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Chaanakya Tracking the economy…. A Wealth Incorporation Publication October 01, 2012 Vol. 6 Issue 13 Christ University Institute of Management
Chaanakya Tracking the economy….
A Wealth Incorporation
Publication
October 01, 2012
Vol. 6
Issue 13
Christ University
Institute of Management
2
Index
News
National 3
International 5
Rates and Graphs 7
Contemporary Articles
Macroeconomic Signals Still Unfavourable 9
QE-3 and its impact 10
Debate LPG Subsidy– A Big Dilemma 11
Stock Watch
Cipla Limited 12
Commodity Market
Brent Crude Oil 15
Scams
Irrigation Scam 17
Buzz Word 18
3
National News
Sanjeet Kumar [II MBA J]
Must act or face 5% growth in 12th Plan period, warns govt
Day after the government announced big bang FDI reforms, the government on 16th
September 2012 cautioned that even the truncated target of average annual economic growth of 8.2 per cent for five years starting from the current fiscal could not be taken for granted
and required concrete policy measures.
The draft document for the 12th Plan (2012-13 to 2016-17), adopted at the full Planning
Commission meeting chaired by Prime Minister Manmohan Singh, set an average growth
target of 8.2 per cent, way below the earlier target of nine per cent set in the approach paper.
If adequate policy steps are not taken, the average annual growth in the 12th Plan period may
slip below 8.2 per cent. In such a scenario of insufficient action, the average annual growth
might fall to 6-6.5 per cent, the Plan document said.
Wal-Mart FDI to go to Easy Day if it extends Bharti JV
The world‟s largest retail chain, the $446-billion Wal-Mart, is likely to be the first
international player to take off in India with its supermarket format. The Bentonville-based
US giant is, in fact, ready with a network of 195 stores across India if it decides to extend its
back-end and cash-and-carry partnership with Bharti Enterprises to front-end retail.
Bharti‟s retail chain, Easy Day, operates 195 stores in various formats in the country.
Wal-Mart entered a joint venture with Bharti in 2006 to provide back-end support to the Indian group‟s retail stores and also to set up cash-and carry or wholesale outlets.
CBDT scrutinising firms enjoying tax exemptions
Companies availing tax exemptions are being scanned by the income tax department. The
Central Board of Direct Taxes has started a closer scrutiny of companies paying less
corporate tax due to various exemptions. The finance ministry says it has found some of these companies are evading taxes by shifting profits of a non-eligible unit to one in the exempted
category.
Lending rate to pinch less
The Reserve Bank of India did not take any big step on inflation or growth in its monetary
policy review, but the message it sent out was enough for bankers to signal an imminent cut in lending rates. Though the 25basis point cut in the cash reserve ratio or CRR , which will
infuse around `17,000 crore into the system, is not going to do wonders for either liquidity or
bank credit growth, experts say the central bank gave enough hints of policy easing in October‟s monetary policy review. In any case, a CRR cut is more potent than a cut in policy
rates, they say.
The CRR cut comes into effect from the fortnight beginning September 22. The CRR will
come down to 4.5 per cent, while the repo rate at which the central bank lends to the banks
would remain unchanged at 8%.
4
S&P further cuts India growth forecast
Global ratings agency Standard and Poor‟s (S&P) on 24th September 2012 cut projections for
India‟s gross domestic product (GDP) growth to 5.5 per cent for 2012-13 from its earlier
estimate of 6.5 per cent.
And, it said, this could even slip to 4.3 per cent, despite the flood of reform policy
announcements in the past couple of weeks. The rating agency has already put India on its radar for a possible cut in the sovereign rating to junk grade.
Tech Mahindra buys 51% stake in Comviva
Tech Mahindra, on 17th September 2012 announced the acquisition of 51 per cent stake in
mobile value-added services (VAS) provider Comviva Technologies, a Bharti Group
company, for `260 crore. The acquisition is expected to shore Tech Mahindra‟s top line.
With the new brand identity, Mahindra Comviva, the mobility business of Tech Mahindra
and Mahindra Satyam combined is expected to clock revenues of `1,000 crore by March
2013.
Reforms may save India from sovereign downgrade
The recent reforms announced by the government are perceived as steps in the right direction
by rating agencies, and it might save India from a sovereign downgrade.
Rating agency Standard & Poors (S&P), which in June had threatened to downgrade India‟s
sovereign ratings, on 17th September 2012 welcomed big-ticket reform measures by the government, saying the steps would serve as a medium-to long term positive for the
macroeconomic conditions.
Similarly, rating agency Moody‟s said on Monday the Indian government‟s decisions like raising diesel prices, sale of part-stake in public sector companies and liberalisation of foreign
direct investment in the retail sector would have minimal effect on the country‟s credit
profile. Fitch Ratings said the reforms announced last week at first glance appear credit-positive.
Trade deficit likely to fall 20 percent in FY13
This financial year, India‟s trade deficit is likely to contract to about a fifth of the deficit in
2011-12, owing to a fall in gold imports.
Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO), said, “Much
of the gold was imported for creating assets in the last financial year. The stock market and
the real estate sector were not doing well. Now, with the markets expected to perform better, gold imports are likely to decline at least 50 per cent by the end of the year.” In 2011-12, 969
tonnes of gold, valued at about $54 billion, were imported. Gold imports are estimated to
decline by $25-30 billion in the current financial year.
Banks want NPA norms relaxed for housing project loans
Banks want the Reserve Bank of India (RBI) to relax the norms on asset classification in the real estate sector to facilitate credit flow. The request comes after the finance ministry had
asked banks to increase lending to residential housing projects.
5
International News
Sanjeet Kumar [II MBA J]
Money-laundering inquiry now takes aim at US banks
Federal and state authorities are investigating a handful of major American banks for failing
to monitor cash transactions in and out of their branches, a lapse that may have enabled drug dealers and terrorists to launder tainted money, according to officials who spoke on the
condition of anonymity.
These officials say they are beginning one of the most aggressive crackdowns on
money-laundering in decades, intended to send a signal to the nation‟s biggest banks that
weak compliance is unacceptable.
China GDP growth seen 7.7% in 2012
Chinas annual economic growth will reach between 7.7 per cent and 7.8 per cent this year and begin to stabilise in the second half as progrowth policies gain traction, a government
researcher said in remarks published on Saturday. Fan Jianping, chief economist at the State
Information Centre, a prominent government think tank, said Chinas economy would grow 7.6-7.8 per cent in the July-September period from a year earlier, staying flat or picking up
from the second quarter‟s 7.6 per cent.
UK inflation dips in August
British inflation ticked down in August despite a rise in oil and fuel costs, data showed on
18th September 2012. Consumer price inflation stood at 2.5 per cent last month, down from 2.6 per cent in July and in line with economists‟ forecasts. Easing price pressures for
furniture, health, household services and clothing helped bring the annual inflation rate down,
the ONS said. Apart from upward blips in March and July, inflation has been falling since reaching a high of 5.2 per cent last September.
Alibaba buys back half of Yahoo’s stake
Chinas Alibaba Group said it bought back half the stake Yahoo! owned in the company for
about $7.6 billion, moving closer to an IPO. Alibaba received $1 billion in funding from eight
international banks including Barclays Bank, Citi, Credit Suisse, Deutsche Bank and Morgan Stanley and another $1 billion from China Development Bank. The company had raised the
remaining funds through an issue of preferred shares, bank loans and the sale of a stake to
existing shareholders.
Bank of Japan joins bond buying spree to bolster economy
The Japanese central bank moved to ease monetary policy on 19th September 2012, saying it would buy larger quantities of government bonds and other assets, following the US Federal
Reserve in its show of resolve to shore up a shaky economic recovery.
The central bank, the Bank of Japan, said it would expand its asset purchase and loan
programme by 10 trillion yen, or $127 billion, to 80 trillion yen, the bank announced after a
two-day board meeting.
6
Arcelor Mittal plans to raise $650 mn by issue of securities
World's largest steel maker Arcelor Mittal plans to raise $650 million through issue of
securities for meeting general financing needs and retiring debt. "The securities have no fixed
maturity date and are deeply subordinated. They bear interest at 8.75 per cent per annum, subject to the right of the company to defer interest payments," Arcelor Mittal said in a
statement.
Lehman to pay creditors $10.5 billion
Lehman Brothers Holdings Inc on Tuesday said it will pay about $10.5 billion to creditors starting early next month, the second leg of a plan to eventually pay out more than $65
billion. Lehman will distribute the money to affiliates and subsidiaries. Creditors have
already received about $22.5 billion under the first leg of the payout plan, unveiled in April.
The additional $10.5 billion will bring total payback to around $33 billion.
Asia-Pacific BPO biz to touch $9.5 bn by 2016: Gartner
The business process outsourcing (BPO) sector in the Asia-Pacific region will touch $9.5
billion in 2016, up from $5.9 billion in 2011, according to Gartner.
As calendar year 2012 nears completion, outsourcing in the Asia-Pacific is on pace to touch
$6.45 billion. Asia-Pacific, however, does not include Japan.
Spain 2013 budget to focus on spending cuts rather than tax hikes: Government
Spain announced a detailed timetable for economic reforms and a tough 2013 budget based
mostly on spending cuts on 27th September 2012 in what many see as an effort to pre-empt the likely conditions of an international bailout.
Government ministries saw their budgets slashed by 8.9 per cent for next year, as Prime
Minister Mariano Rajoy's battle to reduce one of the euro zone's biggest deficits was made harder by weak tax revenues in a prolonged recession.
All-out US 'fiscal cliff' could cut world growth in half: Fitch
The unprecedented belt-tightening known as the "fiscal cliff" that looms over the United
States could at the very least cut world growth in half in 2013, Fitch Ratings said on 27th September 2012.
The fiscal cliff - a double whammy of tax increases and spending cuts totaling about $600
billion - could tip the United States and possibly the world into recession, Fitch said.
UK faces greater downgrade risk
The UK faces an increased risk of a downgrade to its top credit rating after Fitch Ratings said
that government debt will peak at a higher level and later than it previously predicted. Fitch
affirmed Britain‟s AAA level and kept the nation on negative outlook, according to a statement released late on 29th September 2012 in London. The ratings company said it
doesn‟t expect to resolve the question mark hanging over the top grade until 2014.
7
Rates
Pankaj Sharma [II MBA J]
Repo Rate 8.00%
Reverse Repo 7.00%
Call rate 6.99%-8.10% Inflation 7.55% for August 2012
Forex Reserve $293.974 Billion as on 28th September, 2012
91day T-Bill 8.1439% IIP 0.1% for July 2012
8.33 GS 2026 8.2439%
Graphs
Pankaj Sharma [II MBA J]
52
52.5
53
53.5
54
54.5
55
16-Sep 19-Sep 22-Sep 25-Sep 28-Sep
Rs/$
Rs/$
30500
30900
31300
31700
32100
32500
16-Sep 19-Sep 22-Sep 25-Sep 28-Sep
Gold(per 10 gram)
Gold(per 10 gram)
8
107
110
113
116
119
16-Sep 19-Sep 22-Sep 25-Sep 28-Sep
Oil(per bbl)
Oil(per bbl)
1800000
4800000
7800000
10800000
13800000
16800000
5000
5200
5400
5600
5800
6000
16-Sep 19-Sep 22-Sep 25-Sep 28-Sep
future rates open interest
4800
5000
5200
5400
5600
5800
17,500.00
17,900.00
18,300.00
18,700.00
19,100.00
19,500.00
16-Sep 19-Sep 22-Sep 25-Sep 28-Sep
sensex nifty
9
Macroeconomic Signals Still Unfavourable
Sanjeet Kumar [II MBA J]
The government which seemed incapable of taking remedial actions came out strong and hard dusting
aside all the political logjams with some major reforms like FDI in retail, aviation and broadcasting.
But the macroeconomic data that have emerged over the past couple of weeks or so, all point to a
worsening situation. Some data and facts are shown below:
Economic growth Economic growth in April-June 2012 was 5.5 per cent, meaning that in the first half
of calendar 2012 India grew at 5.4 per cent, far below the 8.4 per cent rate of 2009-10 and
2010-11.Furthermore, the data for the first half of 2012 show no growth in manufacturing, barely two per cent in mining and 2.3 per cent in agriculture. It is a cause to worry about.
External sector More than a month back the Reserve Bank of India (RBI) informed us that India‟s
current account deficit in its balance of payments had gone to a record high of 4.2 per cent of GDP in
2011-12, a major reason behind is the substantial depreciation of the rupee over the past year.
With further quantitative easing in monetary policy in the US and Europe, some may feel that capital
inflows into India will increase sufficiently to finance our large trade and current account deficits. But
still the institutional investors are cautious as sudden change in policies and reforms can still get
chocked out because of political impediments.
Fiscal imbalance Controller General of Accounts (CGA) reported that the central government‟s fiscal deficit for the first four months of 2012-13 had already exceeded half of the Budget‟s target for the full
year. More recently despite finance ministry reassurances, tax collections for the year could fall
significantly below budget targets because of sluggish economic activity.
The real fiscal spoilsport is, of course, subsidies, especially those for diesel, LPG and kerosene, though
those on fertiliser and food grain are also large. Even though `5/ litre on diesel have been raised but
still the effect couldn‟t be seen on the fiscal front soon.
Inflation Although headline WPI inflation dipped marginally below seven per cent in July for the first
time in three years, the CPI rate of inflation remained close to 10 per cent. So the problem of low
growth coexisting with high inflation persists. And now with cut in the subsidy for diesel there would
be a 60bps rise in the WPI numbers.
Employment India does not have reliable, current data on employment. But what little information is
available shows unfavourable trends. Thus, a recent survey by Assoc ham (Associated Chambers of
Commerce and Industry of India) reported in the latest India Today, shows substantial slowdowns in
the growth of jobs in the urban, formal sector in April-June 2012 compared to the preceding quarter:
by 31 per cent in IT services, 29 per cent in hospitality, 12 per cent in banking and financial services, 19 per cent in automobile manufacture, 26 per cent in engineering, 20 per cent in infrastructure and
construction, and so on.
Political Instability: Even after PM taking positive action on reforms supporters of UPA as well as
opposition parties differ with their view and are strongly going against the decision of the government.
CPI withdrew its support from the alliance party congress. Talks of midterm polls are ripe but
implementation of reforms is skeptical.
So, every macro indicator for the economy is flashing red signal, though the government has taken
some serious steps by welcoming FDI in major sectors the effect on the major indicators in short term
is still debatable.
Source:
Sankar Acharya. (2012). Macro Signal Flashing Red. Available: http://epaper.business-standard.com/
bsepaper/svww_index1.php. Last accessed 13th Sep 2012.
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QE-3 and its Impact
Vicky Crasto [II MBA I]
The QE3 programme by the US Federal Reserve seems to be a blessing in disguise but there
are many negative factors coupled with it. The Fed has begun buying $40 million a month in
mortgaged backed securities and has promised to carry on with this buying until the employment level in the country improves substantially.
After the announcement of the QE3 the Indian rupee (INR) appreciated by about 2.5%. This
was also supported with the Indian government leashing out an array of long awaited reforms in the retail and aviation sectors. The INR outperformed currencies of other countries in Asia
by a huge margin. The Indian rupee which had hit an all time low of about 57.30 against the
dollar rose up to 54.30 and presently hovering in 52.5 to 53.5 range.
The Sensex touched 18700 level which is the highest since 26 July 2011. The 50 share Nifty
Index of the NSE soared at 5700 level.
Other markets around the globe also celebrated the recovery efforts of the US and Euro zone.
Nasdaq gained 1.3%, Hong Kong‟s Hang Seng jumped up by 2.3%, Shanghai Composite
gained 1.1% and Japan‟s “Nikkei Stock Average” increased by 1.5%.
On the other side with the Fed announcement of QE3 commodities gained. The oil prices
were driven up to $ 118 a barrel. This increase in the oil has serious impact on the Indian economy. As India is a net importer of oil, the fiscal deficit will be on pressure. The fiscal
deficit is about 6.33 percent of the GDP as against the 5.1 percent estimated in the budget.
However the increase in the diesel price may provide some relief but the inflationary
pressures and high commodity prices will be a challenge for the policy makers.
The real impact of QE3 is unclear because of the huge volatility in the crude prices due to the
extra supply of oil by the Oil bank of the world – Saudi Arabia. Analysts remained puzzled with the dip the price of oil two days after QE3.
The inflow of funds into the country from foreign investors has been positive but building investors confidence will depends on how the policy makers bridge the gap between
announcement of reforms and implementation.
Sources:
“Oil‟s mystery fall confounds QE3 critics” - http://www.ft.com/cms/s/0/a864d41e-03f0-11e2-
9322-00144feabdc0.html#axzz27UEfu1Sq
“Federal Reserve's QE3 will benefit India in the short term: Raghuram Rajan” - http://
economictimes.indiatimes.com/news/economy/policy/federal-reserves-qe3-will-benefit-india-in
-the-short-term-raghuram-rajan/articleshow/16543580.cms
A double-edged sword - http://www.business-standard.com/india/news/a-double-edged-
sword/487069
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LPG Subsidy: A Big Dilemma
Bhavesh Dhanesha and Rohit Munka [II MBA J]
Recent announcement by the corruption-stricken government to reduce subsidy on
LPG cylinder for household consumers by capping the subsidized cylinders to merely
6 per household in a year has caused major storm across the nation.
Moreover, LPG subsidy reduction is the result of system leakage on the part of the
government. Had the situations been managed well, things would have been different
today. The decision also overlooks the fact that given the overall universe of energy
subsidies in India – on LPG, diesel and kerosene – it is the urban rich and the middle
class who benefit disproportionately from the subsidy regime, which is ineffective in
targeting subsidies at the intended beneficiaries. If anything, the urban middle class
should be pushing the hardest for subsidy reforms – of which the diesel price hike and
the cap on subsidized LPG cylinders are an important component.
On the flip side, our economy is suffering from high fiscal gap; this has encouraged
the government to go deeper into the role of subsidy in this widening gap.
Government has found out that around `36,000 crores is used for LPG subsidy.
However, they also found out that many not so economically weaker sections were
taking an advantage of this subsidy and even don‟t require them. An average
economically weaker section uses around 6 LPG cylinders in a year and keeping that
in mind such a decision was made, otherwise the requirement for reduction in subsidy
is higher that was is proposed. Around `8,000 to `10,000 crores is expected in
savings from this proposal we which will reduce the growth of deficit in the records
of government. Finance Minister also announced reduction to custom and excise duty
to zero, which was 5% and 8% respectively on non-subsidized cylinders in
Bangalore. This move will reduce the cost of non-subsidized cylinders from `895 to
`798.
However the deregulation in the diesel price by 17% is going to reduce the
purchasing power in the economy and the weaker section will be vulnerable towards
it. Being the life blood of transportation, diesel may push the inflation upwards in the
months to come. Moreover, the agriculture sector would also suffer as most of the
machines used are run by diesel and such hike would hamper the farmers‟ living.
Apparently, what we are witnessing is the creeping „entitlement mindset‟ to the urban
middle class. They see freeloaders all around getting away with it. But rather than
fight lawful plunder, which is a long, hard grind, they too are joining the queue.
Sources:
http://www.deccanherald.com/content/280125/non-subsidy-cylinders-cost-less.html
http://www.dayandnightnews.com/2012/07/govt-looking-at-lpg-subsidy-cut-partial-decontrol-of-diesel/
http://www.casansaar.com/news-detail/Excise-and-customs-duty-on-domestic-LPG-cylinders-reduced-to-
zero/2997.html
http://ariseasia.blogspot.in/2012/09/strengthen-rupee-lpg-subsidy-shall.html
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Cipla Limited
Deebadwita De [II MBA J] and Shashank Mishra [II MBA N]
Headquartered in Mumbai, India, Cipla Limited is a
socially-minded Indian generic pharmaceutical company, probably best-known outside its
home country for pioneering the manufacture of low-cost anti-AIDS drugs for HIV-positive patients in developing countries.. Founded by nationalist Indian scientist Khwaja Abdul
Hamied as "The Chemical, Industrial and Pharmaceutical Laboratories Ltd." in a rented
bungalow, at Bombay Central in 1935, the company has come a long way. Cipla manufactures ampicillin for the first time in the country. One of the most commendable
achievements for the company was developing the anti-cancer drugs, vinblastine and
vincristine in collaboration with the National Chemical Laboratory, Pune. This led to the winning of the Sir P C Ray Award for developing in-house technology for indigenous
manufacture of a number of basic drugs.
The Company today has significant market share in key markets in the CFC inhalers, anti-cancer drugs, cancer chemotherapy, anti- AIDS drugs, drugs for cardiovascular diseases,
arthritis, diabetes, weight control, depression and many other health conditions, and its
products are distributed in virtually every country of the world. The Company's R&D endeavors have resulted in significant progress in its anti- AIDS drugs research program me.
Cipla, is one of the few companies in the world to offer all three component drugs of
retroviral combination therapy (zidovudine and stavudine already launched).
In the year 1999, Cipla Launches Nevirapine, antiretroviral drug, used to prevent the
transmission of AIDS from mother to child. The very next year Cipla became the first
company, outside the USA and Europe to launch CFC-free inhalers – ten years before the deadline to phase out use of CFC in medicinal products.
Key Highlights:
The Company‟s revenue during the financial year 2011-12 amounted to `7075 crore
against `6399 crore in the previous year recording a growth of more than 10 percent.
The domestic turnover for the company increased by 14 percent, from `2822 crore in
the previous financial year to `3213 crore in the financial year under review.
Operating margin (as a percentage of total revenue) increased by about 2 percent.
The Company introduced many new drugs and formulations during the year.
In the domestic market, Cipla continues to maintain its leadership position in various
therapeutic segments including respiratory, anti-virals, gynaecology and urology.
With an R&D team committed to constant innovation and a strong field force of more
than 7,500 people, the Company continues to introduce several new products and dosage forms every year which offer significant opportunities.
Exports constituted more than 50 percent of total turnover. In addition, the Company
earned `30 crore towards technical know-how/fees. The Company continues to
leverage on its strategic marketing alliances and partnerships in more than 170 countries.
PBT for the current financial year `1421 crore against `1151 for the previous year.
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Key Financials:
Key developments in Stock:
Cipla is highly investing in Research and Development specially for manufacture of
low-cost anti-AIDS drugs for HIV-positive patients
Cipla is also performing extremly well in the domestic markets.
The growth in domestic revenues was largely on account of growth in anti-asthma and
anti-biotics therapy segments.
Cipla continues to support, improve and save millions of lives with its high-quality drugs
and innovative devices.
14
Recommendations for the stock:
Cipla is doing really good in the pharma sector. With its unique value preposition and generic
drugs, Cipla is expected to outperform the market. Currently the valuations look attractive.
The comparative chart (Cipla and Nifty) shows that Cipla has outperformed benchmark NIFTY for past one year. The recommendation for the stock is “BUY” for a period of 12
months with a target of `510.
Call: Buy
CMP: `372
Target Price : `510
Time Period:12 months
15
Brent Crude Oil
Srinivas Prasad K [II MBA J]
Brent crude oil is a light sweet crude oil from North Sea. Having a API (American Petroleum Institute) gravity between 38-39 and has higher sulphur content than the other well-known
benchmark, WTI crude oil. Brent crude oil is a global benchmark for other grades and is
widely used to determine crude oil prices in Europe and in other parts of the world. Brent is typically refined in Northwest Europe, but a major portion is been exported to the US Gulf
and East Coasts, and also to parts of Mediterranean. It is more expensive than the
Organization of Petroleum Exporting Countries (OPEC) basket, but lesser than West Texas
Intermediate (WTI) because of higher sulphur content than the WTI crude. Brent Crude Oil stands as a benchmark for Europe.
Crude Oil Units (average gravity)
1 US barrel = 42 US gallons.
1 US barrel = 158.98 litres.
1 tonne = 7.33 barrels . 1 short ton = 6.65 barrels .
Note: barrels per tonne vary from origin to origin.
Global Scenario of Oil
Oil accounts for 40 per cent of the world's total energy demand. The world consumes about 76 million bbl/day of oil. United States (20 million bbl/d), followed by China (5.6 million
bbl/d) and Japan (5.4 million bbl/d) are the top oil consuming countries.
Indian Scenario
India is very much reliant on oil from the Middle East (High Sulphur). The OPEC has identi-
fied China & India as their main buyers of oil in Asia for several years to come.
India ranks among the top 10 largest oil-consuming countries. Oil accounts for about 30 per
cent of India's total energy consumption. The country's total oil consumption is about 2.2
million barrels per day. India imports about 70 per cent of its total oil consumption and it makes no exports. India faces a large supply deficit, as domestic oil production is unlikely to
keep pace with demand. India's rough production was only 0.8 million barrels per day. The
oil reserves of the country (about 5.4 billion barrels) are located primarily in Mumbai High, Upper Assam, Cambay, Krishna-Godavari and Cauvery basins. Balance recoverable reserve
was about 733 million tones (in 2003) of which offshore was 394 million tones and on shore
was 339 million tones. India had a total of 2.1 million barrels per day in refining capacity. Government has permitted foreign participation in oil exploration, an activity restricted
earlier to state owned entities. Indian government in 2002 officially ended the Administered
Pricing Mechanism (APM). Now crude price is having a high correlation with the
international market price. As on date, even the prices of crude bi-products are allowed to vary +/- 10% keeping in line with international crude price, subject to certain government
laid down norms/ formulae. Disinvestment/restructuring of public sector units and complete
deregulation of Indian retail petroleum products sector is under way.
16
Presently :
World oil prices rose in Asian trade this week, extending gains made in New York, as rising
geopolitical tensions in West Asia stoked concerns over crude supply.Spain‟s announcement
of an austerity budget also helped lift the market as it eased fears over an escalation of the Euro Zone crisis, analysts said.
“Tensions between Iran and the West reinforced concerns about potential supply disruptions,” Phillip Futures said in a market commentary.
The declining output trend in India's crude oil, fertilizers and cement has resulted in a dip of the growth rate of eight key sectors of the industry to 2.1 per cent in August from 3.8 last
year. The data is indicative of sluggishness in the economy. Crude Oil production had a
negative growth of 0.6% in August 2012 compared to its 1.6% growth in August 2011.
Cumulatively, crude oil production recorded a negative growth of 0.6% during April-August 2012-13 compared to its growth at 6.1% during the same period of 2011-12.The growth rate
of natural gas production was negative both in August, 2012, at 13.5% and in August 2011 at
5.3%. Cumulatively also, natural gas production registered negative growth of 12.1% during April-August 2012-13 and 8.9% during the same period of 2011-12.
The prices have grown steadily with volatility with the global economic changes, effecting its demand supply significantly in the recent past after the recession & Euro crisis.
Sources:
http://in.finance.yahoo.com/q/bc?s=%5EBSESN&t=3m&l=off&z=l&q=c&c=
http://www.thehindubusinessline.com/markets/commodities/article3945018.ece
http://www.mcxindia.com/SitePages/ContractSpecification.aspx?ProductCode=BRENT_CRUDE_OIL
17
Irrigation Scam
Ankita Pagaria [II MBA J]
Ajit Pawar, nephew of union agriculture minister and Nationalist Congress Party (NCP) chief
Sharad Pawar, has been accused of irregularities in mega irrigation scam in the state during his tenure as water resource minister.
From 1999 to 2009, the irrigation ministry which was led by Pawar, had approved 38 projects
worth `20,000 crore in 2009 without the clearance of governing council of Vidarbha
Irrigation Development Corporation (VIDC). After that, it was given to the NCP‟s Sunil
Tatkare.
According to reports, Pawar and VIDC executive director had approved the projects without
placing it before the governing council comprising state's chief secretary and officials of the
finance, planning agriculture and water resource departments for deliberation and clearance, as mandated under the rules. It has also been alleged that tenders were approved at inflated
rates but Pawar has flatly refuted the charges.
Prithviraj Chavan is from the Congress and Pawar from the NCP. Both parties are ruling
coalition partners in the Central government at Delhi. The irrigation scam was a major reason
for the rising tension between the Congress and the NCP. Chavan had recently said a white
paper on irrigation woud be issued, and a mere 0.1 per cent area was added under irrigation
projects during the past decade, after spending `70,000 crore. This was countered by the
NCP, saying the actual increase was 12 per cent.
The Opposition accused NCP of misappropriation of funds in 2011. Chavan too made a
public statement on the issue about a year ago, saying about `68,000 crore was spent on
irrigation schemes in the past 10 years, which resulted in very little, or no improvement, in the land under irrigation. Sharad Pawar‟s NCP has held the irrigation portfolio throughout
this period and Ajit Pawar was in charge of the ministry for eight years.
NCP Leader Ajit Pawar on September 24, 2012 resigned as Maharashtra deputy chief
minister over corruption charge against him. He said, “I am just an MLA now. I won‟t accept
any ministry or post till I am cleared of all allegations. If I had not resigned, people will think I am guilty and I do not want to give up my political posts.”
There are 61 NCP MLAs in the 288-member House which has 82 Congress legislators.
Opposition Shiv Sena has 45 MLAs and BJP 47. Out of that NCP's 19 ministers and some party legislators gave their resignations to state party chief Madhukar Pichad.
Sources:
http://articles.timesofindia.indiatimes.com/2012-09-25/india/34081252_1_ncp-legislators-ncp-
mlas-ncp-ministers
http://www.business-standard.com/india/news/ajit-pawar-quits-over-irrigation-scam/487665/
http://indiatoday.intoday.in/story/maharashtra-deputy-cm-ajit-pawar-resigns-irrigation-
projects/1/222140.html
18
Buzz Word
Prachi Sharda [II MBA J]
SOCIAL RETURN ON INVESTMENT
Social Return on Investment (SROI) is an analytic tool for measuring and accounting for a
much broader concept of value. It incorporates social, environmental and economic costs
and benefits into decision making, providing a fuller picture of how value is created or destroyed. SROI is able to assign a monetary figure to social and environmental value
which is created. For example, nef research on the value created by a training programme
for ex-offenders revealed that for every £1 invested, £10.50 of social value was created.
While in financial management the term ROI refers to a single ratio, SROI analysis refers
not to one single ratio but more to a way of reporting on value creation. It bases the assessment of value in part on the perception and experience of stakeholders, finds
indicators of what has changed and tells the story of this change and, where possible, uses
monetary values for these indicators. It is an emerging management discipline: a skill set
for the measurement and communication of non-financial value. Therefore, the approach distinguishes between "SROI" and "SROI Analysis." The latter implies: a) a specific
process by which the number was calculated, b) context information to enable accurate
interpretation of the number itself, and c) additional non-monetized social value and information about the number‟s substance and context
RETURN ON TIME INVESTED
ROTI, or Return on Time Invested, is the hourly return on any time expenditure as valued in a dollar amount per hour.
For example, if you spend `200 on new domain registrations at the registrar Go Daddy and spend 5 minutes searching the internet for a discount code that saves you 20% on the total
purchase, your ROTI on that 5 minute investment is `480 per hour.
CALCULATION
Savings: `40 (`200 X 20%)
Time Invested: 5 minutes
ROTI calculation:
60/5 X `40 = `480.00 per hour
Source:
http://www.neweconomics.org/projects/social-return-investment
http://www.fastlaneentrepreneurs.com/2010/roti-return-on-time-invested/
19
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20
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