COVER STORY Atmanirbhar Bharatdomsnitt.in/students/Monetarist/August_Issue.pdf · of Atmanirbhar Bharat – Economy, Infrastructure, ... explained how much water is used to produce

AUGUST 2020 | ISSUE 1

V I T T I Y A | F I N A N C E & I N V E S T M E N T C L U B

D E P A R T M E N T O F M A N A G E M E N T S T U D I E S | N I T T R I C H Y

COVER STORYAtmanirbhar

Bharat

THE MONETA₹I$T

THE MONETA₹I$TReaders Message

Faculty Mentors

Dr. B. Senthil ArasuDr. J. Kirubhakaran

Issue 1 | August 2020

Editor

Karthik MSubha P

Authors

Visagan NKeerthana BKokkiligadda Sujitha Amulya

Designers

Deepak Kumar C SRambabu A

Dear Readers,

The Monetarist is a bimonthly magazine launched by Vittiya (Finance and Investment club of DoMS, NIT-Tiruchirappalli) in the year 2010. We sincerely thank our alumni Mr. Ashish Vazirani, Mr.Hemnath Kumar, Mr. Sukant, Mr. Anurag Nath, Ms. Manjushaa, Mr. Piyush Chawla, Mr. Raghuram and Ms. Ramasundari for their pioneering efforts in introducing this magazine. We also thank our Head of the Department, Dr.P.Sridevi and faculty members Dr.B.Senthil Arasu (Professor), and Dr.J.Kirubhakaran (Assistant Professor) for their earnest support and guidance in reviving this magazine. Last but not the least, we will be miserably failing in our duty if we forget to mention a special thanks to our alumnus, Mr.P.Suresh Kumar (Batch 1998-2000) for the valuable contribution of his article viz., “Win your trades by losing your fear”.

In this issue, we will be dealing with Atmanirbhar Bharat: What is self-reliant India?, its possibility and the problems associated with it. We have also made an extensive coverage about RIL Mega Deals and Google’s $10 billion investment in India.

We wish you a happy and knowledgeable reading.

Please mail your suggestions and feedbacks to [email protected].

Thanks

Visagan NAuthor-The Monetarist

Contents

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03

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12

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06

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11

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08

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10

Atmanirbhar Bharat

Win your Trades by losing your Fear

Page

01

RIL Mega Deals

Google’s $10 billion development for developing tech infrastructure

Why financial analytics?

RBI Policy Rates

FinQuiz

THE MONETA₹I$T Page 01August 2020

‘Atmanirbhar Bharat’ is a word uttered by our Prime Minister Mr. Narendra Modi in his address on 12 May 2020 while announcing a relief package of 20 Lakh crore rupees. What does it mean? It roughly translates to ‘Self-reliant India’. It is an initiative taken to foster entrepreneurship and nurture innovation. Atmanirbhar Bharat is about strengthening local markets, production, and supply chain in the country. It doesn’t mean we have to cut off from the rest of the world, it means India has to grow bigger and become a significant part of the global economy. Mr. Narendra Modi also outlined the five pillars of Atmanirbhar Bharat – Economy, Infrastructure, System, Vibrant Demography and Demand.

The key highlights of the policy are to increase the borrowing limits of state governments and the privatization of Public Sector Enterprises. Secondly, it provides economic relief to various sectors including MSMEs which will strengthen the local supply chain with further development and promotion of locally produced products. It also focuses on empowering the poor, laborers, and migrants from both organized and unorganized sectors which will significantly reduce poverty. Fiscal deficit targets have been considered thoroughly thus not leading to fiscal extravagance.

Under Atmanirbhar, many schemes have been introduced by the ministry of finance that focuses on ease of doing business in India. The county jumped from 142 or 63 in the World Bank Doing business report, indicating the success of this effort. Agri-marketing reform packages are proposed to strengthen the agriculture infrastructure and to boost up exports. Atmanirbhar Bharat App Innovation challenge launched by PM Narendra Modi has been seen as an enthusiastic response, it opens up a latent option for Indian tech Start-ups.

Atmanirbhar Bharat

“Mr. Narendra Modi also outlined the five pillars of Atmanirbhar Bharat – Economy, Infrastructure,

System, Vibrant Demography and Demand.”


But at the same time, India has a diverse population with 130 + crores of people which is three times the size of the United States but only one-third the physical size. By 2050 the overall population is expected to increase to 160 crores, which sounds to be a threat for the available resources. For any country being self-reliant is very important because it shows how powerful the country is and how it is independent. But whether it’s possible or not is a big question before India? India is extremely labor centric but to achieve the state of self-reliance, labor alone is not enough. It needs many resources and one among them is water, which is still a question. But for achieving a state of self-reliance, considering virtual water is very important. India has only 4% of the world’s freshwater resources despite a population of over 1.3 billion people, and water is being polluted. The concept of virtual water was invented by Tony Allan, who explained how much water is used to produce non-food consumer goods, including energy. For example, the production of a cotton T-shirt weighing about 250 grams requires about 2.7 cubic meters of water. So, if India starts producing each and every product then the resources may not be available in the future and what we leave for our next generation is very important. Many economists state that the rapid growth of exports leads to higher economic growth and growth is very essential for India. At the same time, India also depends on the import, for example China accounts for about 14 percent of India’s imports and is a major supplier for sectors like mobile phones, telecom, power, plastic toys, and critical pharma ingredients.

During April 2019-February 2020, India imported goods worth $62.4 billion, while exports to the neighboring country stood at $15.5 billion. The commerce ministry has identified the major sectors - food processing, aluminum and copper, industrial machinery, furniture, leather and shoes, auto parts, textiles, to make India a global supplier and cut import bills. The idea of self-reliant India is very good and it’s a correct time for India to become a global leader in exports and this reduces unemployment to a great extent. But at the same time, the available resources should be used efficiently and effectively, or else this cannot run for a long time. The other factor to be considered is air pollution, in the year 2019, of the most polluted cities in the world, 21 out of 30 are in India and 51% of air pollution is caused by industrial pollution. So the government should not compromise in the industrial norms for controlling pollution. The environment is very conducive and there is a huge market in India, so entrepreneurs should utilize this and make India self-reliant. Ultimately Atmanirbhar Bharat is a strategic plan to spur the growth in the economy and self-symbiotic environment, till then we should hold on and work towards achieving the goal.


Win your Trades by losing your Fear

“In investing good times and good prices never come together”. Every crisis is an opportunity to buy stocks of great companies at mouth-watering prices. As you can see from NIFTY graph from 1995, even though there had been few steep falls in stock markets, it always went up afterwards.

Corona crisis was one such opportunity, NIFTY had fallen by 39% from its peak due to CORONA virus fear. Yes, there will be some economic impact and few industries will suffer in short / long term, However a growing economy such as INDIA will always bounce back. In extension of that, stock market too will bounce back.


By looking at NIFTY graph you will find that last time NIFTY had fallen by more than 30% was in 2008. We are expected to see such fall only about ten times in our effective investment life times.

Even though investors know that investors gain more returns by investing during crisis, retail investors sell in panic and exit the market only to enter again when markets are at its peak.


All financial assets go through cycles. Maximum risk and minimum potential is when markets are in peak, minimum risk and maximum potential is when market is at the lowest. ( Even though it’s tough to predict what is the peak and bottom).

Those who held their nerves and bought stocks have made quite a bit of money in very short term ( graph). For example AURO PHARMA a large cap stock has given about 200% return in just few months ( LOW 288, HIGH 967)

Soon it will be your turn, you may become an investor or advising to investors after passing out from NIT DOMS. That time remember the golden words of Warren Buffet, “Buy when people are fearful, sell when people are greedy”.

“Buy when people are fearful, sell when people are greedy”

P. Suresh Kumar Associate Director

Zebu Share and Wealth Management Pvt. Ltd.

Distinguished Alumnus( Batch of 1998-2000)


RIL Mega Deals

In the 2019 Annual General Meeting of Reliance Industries Limited (RIL), Mukesh Ambani, the Chairman announced that the multinational conglomerate will be net debt-free by 2021. Now he has achieved it by 2020. This has shown his ambition and how the organization is going to be running in the future. It is seen that RIL is being under the process of transformation from a Petro-chemical company to Retail-Digital oriented Corporation.

During the pandemic when the whole economy has come to a standstill, Jio was working at a full speed with massive investments from abroad. It all started with Facebook acquiring a 9.9% stake for USD 6.1 billion in April 2020. After this, there were more than a dozen investments in the company.

In May, the next major investment was from private equity firm silver lake partners who bought 1.15% for USD 790 million followed by General Atlantic which invested USD 930 million for 1.34%. Also, American Venture capital firm KKR acquired 2.32% for USD 1.6 billion. Then, Silver lake increased its investment by 2.08%. TPG also bought shares worth 0.93%

Then there were investments from the middle east with Emirati sovereign fund Mubadala acquiring 1.85% for USD 1.3 billion followed by Abu Dhabi investment authority which bought 1.16% for USD 800 million. Further Saudi Arabia’s Sovereign fund PIF plunged USD 1.6 billion for a 2.32% stake.

“These investments all point towards the changeover of RIL to a Telecom-Retail company

from its Strong Petrochemical foundation.”


American private equity firms Catterton and Vista equity partners bought 0.39% and 2.32% for USD 270 million and USD 1.5 billion respectively.

Then, the American Tech rivals Qualcomm and Intel invested 0.15% and 0.39% for USD 10 million and USD 26 million respectively

Finally, the investments were capped by Google who poured USD 4.5 billion for a 7.7% stake and strategic partnership with the disruptive telecommunication and digital giant Jio.

With all these investments and the biggest ever rights issue of Rs.53,124 crore, RIL is net debt free pending the regulations and other processes. Apart from this Reliance retail is also closer to inching a deal with Kishore Biyani’s Future group for a merger. Future retail has over 1,500 retail stores through brands like Big Bazaar, Nilgiris, and Lifestyle clothing. Reliance Retail already has over 3,837 stores across 750 cities.

These investments all point towards the changeover of RIL to a Telecom-Retail company from its Strong Petrochemical foundation. Moreover, it seems that Mr. Ambani is following the Atmanirbhar Bharat vision by making his company investing in Indian start-ups and making Indian origin Equipment and software. Further RIL has achieved this without any contribution from Chinese investors pertaining to the present circumstances.

Jio was able to knock out foreign telecom competitors like Vodafone and DoCoMo to become a market leader. Now it’s fighting against many leading organizations across various sectors for dominance. With Jio venturing into various digital domains and e-commerce, the future looks bright for the 47-year-old Organization. Further, there may be a separate listing of Jio and Reliance Retail separate from RIL in the future.


Google’s $10 billion fund for developing tech infrastructure

GOOGLE, a search engine is the United States-based multinational technology company that specializes in Internet-related services and products, it also includes online advertising technologies, a search engine, cloud, and other resourceful aspects. According to the most recent report, Google’s revenue amounted to 160.74 billion US dollars, as per records its revenue is largely made up by advertising revenue, which amounted to 134.81 billion US dollars in 2019. As of June 2019, parent company Alphabet ranked fourth among worldwide internet companies, with a market capitalization of 741 billion U.S. dollars.

This US TECH giant Google set up a ‘Google for India Digitization Fund, through which it will invest $10 billion in the country over the next five to seven years through a mix of equity investments, partnerships, operations, infrastructure and ecosystem investments’. The $10-billion investment by Google is pegged to fill the space that could be left vacant by Chinese investors after the Indian government’s clampdown on Chinese companies.

The announcement comes close on the heels of New Delhi signaling curbs on Chinese technology investments and banning 59 mobile apps with links to Chinese technology majors such as Alibaba – one of the largest Chinese investors in Indian startups. It’s stated that its $10-billion fund will focus on areas such as enabling affordable access to the internet and information for every Indian in their language focus on bringing more high-quality low-cost smartphones to enable Internet access”. In the past, the company had already rolled out the Android One program, under which it partnered with Indian OEMs like Lava, Micromax, Karbonn, etc, particularly on account of cheaper Chinese devices and a large second-hand market of higher-end devices, but it did not take off.

“This US TECH giant Google set up a ‘Google for India Digitization Fund, through which it will invest $10 billion in the country over the next five to seven years through a mix of equity investments,

partnerships, operations, infrastructure and ecosystem investments”


It also planned to focus on building new products and services in segments like consumer tech, education, health and agriculture; empowering businesses especially small and medium businesses to transform digitally; leveraging technology and artificial intelligence for digital literacy, outbreak predictions, and support for rural economies

Google’s investment agenda included “leveraging the power of technology to transform the lives of India’s farmers, youngsters, and entrepreneurs, to focus on the new work culture that is emerging in the times of Covid-19, the importance of data security and cyber safety, and the challenges the global pandemic has brought to areas such as sports.Why Google is planning to invest in our country INDIA!?

Apart from all other secondary political reasons, India is a developing country and is one of the top developing countries having a lot of chances, to jump into the category of the developed country. And for that, it needs monetary growth as well as technological growth. Though they both are co-related in the wider sense, individual growth of both aspects plays a key role in effective output. As our country stands second in the world’s population with 1,380,004,385 populations, which means to have an asset of a great workforce who can be trained and shaped accordingly through efforts. So, what more is needed other than the talented workforce for a company to achieve the expected returns?


As, Mr. Clive Humby stated “Data is the new oil” the world’s most valuable resource is no longer oil, but data. But to get the useful and required information data wrangling, data analysis and data mining has to be done.

Coming to the field of finance, why analytics is needed? In what way financial analytics help to improve the financial position of a company? In what way financial analytics help in increasing the shareholder’s wealth?

The answer is, in today’s competitive and challenging business environment companies need more from finance than the financial statements or reports. Organizations need predictive insights that can help shape the future’s business strategy and improve the process of decision making.

Financial analytics can help in measuring the risk exposure with a specific customer, analyzing the future events that can affect the stock price, help to invest in the right opportunities, analyzing the profitability of the products and services across sales channels and customers. The major benefit with the help of financial analytics is, an investment and operating decision can be taken with more confidence and mitigated risk.

Why financial analytics?

“In today’s competitive and challenging business environment companies need more from finance

than the financial statements or reports”


RBIPolicyRates

Indicator Current Rate

CRR 3%

SLR 18.50%

Repo Rate 4.00%

Reverse Repo Rate 3.35%

Marginal Standing Facility Rate 4.65%

Bank Rate 4.65%

RBI Monetary Policy as updated on August 07, 2020:

6th August: RBI keeps Repo Rate unchanged at 4%

The key indicators of RBI Monetary Policy along with their rates are given in the table below:


Fin-Quiz1. Which Insurance Policy is basically launched to cover the hospitalisation expenses of the COVID-19 patients? • LIC Jeevan Saral • Jeevan Saral • JeevanAnand • Arogya Sanjeevani Insurance Policy

2. ‘Imagining India: Ideas for the New Century’ is a book written by X. It speaks about the evolution and the future of Indian economy. X was also the co-founder of Infosys and former chairman UDAI. Identify X

3. Which of the following taxes is the largest source of revenue for the Government of India? • Excise • Customs • Income tax • Corporation tax

4. Which was the first Indian Bank to introduce credit card? • ICICI bank • HDFC • Axis bank • Central bank of India

5. CAMEL is an effective system of rating by the banks. The model insists five main criteria and based on these the financial health is evaluated on a scale of highest to lowest, 1 to 5. In that A means ‘asset quality’, M means ‘management’ and L for ‘liability’, then what does C and E refer to?


6. What is the name of the two deutsche bank towers which is based on the two major financial aspects?

7. Which Indian FMCG company has decided to rent out its 40000 sqft Corporate Office in Chennai and close down its branch offices as employees have adjusted to Working from Home?

8. During economic recessions ‘________’ sales go up as witnessed during 2001 and 2008. It is called ‘_______ index’ by Estee Lauder.

9. What was the flagship company of Tatas during the time of Jamshedji Tata? He started it after returning from England in 1874. It was inaugurated on 1st January 1 st 1877, the day Queen Victoria was coronated Queen of India. So, he called its main mill: Empress Mills

10. It was started by a journalist, social reformer, freedom fighter Nageswara Pantutu in 1893 in Mumbai. Even today Bombay is inscribed on its lid. This pain balm was popularised by distributing it free-of-cost in music concerts. Apart from shifting its HQ to Chennai nothing much has changed with the company. The company entered call centre and fruit drinks business, but it is still known for its pain balm. Name the company/brand.

THE MONETA₹I$T

Contact us at:Vittiya - Finance and Investment Club of DoMS,

NIT Tiruchirappalli, Tamil Nadu, India.email: [email protected]

LinkedIn: https://www.linkedin.com/in/vittiya/

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COVER STORY Atmanirbhar Bharatdomsnitt.in/students/Monetarist/August_Issue.pdf · of Atmanirbhar Bharat – Economy, Infrastructure, ... explained how much water is used to produce