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February 03, 2013

Company In Focus

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Company in

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Term of t

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Mark

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News of t

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Cover Sto

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Fun Corner

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Term of the Week: Leveraged Buyout

INSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD

Cover Story : The Best Investments for 2013

EDITORIAL

Dear Readers,

Greetings from FinNiche!

It has been relaxed first week at college for most of us. With few subjects lined up for this semester, Team FinNiche wishes all the very best to the first year students. We, at FinNiche are happy to present this week’s FinXpress to you.

In this edition of FinXpress, we have ICICI Bank as the ‘Company in Focus’. In the ‘Term of the week’ we have leveraged buyout. Moving to the ‘Markets This Week’, markets ended the week marginally lower. The special page features a review on the “The best investments for 2013”. We sincerely hope that the readers will find the content engaging. We would appreciate feedback and suggestions for improvement. We look forward to keeping you updated and adding to your knowledge base. Till then, “Enjoy Reading”!

Yours Sincerely,

The Editorial Board

FinXpress

February 03, 2013 PAGE 1 http://www.imtgfinxpress.co.cc

COMPANY IN FOCUS

ICICI Bank Limited was established in 1994 is an Indian diversified financial services company headquartered in Mumbai. It was started by the Industrial Credit and Investment Corporation of India, an Indian financial institution, as a wholly owned subsidiary. The parent company was later merged into ICICI Bank. It is the second largest bank in India by assets and third largest by market capitalization. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank has a network of 2,883 branches and 10021 ATM's in India, and has a presence in 19 countries, including India.

ICICI Bank is one of the Big Four banks of India, along with State Bank of India, Punjab National Bank and Canara Bank.

ICICI bank was responsible for creation of market infrastructure in India such as NSE, Crisil, NCDEX, CIBIL etc.

ICICI Subsidiaries

Domestic

ICICI Lombard

ICICI Prudential Life Insurance Company Limited

ICICI Securities Limited

ICICI Prudential Asset Management Company Limited

ICICI Venture

ICICI Home Finance

ICICI direct.com

ICICI fund

International

ICICI Bank UK PLC

ICICI Bank Canada

ICICI Bank Eurasia LLC

ICICI Bank has a total assets of Rs. 4,736.47 billion (US$ 93 billion) at March 31, 2012 and profit after tax Rs. 64.65 billion (US$ 1,271 million) for the year ended March 31, 2012. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

February 03, 2013 PAGE 2 http://www.imtgfinxpress.co.cc

Stock Details

Current Market Rate is Rs 1171 at BSE

As shown, the stock price of ICICI has seen a significant increase in the last 1 year. ICICI bank’s Q3 profit has seen a rise upto 20% to Rs 2077 Cr. Some of the major initiatives taken by ICICI in the last year are:

ICICI Bank rolls out 25 electronic branches and launches many next generation banking solutions

ICICI Bank was the first private sector bank in India to offer PPF account facility at all bank branches.

Among the first banks to introduce account portability and also the only bank to offer portability on two additional channels – Internet Banking and Phone Banking.

CSR Initiatives

Read to Lead is an initiative of ICICI Bank to facilitate access to elementary education for underprivileged children in the age group of 3–14 years including girls and tribal children from the remote rural areas.

ICICI Bank has supported the establishment of 63 libraries that will reach out to approximately 7,200 children in the rural areas of Jagdalpur block of Bastar district in Chhattisgarh.

ICICI Bank’s Green initiative is to make healthy environment in the organization. The Green products and services provided by it are

Instabanking

It is the platform that brings together all alternate channels under one umbrella and gives customers the option of banking through Internet banking, i-Mobile banking, IVR Banking.

Vehicle Finance

As an initiative towards more environment friendly way of life, Auto loans offer 50% waiver on processing fee on car models which uses alternate mode of energy.

February 03, 2013 PAGE 3 http://www.imtgfinxpress.co.cc

TERM OF THE WEEK : Leveraged Buyout

A leveraged buyout (LBO) is an acquisition where the purchase price is financed through a combination of equity and debt and in which the cash flows or assets of the target are used to secure and repay the debt. As the debt usually has a lower cost of capital than the equity, the returns on the equity increase with increasing debt. The debt thus effectively serves as a lever to increase returns which explains the origin of the term LBO.

LBOs are a very common occurrence in today's M&A environment. The term LBO is usually employed when a financial sponsor acquires a company. However, many corporate transactions are part-funded by bank debt, thus effectively also representing an LBO. LBOs can have many different forms such as Management Buy-out (MBO), Management Buy-in (MBI), secondary buyout and tertiary buyout among others and can occur in growth situations, restructuring situations and insolvencies just like in companies with stable performance. LBOs mostly occur in private companies, but can also be employed with public companies.

As financial sponsors increase their returns by employing a very high leverage (i.e., a high ratio of debt to equity), they have an incentive to employ as much debt as possible to finance an acquisition. This has in many cases led to situations, in which companies were "overlevered", meaning that they did not generate sufficient cash flows to service their debt, which in turn led to insolvency or to debt-to-equity swaps in which the equity owners lose control over the business and the debt providers assume the equity.

February 03, 2013 PAGE 4 http://www.imtgfinxpress.co.cc

MARKET THIS WEEK

SENSEX

SENSEX lost 1.60% from last week and ended at 19781.19 this week.

Simple Moving Averages

NIFTY

The Nifty lost 1.24% from last week and ended at 5998.90 this week.

Simple Moving Averages

30 Days 50 Days 150 Days 200 Days

19,766.94 19,542.32 18,503.97 18,042.38

30 Days 50 Days 150 Days 200 Days

5,994.11 5,933.45 5,615.63 5,474.12

February 3, 2013 PAGE 5 http://www.imtgfinxpress.co.cc

Overview

Steep losses in Tata Motors, Bharti Airtel and ICICI Bank last week dragged BSE benchmark Sensex to three

-week low of 19,781.19 and Nifty to below 6,000 as tepid earnings and RBI's draft guidelines on bank

provisioning requirements hit the sentiment. "Markets ended down on the last day of the week on weak

global cues and uninspiring results. Bharti and BHEL reported numbers which were below expectations.

Tata Motors was the biggest loser in 30-share Sensex as it lost 4.36 per cent. Bharti Airtel lost 2.62 per

cent and Bhel over 1 per cent. While Bharti posted 72 per cent decline in net profit at Rs 284 crore for

December quarter, BHEL profits declined by 17.5 per cent to Rs 1,182 crore.

ICICI Bank, HDFC Bank and SBI lost between 1-2 per cent after RBI issued revised draft policy norms for

restructured loans last week. According to RBI draft norms, banks would need to step up provisioning on

restructured loans to 5 per cent by FY'15 on the existing stock of restructured loans. Many government

banks (ex-SBI) to be more impacted.Besides banks, HDFC, HUL, Infosys, and L&T mainly weighed on

broader benchmark indices while rise in RIL, ITC, Maruti Suzuki and Bajaj Auto cushioned the fall to some

extent.

Brokers said the market mood was also subdued after HSBC India Manufacturing Purchasing Managers'

Index (PMI) - a measure of factory production - stood at 53.2 in January, after hitting a six month high level

of 54.7 in December. Among sectoral indices, the BSE-Realty fell by 1.16 per cent, followed by BSE-Auto

0.98 per cent, BSE-Bankex 0.79 per cent and BSE-Metal 0.78 per cent. BSE-CD firmed up by 1.77 per cent

and BSE-HC by 0.78 per cent.

February 3, 2013 PAGE 6 http://www.imtgfinxpress.co.cc

Exchange Rates vs. INR

Currency Symbol Rates % Change

US Dollar $ 53.16 1.17%

Euro € 72.62 0.29%

Dirham AED 14.47 1.22%

Japanese Yen ¥ 0.57 3.71%

Chinese Yuan CNY 8.5 1.77%

Commodities Unit Rs. / Unit % Change

Gold 10gms. 30036 0.97 %

Silver 1 Kg. 58635 0.66%

Crude Oil 1 BBL 5189 0.09 %

RESERVE RATIOS

CRR 4.25%

SLR 23.0%

POLICY RATIOS

Bank Rate 8.75%

Repo Rate 7.75%

Reverse Repo rate 6.75%

Marginal Standing 8.75%

LENDING DEPOSIT RATE

Base Rate 9.75%-10.50%

Savings Deposit

Rate

4.00%

Term Deposit Rate 8.50%-9.00%

NEWS OF THE WEEK

Fifth round of proposed India-Australia FTA talks in April

India and Australia are expected to hold the fifth round of negotiations in April in a bid to fast track talks for the proposed Free Trade Agreement (FTA). There has been a discussion on exchange on goods offer and now exchange in services and investments would take place. The FTA negotiations were started in 2011.During 2011-12, the bilateral trade stood at about USD 18 billion and the two countries had set a target to increase it to USD 40 billion by 2016.

Sharma and Emerson reiterated that a comprehensive, equitable agreement would broaden the base of merchandise trade, remove non-tariff barriers that impede trade in services, facilitate and encourage investments. Besides, the ministers from the two parties reaffirmed their commitment to finding ways to break through the current impasse in the Doha Round of World Trade Organization negotiations.

Stating the critical role played by industry in driving trade and investment between the two countries, both the ministers commended the important work under way in the India-Australia CEOs Forum. The third meeting of the Forum will be held in Australia in March 2013.

Cap on export of branded edible oil removed

The government decided to remove restriction on export of branded edible oil in small packs in an attempt to boost shipments of processed agro-products. The Cabinet Committee on Economic Affairs (CCEA) also decided to fix a minimum export price (MEP) of USD 1,500 per tonne to ensure that the low priced edible oils are not allowed to be exported. The Centre had earlier put a quantitative ceiling of 20,000 tonnes on export of branded edible oil in small consumer packs of up to five kg. Besides, the CCEA has also allowed export of coconut oil from all EDI (electronic data interchange) ports and through Land Customs Stations instead from Kochi port alone. Further, the government permitted exports of edible oil from Domestic Tariff Area to Special Economic Zones to be consumed by SEZ units for manufacture of processed food products.

The Cabinet has also suggested setting up of an inter-ministerial committee under the chairmanship of the Commerce Secretary to review MEP keeping in view the global prices. The country exports small quantities of groundnut, sunflower and rapeseed oils to cater to expatriate demand.

FDI in services sector dips 14% in Apr-Nov 2012-13

Foreign direct investment (FDI) inflows into the services sector declined by about 14 per cent to USD 3.63 billion during the April-November period this fiscal. The financial and non-financial services sector had attracted FDI worth USD 4.22 billion during the same period last year, according to the Industry Ministry data.

The other sectors which have received FDI during April- November, 2012-13 include hotel and tourism (USD 3.13 billion), metallurgy (USD 1.26 billion), construction (USD 1.01 million) and automobile (USD 760 million). India received maximum FDI from Mauritius (USD 7.2 billion), Japan (USD 1.56 billion), Singapore (USD 1.5 billion) the Netherlands (USD 1.09 billion) and the UK (USD 615 million), the Department of Industrial Policy & Promotion (DIPP) data showed.

The government is making sustained efforts, including involving stakeholders in policy formation and to make the investment regime more attractive and investor friendly. It has already allowed FDI in multi-brand retail sector besides hiking the cap to 100 per cent in the single brand retailing.

Foreign investments are considered crucial for India, which needs around USD 1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth. Decline in foreign investments could affect the country's balance of payments (BoP) situation and also impact the rupee.

February 03, 2013 PAGE 7 http://www.imtgfinxpress.co.cc

Government clears proposal to sell 10% stake in Oil India

The government has cleared a proposal to sell 10% stake in state-run Oil India, which is likely to help mop up around 3,000 crore. The proposal has been cleared by the empowered group of ministers (EGoM). Disinvestment will take place on February 1 through offer for sale (OFS) route. According to merchant banking sources, EGoM, headed by finance minister P Chidambaram, has fixed a floor price of about 500. The government will offer a discount to the current market price. It had offered a discount of 42% discount in the case of Hindustan Copper and 7.6% for mining firm NMDC. At Oil India's current share price, the stake sale will fetch the government around 3,160 crore. The company was listed in 2009 and the government had then raised around 2,247.06 from the initial public offer (IPO). The government's stake in the company will fall from 78.43% to 68.43% after the disinvestment. After Oil India's OFS, the government hopes to go ahead with disinvestment in blue-chip firms such as NTPC, Nalco, MMTC and Neyveli Lignite. The government will also launch its PSU exchange-traded-fund (ETF) in the next fiscal, besides continuing to push companies to opt for share buybacks if they do not ntend to go to the market.

State Bank of India cuts base rate by 5 basis points

Country's largest lender State Bank of India (SBI) cut lending rate by 0.05 per cent; a day after the Reserve Bank cut its key policy rates. After this marginal reduction, SBI's base rate, or the minimum rate of lending, will come down to 9.70 per cent from 9.75 per cent effective February 4. The bank has not cut deposit rates as the ALCO felt its offering is among the lowest in the market at present. The bank will earn around Rs 225 crore by deploying the additional Rs 2,780 crore funds which get released due to the 0.25 per cent CRR cut. The Reserve Bank cut its short-term lending rate by 0.25 per cent and also reduced the CRR by a similar amount to ease the strained liquidity conditions.

Spectrum auction: COAI seeks 50% reduction in 1800 MHz base price for 4 circles

GSM industry body COAI today sought 50 per cent reduction in the reserve price of 1800 MHz spectrum band in Delhi, Mumbai, Rajasthan and Karnataka circles for the upcoming auction. It also requested reduction in the base price for all the 21 circles which have the unsold spectrum. COAI termed the government decision to reduce the reserve price of 1800 MHz spectrum by 30 per cent for the upcoming auction for the circles of Delhi, Mumbai, Rajasthan and Karnataka, as opposed to 50 per cent reduction in case of 800MHz, as "both arbitrary and discriminatory", saying that there is no basis for this differential treatment. COAI said there should be parity between 800 MHz and 900 MHz pricing for reserve price by reducing the same for 900 MHz to equal that of 800 MHz spectrum. The government will sell 800 MHz and 900 MHz spectrum after the GSM auction. About 70 per cent of the radio waves went unsold in the November auction that raised just Rs 9,410 crore, less than 25 per cent of the amount the government was targeting to raise from spectrum sale this fiscal.

Sunil Bharti Mittal takes over as Executive Chairman of Airtel

In a major restructuring of the top level management, Bharti Airtel, India's largest private mobile operator, said that Sunil Bharti Mittal has taken over as the Executive Chairman of the company. In a communiqué to the BSE, Airtel said that the company has made the changes in the board of director with effect from February 1, 2013.

The filing added that Sunil Bharti Mittal has been appointed the Executive Chairman, Manoj Kohli as the Managing Director and Gopal Vittal as an Additional Director and Joint Managing Director of Bharti Airtel. The management rejig comes at a time when the company is looking at improving profitability while increasing both 3G and 4G subscriber base.

February 03, 2013 PAGE 8 http://www.imtgfinxpress.co.cc

COVER STORY : The Best Investments for 2013—Where to

Commit Your Money

It can be difficult to evaluate the current economic standing in the United States, as sensationalist reporting often creates a distorted view of the nation's finances. Despite this, it appears as though the U.S. economy is finally embarking on an upward curve, with property prices soaring by 7.4% and unemployment remaining at 7.8% throughout December 2012.

The signing of the fiscal cliff deal seems to have played a pivotal role in reinforcing the nation's tentative growth, which was reflected by a surge in investor confidence at the turn of the year. In total, investors in U.S.-based funds committed $7.53 billion into stock mutual funds, and this represented the highest volume of capital since 2001. All things considered, the fiscal portents for 2013 appear to be far brighter than they were just six months ago.

Investing in 2013: Where to Commit Your Capital

While the U.S. is experiencing a sustained growth period, however, the global economy remains mired in instability and uncertainty. Take the ongoing fiscal crisis in the eurozone, for example, which despite showing signs of stabilizing remains a viable threat to long-term economic prosperity. This volatility provides an interesting challenge to investors in 2013, who must navigate both the economic tumult and financial market intricacies if their portfolios are to deliver returns.

The first thing to remember is that this uncertainty can be positive for some investors, especially those looking to trade in equities and shares. As a basic principle, macroeconomic instability is known to trigger diminishing stock prices, which subsequently offer tremendous value as long-term investment vehicles. As long as the eurozone crisis continues to rage, investors with a long-term outlook can purchase plummeting, blue chip shares that will regain their value while the global economy recovers throughout 2013 and beyond.

Another key investment trend in 2013 involves the substantial growth of emerging Asian economies presenting new and exciting opportunities for profitability. Nations such as China and Japan provide a relevant case in point, as, despite mixed economic portents, their markets have benefited from record low valuations. In addition, both nations boast high rates of productivity and burgeoning stability, which again make them ideal for investors who are seeking long-term gains.

February 03, 2013 PAGE 9 http://www.imtgfinxpress.co.cc

Investing in Precious Metal and Property: The Importance of Tangible Assets

Another investment option compatible with economic turbulence is gold, as its inherent value provides security during times of austerity. It is therefore expected to enjoy a prosperous 2013, on the back of a 12-year upward price trend that has seen its value soar from $250 to $1,700 per troy ounce. While analysts are predicting that the value of gold will peak during the next 12 months and then begin to fall in line with an improving global economy, this market currently presents a sound and profitable investment option.

While silver is still referred to as the poor man's gold within investment circles, there is a definite sense that this is set to change in 2013. Although critics often deride a material that has been used primarily as an industrial metal during the last decade, it is hard to ignore the fact that it has experienced a 600% price rise since 2003, while also beginning to earn a greater reputation as a precious metal and source of wealth. With some forecasts suggesting that the price per troy ounce could soar to $60 by the end of 2014, the next 12 months provide an ideal opportunity to claim a faction of this thriving market.

In terms of tangible assets, property may also provide a profitable investment opportunity in 2013. Housing markets throughout the world made a sustained recovery during the last six months of 2012, with the U.S. in particular benefiting from a 7.4% increase in property prices within this period. With this growth predicted to continue for the duration of 2013, those who are interested in investing in property may need to act quickly before they are priced out of the market and activity begins to dwindle.

The Bottom Line

This diversity of investment options and their potential reflects an improving economy, which has continued to build momentum during the last three financial quarters. With emerging economies continuing to develop alongside their more established contemporaries, there are now a wider range of markets and financial instruments that can deliver sizable, long-term returns. The key for individuals is to determine which suits them best, in terms of their disposable income levels, strategy and wider investment philosophy.

February 03, 2013 PAGE 10 http://www.imtgfinxpress.co.cc

CAN YOU SOLVE IT?

**Rush in your entries to : finniche.imt@gmail.com

The right entries will get their name featured in the next issue of FinXpress. So hit the quiz fast & get yourself visible among 1000 odd in the campus.

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LAST WEEK’S ANSWERS:

Jeffrey R. Immelt - General Electric

Jamie Dimon - J.P. Morgan Chase

Lloyd C. Blankfein - Goldman Sachs

A.W. Clausen - Bank of America

Barry Salzberg - Deloitte

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CARTOONS:

FinQuiz 1. In the world of trade and commerce what is special about the commissioning of Monte dei Paschi si

Siena in Italy in 1742?

2. Name the term used for depreciating a company's intangible assets?

3. This term is derived from the Greek word 'Oikanomia' means "House Management". What is it?

4. Who founded the famous Wall Street Journal?

5. Name the first private sector corporate launched the gold fund in India?

6. What term became popular after the newspaper report of Watergate Scandal in the year 1973?

February 03, 2013 PAGE 11 http://www.imtgfinxpress.co.cc