FINOMETRICS DEPARTMENT OF

MANAGEMENT STUDIES

VOL: (4) 26 November 2014

INDEX

Goods & Services Tax– The shaping of ‘Place of supply’ rules 1

An Expected End to the Tyrannical Monetary System 3

G-20 Summit 5

Indian Aviation Sector to revive its flying spirit again 7

Investment in Gold, currently on hold! 9

India’s city of dreams- Aamchi Mumbai 11

Green Banking for High Ranking 13

Giant of E-Shopping: FLIPKART 15

We have been hearing about the Goods & Services Tax (GST) taking shape at its own pace. It is one of most the important

shift in the legislation that is pending till date. The need to introduce GST into our tax system is to eliminate the cascading

effect of taxes in India and also to bring about better transparency into the system.

The Government places importance on its implementation at the earliest along with the involvement of state finance

ministers. The ‘Place of Supply’ Rules will act as a backbone of this new indirect tax system and is more likely to remove the

complications of the old system. It is also expected to give a boost to the country’s GDP by two per cent.

The place of supply rules talks about intricacies involved in deciding as to where the goods and services will be taxed,

focusing on the importance of levy due to upward movement in the e-commerce and delivery of services through electronic

means. The GST will absorb the excise duty and service tax at the central level and VAT at the state level, the place of supply

and consumption of them will ascertain the tax recipient state and consuming state thereby impacting the revenue. Shaping

the final form of these rules is a very crucial key to GST.

The Government is preparing a common platform through GST that will eliminate barriers to trade between the states. The

Centre is also making an attempt to induce the reluctant states by offering a reward mechanism. The states are being

assured that they will not suffer any downward trend in their income generation due to inclusion of petroleum product and

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Goods & Services Tax– The shaping of ‘Place of supply’ rules

entry level taxes within scope of GST.

The Modi sarkar has indicated its implementation as crucial on the agenda and the developments are monitored closely. The

government will shortly finalize the draft of the Bill required for the amendment. The states show a positive response towards

GST being ready to be implemented by 1st April 2016.

NITESH G

II MBA (Financial Management)

2

To emancipate from the satanic global economic system, the Islamic state has started producing their currency in areas

under its control. The organization has started minting gold, silver and copper of its own currency to change the tyrannical

monetary system which was modelled on the western economies that had enslaved Muslims. There have been large swaths

of Iraqi and Syrian territory this year as Islamic state of Iraq and Syria has proclaimed a caliphate or Islamic empire on lands

under its control. The state already issued a statement which explains the new currency’s exchange rate and where to find it.

The new currencies will be based on the original dinars that are used during the caliphate of Uthman in 634 CE which

includes two gold, three silver and two copper. As the dinar is made with the gold and silver, the purchasing power of money

will be entirely depend on the purchasing power of gold and silver. ISIS doesn’t have the gold reserves that are required for

them to produce the currency and if they have to buy it from the others then it would be burden on the people to buy the

currency. Their main strength in generating revenues is oil production which is helping them to become a complete

self-sufficient state.

The biggest challenge for the Islamic state is how the group will be able to resource enough of the precious metals that are

required to distribute the coins to the people. As their major revenues are from the oil revenues which help them make up to

2 million a day, they also earn by extortion of local businesses, hostage ransoming and selling off looted artefacts. The Islamic

proclamation is that, their currency would be unaffected by movements in the dollar and other prevailing world currencies.

The gold is non-interest bearing investment and strict interpretations that charging interest is forbidden which could be an

ideal way for stricter Muslim’s to transact business wealth and amass wealth. It seems to be venue for smuggling and thievery

3

An Expected End to the Tyrannical Monetary System

as aspiration to use gold for money. So it would be the most important for the finance ministry to take this challenge of

introducing Islamic dinar as they have to generate revenues to issue coins.

SAI KRISHNA

II MBA (Financial Management)

4

G-20 SUMMIT 2014 was held in Australia at Brisbane the capital city of Queensland on 15th and 16th November 2014. It was the

ninth meeting held by the G-20 heads of the government. The venue which hosted the event was Brisbane Convention

Centre at South Brisbane .This event was the largest ever peacetime police operation held in Australia. Around 2500 media

representatives attended this event and leaders from various countries also were invited to attend this event.

Proper preparations were made for summit by the Australian government by providing a wonderful hospitality for the world

leaders and delegates. Around 6000 policeman were deployed to oversee the security, and around 600 volunteers also

provided assistance for the summit and about $800 million were spent on the summit.

The agenda for this event was to support the recovery as the global economy moves beyond the global financial crisis. Many

European leaders expressed their opinions to support the cause and President Barroso and European Council President Van

Rompuy expressed their desire for the importance of coordinated growth strategies as well as finalizing agreements on core

financial reforms, actions on tax and anti-corruption. The main objective of summit meeting was all about strategic priority for

growth, financial rebalancing and emerging economies, investment and infrastructure etc. But the climate change was not

included in the discussion as the Prime Minister Tony Abbot did not wanted the agenda to be cluttered by subjects which

could distract the discussion from the primary objective that was economic growth. Due to this decision many European

leaders were unhappy about the decision. As the climate change was always included in every other agenda of previous

summits.

5

G-20 Summit

The other main issue in the summit was focused on was about Russia acquiring Ukraine and other neighboring countries.

Many European delegates expressed their views against Russian President Vladimir Putin role for acquiring other countries. The

stage was therefore set for some serious posturing and chest-beating in Brisbane, sparing hacks the humiliating task of

tracking down some odd looking anti-globalists for an interview or filming stern-faced cops, looking into the distance

purposefully, representing the "unprecedented levels of security”. Even United States President Barak Obama also lashed on

Putin to change his ways or face the risk of further isolation. By then even German president Joachim Gauck also joined in

support to criticize Putin. The climax of the summit came when the Russian president left the summit early leaving everyone

guessing what the real game of Putin was and even the Canadian President Graham Arthur Charlton Bell further snubbed

him that he had only one thing to say to him that was to get out of Ukraine.

It was also a productive summit meeting for the United States as the trade deals and new climate change initiatives flowed

from the United States camp, with the president clearly enjoying his trip, not to mention his rock-star treatment by students in

Queensland and in Myanmar and it was same for the Chinese President Xi Jinping as he stressed about his country’s climate

change and also had a trade deals with Japanese.

So overall the summit was filled with drama, tension which was displayed in the summit, and the outcome of this summit

meeting was to reduce taxes, poverty and ensure economic growth and economic development, and also reduce risk in

financial systems by improving the stability of banks, and others topics like Ebola virus epidemic in Africa and climate change

was also discussed in the summit by the world leaders.

KAUSHIK RAO

II MBA (Financial Management)

6

Aviation sector is perceived to have been performing well recently after the downfall. Referring to the reports of second

quarter of major airlines like Jet airlines and Spice Jet, we can generalize that the sector is reviving currently. The rise in profits

can be attributed to their innovative strategies like discounts being offered and improved sentiments of the customers. During

the second quarter, both the airlines have reported approximate growth of 15% in revenues compared to the second quarter

last year. Considering the growth itself, from last year, these two companies have increased their revenues by about 500

percent. This is a clear indication that airlines industry is hoping brighter days.

The reasons sorted by the analysts as mentioned above are improved investor sentiments and discounts being offered

corresponding to various reasons and occasions. It is evident that more people are thriving towards commutation via air

which wasn’t the case earlier. Strengthening of economy and its revival from the last recession are also among the reasons

for betterment of airlines industry. However, the role of Spice Jet is considered prominent recently as its strategy has been

able to produce effective results. Advance purchase sales and promos have led to filling up of seats which would otherwise

go empty. The result is the incremental revenue. During the quarter, a consistent growth was observed with growth in

September.

Despite all the efforts, analysts say that the chances of revival as of now are meagre though the falling price of crude is

helping the sector to reduce the costs. Though the challenges are significant, the chances of improvement are higher as per

the airlines executives. Investors perceive that from the next fiscal year, there will be economic growth in our country creating

7

Indian Aviation Sector to revive its flying spirit again

positive investing environment which will improve aviation sector all the more.

Since the decline is macroeconomic, handful of airlines cannot create an overall growth in the industry, but they certainly

have created hope for the future improvement of the sector. Thus the change that is occurring in the market is highly

appreciable which shows the hopes for betterment of aviation sector in future. The situation as of now is to stabilize in the

current scenario and strategize for the coming period.

DINESH SINGH MAHAT

II MBA (Financial Management)

8

Recently we have seen a fall in gold prices globally by nearly 40% since the last three years. Gold prices in India are also

down by over 20% from their peak over a year ago. The fall in gold prices has brought us to think whether we should consider

buying gold at the moment. But global investors are not in favour of buying gold as they neither see returns nor safety by

parking money in gold. Investors also feel that gold is not a good risk bearing tool against inflation as falling crude oil prices

and overall drop in prices of commodities seem to have given investors some relief on the inflation front. However in the case

of Indian investors, gold does provide protection from imported inflation as the rupee is weaker against the dollar, thus gold

will become costlier and protect prices from falling. Buying gold in India is like buying a US Dollar asset as gold is denominated

in US dollars.

The fall in prices has resulted in the public favouring gold. Most of the general public are tempted to buy gold now, but is

important for them to keep in mind the purpose for which they want to buy. If it is for use, perhaps this may be the time to

accumulate with purchase advisable at every fall. However investors globally are consistently selling gold. Holdings in the

largest US gold ETF has fallen by 45% from its peak two years ago.

Large investment banks have also predicted a further fall in gold prices. Indian investors should, however, keep in mind risks in

the exchange rate movement. If the rupee doesn’t weaken, then gold prices in India will also fall along with global trends.

During the last 40 years, gold has hardly given a negative return which was not the case for gold globally.

Another likely risk could be import duty cut as 10% custom duty was levied on import of gold. This has resulted in rise of

9

Investment in Gold, currently on hold!

smuggling gold because of which the industry has been asking for lower duty. If duty is cut by 2%, gold prices will fall to that

extent. Although how and when this will happen is an issue. Gold has been quoted at a premium for physical delivery, due to

several restrictions on import of gold over the last one year. The high premium as a result of lower supply could support gold

prices.

High premiums, duty cuts and fall in exchange rate of rupee would not let price of gold fall freely in India. Even globally, the

gold mines output growth has been slowing down causing restrictions in supply. Thus in the current scenario, Indian investors

need not be in a hurry to buy gold and should gradually make any future purchases at every fall.

MICHAEL ANTONY COLACO

II MBA (Financial Management)

10

Mumbai is undoubtedly India’s financial powerhouse. It contributes a major chunk to the GDP of India. Lying along the coast

of the Arabian Sea, it has a deep natural harbour which has aided a lot in India’s marine time trade. Popularly known as the

city that never sleeps, it is vibrant, fun and has something for everyone. It houses the major financial institutions of India i.e. the

Reserve Bank of India (RBI), National stock Exchange (NSE) and the Bombay Stock exchange (BSE). It is one among the

world’s top 10 centres of commerce in terms of global financial flow. It also houses India’s premier scientific and nuclear

institutes and furthermore, it also houses Bollywood and Marathi film industry along with the television industry. Mumbai,

formerly known as Bombay is the economic powerhouse of India. Its contribution to India’s economic development is

immense. Anything that impacts Mumbai impacts India as well. It is the nerve center of India’s economy just like New York is

to the United States of America.

It constitutes 70% of India’s maritime trade contains Asia’s oldest stock exchange that is the BSE. Mumbai has also benefitted

from the IT boom that has taken place in India. Until the 1970s, Mumbai owed its prosperity largely to textile mills and the

seaport, but the local economy has since been diversified to include engineering, diamond-polishing, healthcare and

information technology. The key sectors contributing to the city's economy are: gems and jewelry, leather, IT and ITES,

textiles, and entertainment. Nariman Point and Bandra-Kurla Complex (BKC) are Mumbai's major financial centers. Mumbai

provided the initial lead in the IT industry. Despite competition from Bangalore, Mumbai has created a niche in the IT industry

scenario of India. The SantaCruz Electronic Export Processing Zone (SEEPZ) and the International Infotech Park (Navi Mumbai)

offer excellent facilities to IT companies.

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India’s city of dreams- Aamchi Mumbai

It has the highest GDP in South Asia and in India. It contributes up to six per cent of India’s GDP and has the highest number of

billionaires and high net worth individuals in India.

It has always attracted people from all over India and it is also the gateway to India and has one of Asia’s busiest airports, the

Chhatrapati Shivaji International Airport. It has the largest consumer market in India and also the largest internet and telecom

users. Mumbai’s railways carry the most number of passengers in the world as per the recent findings. Thus with so many

institutes and businesses of national and international importance, it is little wonder about how much it contributes to the

Indian economy and this is only expected to grow in the coming years.

Thus no doubt Mumbai is India’s economic powerhouse and the pride of India and its importance in the development of the

Indian economy cannot be denied. It is the pride of us Indians and is poised to become one of the major cities of global

importance. Mumbai has always and will always continue to be the pride of India. True, it faces a lot of challenges ahead

but there is no doubt that it will stand and stick to it’s never say die attitude that keeps the city moving towards its prosperity.

PRITESH D’SOUZA

II MBA (Financial Management)

12

The concept of Corporate Social Responsibility refers to business decision making process which is linked to ethical values,

compliance with legal requirements and respect for people, communities and the environment. In other words the concept

of green marketing refers to the development of the products that consume low energy and the pricing policies associated

with it. All the four P's of the traditional marketing mix should be ‘green’, only then the concept of green marketing is

completed. In bank marketing literature, green marketing refers to the development of new ‘green’ financial products, such

as loans that finance cleaner technology and environmental strategies (such as energy efficiency and waste management

programmes) that improve bank’s environmental performance and reputation.

Environmental marketing planning should be based on social and environmental responsibility. In relation to the banking

sector, there are three dimensions of green marketing. The first refers to bank lending decisions based on environmental

criteria, the second dimension deals with bank’s environmental management strategies and the third is about developing

environment friendly financial products. According to one of the survey that was conducted on consumers who had the

experience of purchasing green or environmental products in Taiwan, a green corporate image exerts a positive effect on

customer satisfaction and customer loyalty. According to Chen, the companies should develop green marketing in order to

comply with environmental pressures, to have competitive advantages, to improve corporate image and to seek new

market opportunities.

A well-implemented green positioning strategy can lead to more favourable perceptions of the brand, indicating a positive

13

Green Banking for High Ranking

relationship between green and green image. (Hartmann et al, 2005).

Green product development (GPD) includes the development of business loans offered at beneficial terms to the companies

which are into sectors of green development. It also includes business loans offered at favorable terms to companies that

produce environmental friendly products along with the development of home improvement loans to individuals for the

improvement of house energy consumption and to development of consumer loans to individuals for the purchase of green

products. According to the bank manager green corporate social responsibility (GCSR) includes indicators like sponsorships

of projects, organisations and institutions that contribute to the protection of the environment and special programmes for

training customers as how to protect the environment green internal processing (GIP) could be also expressed by using

appropriate tactics for maximising the utilisation of the bank's resources and saving energy, special programmes for

personnel training in how to protect the environment

A green marketing strategy could make the difference for banks wishing to regain their lost pride and recapture their

customers, through an enhanced green image. The qualitative results confirmed that GPD and green processing are

important dimensions of green bank marketing. Even though green bank marketing is complex and multidimensional,

qualitative research showed that green marketing results in a favourable, green bank image. So the bank marketers should

pay special attention to their internal processes, aiming at continuous improvement and eco-friendly system solutions.

BABIL JOSE THOMAS

II MBA (Financial Management)

14

Flipkart, an E-commerce giant established its business in a remarkable way. Flipkart was started by Sachin Bansal and Binny

Bansal in Bangalore, Karnataka. It is registered in Singapore and has millions of customer in India. It specializes in online retail

in fashion, sportswear and other accessories. Initially, the founders had spent just rupees four lakhs for making website to set

up the business. Now having more market share in India it is trying to expand its business for which it had raised funding from

venture capital funds Accel India (US$1 million in 2009) and Tiger Global (US$10 million in 2010 and US$20 million in June

2011). On 24 August 2012 Flipkart had announced the completion of its 4th round of $150 million funding from MIH (part

of Naspers Group) and ICONIQ Capital. The company also announced on 10 July 2013, that it had raised an additional $200

million from existing investors including Tiger Global, Naspers, Accel Partners and Iconiq Capital. Even when there is

competition from Amazon, Snapdeal, Myntra and other retailers it has sustained to become number one in Indian Market

When Flipkart entered Indian market it adopted various strategies to attract its customer thus increasing the number of online

shoppers drastically. The Indian retail shops are under threat because of online retailers playing major role in distribution of

various products. They are running under loss because of lack of customers. Spiraling inflation and economic slowdown have

failed to impact shoppers who are visiting the retail shops more, but also at the same time are increasingly giving preference

to buying stuff online. Shopkeepers and mall owners are feeling the heat as they scramble to stand up to increasing

competition from online retailers. A recent Associated Chambers of Commerce and Industry of India (Assocham) paper for

2013 said that regular trade (when people buy goods from shops) had increased by 65% but online trade registered an

impressive growth of 85%, a good 20% more. Hottest products online are in the tech and fashion categories, according to

15

Giant of E-Shopping: FLIPKART

Assocham. India's e-commerce market was worth about $2.5 billion in 2009, and it went up to $6.3 billion in 2011 it also went

up to $16 billion in 2013 and is expected to touch a whopping $56 billion by 2023 which will be 6.5% of the total retail market.

It will overtake the show room retailers. While customers eschew the many advantages of online shopping, small businesses

are hit hard by the trend. Many sites today offer huge discounts on products. There is no overhead cost incurred by online

stores like other retail stores. The retail stores have to rent store space, hire manpower, pay electricity and after all that to offer

discounts to customers is not possible. The conflict between the offline retailers and their online counterparts has really come

to a head, and for the traders at least, the situation has started to look desperate. Their continued survival could depend on

the brands' support at this stage but not every brand is giving the support. The fact that online discounts and sales have

come to dictate pricing in India. While customers benefit from reduced pricing and increased convenience, the extent of the

impact that online retailers like Flipkart and Amazon are having on the day-to-day operations of brick-and-mortar stores is

something very few have paused to think about. Thus it can be concluded that the offline retailers will surely have a tough

time in future

GIRISH PATEL

II MBA(Finanncial Management)

16

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EDITORIAL TEAM

CHIEF EDITOR

Dr JAIN MATHEW

HEAD OF DEPARTMENT

MANAGEMENT STUDIES

ACADEMIC CO-ORDINATOR

PROF SURESHA B

FACULTY CO-ORDINATOR

Dr SUNITA PANICKER

EDITORS ANKITA BHATTACHARYA

ANUPAMA SAPRU

ERICA NIKHITA D’SOUZA

NIVYA DEVRAJ

SAI KRISHNA

CREATIVE TEAM UMME SALMA

18

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