PIPELINE

Today's word:  PIPELINE
Theme for this fortnight: VENTURE CAPITAL 

An investment company whose purpose is to collect investment funds from a pool of individual investors and invest them in financial securities. It is the flow of upcoming underwriting deals.

 

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INCUBATOR

Today's word:  INCUBATOR
Theme for this fortnight: VENTURE CAPITAL 

A firm engaged in the business of fostering early-stage companies through the developmental phases until such time as the company has sufficient financial, human and physical resources to function on its own.
                The firm can be either a non-profit or a for-profit entity, and it can provide assistance via any or all of the following methods: 1. access to financial capital through relationships with financial partners, 2. access to experienced business consultants and management-level executives, 3. access to physical location space and business hardware or software and 5. access to informational and research resources via relationships with local universities and government entities.

 

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VRITTAM (20 OCT 2013 - 26 OCT 2013)

THE WEEKLY FINANCIAL NEWS

Festive season: Discounts, freebies galore as cos try to woo consumers

As the festive season sales peaks, consumers are spoilt for choices as companies and service providers flood the market with discount and freebies. Consumer durables makers have come with offers as assured gifts, cash backs and special packages as free installation, discount on annual maintenance cost, free insurance etc to boost up their sales festive season. South Korean major LG is storming the market with offers like free 3D Blue Ray Home Theater with selected high end televisions, free LED TV 24 and 22 inch, with the purchase of designated high end television models and an assured Magic Motion Remote with the purchase of selected smart TV models.

 

Consumer durables makers have come with offers as assured gifts, cash backs and special packages as free installation etc to boost up their sales festive season.

India to build $300 billion forex chest to counter a slimmer QE figure

India hopes to have a $300-billion war chest ready by the end of the year as a frontline defence against tapering by the US Federal Reserve, which is now expected to begin sometime early next year. The finance ministry expects $30 billion to be added to its foreign exchange reserves, currently estimated at $251 billion, by the end of November.

Post offices, cooperative banks the next Amul success story in banking?

When there are nearly 96,000 co-operative banks spread over thousands of villages and post offices located in 2.38 lakh panchayats, is there a need for a fresh set of institutions to harness the savings of people in rural India? This may be the turn of financial services to have its own Amul, the milk co-operative that has delivered prosperity to millions of rural folk, and proved that it could still be a business model.

US QE tapering: FM P Chidambaram wants regulators to take preventive steps

Finance Minister P Chidambaram today asked financial sector regulators, including RBI and Sebi, to take preventive steps to neutralise the impact of US Federal Reserve's monetary stimulus tapering that is likely early next year. Chidambaram, according to sources, asked regulators at FSDC meeting to work out preventive measures. The Financial Stability and Development Council (FSDC) members include heads of regulatory bodies like RBI, Sebi and IRDA. 

Tata-Singapore Airlines aviation venture gets FIPB nod without any riders

The Foreign Investment Promotion Board (FIPB) has approved Tata group's proposal to set up a full service airline in partnership with Singapore Airlines, paving the runway for the high-profile aviation venture to take to the skies in the months ahead. The board has not imposed any rider on the venture. All departments and ministries had cleared the proposal. An earlier proposal by the Tata group to set up a low-cost airline together with Malaysia's Air Asia had encountered some problems a few months ago. 

Final costs of US shutdown could tally in billions

The government shutdown that ended this week will cost the U.S. economy several billion dollars, according to estimates by economic research firms. But the affiliated damage - like the undermining of consumer and business confidence - will be far greater, economists said, especially combined with the financial effects of the near-breach of the country's statutory debt ceiling. When the federal government shut down Oct. 1, permit offices across the country stopped accepting fees, contractors stopped receiving checks and research projects were put on hold. Such disruptions come with a price tag, although it will be small in the context of the $3.5 trillion the federal government spends every year.

Income Tax department puts HRA exemption under scanner

As if the additional information required in tax returns was not enough, there's more bad news for tax evaders. Salaried taxpayers who claim HRA exemption will now have to report their landlord's PAN if the total rent in a year exceeds Rs 1 lakh. "In case the landlord does not have a PAN, he must submit a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee," says a circular issued by the Central Board of Direct Taxes last week.Till now, if the total rent paid was less than Rs 15,000 a month, there was no need to submit the landlord's PAN details. The new rule effectively reduces this limit to Rs 8,333 a month.

Special RBI measures got India $ 9.6 bn in forex: P Chidambaram

India has received over nine billion dollars from two foreign schemes, which were announced in September to attract foreign funds and help the country to bridge the widening current account deficit(CAD). Soon after taking over as RBI Governor on September 4, Raghuram Rajan had announced opening of a swap window facility to encourage banks to lure NRI funds. 
Under the facility, banks are permitted to swap fresh FCNR(B) dollar funds, mobilised for a minimum tenor of three years, at a fixed rate of 3.5 per cent per annum for the tenor of the deposit. Also, he had relaxed norms for banks and allowed them to raise capital abroad to the tune of 100 per cent of their Tier I (equity) capital. tic staff

India's mobile economy to contribute $400 billion to GDP by 2020

Mobile economy in India, world's second largest market by subscribers, will contribute around USD 400 billion to the country's GDP and create 4.1 million jobs by 2020, a report by the global mobile operators industry body GSMA said. Mobile economy will also lead to investments of USD 9 billion in telecom infrastructure, said the 'Mobile Economy India 2013' report prepared in collaboration with consulting firm Boston Consulting Group. 

Government for minimum 6 pc of vehicle price as registration tax

The government has favoured a levy of a minimum 6 per cent of the sale price of the vehicle as a lifetime tax by various states. Ministry of Road Transport and Highways recommended all the states should levy a lifetime tax at floor rate of 6 per cent of the sale price of the 2-wheelers, cars and LMVs ( light motor vehicles).

EXPERT VIEW

Gold coin not a gift option anymore this Diwali
By Sutanuka Ghosal, ET Bureau

 

A SNEAK PEAK INTO THE WORLD OF FINANCE

To know the five mistakes people make while setting financial goals, click on the slideshow below.

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T-REX FUND

Today's word:  T-REX FUND
Theme for this fortnight: VENTURE CAPITAL 

Slang term for a very large venture capital fund. These funds typically have over one billion dollars, and tend to be powerful in their business dealings.

 

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GROUND FLOOR

Today's word: GROUND FLOOR
Theme for this fortnight: VENTURE CAPITAL

 

 

The first stage of a new venture or investment opportunity. Venture capitalists get in "on the ground floor" of as many reasonably promising companies as they can, hoping to catch the explosive growth of a small company that becomes the next big thing.

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FULL RATCHET

Today's word: FULL RATCHET

Theme for this fortnight: VENTURE CAPITAL

An anti-dilution provision that, for any shares of common stock sold by a company after the issuing of an option (or convertible security), applies the lowest sale price as being the adjusted option price or conversion ratio for existing shareholders.

Full-ratchet anti-dilution protection allows an investor to have his or her percentage ownership remain the same as the initial investment.

For example, an investor who paid $2 per share for a 10% stake would get more shares in order to maintain that stake if a subsequent round of financing were to come through at $1 per share. The early round investor would have the right to convert his shares at the $1 price, thereby doubling his number of shares.

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VRITTAM (13 OCT 2013 - 19 OCT 2013)

THE WEEKLY FINANCIAL NEWS 

Prime Minister Manmohan Singh heads to Russia, China to boost trade

Prime Minister will look to clinch energy, defence and other economic deals to boost trade and investment to kick-start sluggish growth.
 
India may launch interest rate futures in next two months
India plans to launch trading of government bond futures within the next two months as part of efforts to deepen its financial markets. These interest rate futures would help banks and financial firms in Asia’s third-largest economy assess expectations for borrowing costs and hedge the risks of rate changes to their bond portfolios. It would also provide the country’s policymakers with a valuable gauge to measure market expectations for their future rate decisions.

HSBC to shut retail brokerage, depository business in India

Hong Kong and Shanghai Banking Corp. Ltd plans to discontinue its retail broking and retail depository services businesses in India, operated under HSBC Invest Direct Securities (India) Ltd, following a review of its business in the country, a spokesperson said on Thursday. About 300 employees at these two divisions will likely lose their jobs, the spokesperson said. HSBC employs about 30,000 people in India.

India may use forex reserves to finance CAD: World Bank

India may have to dip into its foreign exchange reserves to finance the current account deficit (CAD) in 2013-14, the World Bank said. The CAD for the first quarter of the current financial year was USD 21.8 billion, or 4.9 percent of gross domestic product, driven by sluggish exports and high gold imports in April and May.

Gold is so yesterday, the VIX is the new safe haven

With gold's safe-haven status eroding, analysts say volatility indexes like the VIX are becoming the preferred method for hedging risk. As a traditional safe-have asset, gold typically rallies during periods of heightened economic risk, but in recent years gold's behavior has befuddled many analysts. Over the course of the over two-week US government shutdown, for example, gold has fallen 3.35 percent.

Economy will pick up by year-end: RBI Guv Rajan

India's economy will pick up by year-end thanks to the start-up of billions of dollars’ worth of stalled resource projects and a good monsoon season that will bolster agricultural production, the Reserve Bank of India's chief said on Tuesday. The Reserve Bank of India is due to review monetary policy on October 29, with a rising pace of inflation bolstering odds for another central bank interest rate hike even as the economy stumbles through its worst crisis since 1991. He said that he believed India's economic growth would start to pick up in the fourth quarter after a commission gave the green light to scores of resource projects that had been put on hold during a sweeping government review of transparency and environmental policy.

World Bank cuts India's 2013-14 GDP forecast to 4.7%

In April, the World Bank had projected India's GDP would grow at 6.1 percent in the current financial year and at 6.7 per cent the following year. The World Bank today slashed India's economic growth forecast for the current financial year to 4.7 percent.

Don't merit IMF downgrade; preparing for QE tapering: FM

At a time when rating agencies are raising doubts over US' financial stability , Finance Minister P Chidambaram is trying his best to dismiss negativity surrounding the Indian economy. The International Monetary Fund recently lowered India’s growth forecast from 5.6 percent to a steep 3.8 percent. Chidambaram, however, believes India does not deserve this downgrade.

Managing slowdown: Brands embrace innovative tactics to keep consumers happy

From pariah to world's favourite, rupee becomes carry trade pick on Raghuram Rajan’s moves
Reserve Bank of India governor Raghuram Rajan has turned the rupee from a pariah to the world's favourite currency after just a month in office as he intensifies efforts to quell inflation and lure capital. Investors selling dollars to buy rupees earned 10 per cent since Rajan took over on September 4, the most among 44 currencies tracked by Bloomberg and a turnaround from a 2.8 per cent third-quarter loss.

Slums contribute over 7.5% to GDP: Study

India has 240 million households living in informal urban settlements, including slums — 40 per cent higher than 140 million slum households estimated by Census of India 2011 data, says an independent study by research firm Indicus Analytics and civil society organisation PRIA. The study on the 'economic contribution of urban poor in India' has also found that people living as informal settlement dwellers contribute about more than 7.5 per cent to the country's urban GDP.

High inflation to persist till Dec; repo hike likely: Pros

EXPERT VIEW

Why Raghuram Rajan has to deliver a kick in UPA's pants

By R Jagannathan, editor-in-chief, digital and publishing, Network18 Group

A SNEAK PEAK INTO THE WORLD OF FINANCE

To know what are the risks of a US Treasury default, click on the slide show below

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DOWN ROUND

Today's word: DOWN ROUND
Theme for this fortnight: VENTURE CAPITAL

 

A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the company by earlier investors.

Down rounds cause dilution of ownership for existing investors. This often means the company's founders stock or options are worth much less, or even nothing at all. Unfortunately, sometimes the only other option is going out of business. In this case down rounds are necessary and welcomed.

Down rounds are commonplace when a red hot economy turns bad. A perfect example was the dot-com crash of 2000-2001.

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DEATH VALLEY

Today's word: DEATH VALLEY
Theme for this fortnight: VENTURE CAPITAL

 

A slang phrase used in venture capital to refer to the period of time from when a startup firm receives an initial capital contribution to when it begins generating revenues. During the death valley curve, additional financing is usually scarce, leaving the firm vulnerable to cash flow requirements.

 

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ARCHANGEL

Today's word: ARCHANGEL
Theme for this fortnight: VENTURE CAPITAL

 

An angel investor who has invested in a number of ventures that have achieved fame and fortune as commercial successes. An angel investor with this degree of success may also be referred to as a "super angel." The term may also refer to an external advisor hired by a group of angel investors to perform due diligence and provide advice on business opportunities that are being considered by the group.

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ADVENTURE CAPITALIST

 

Today's word: ADVENTURE CAPITALIST
Theme for this fortnight: VENTURE CAPITAL

A specific type of venture capitalist who is more accessible, but who may be harder to find and whose pockets are not as deep as a traditional venture capitalist. Or, a specific type of venture capitalist who is willing to invest in endeavors that would be considered too risky for traditional venture capitalists.

Adventure capitalists invest in smaller upstarts when they are young and in need of funding to expand their operations. They may specialize in investing in particular industries, in which they have specialized knowledge. Adventure capitalists also take on a great deal of risk, but often have a say in company decision making and can earn large returns on their investments if the company succeeds.

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STREET BOOK

Today's word: STREET BOOK
Theme for this fortnight: FUTURES 

A daily account of futures commission merchants and clearing members. The street book gives details on each futures transaction, including the date, type of commodity, price and the affected market. The street book also records the name of the person for whom the trade was made.

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VRITTAM (07 OCT 2013 - 12 OCT 2013)

THE WEEKLY FINANCIAL NEWS 

Promoters crowd the street to buy out ‘bottomed-out’ stocks

Promoters of many mid- & small-cap companies and a few high-profile owners are quietly acquiring shares of their companies through open market purchases for the past few months as they feel that these stocks have bottomed out, and are priced attractively.

RBI announces measures to improve liquidity, cuts MSF rate by 50 bps to 9%

In a bid to improve liquidity in the banking system, Reserve Bank of India (RBI) cut the Marginal Standing Facility (MSF) rate by 50 basis points to 9%. Starting with the Mid-Quarter Review of September 2013, RBI began a calibrated withdrawal of exceptional measures undertaken since. July 2013. This was done with a view to normalising liquidity conditions. Accordingly, the MSF rate was reduced by 75 basis points from 10.25 per cent to 9.5 per cent.

RBI Governor Raghuram Rajan vows to free markets for $1-trillion core sector investments
Reserve Bank of India Governor Raghuram Rajan aims to build sophisticated financial infrastructure in three years that will facilitate trillion-dollar core sector investments, leading to sustained economic growth. Further, now that the currency has stabilised, the dependence on external sources offunding needs to be curbed and domestic savings have to be encouraged, the governor, who took charge on September 4, said.

Bharti, Walmart call off India JV; to independently pursue retail business

Ending speculations over future of their partnership, Bharti Enterprisesand Wal-Mart Stores, Inc. said they are going separate ways for operations in the Indian retail sector. Subsequently, the US retail major will buy out the Indian partner from their 50:50 wholesale cash and carry joint venture -- Bharti Walmart, for an undisclosed sum. In a joint statement, the companies said they have reached an agreement to independently own and operate separate business formats in India and discontinue their franchise agreement in the retail business. 

September trade deficit dips to $6.76 billion, gold imports decline sharply

Rising exports and declining imports in September narrowed the trade deficit to a 30-month low of $6.76 billion, which may help the rupee to stabilise after excessive volatility in the past few months. While exports of textiles, pharmaceuticals and agriculture recorded decent growth, imports came down mainly on account of a decline in inward shipments of gold and oil. 

US default threat following govt shutdown makes world economy jittery

The bitter fiscal stalemate in Washington is producing nervous ripples from London to Bali, with increasing anxiety that the United States might actually default on a portion of its government debt, set off global financial troubles and undercut fragile economic recoveries in many countries. Five years after the financial crisis in the United States helped spread a deep global recession, policymakers around the world again fear collateral damage, this time with their nations becoming victims not of Wall Street's excesses but of a political system in Washington that to many foreign eyes no longer seems to be able to function efficiently. 

Arundhati Bhattacharya becomes first woman to head SBI

The government on Monday cleared the elevation of Arundhati Bhattacharya as the chairperson of the State Bank of India - the first woman chief of the country's largest lender - succeeding Pratip Chaudhuri who retired on September 30.

Arundhati Bhattacharya, 57, is the bank's 24th chairperson and has a two and a two-and-a-half-year term at the top.

The Big News

Big Bazaar's new bet 'Big Bazaar Direct'

The Future Group recently launched Big Bazaar Direct, a cross between e-commerce and door-to-door sales. 

How will the idea work:

1.      Your local shopkeeper becomes a Big Bazaar Direct franchise by paying Rs. 3 Lakh.

2.      At your calling, he comes home and takes your order on his tablet and takes cash.

3.      He transfers your order, via internet, to Big Bazzar.

4.      Big Bazaar delivers home in 3-7 days.

How they Gain:

1.      Franchisee – Big Bazaar brand gets him sales ;earns 7-9% commission on sales; zero inventory ; zero working capital.

2.      Consumer – Big Bazaar products and discounts; Home delivered; Credit cards or internet access not needed.

3.      Big Bazaar- New Sales channel ;Reach customers it can’t physically service; Leverage local connect of franchisees to acquire customers.

The Risk

1.      Delay and errors in delivering goods to consumers.

2.      Uneven consumer experience can hurt the Big Bazaar brand.

3.      Revenue generation for franchisees not in line with their investment. 

EXPERT VIEW

Food inflation: How to decode the onion price puzzle
By Usha Tuteja

A SNEAK PEAK INTO THE WORLD OF FINANCE

To know six financial mistakes that young investors should avoid, click on the slide show below
 

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