the agricultural sector as
well as RBI adopted the policy of direct agricultural lending target for banks. In April this
year, The RBI had announced revised norms for priority sector lending in which the
distinction between direct and indirect lending was abolished. These norms became
effective immediately. But RBI issued a circular to banks asking lenders to beef up credit
directly to the farmers so that they do not resort only to corporate farm loans to meet
targets. However, it is the banks duty to ensure that their direct lending to non corporate
farmers does not fall below the system wide average of the last three years. These norms
not only abolished distinction between direct and indirect agricultural norms but also set
targets for loans to marginal farmers and a variety of corporate loans.

Mindtree announced two acquisitions

Mid-sized information technology services company Mindtree announced two acquisitions
worth Rs. 425 crore. The reasons can be digital is getting more and more popularity and
other big players are taking similar kind of steps and also the company will definitely
experience certain increase in the cline base. These acquisitions are expected to expand the
companys offerings in the digital field and also overall revenue. Mindtree will acquire
British technology consultancy Bluefin Solutions and US-based analytics firm Relational
Solutions.

tenure Ravi helped to build India into

Microsofts second largest presence in the
IIT Bombay

world and one of its fastest growing markets.

Purdue University

He is also the creator of Microsoft Indias

Harvard Business School

Project Shiksha, which is a computer literacy

program. It trained almost 40 million school
children in India.
At Cummins Inc.
Ravi spent sixteen years with Cummins Inc.

2003
Distinguished Alumnus Award,

As a chairman of Cummins India he led its

IIT Bombay

transformation into Indias leading provider

of engines and power solutions. He is one of

2011
Distinguished

the key members in establishing Cummins

Engineering

College of Engineering. It is Indias first

Alumnus, Purdue University

engineering college for women in Pune.

Ravi Venkatesan is the former chairman of

2011

Microsoft India, now is the founder chairman

Most Influential MNC CEO,

of Social Venture Partners India. Through

Education
Ravi Venkatesan has obtained his bachelors

Economic Times

Social Venture Partners Ravi Venkatesan

degree

formed a network of engaged philanthropists

Indian institute of Technology, Bombay. He

who are into addressing social problems

did his masters in engineering from Prude

through venture philanthropy. He is also

University and has a Master of Business

serves as a venture partner at impact investor

Administration

Unitus Seed Fund. He also serves as a board

School.

2013

Indias

Best

Management

Thinkers, Thinkers 50

in

mechanical

from

engineering

Harvard

from

Business

member of Rockefeller foundation, Infosys

Ltd, and Strand Lifesciences. He is the author

He received Indian Institute of technology

of the book which is published in Harvard

Bombays Distinguished Alumnus Award.

Business Review, which is Conquering the

He was also voted as one of Indias best

Chaos: Win in India, Win Everywhere.

management thinkers by Thinkers50. He was

voted the most influential MNC CEO for 2011

At Microsoft
Ravi Venkatesan served as Chairman of

by the Economic Times daily. He was in the

Microsoft India from 2004 to 2011. during this

government for the post of chairman in PSBs.

news recently when he was shortlisted by the

- By Shubhra Sasmit

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With the prevalence of home offices,
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