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Term of Week

In Focus

Opinion

Personality Tech World

ESOP | 6

iFusion |12 Ravi Venkatesan |11

Grexit Worries | 4

JULY 19, 2015 | A FINNICHE INITIATIVE

Irans Nuclear

Deal | 2

Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.

IMT Ghaziabad will be hosting the launch of Indias most important biggest B school

case study event on 19th July. Club FinNiche would like to take the opportunity to

welcome all the juniors to the clubs and committees in IMT Ghaziabad. It is exciting to

see the flare with which the juniors are taking the new leadership roles and carrying

forward the IMT legacy.

FinNiche launches yet another edition of FinXpress with the In Focus section putting

light on Irans Nuclear Deal. The Opinion gives an overview of Grexit Worries.

The term of the week describes ESOP", a decision by the board of the directors to

increase the number of outstanding shares by dividing the shares, keeping the total value

of shares same. Do have a look at the revamped market section which has included

international markets and Tech world which brings to you iFusion.

Hope everyone likes the revamped version of magazine. Club FinNiche welcomes any

comments, suggestions or criticism regarding the magazine. Please do write to us and

share your ideas.

Happy Reading!

Regards

The Editorial Team

Club FinNiche

July 19, 2015 | Volume 40

Irans Nuclear Deal

Grexit Worries

ESOP

Ravi Venkatesan

iFusion

Deal has the potential to

change the political landscape

of Western Asia.

Israel has condemned the

deal.

- By Shashwat Shekhar

Iran reached an historic deal with six major

world powers on Tuesday. The nuclear deal

ends a decade of tough negotiations. This

deal has a potential to transform West Asia.

The agreement was reached in Vienna, on the

18th day of diplomatic talks. According to the

deal, the sanctions imposed on Iran by U.S,

European Union and the United Nations will

be lifted and in return Iran will curb its

nuclear programme. The west has always had

its suspicion that Irans nuclear programme

is aimed at making a nuclear bomb. After the

deal, the President of the U.S, Barack Obama

said that the deal effectively blocks every path

to a nuclear weapon that Iran can take. The

foreign minister of Iran, Mohammad Javar

Zarif, called deal a win- win. The deal can

be seen as a major victory for both U.S

President Barack Obama and his Iranian

counterpart Hassan Rouhani. The latter was

elected two years ago on a promise that he

would reduce the diplomatic isolation of

Iran.\The Prime Minister of Israel, Benajmin

Netanyahu, termed the deal a mistake of

historic proportions while the deputy foreign

minister of Isreal, Tzipi Hotovely, called the

deal historic surrender.

The U.S congress has 60 days to review the

deal and if the congress chooses to reject the

deal, the US President, Barack Obama can

exercise his veto power. It would take two

third majority of the lawmakers to override

the veto. This means that for the bill to die,

some fellow members of Obama from the

democratic party will have to vote against the

bill. On the other hand, it is not likely that

Iran will be able to receive benefits of the deal

before next year as it needs to be ratified. It is

also required to verify the implementation.

Irans National Security Council will also

review the deal and if it thinks that the deal is

against national interest then Iran will not go

ahead with the bill.

The deal also has a snapback mechanism.

Under this clause, some sanctions can be

re-imposed in 65 days if Iran violates the deal.

The ban on Iran for procurement of missile

technology will remain for next eight years.

Similarly, embargo on weapons is to remain

for next five years. On the sidelines of the

deal, the International Atomic Energy Agency

(IAEA) also reached an agreement with Iran

on ways to resolve outstanding issues

between the two by the end if thus year. The

deal with the world powers hinges on the

condition that IAEA will be able to inspect the

nuclear sites in Iran. Iran is also expected to

answer questions of IAEA regarding military

aims of past research.

The fact that the deal can benefit Iran has not

gone down well with allies of U.S in West

Asia. Iran does not officially recognize Israel

and supports enemies of Israel. Some people

believe that the reason behind the US

improving its relationship with Iran is the

emergence of a common enemy in Islamic

State which has gained ground in Syria and

Iraq.

Lifting off sanctions can bring a rapid

economic boon in Iran. The restrictions had

reduced countys oil exports and the economy

shrunk by approximately 20%. The global oil

prices fell at the prospect of Iranian oil

returning to the market. U.S and European

Union will allow Iran to export oil to any

country and reduce restrictions on trading

other products such as chemicals, natural

gas and refined products. Only Russia holds

more gas reserves than Iran.

Once the sanctions are removed , it will be

easier for India to pay in rupees for the crude

oil it imports from Iran. The plan of a gas pipe

line from Iran to India through Pakistan can

also be revived. Iran is also expected to open

its substantial hydrocarbon reserves to Indian

companies.

The prospect of oil production in Iran will put

downward pressure on crude oil prices. It is

estimated that crude oil prices will remain

below $70 per barrel in both long and

medium term. This will continue to have a

profound effect on Indias import bill.

Indias energy consumption is 4.4% of total

global consumption of energy. It comes

behind only U.S, China and Russia in terms

of energy consumption. Consumption of

petroleum products in India grew by 3.14% in

the fiscal year 2014-15. IMF has pointed out in

its report titled Implications of lower oil

prices that countries like India will be able to

reap modest benefits of lower oil prices as the

government does not fully pass on the

benefits to the final consumers. The fall in

crude oil prices is expected to boost the global

economy by one percentage point in 2015

and 2016. In the same period Indias GDP is

expected to grow by 0.4 and 0.6 percentage

points respectively. This is done mainly by

the government the budget deficit and correct

the subsidiary burden. Fall in international

prices of crude oil has helped the NDA

government to keep the retail inflation below

5%.

Low crude oil prices has also given countries

like India an opportunity to re-negotiate the

conditions of imports. India has requested for

a correction in terms and price with

Organization of the Petroleum Exporting

Countries and has asked for abolition of

something called Asian premium.

Abolition of this premium will also help

Japan, China and Korea along with India.

OPEC accounts for 94% and 85% of Indias

gas and crude oil imports respectively.

If the agreement manages to survive it will

be one of the greatest foreign policy successes

for the President of U.S. Obama had

personally started the initiative two years ago

with a call to the Iranian President Hassan

Rouhani. In 1980, the U.S had cut diplomatic

ties with Iran after a group of revolutionaries

attacked the U.S embassy in Tehran and kept

hostages for more than year.

Oil prices are likely to drop in

anticipation of excess supply.

Iran has the second highest

gas reserves in the world.

- By Gayatri Pandit

In European Union, most political decisions

related to money and migrants rests with 28

national governments. The tension of

adjusting the economy according to other

factors like currency, tax laws has become

acute since 1999 on introduction of the euro,

which now binds 19 nations into single

currency which is watched by European

Central Bank. However, it leaves budget

decisions and tax policies in the hands of each

country. With the beginning of Greece crisis

in 2010, many international banks and foreign

investors sold their Greek bonds and holdings

to avoid the repercussions of Greece debt

crisis.

Bailouts to Greece

After Wall Street imploded in 2008, Greece

announced that it had been understating its

deficit figures for years, which left investors

and creditors questioning about the

soundness of Greek finances. By 2010, Greece

curtailed the borrowings in the financial

markets which further threatened to set

financial crisis. To control this situation, the

troika the International Monetary Fund,

the European Central Bank and the European

Commission issued two international bailouts

for Greece, which would eventually total

more than 240 billion euros. In 2010, a 110

billion bailout loan to rescue Greece from

sovereign default was launched and cover its

financial needs throughout May 2010 until

June 2013, however with delayed

implementation by Greece calls for another

bailout package of 130 billion. These

packages comes with conditions on

implementation of austerity measures,

structural reforms, and privatization of

government assets. It requires deep budget

cuts and tax increase.

The bailout money was given to let the Greek

economy stabilize its finances and quell the

fears that the EU could break. Though it had

helped to reduce problems twinned

unemployment raised above 25 percent. The

bailout money mainly goes toward paying off

Greeces international loans, rather than

making out a way for economy to recover.

The Greek government still has debt load

which could not be paid unless the recovery

takes hold.

Very nearly 66% of Greece's obligation,

around 200 billion euros, is owed to the

Eurozone bailout fund or other Eurozone

nations. Greece does not need to make any

payments on that obligation until 2023. So

while Greece's aggregate obligation is huge as

much as twofold the nation's annual

economic outputit may not make any

difference much if the legislature did not have

to make payments for quite a long time to

come. When the money came due, the Greek

economy could have sufficiently developed

that the entirety no more appeared to be

daunting. In the short term, however, Greece

has an issue making payments due on

Grexit, an abbreviation for

"Greek exit," refers to Greece's

potential withdrawal

from the Eurozone, after which

it would most likely revert to

using the drachma, its currency

until 2001

credits from the International Monetary Fund

and on securities held by the European

Central Bank. Those commitments add up to

more than 24 billion euros through the middle

of 2018, and it is impossible that either

institutions would agree to delay the

repayments.

As said by Paul Krugman, Greek economy can

recover from the crisis by exiting from EU and

launching a new currency. The Greece can

further devaluate its currency to boost its

exports and the debts can be paid with

cheaper currency. However, it may have

consequences such as the dogma that the EU

membership would no longer be perceived as

irrevocable, which also led to impact on the

austerity measures set by IMF which has

contributed to Greek depression. In addition,

looking at the current scenario with a very

high debt (177% of its GDP) the solution of

third bailout is a temporary fix as Greece is

likely to find it increasingly difficult to meet

the revenue and budget deficit targets.

Currently, the Greek parliament has agreed to

European demand of tough new austerity

measures and structural reforms for defusing

the countrys sovereign crisis. Now here the

question raises whether the Europe is able to

deliver the broad-based economic reforms to

stressed countries like Greece. The answer to

this question is obvious, in the global

economic crisis the outcome of euro zone is

disappointing which is due to the weak

performance of Eurozone as a whole and

asymmetric outcomes within the Eurozone

countries.

A credit default swap is a type

of contract that offers a

guarantee against the

non-payment of a loan. In this

agreement, the seller of the

swap will pay the buyer in the

case of a credit event (default)

by a third-party. If no default

occurs, the seller of the swap

will have collected a premium

from the buyer.

Employee Stock Ownership Plan or ESOPs is

a type of employee benefit plan which tends

to encourage employees to acquire stock or

ownership in the company. Certain stocks are

given to the employees at no or negligible

costs under these plans and they remain in

the ESOP trust fund till the time the employee

retires or leaves the company and the

employee can exercise the rights on such

shares.

These plans aim to motivate the employees

and ensure dedication towards the company

for improvement in work performance and

also to increase the value of the company by

offering shares to the employees of the

company. It is an incentive which is given to

the employees to create a sense of

commitment towards the company and is

proven to be effective as an appeal to the

employees. It generally appeals all kind of

employees and the HR need not be in a fix as

to what kind of incentives needs to be offered

to the employees: monetary or non-monetary.

ESOPs are often used as a corporate finance

strategy and to align the interest of the

employees with that of the interest of the

organization. ESOPs are considered to be

qualified in the sense that it provides various

tax benefits to the company which is

sponsoring ESOPs, the employee and also to

the selling shareholder.

It can be used to keep plan participants

focused on company performance and also

the appreciation of share prices. It acts as an

interest builder to the employee as he will be

interested in the performance and stock

prices of the company and will be

encouraging participants to do what is best

for the shareholders as the employees

themselves are shareholders.

Uses of ESOPs :

To create an additional employee benefit:

It can be used in conjunction with

employee saving plans

To borrow money at a lower after-tax

cost: The ESOP borrows cash which it

uses to buy company shares enabling

company to make interest and principal

deductions

To buy the shares of a departing owner:

Owners of privately held companies can

use ESOPs to create a ready market for

their shares.

- By Yojana Ranasaria

INDIAN MARKETS BSE index ended up 0.06 percent, while the NSE index closed 0.02 percent higher,

marking their highest close since April 16.For the week, the BSE 30-share index gained

2.9 percent and the broader NSE index rose 2.98 percent. Inflation data, Greek develop-

ments and companies' quarterly earnings decided the course for the stock markets this

week. Besides, progress of monsoon, investment trend by foreign investors and the

movement of rupee against the dollar also influenced sentiment. Indian markets start

its upward journey on its own merits.

BSE SENSEX

CNX NIFTY

Open High Low Close

SENSEX 28,480.92 28,576.32 28,417.46 28,446.12

NIFTY 8,623.65 8,642.95 8,593.15 8,608.05

COMMODITIES

EXCHANGE RATES

INTERNATIONAL MARKETS

Commodity Unit Rs / Unit % Change

Gold 10 grams 25498.00 -1.06

Silver 1 kg 34200.00 -0.88

Crude Oil 1 bbl 3208.00 -1.44

INR/ 1 USD 63.49

INR /1 EURO 69.14

INR/ 100 JAPAN YEN 51.20

INR / 1 POUND STERLING 99.42

Open High Low Close

NYSE Comp 11,010.84 11,010.84 10,965.67 11,024.87

NASDAQ 5,196.11 5,210.16 5,183.23 5,210.14

S&P 500 2,121.50 2,123.00 2,120.75 2,121.25

FTSE 100 6,796.45 6,799.78 6,764.80 6,775.08

CAC 5,138.98 5,138.98 5,110.48 5,124.39

DAX 11,747.47 11,753.18 11,649.94 11,673.42

NIKKEI 225 20,646.63 20,658.95 20,611.22 20,650.92

SSE 50 2756.87 2834.18 2723.74 2742.85

Hang Seng 25,246.64 25,517.45 25,183.86 25,415.27

Data centres in India Oracle

With the increase in adoption of cloud based applications and solutions as well as increase

in demand from the government segment, Oracle an enterprise software company is now

mulling data centres in India. This will help the software company to host the applications

and some other cloud based solutions within the country. Oracle presently does not have

any data centre India and the potential growth as well as demand are certainly making the

company to think over having some data centres in India. India is the second largest

employee base for Oracle globally. Recently, Microsoft announced to set up three data

centres in India. Considering data centre in India, Oracle will have 19 cloud data centres in

India. Also the government will be benefitted through the applications and solutions in the

Digital India campaign. Other than public sector, the demand for such solutions is

increasing in the banking, financial services, insurance, telecom and manufacturing sector.

Declining steel prices are affecting makers of raw materials

The declining steel prices are affecting the makers of pellets, sponge, pig iron units etc. Even

in the last four months, several sponge iron units across the country have shut down , pellet

plants have been unable to sell and the pig iron industry experienced reduction in capacity

utilised. The industry has an annual capacity of 50 million tonnes but currently it is

producing only 17-20 million tonnes, and that is how they are also failing to make money.

Karnataka has experienced significant number of shut downs, 36 out of 66 units have shut

down, 2 are sold and rest are running at the half the capacity.

WPI remains in negative zone for eighth month

Annual wholesale prices continued to decline for the eighth consecutive month. WPI

declined at a faster rate of 2.4% in June year-on-year compared with 2.36% in May. The WPI

inflation in June 2014 was 5.66%. WPI food inflation also came down from 3.80% in the

previous month to 2.88%. However, CPI inflation rose to a nine month high of 5.4% in June.

Considering the difference in the WPI and CPI, economists said that higher margins at retail

levels also led to the divergence between the two inflation numbers especially on food front.

From merchandised dolls and

board games to reality shows,

amusement park sides and

digital properties, Disney has

mastered the art of making

movies live forever. The Indian

arm of Disney is even doing the

same.

Monsoon session could derail GST deadline

Earlier this year, Finance Minister Arun Jaitley made an impassioned plea in the Lok Sabha

to pass the GST bill. If the House did not pass it, he warned the Constitutional Amendment

Bill would not clear the April 2016 deadline when it must be rolled out. And this fear may

come true. Other competitive political power in Bihar, where an election is yet to happen is

likely to dominate the monsoon session and less amount of business may happen, especially

in the Rajya Sabha. Whereas, other political leaders are also trying to extend the deadline.

The All India Anna Dravida Munnetra Kazhagam (AIADMK) is not in favour of the bill in

terms of its existing principle. On the other side, Congress which has 12 state governments

out of 29, already showed its disagreement with the existing norms. So even after monsoon,

it seems difficult to get the bill cleared having maximum votes in favour.

RBI reverses farm loan norms because of weak rains

Government showed its concern over a week monsoons impact on the agricultural sector as

well as RBI adopted the policy of direct agricultural lending target for banks. In April this

year, The RBI had announced revised norms for priority sector lending in which the

distinction between direct and indirect lending was abolished. These norms became

effective immediately. But RBI issued a circular to banks asking lenders to beef up credit

directly to the farmers so that they do not resort only to corporate farm loans to meet

targets. However, it is the banks duty to ensure that their direct lending to non corporate

farmers does not fall below the system wide average of the last three years. These norms

not only abolished distinction between direct and indirect agricultural norms but also set

targets for loans to marginal farmers and a variety of corporate loans.

Mindtree announced two acquisitions

Mid-sized information technology services company Mindtree announced two acquisitions

worth Rs. 425 crore. The reasons can be digital is getting more and more popularity and

other big players are taking similar kind of steps and also the company will definitely

experience certain increase in the cline base. These acquisitions are expected to expand the

companys offerings in the digital field and also overall revenue. Mindtree will acquire

British technology consultancy Bluefin Solutions and US-based analytics firm Relational

Solutions.

Ravi Venkatesan is the former chairman of

Microsoft India, now is the founder chairman

of Social Venture Partners India. Through

Social Venture Partners Ravi Venkatesan

formed a network of engaged philanthropists

who are into addressing social problems

through venture philanthropy. He is also

serves as a venture partner at impact investor

Unitus Seed Fund. He also serves as a board

member of Rockefeller foundation, Infosys

Ltd, and Strand Lifesciences. He is the author

of the book which is published in Harvard

Business Review, which is Conquering the

Chaos: Win in India, Win Everywhere.

At Microsoft

Ravi Venkatesan served as Chairman of

Microsoft India from 2004 to 2011. during this

tenure Ravi helped to build India into

Microsofts second largest presence in the

world and one of its fastest growing markets.

He is also the creator of Microsoft Indias

Project Shiksha, which is a computer literacy

program. It trained almost 40 million school

children in India.

At Cummins Inc.

Ravi spent sixteen years with Cummins Inc.

As a chairman of Cummins India he led its

transformation into Indias leading provider

of engines and power solutions. He is one of

the key members in establishing Cummins

College of Engineering. It is Indias first

engineering college for women in Pune.

Education

Ravi Venkatesan has obtained his bachelors

degree in mechanical engineering from

Indian institute of Technology, Bombay. He

did his masters in engineering from Prude

University and has a Master of Business

Administration from Harvard Business

School.

He received Indian Institute of technology

Bombays Distinguished Alumnus Award.

He was also voted as one of Indias best

management thinkers by Thinkers50. He was

voted the most influential MNC CEO for 2011

by the Economic Times daily. He was in the

news recently when he was shortlisted by the

government for the post of chairman in PSBs.

IIT Bombay

Purdue University

Harvard Business School

2003

Distinguished Alumnus Award,

IIT Bombay

2011

Distinguished Engineering

Alumnus, Purdue University

2011

Most Influential MNC CEO,

Economic Times

2013

Indias Best Management

Thinkers, Thinkers 50

The iFusion device is a device that allow you

to bring together the traditional features of

the phone with the features of the iPhone,

thus bringing a completely new device that

enables the user to enjoy the benefits of both

the worlds.

Its ideal for the use as it allows for hands

free talking especially in a home or office

setting.

With the prevalence of home offices,

especially in a start up, it becomes really

ideal for them

Its very easy to coordinate a video call in a

skype or facebook app.

Docks are integrated for helping it to get

charged faster and easier.

Streaming music is also easier from your

iPhone.

Compatibility is not an issue , as iFusion is

highly compatible with iPhone PBX apps,

Cisco Mobile 8.1, Avaya one-X Mobile, and

MaxMobile for Microsoft Lync.

Key Features

The Bluetooth technology is the latest to

allow for rich audio and video quality to

allow for rich quality.

The speaker are dual full duplex for

amazing audio quality in conversation or

in audio quality.

Highly efficient design, ergonomic, and

very easy on the palm as well as in the

hand.

The embedded ports are integrated to

provide the facility of charging.

The data facilitation is easy as USB port

allows data and other synchronization

with a Mac or PC.

It also comes with an audio enhancer, for

external use.

The USP of the device is that it allows all the

platform of IOS to work , doing away with

the compatibility issues, and the networking

issues.

- By Shubhra Sasmit

Bluetooth 2.1 + EDR

Apple 30-pin Connector

3.5mm stereo port for external

speakers

Power Supply Input - 100-240V

auto sensing 50/60Hz 0.3A

DC to phone - 12V 1A

USD 29.95