FinXpress

Company in Focus:

Procter & Gamble Co.

2

StartUp in focus:

What’s on India

3

Markets this Week 4

News of the Week 5

CAN YOU SOLVE IT? 7

AUGUST 7, 2011

Institute Of Management Technology

Ghaziabad

Sources of Data:

HDFCsecurities

Economic Times

The Hindu

Rediff Money

MoneyControl.com

Financial Express

Inside this issue:

Procter & Gamble Co. is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio that manufactures a wide range of consumer goods. It is 5th in Fortune's Most Admired Companies 2011 list. P&G is credited with many business innovations including brand management and the soap opera. CEO Bob McDonald said in 2010 that he wants P&G to grow sales in China and India to reach 1 billion more customers by 2014.

Products

Starting with soaps and candles, the company has moved to numerous other brands by now, ranging from toothpaste, detergent, toilet paper, hair care products to food items. In January 2005 P&G announced an acquisition of Gillette, forming the largest consumer goods company and placing Unilever into second place adding brands such as Gillette razors, Duracell, Braun, and Oral-B to their stable.

Markets and competition

P&G has a well-established market presence in developed countries such as the United States and Western Europe and is looking to its presence in emerging markets. It has created products designed specifically to target developing nations. By 2010, 23 of P&G's brands have more than a billion dollars in net annual sales and another 18 have sales between $ 500 million and $ 1 billion.

Procter & Gamble provides the broadest and biggest portfolio of products in the household and personal care industry with 24 billion-dollar brands. P&G generates approximately one and half times the revenue than its closest competitor, Unilever (UL), and possesses a higher operating margin (20.30%) than any of its competitors as well. The company invests about $ 2 billion a year in R&D, nearly twice that of Unilever, and equal to the combined total of its other major competitors — Avon, Colgate-Palmolive Company (CL), L'Oreal and Reckitt Benckiser.

Year 2010

On the financial front Procter & Gamble Co. posted a record earnings of $12.736 billion in the year 2010. Procter & Gamble Co has assets of $128.127 billion and, with operations in around 80 countries worldwide. With $79 billion in sales across the world in fiscal 2010 and 24 brands with $1 billion of sales each, P&G is a global giant for household and personal goods. P&G divides its business into three Global Business Units (GBUs) that develop and produce products. Its Corporate group which handles the operation and administration of the company as follows:

Beauty (34.0% of 2010 sales, 38% of 2010 net income) Health and Well-Being (18.3% of 2010 sales, 20% of 2010 net income) Household Care (48.4% of 2010 sales, 50% of 2010 net income)

Protection against RECESSION

The company's broad offerings, combined with the necessity of household items, provide a degree of insulation against recession. In a recession consumers often turn to cheaper private label or store brands instead of "brand name" products from P&G. To combat private label encroachment, P&G offers at least two product forms in many product categories. For example, the company has seen increases sales in Luvs from Pampers diapers and an increase in Gain detergent sales from Tide. In addition, P&G offers "Basic" versions of its Charmin toilet paper and Bounty paper towels.

Page 2 FinXpress

Company in Focus : Procter & Gamble Co.

The Origin

There was a point of time when the Indian audience would eagerly await the telecast of Chitrahaar on Doordarshan every Wednesday at 8:00 P.M. Viewing television in those days was free of hassles. Cut to the year 2010 where we have over 400 channels on television with plenty of soaps, shows and movies on every channel and yet, there is nothing worth watching. The enormous number of choices has become a bane rather than a boon for the Indian viewers.

The dilemma that the viewers face is immense. This dilemma became the focal point of one the most happening start-ups of India, ‘What’s on India’. Remarked as one of the best start-ups of India in 2009, What’s on India took birth in the year 2005 under the aegis of Mr. Atul Phadnis, CEO with the slogan, “What to watch when you don’t know what to watch!”.

How it works?

Modelled on TV guidance channels worldwide, What's On India launched India's first consumer TV guidance channel in December 2009. The proposition is that viewers can check what's showing on TV at any time and get recommendations on the best shows, films, sports, documentaries and events to watch. The WOI team started working by developing an Electronic Program Guide (EPG) for TV. It is similar to the guide DTH users get in order to browse the channels and their content and select one of their choice. It took the company two years to build this system. Having accomplished this, Phadnis wanted to launch a TV guidance channel that could further simplify the decision-making process by offering previews and recommendations.

The channel was launched in December 2009 and has already reached 20 million homes across the country. By the end of the current fiscal year, the company aims to double this reach to 40 million homes.

The channel has three parts to it. The bottom one-third of the screen plays a constant scroll showing a programme guide aimed mainly at viewers who are still on the analogue system or the regular cable and therefore, are not able to get the EPG that comes with set-top boxes. The rest of the screen is divided into two parts: on the right is what Phadnis likes to call 'the breaking news' or the best shows coming up next across channels. Viewers can also set SMS reminders of the shows they like.

How it makes money?

The biggest and the central part of the screen is the 'entertainment' area playing the What's On Specials. This is where the channel makes its money. This part carries promos and sneak previews from various current and upcoming shows and the TV channels have to pay for their promos to run here.

Catch-up-TV, showing recaps of popular shows is another offering on the What's On India channel. Phadnis plans to monetize this original programming by selling advertising space on these shows like any other TV channel. What's On India also has a website www.whatsonindia.com and some plans for mobile.

Even though there are multiple EPGs in international countries with television networks themselves having their own guiding channels, Phadnis believes that in India, since What's On India is the first and only TV guidance channel at the moment, his first-mover advantage will take him a long way and he hopes that his channel will become the default first channel that viewers go to after switching on their TV sets.

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StartUp in Focus : What’s on India

Page 4 FinXpress

Markets this week

After beginning the week on a positive note and testing the 18, 314/5516 levels, markets slide lower during the rest of the week. The NSE Nifty ended at 5, 211, down 120 points or 2.2% over the previous close. It earlier touched a day’s low of 5, 116 and a day’s high of 5,229. The BSE Sensex finally closed at 17, 305, down 387 points or 2.2% over the previous close. It had earlier touched a day’s low of 16,990 and a day’s high of 17,58. It opened at 17, 350.

ONGC gained the most this week around 1.08%, followed by Hindalco Inds gained 0.77%. An unfavourable week for Reliance Infrastructure, losing 7.43%, followed by Reliance Communications which lost 7.16% this week.

Debt crisis and its impact

In the new world order, the US is giving chills to the rest of the world. As weak economic data kept coming out of the US and Europe’s sovereign debt crisis looked set to worsen, Dow and the S&P tumbled more than 4 per cent on Thursday and the Nasdaq lost five per cent on fears that the US could be staring at another recession. The fall in the US markets this week is the worst since December 2008. The US indices are down about 10 per cent in the past 10 days. The panic situation gripped Indian equities too, which saw the benchmark Sensex fall by 387 points to 17, 305.87 points on Friday.

Some highlights of the week

Rupee was near its weakest level in over five weeks on Friday as domestic equities stayed deep in the red, tailing the global shares rout, fuelling concerns of outflows. Rupee ended at 44.73/74 per dollar against the previous close of 44.55/56 per dollar.

Lok Sabha on Friday approved additional gross expenditure of ` 34, 724 crore for 2011-12 with a government assurance that the net cash outgo of ` 9, 016 crore would not push fiscal deficit beyond budget estimates.

In the previous week, annual food and fuel inflation stood at 7.33 per cent and 12.12 per cent, respectively. The Oil Marketing Companies (OMCs) like Bharat Petroleum and Hindustan Petroleum will be forced to absorb an under-recovery (revenue loss) of more than ` 14, 000 crore in the first quarter despite government's assistance. Their net profit would be negative this quarter.

India is set to fund bailouts in financially-stricken Europe, marking a dramatic role reversal from 20 years ago when it went knocking on the doors of the International Monetary Fund (IMF) to avert a balance of payments crisis. The government on Tuesday sought parliamentary approval to provide over ` 9, 003 crore (over $2 billion) in loans to the multilateral agency's New Arrangements to Borrow (NAB), a fund whose corpus was raised to over $ 500 billion in March when the debt crisis in Europe showed no signs of abating.

As reported by the district authorities in the monthly progress reports for period ending June 30, 2011, an amount of ` 2, 627.98 crore was lying unspent with the district authorities. Uttar Pradesh was at the top of the list with ` 408.88 crore being unutilized, followed by Bihar ( ` 261.52 crore), Maharashtra ( ` 217.34 crore), West Bengal ( ` 185.22 crore), Andhra Pradesh ( ` 177.19 crore) and Karnataka ( ` 144.36 crore).

Obama may have to run in a

recession

Barack Obama may soon have to deal with the most daunting problem facing any president seeking re-election - A recession. S l o w g r o w t h , h i g h unemployment and tumbling global markets have revived fears that another recession is upon the US -- the second in three years. It will be very difficult for Obama to get anything very big through a Republican-run House—the recent problems he had in getting an increase to the $14.3 trillion debt ceiling – is an evidence. In the weeks ahead, Obama will push a jobs program; an extension of the payroll tax cut; extension of unemployment benefits; approval of free trade deals; patent reform; and infrastructure programs.

India’s Telecom Commission

unveils raft of policy

decisions

The Telecom Commission has reportedly reached a final decision on a number of major policy changes - including the introduction of a uniform fee for

Page 5 FinXpress

News of the Week

revenue sharing for mobile network operators, a limit of the maximum amount of frequencies a cellco can hold and the delinking of spectrum from licenses in the future. The Commission rejected the proposals set forth by the Telecoms Regulatory Authority of India (TRAI) for a reduction in the percentage of revenue that operators are required to share with the state - from 8.5% to 6%. Stricter rollout norms mandating mobile phone companies to offer services in all regions that have more than 500 residents were also approved; a move that it has been suggested could significantly increase capital and operating expenditures for operators. However, there was no discussion on the pricing of spectrum.

Food inflation crosses 8 pc

mark The Indian Meteorological Department of India (IMD) had forecasted that rainfall for India as a whole during August-September is likely to be 90% of Long Period Average. This could affect farm output in some parts.

The primary articles recorded inflation of 10.99 per cent for the week ended July 23, up from 10.49 per cent in the previous week. Inflation of non-food articles, which include fibres, oil seeds and minerals, however, fell to 15.60 per cent from 16.05 per cent. The Reserve Bank has already hiked interest rates 11 times since March, 2010, to tame

demand and curb inflation and more hikes are expected in the coming weeks.

Nissan to export 20 per

cent of mini vans made in

India

As part of its strategy to make India a global hub for a range of automobiles, Japan’s Nissan Motor will export 20 per cent of its proposed mini-vans to be produced by its joint venture with Ashok Leyland. The 51:49 joint venture named Ashok Leyland Nissan Vehicles, does not have dedicated factory of their own yet, these will be produced at the unit of another joint venture Renault-Nissan Automotive. Palmer, who is also chairman of the Ashok Leyland Nissan Vehicles, said this venture is for producing light commercial vehicles for goods and passenger use. They have two more ventures here - one for engines & gear boxes and another for research. "Dost" is the name given to the 1.25-tonne goods carrier that will be sold by Ashok Leyland through its own network.

Banking services paralyzed Banking services across the country were affected as nearly 10 lakh bank employees and officers owing allegiance to nine trade unions did not report to work on 5th August 2011. The protest was against the UPA

Government's ‘reforms' policies in the banking sector - to keep merger of banks outside the purview of the Competition Act; to allow unrestricted voting rights to shareholders in private banks by removing the present 10 per cent ceiling; and to increase voting rights from 1 per cent to 10 per cent in public sector banks. They are also opposed to the attempts to outsource the regular and normal banking jobs instead of recruiting permanent employees through Banking Service Recruitment Board.

Cummins India declares 2:5

bonus issue

Cummins India, sitting on a cash pile of ` 800 crores, has declared a 2:5 bonus issue ie., two shares for every five held, even as it is paying out an all time high dividend of 750%. the long term growth prospects in India are good and hence Cummins India will be a $2.5 billion entity by 2016 Targeting this growth, Cummins India will start market ing recondit ioned components, which will have been reconditioned in a plant at

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News of the Week continued...

its mega site in Phaltan. Among the new plants coming up at Phaltan is one to re-build and recondition engines, where components will also be reconditioned. Reconditioned components will be sold at a 30% discount to the price of new ones.

Audi to start used car

business in India by year

end

G e r m a n l u x u r y c a r maker Audi on Wednesday said it will start operations for its used car business in India by the end of this year, expecting it to account for up to 20 per cent of its new car sales in future. The company's expectation in the long term for the used car business is to have about 10-20 per cent of the new cars sales in India and expects the Indian luxury car market to cross 50,000 units annually in the next five years from about 15,000 units in 2010. At present, the company sells sedans A4, A8, A7 sportback, sports utility vehicles Q5 and Q7 along with sports cars R8 and R8 Spyder. The company also launched the new version of its sedan A6 priced between ` 37.7 lakh and ` 47 lakh (ex-showroom Delhi), which will be available in four variants.

No Iran oil next month

India is Iran's second largest client after China and absorbs about 20 per cent of its crude exports, but Indian firms have been struggling for more than six months to pay Tehran due to international banking sanctions imposed on the Islamic republic over its nuclear programme. The annual trade between India and Iran stands at an estimated $12 billion, with India purchasing some 400,000 barrels of Iranian crude per day. Central Bank of Iran chief - Mahmoud Bahmani has estimated that India's overdue crude payments is around $5 billion, according to the official news agency. As a result, companies like Essar oil, MRPL, Indian Oil, HPCL, BPCL expect that the regular supplies from Iran would be affected unless this $5 billion dispute was resolved.

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First 3 right entries will be given exciting prizes courtesy Pizza Hut, as well as get their name featured in the next issue of FinXpress. So hit the quiz fast & get yourself visible among 1000 odd in the campus.

Set A Match the Banks and their brand ambassador

1) Dena Bank Hema Malini

2) Bank of Baroda Shahrukh Khan

3) Canara Bank Juhi Chawla

4) Bank of Rajasthan Rahul Dravid

5) ICICI Bank Mona Singh

6) UTI Bank Venkatesh Prasad

Set B Question of the week :

The first mechanical form of this machine was developed & built by Luther George Simijian & installed in 1939 in New York, but removed after 6 months due to lack of customer acceptance. De La Rue developed the first electronic form of this machine, which was installed first by the Barclays Bank. Which machine are we talking about?

CAN YOU SOLVE IT ?

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LAST WEEK’S FIRST 3 RIGHT ENTRIES WERE FROM

1. Naman Gupta 2. Parag Jain 3. Swati Goyal

OTHER RIGHT ENTRIES

1. Abhushan Sarraf

LAST WEEK’S ANSWERS

Set A -

1) Improving the quality of life

2) Growth of life

3) Touching lives

4) Brightening lives powering people

5) Better ideas better life

Set B - Nokia ; Manufacturing Paper

Set C - Isaac Newton