News Feed - 29 May 2010

1) A typical housing contract of any large builder is highly skewed. While the home buyer pays a penal interest of 18% per annum for a delay of 15 days on his instalments to the builder, the builder pays as little as 1% per annum for a delay exceeding 18 months in the delivery of the house — an incentive and not a deterrent to delay.

2) Microsoft had a profit margin of 25%, while Apple reported 19% Indian market, which generates as much revenue for the company as China, despite the latter adding eight times as many new personal computers in a year compared to India. The revenues from both remain almost the same. The reason: Piracy, which is higher in China.

3) The value of shares pledged has gone up, partly because of additional pledging and partly stock price appreciation. However, sectors such as consumer goods, utilities, IT, manufacturing and healthcare have seen a year-on-year rise in the number of additional shares pledged by the promoter, an analysis by Morgan Stanley revealed. Companies such as Videocon, United Spirits, Fortis Healthcare, Plethico Pharma, Suzlon Energy, Parsvnath Developers, Ackruti City and Adani Power have pledged more number of shares in value terms, the Morgan Stanley report said.
According to corporate advisors, certain sectors such as utilities have higher promoter pledging (also called loan against shares) due to the requirement of providing larger collateral security to banks and financial institutions to avail themselves of loans.

EXPLAINATION OF BALANCE SHEET TERMS

LIABILITIES - These are claims of outsiders against the business. These are amounts owed by the business to persons other than owners.

CURRENT LIABILITIES - These are obligations to be met with current assets or creation of other current liabilities. Obligations entered in the course of the operating cycle. These also compromise of other liabilities whose ordinary retirement is a short period of time, usually 12 months. Amounts owing to creditors are purposes of goods for instance.

PROVISIONS - These are amounts set aside out of profits or other surpluses to meet :

• Specific requirements.
• Specific commitments, known contingencies and dimunition in value of assets.
• Bad debts provisionds for instance.

CREDITORS / ACCOUNTS PAYABLE - Claims of vendors and others; for sale of goods for instance.

ACCRUED EXPENSES - Valid claims against the company remaining unpaid. Interest accrued or accuring on loans for instance.

DEFERRED INCOME - Advance payment received for service or goods to be rendered / delivered in future.

OTHER LIABILITIES - Compromising of other than current liability. Are claims of outsiders that do not fall within one year; medium term loans for instance.

CONTINGENT LIABILITY - Liabilities indefinite has to either their amount or occurance, for instance, law suits against the business.

DEBENTURE / BOND - Is a certificate of debt which usually : represents a part of loan; bears interest; matuares on a stated future date. It may be with or without a charge on the assets of the company. Debentures do not have voting rights.

NET WORTH / OWNER'S EQUITY - These are the claims of the owners represented by the capital and surplus.

SHARE CAPITAL - Is money subscribed by shareholders.

NOMINAL / AUTHORISED / REGISTERED CAPITAL - Is amount stated in the Memorandum of Association as authorsed to be issued and upon which stamp duty is paid.

ISSUED / SUBSCRIBED CAPITAL - Capital represented by number of shares issued to the public.

CALLED - UP CAPITAL - Amount of money called -up on the shares actually subscribed.

PAID UP CAPITAL - Amount of the called up capital that has actually been paid by the shareholders by way of application money, allotment money and call money on the share taken by them.

UNCALLED CAPITAL - Amount of capital remaining uncalled on the shares actually issued.

RESERVE CAPITAL - It is that part of the issued capital which is set aside for being called up at the time of winding up of the Company.

CALL - It is a demand made by the company to pay the balance amount outstanding on the shares taken up by the shareholers. There may be several calls. eg. 1st call, 2nd call, 3rd call etc.

SHARE PREMIUM - This is the excess of issue price of share over its face or par value.

SHARE DISCOUNT - Where shares are issued at a price lower than the book (face) value, a discount results.

PREPAID CALLS - Are calls paid in advance.

CALLS IN ARREARS - Calls outstanding to be paid by the shareholders.

SHARE FORFEITURE - These are the shares which are forfeited by the Company for non-payment of allotment money or call money.

EQUITY SHARES - To these shares no special rights are attached. These shares carry ordinary rights to participate in the profits of the company and have voting rights.

BONUS SHARES - This is in the nature of capitalisation of profits or reserves of a company.

PREFERENCE SHARES - These have a prior claim on profits available for dividend at a fixed rate, or amount; Are also preferential as regards repayment of capital in the event of winding up; Ordinarily have no voting rights.

CUMULATIVE PREFERENCE SHARES - The stipulated dividend accumulates until it is all paid; Arrears of any one year are carried forward as a charge upon the subsequent year's profit.

NON-CUMULATIVE PREFERENCE SHARES - Preference dividend is payable only out of profits of each year; If not paid, shareholders cannot claim to receive it out of profits of subsequent years.

REDEEMABLE PREFERENCE SHARES - The company may redeem or pay off these at a later date; Re-payment may be by creating a 'Reserve Fund' built out of profits or alternatively by an issue of new shares for this purpose.

CAPITAL - In a narrow sense, it is the value assigned in the balance sheet to the various stock issues.
In broader sense, it represents stock issues and surplus. In a still broader sense it includes long term debts.

TOTAL CAPITAL EMPLOYED - Total assets less fictitious assets and deferred expenses.

TRADING CAPITAL - Consists of fixed and floating assets.

FIXED CAPITAL - Compromises of fixed assets.

CIRCULATING CAPITAL - Consists of floating and circulating assets.

RETAINED EARNINGS - Is the differnce between total net earnings to date and total amount of dividends. If differnce is negative it becomes deficit.

SURPLUS / RESERVES - Is the excess of net worth over par value of capital stock;
It comprises : Earned Surplus and Capital Surplus
The sum is not designed to meet any liability, contingency, commitment or dimunition in value of assets known to exist.

CONTINGENCY RESERVES - These reserves set up out of earnings or surplus to indicate a possible future loss or claim against the company. A likelihood of loss is open to considerable question.

INVESTMENT ALLOWANCE RESERVE - It is the rebate given to the assessees in respect of new machinery and plant under certain conditions viz.,
1. Ownership
2. Wholly used in the business.
The reserve created for this purpose is called investment allowance reserve.

DOUBTFUL DEBTS RESERVE - This is a Reserve for debts which are doubtful of recovery.

DEBENTURE REDEMPTION RESERVE - This is a fund created by setting aside periodically a sum from the profits of the company with a view to accumulate a sum for repayment of debentures. After repayment of debentures the fund may be transferred to general reserve.

CAPITAL REDEMPTION RESERVE - This is a fund created when redemption is to be done out of the profits of the company by setting aside from the profits of the Company a sum equal to the nominal amount of preference shares reddemable.

what is calls-in-arrears?

If any body purchase the share of a company whose per share
value is Rs.10 (Rs 2 on application,3 on first allotment &
Rs 5 on final call)and company demand the the value of
application & first allotment i.e. Rs. 5 but person who
purchase one share pays Rs 2 only in stead of Rs.5.So Rs.3
will be calls in Arrear.

Mergers and Acquisitions - RIL - ATLAS Energy

The Atlas Energy deal envisages RIL paying upfront $339 million for its 40% stake, followed by $1.36 billion out of Atlas’ share of exploration expenditure over a period of seven-anda-half years. In addition, towards its own share of exploration expenditure, the firm will shell out $3.4 billion over ten years. For a company that generated cash profit of $4.2 billion in the first nine months of FY10, and was carrying $3.4 billion as on December 31, 2009, these investments will hardly strain the company.
Since the initial payout under the deal can be easily met out of the company’s existing cash balances, RIL will not need to raise any debt for financing the deal. Similarly, the payment towards future exploration efforts too can be met through recurring cash flows from its existing assets. According to Goldman Sachs, RIL could have generated $25 billion in excess of its committed capex over the next four years and left the company cash surplus and debt-free by as early as FY13.
While RIL has signed the deal at a fair valuation, access to shale gas exploitation technology is a crucial strategic benefit to the company. RIL has retained the option to operate in certain project areas, although Atlas will serve as the development operator for the joint venture. RIL also gets the right of first offer in case Atlas plans to sell any more of its shale gas acreages not covered under the current agreement.
Similar to the coal-bedmethane (CBM), shale gas is an unconventional source of natural gas. Exploiting the shale gas became possible over the past decade due to development of innovative drilling techniques, including horizontal drilling and hydraulic fracturing to create fractures in the rocks to allow permeability. Exploiting shale gas is costlier to conventional gas due to the use of better technology, but the risk of failure is substantially low.
In the contracted area, Atlas and Reliance have already charted a five-year development plan to drill 45 horizontal wells during the remainder of 2010, increasing to a total of 300 wells in 2013. The development opens a new chapter for the Indian energy giant, which also recently completed setting up the solar power plants in New Delhi for the Commonwealth games. Apart from just studying the financial impact, investors should view this development as addition to the energy portfolio of the company improving its diversity.

Escrow Account

A trust account held in the borrower's name to pay obligations such as property taxes and insurance premiums.

An escrow account is

• an account established by a broker, under the provisions of license law, for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction, or
• a trust account held in the borrower's name to pay obligations such as property taxes and insurance premiums.

Escrow is best known in the United States in the context of real estate(specifically in mortgages where the mortgage company establishes an escrow account to pay property tax and insurance during the term of the mortgage).

Some good papers on finance

Hi,

I am providing following link. You will get lots of papers written on finance and other areas.

To download these papers, you have to register for it. It contains very good papers, articles...

http://hq.ssrn.com/rankings/Ranking_display.cfm?TRN_gID=10&requesttimeout=900

(Social Science Research Network)

Regards,

Somanth

L&T ratios

I am providing the link to my working file on L&T ratios.
The file is being updated and so please be careful while using it.

Corporate Finance Lecture Series

Dear Forum members,
Kindly make sure that you guys are done with the first two lectures of Damodaran by Wednesday, so that we can straightway start solving problems on the first two parts of CF - Value and Risk.

Here is the link to the video lectures.

Kindly either download them or get them from me in pen drive on Wednesday.

Three cheers
(Happy new year.)

All you ever wanted to know about GST

The goods and services tax (GST) is a comprehensive value-added tax (VAT) on goods and services.

France was the first country to introduce this system in 1954.

Today, it has spread to over 140 countries.

Through a tax credit mechanism, GST is collected on value-added goods and services at each stage of sale or purchase in the supply chain.

GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services. But being the last person in the supply chain, the end consumer has to bear this tax and so, in many respects, GST is like a last-point retail tax.

Many countries have a unified GST system. However, countries like Brazil and Canada follow a dual system wherein GST is levied by both federal and state or provincial governments.

In India, a dual GST is being proposed wherein a central goods and services tax (CGST) and a state goods and services tax (SGST) will be levied on the taxable value of a transaction.

The central and state governments are discussing the GST system proposed to be implemented in India from April 1, 2010.
Representing the statesin the discussions is the empowered committee of state finance ministers.

Here are some questions on GST and their answers:

Will dual GST be levied in addition to the existing taxes?
No. It is proposed that the CGST will subsume central excise duty (Cenvat), service tax, and additional duties of customs at the Central level; and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the state level.

What will be the rate of GST?
The combined GST rate is currently being discussed by the Centre and the EC. The rate is expected to be in the range of 14-16 %. Once the total GST rate is determined, the states and the Centre have to agree on the CGST and SGST rates. Today, services are taxed at 10% and the combined incidence of indirect taxes on most goods is around 20%.

Will prices go up after the implementation of GST?
In fact, the prices of commodities are expected to come down in the long run as dealers pass on the benefits of reduced tax incidence to consumers by slashing the prices of goods.

What are the implications of GST on imports and exports?
Imports would be subject to GST. Exports, however, will be zero-rated, meaning exporters of goods and services need not pay GST on their exports. GST paid by them on the procurement of goods and services will be refunded.

What are the benefits of shifting to a dual GST system?
Dual GST is expected to be a simple and transparent tax structure with only one or two rates of taxes. The result would be a reduction in the number of taxes at the Central and state levels, cut in effective tax rate for many goods, removal of the current cascading effect of taxes, reduction of transaction costs for taxpayers through simplified tax compliance, and increased tax collections due to wider tax base and better compliance.

How will dual GST affect the fiscal health of states?
Being a consumption-based tax, dual GST will result in better revenue collection for states with higher consumption of goods and services.

The backward and less-developed states would see fall in collections. The Centre is expected to put in place a mechanism to compensate states for any revenue loss due to GST.

The introduction of the GST system is by far the most important tax reform in India. Consensus and coordination among states is required for it to succeed. Before it can be introduced, the Centre and states have to sort out issues like agreement on GST rates, constitutional amendments empowering states to tax services, taxation on inter-state transactions of goods and services, drafting of CGST and SGST laws, consultation with all stakeholders including trade and industry associations before finalisation, administrative preparedness to implement the new tax regime and resolution of all other issues under discussion.

FRA and Macroeconomics

FRA and Macroeconomics are pretty large subjects and it would be a challenge to finish it in this trimester. Most of the lecture that I will take will have following pattern:
1)FRA :

• Lectures of FRA will have three components besides core lectures
• Presentations from on different Celebrated Reporting Scandals that have rocked of the World. While we wont discuss in depth about likes of ENRON or Worldcom in an in depth manner as I believe this would  be counter prodcutive till we have sound footing on Reporting analysis and treatments. But we will see how some of the provisions from GAAP and IFRS have been misused. (take these more like anecdotes)
• Case Studies from the book  
• And continuous evaluation. I am a maverick so expect Quizzes any time. I would use multiple formats for quizzes. Quizzes are great way of doing self-evaluation it tells us how we are progressing and if there is any value addition through these. (besides it also lets me know where I should put more stress.)

2) Macroeconomics :

• Lectures of FRA will have two components besides core lectures:
• Presentations on Economic News (typically gleaned from current Economist Magazine).
• And some Quizes given randomly. Quizes for Macroeconomics would have more simpler formats. Lastly they would also cover current happenings across the Globe. ( Please do understand Politics and Economics are interlinked so they are also game, meaning the reason Barack Obama has failed in getting many of the promised legislations esp. the health care bill passed from Senate has more to do with Democrats and Republican Politics then just the merit of the bill as such.

Both of us would also use the Calendar to announce the necessary readings before each Knowledge Meets. Lastly, if any one of us would like to teach any other subjects ( I am esp. scouting for some one with understanding of Econometric or Stochastic Calculus,& in depth understanding of Derivatives.) please do help us out.

MENTOR-SHIP PROGRAM : We would like this to get off the ground by the end of MARCH. But we can not do this unless we can give confidence to the Alumni that their time and resource would be utilized in a manner that would lead to value addition to their lives also.

Finance Management game No 1

Please fill in this form before 11th March.

Corporate Finance - Brealey Mayers

As discussed today, all the lectures on topics for CF (Corporate Finance) need to be covered in this trimester. I was going through the book and i found out that the book is divided into 10 parts comprising of 34 chapters. If we take a look at our time in hand we hardly have 3 months or 12 weeks (Mar - May) before we push off for our Summer interns. If we wish to complete this book by any chance we shall have to cover 1 part each session. That would mean lots of hard work as you have to balance this off with all your hectic schedule of syndicates and other class assignments.

We will discuss part 1 & 2 of the book on next saturday, it would cover the following topics :-

Part 1 - Value (1 hr session)

PV and opportunity cost of capital
How to calculate PV
Value of common stocks
Why PV leads to better investment decisions than other criterion
Making investment decison with PV rule

Part 2 - Risk (2 hr session)

Intorudction to risk, return and opportunity cost of capital
Risk and Return
Capital budgeting and risk

Time suggested is indicative as i am yet to prepare for the sesssions and may vary, any changes shall be indicated subsequently.

Consumer Behavior :Why the Party dresses Spike on Wednesday and Thursday Evening in PUNE?

Last Thursday, I went out to Polka Dots along with my room partner (MBA-Marketing) and his Girl friend. I still had my last paper(Research Methodology) to give, so Time was of an essence in choice of restaurant. Polka Dots fitted the bill, it was near, it had faster service,and it had a good food.

Not surprisingly, FATTY food make my brain work on overdrive. Or its pain to be Kabbab mein Hadi (though they had a different opinion about this!!). A stray thought ran in my mind: Would POLKA DOTS be so efficient on the other days too. Would the waiter be as courteous on the other days? Would the food taste so good every day? Is the food as good on crowded Fridays, Saturdays and Sundays? Do I go out ever on Fridays, Saturdays and Sundays? Occasionally( I have always cringed at all of those occasions) and during my college days but a lot had changed.

Stray thoughts that follow a chain sometimes can lead you to  unknown Insights.

Saturday is a Holiday to most people same goes for Sunday. So its not surprising that People enjoy a meal out on these days, enjoy a movie on Friday, Saturday, and Sundays. So these Days are heavily crowded on most nights. So, I somehow latched on to Thursdays and Wednesdays for my fun days whether it was movies or a good meal out. I asked my friend why dont we go out for food on Saturdays? Aarey yaar Weekend mein Bahut bhid rehta hai. And why not on Monday? Aarey Monday ko BOSS nahi chodega plus pura weekend ka pada hua kaam. And why not on Tuesday? He was getting agitated now ( Kabab mein Hadi). He did not reply(You see you should never make a marketing person a part of your Survey)... just murmured few profanities at me!

I had my answer. Most people behaved this way within my circle of friends.

And then I remembered , some time back we had an Alumnus of PUMBA from Pune Central explaining this seemingly un-explained phenomenon "Why some of the Party dresses see a  Spike on Wednesday and Thursday Evening in PUNE?" 


Did the same reasoning runs for Parties too?

A significant population should have shifted from Friday Nights to Thursdays! To cause an increase in sales for some type of Party Dresses. If so what is this consumer?

DINK? or College Students with more disposable Income?

Perhaps this is a good topic for RM.

Schedules

As per my earlier post where in I requested forum members to give us about 4 Days. (Finance Forum I know has the largest requirement of all forums) But we will adjust things. We initially planned to have Guest lectures on Saturday.But now lets see about that. Any decision has to consider number of active forum members. For under 15 Guest lectures might not be a good Idea. Then we need to think of some other way of increasing Industry Interaction. Check out Time Table here

I suggest following 

1) Saturday : a. Lecturers CF FRA and Macroeconomics.

2) Tuesday : Lecture CF and Macroeconomics.

3) Friday :  Presentation FIN Div (B)  11 - 4:45 FIN Div (A) 5:00 -7:30

4) Monday : Presentation FIN Div (A) 2;15 - 7:30

5) Wednesday : Presentation FIN Div (B) 

I know I am nearly using most of your time, but this is just one of the possibilities. I look forward to your suggestions.

ps: If there are just few of us, as I believe it would be given the strength. I think we should speak to Sir and shift all of us to one single FIN Div. That would make planning much more easier and robust, giving us some buffer days also.

Plan of Action : "Fire In the Belly"

As enumerated in my previous post the forum will take actions to rectify some of it. At the end of day it should be remembered though that Forum is just a Forum, it on its own can not make or break an Individual. You make this forum. A forum will not work without its dedicated participants.

As decided by forum members following is the Plan of Activities: 

1. Lectures : 
1. Gajju will be teaching Corporate Finance this Trimester. (Recd. Text: Brealey Myers Principles of Corporate Finance. I personally recommend the International Edition the 9th edition will cost about Rs 3000/- so look for 7th Edition on the streets of ABC.)
2. I would be teaching two subjects Macroeconomics and Financial Reporting and Analysis.(Recd Text: Economics by Samuelson and Xerox notes for FRA that you need to order to RAHUL.)
3. All lectures follow IIMA pattern. So do collect your books at the earliest.
2. Presentations: 
1. HBR Articles: HBR articles will have to be presented in the form of presentations. The Articles will be given on an Individual Basis. Aim is to learn current Happening in Business that are re-defining the world of Business. (Jeff Immelt G.E. CEO used HBR to spell out GE strategy for next 2 Decades). Time allocated one Night.
2. Case Studies: Case Studies Involve Presentations of Case Solutions by 1-2 Team members. Depending on Size of the case time would be allocated. But understand that we would progressively move towards 'One Case Study A Day'. ( This does not involve cases taken by Gajju in CF and by me in FRA and Macroeconomics)
3. Assignments: 

1. CF  and FRA Assignment: You need to select Five companies. At max four of them can be Indian or India listed (meaning Rediff that is listed on NASDAQ will be counted as Indian). And one needs to be an International Company.  Some guidelines : Do not select Any Financial firms or Firms that have huge financial operations (so do not select GE). Do not select loss making companies. Do not select unlisted companies. And lastly the companies must have a theme  for eg. Cars is not a theme Locomotion is (so you can choose companies like TATA Motors, Apollo Tyres, Boeing, Container Corporation of India, Great Eastern Shipping Corporation). For those with perverted minds like mine you can select SIN also (Phillip Morris(Malboro), Anheuser Busch(Bud-wiser), United Spirits(Mc Dowells), Playboy Entertainments(well Playboy), General Dynamics (Predator Drones... Weapons). Just Be ready with the companies we will let you know what to do with them.
2. Macroeconomics: A country will be allocated in a group of 2-3 you need to make a presentation with following thing in mind. I have a USD $ 10 Billion Fund for investing in various economies of the world. Your task is to approach us Me and Gajju and suggest us : 
1. To Stay Away from the country. ( if its pakistan... But I really do not know... someone can identify opportunities here also). 
2. To invest in the Country: If so then which sector? Which companies or a Group of Companies (do not worry I am not looking at Company valuations just Country and Sector Attractiveness)?  How Much? Whats are the Risk Factors.
3. To Stay Neutral.  
4. Forum Lectures and Programs :  As you may have been aware we plan to make Budget Discussion a Big event for FINANCE Forum and others. This is one of the event we are targeting at and while going forward we do believe this to become Finance Forums Flagship event, we would also be looking at leveraging forums contacts along with the Alumni base that we have to organize structured lecture on various topics like GST, M&A scenarios, PE funds etc. We welcome topics (topics have to be a structured framework or agenda for a day long or even smaller.) and other suggestions on these. 
5. Alumni Support : We would be looking at approaching Alumni for mentor-ship Program**  

Way forward:
We plan to accomplish this in 4 days per week.

1. Lectures: 2 Days per Week 3 hrs Each day after the college. (the Days would be decided after we get our Time Tables)
2. Presentations: 2 Days per week. Amount of time would be decided after acertaining forum strength as the Aim is to have more frequent presentation practice.

Please do suggest your views on these.

** Conditions applied

Why PUMBA does not get Core-finance companies?

There are multiple reasons for this we shall look at all of them (there are not arranged in the order of Importance I personally believe each of them are equally responsible):

1. Teachers: I am not qualified to question them. But they have been at fault too. World over Teaching works on 'Pull Phenomenon' , if students show interest teachers take more efforts to make the Teaching more interesting, while if students take no interest Teacher use their ultimate punishment: "Ignore the Bastard, they will learn in good time." Perhaps its me, but I do believe PUMBA students had not reached a level that merited that kind of Punishment. The Teachers actions directly resulted in Mediocre culture of PUMBA.
2. Course Structure: Unfortunately PUMBA course structure is weak on Core-Finance Subjects or gives it a cursory reading to it. What ends up happening is that Industries end up expecting in but students have very feeble knowledge of it. The subjects where I believe PUMBA is weak are
1. Corporate Finance Basic and Applied
2. Financial Reporting and Analysis (GAPP, IFRS)
3. Security Valuation (one Half Credit subject is there)
4. Fixed Income valuation
5. Options and Future (including exotic Derivatives)
6. Macroeconomics including optional Econometrics
7. Mergers and Acquisition.
3. Application Knowledge and Case Studies :  PUMBA does not use a Case Study methodology for imparting knowledge. Why is Case Study method used? Using case studies to learn a concept is like doing a Lab experiment it helps you learn an aspect in more controlled environment, understand practial application of a subject.
4. Current News: In sequence to the above, its inherently highly important to understand current happenings in the world as Finance by nature is a very fluid subject many parts of it change because of new Innovative products that come in market and new developments that happen. Like its important to understand the demerger of Grasim and Sammruddhi Cements and Merger of Ultratech and Sammrudhi Cement on the bottom line of the related companies. Such thinking is needed if you plan to have a job as an Investment Banker, Business Analyst, Corporate Finance Job with Bank or any Company that will be affected by such a merger. Same stands for views on Bharti's  $10.8 billion takeover deal of Zain's Africa asset or Bharti's and MTN's fialed merger deal (those of you who do not know BHARTI-MTN deal would have re-written lots of rules of M&A in India). Anyone, is RIL's reported Bid for Lyondel Basell at USD 13.5 Billion justified?

But then the most important failure I believe has been of students themselves. I do not know where to begin.PUMBA students have earned a Hall of Distinction in the depths to which a man can fall profesionally.  We have an Un-professional attitude and do not appreciate realities. We want Mc Kinsey to come for placements but are least prepared to tackle them (for those who do not know Mckinsey uses Case Interview Method to select candidates. Yahan Logon se Case solve nahi hote CASE Interview kaise denge!! A simple case interview will be like I have a Cement Company that plans to enter in to emerging market. You have to advise the CEO of the company.)

As SRK said in Chak De India Mere logon mein Niyat nahi hai game kahan se khelenge. I accept SRKs diagnosis of organisation of Teams, trust me no amount of efforts will make any change if we do not have that one thing Niyat!

The Finance Forum will try to nullify some of these but we request Professionalism on part of other member parts. We do not want to waste any members valuable time. This is not a CSR initiative on any ones part. If only 6-7 people are interested in Forum. The Forum will be very happy to support them. (TRUST ME on this I would enjoy 6-7). 

So these are set Rules for the Finance Forum

1. No DELAY in submission of any assignment. (If assignments worry you do not take part in this)

2. Lectures planned are not PUMBA lectures so show some courtesy to the colleague. 

3. Be Punctual.

4. Voice you disagreements. We are interested in knowing them but remember Industry practices take primary goal. Meaning you want a Flexible schedule for all activities and submissions simply forget it. We would rather shutdown the forum than allow such banalities to ever take precedence.

Please understand implication of all this and make a right Choice for yourself.

Clarifications on Finance Related Concepts

Any doubts related to Finance for any non finance guy can be discussed in on this post. Please ask your doubt in the comments section for this post. I request finance guys to please answer the queries as they appear.

Best of luck for Exams.

Activities of Forum

Thanks Gajju for introducing this wonderful method of communication for the forum. 

I have few suggestions to make

1.  About selection of companies : There must be restriction on number of companies that can be selected  from NIFTY50 or BSE 30 as these are covered by many analyst and there would be little challenging in them unless its strategic aspect like Bhartis deal for  Zain's African opraion at USD 10.8 billion. for which the group is still un-prepared(the restriction can be up-to 4 out of 5 for this trimester). Other point on the same topic is people will have to decide before hand their rational for choosing companies on either: 
1.  technical Basis
2. Fundamental basis. 
2. If they chose these we need to decide how frequently will a technical person shall update his recommendations and what will be the role of Fundamental Analyst in it (they could come out with Annual and Quarterly earnings update)
3. PUMBA course structure lacks basic Financial knowledges that a Managers should know. I was surprised at cursory treatment given to NPV and IRR. Perhaps it might be taken in the next trimester.Thats unfortunate as other managers(marketing :( and Ops :(  ) need to understand these concepts well. So we need to Identify courses that can be covered through these forum. I am excited about IFRS and GAAP if possible and options and futures. Lets see!
4. We need to target few competitions. More about this latter on 26th
5. If HR can have its flag ship programm we need ours too I take this opportunity to solicit help of every person on Finance forum to help us(CK & Gajju)  make the Budget Progamm a grand success!!
6. I am looking for contributors for wikinvest.com more the merry, as a way of branding the forum and exposing people to analysis skills.
7. Lastly 43 is a huge number to handle we might have to think about splitting the group. (seriously 43 members group case study will be challenging ).

Finally I have two suggestion, I believe that many people who wish to take finance will in future will be associated with capital markets in one way or the other either as an Investment Banker (i hope so!) as Bankers as Financial Advisers as Corporate Financial Managers so can we adopt CFA ETHICS as code of conduct for the group. Do not worry it will be easy to get the permission from the CFA Institute. 

And the second suggestion been Professionalism. I request members to please look out in to ways of putting these at the earliest. Commitments to forum must be honored at all cost. No Force majeure clauses.

We need to discuss all these aspects and more. And this can not be just for Finance forum there are three other forums Marketing, System & Ops. But at least for finance forum I second Gajjus call lets have a general Body Student meeting of Finance students on 26th.

First Post

I take this opportunity to congratulate ourselves on having taken the first successful step in starting the Finance forum at PUMBA. Also on behalf of the forum members i suggest the following modus operandi for the functioning of the forum. Kindly go through the same and give your suggestions for the modification to the same.

1. We shall start the forum from the first working day of the next trimester.

2. The forum members shall meet at least twice a week (i.e 2 session of 3 hrs each per week). Days shall be decided once the time table for the next trimester is displayed.

3. The forum shall be involved in following activities to start with
Case studies (Group and individual)
Presentations (Group and individual)
Tasks (Group and individual)
Financial market updates - kind of Finance Quiz.
Short discussions on important conceptual topics

4. As this is a voluntary group attendance is not compulsory (but you should make sure that you complete the assigned work and update the same on the blog without fail and without excuses).

5. Point system, however is applicable (nature of point system shall be decided in our first general body meet).

6. Any other additional points are welcome as suggestions from your side.

I had mentioned that the forum should try and meet on 26th of Feb ie on the last day of the exams, now i feel nobody would be interested in meeting on that day as the end of exams shall mark a beginning of a few days of refreshment and enjoyment period. So i share my views on what i wanted to share on that day. This would be the part of the first individual assignment we take for ourselves.

I suggest each member of the forum be given a hypothetical amount of Rs 1,00,000/- and she/he comes up with an investment portfolio comprising of not more than 5 stocks (traded on NSE) on the first day of the next trimester. Task doesn't end there as each member shall have to come up with his rational behind selection of the stocks portfolio in form of a presentation. You may base your findings on either fundamental or technical analysis or both. This shall keep us busy during the vacations and also would give us an opportunity to learn stock valuations and get a pulse of the current market situation. It will also help you to try and understand the balance sheets of a few companies that you might select. Even if you do not understand much about the market or any other basic concept, at least try doing it reading some books or searching over the net. In case of any problem you can always direct them on the blog or contact any other member who knows it.

I am also sharing the list of all interested members of our forum with you. I would like to make this blog as a means for sharing data and updates of our forum so do make it a point to keep visiting it on a regular basis. This will help to avoid flooding of emails in our mailbox. However, those interested in getting all updates can definitely subscribe for the same on the blog page. I have also sent you invitations to join the blog, do accept the invitation and be a follower.

Three cheers...
PUMBA Finance Forum