|
Cover
Story
Recession:
End in Sight?
-- N
Janardhan Rao, Team Analyst
US,
the world's largest economy, has been reeling under recession
since early 2001, engulfing the whole world. Monetary policies
failed to arrest the adverse effects of the resultant economic
upheaval. Excessive borrowings have been held responsible for
this global economic cataclysm. During the growth phase, both
the household and business sectors borrow indiscriminately,
anticipating an eternal economic expansion. However, when the
economy is in a downturn, borrowings mismatch earnings and
future cash flows. Sectors find themselves in a vicious
circle. Under present circumstances, a rebound requires
dilution of the borrowings burden to restore confidence and
bring back productive efficiency and consumption propensity.
© IUP. All Rights Reserved.
Spotlight
Corporate
Bankruptcies : Caveat lender
-- D
Satish, Team Analyst
With
more and more highly leveraged companies going bankrupt, the
commercial banks and financial institutions are feeling the
pinch.
Enron,
the energy giant filed for bankruptcy recently. It was a huge
energy company and a member of Fortune 500 club. Though this
collapse has received wide attention all round, the plight of
its creditors is unknown. Being one of the largest
bankruptcies in the history of American business and given the
leverage Enron carried, it is sure that the fate of banks and
financial institutions, which have lent to Enron hangs in
balance. Such a large bankruptcy has the potential to bring
down its creditors along with it.
© IUP. All Rights Reserved.
Case
Study
Wealth
Added Index : A new metric
-- D
G Prasuna, Team
Analyst
Wealth
creation has been the professed goal of companies all along
and continues to be so. But how many have actually created
wealth and how many have not? There are many metrics ranging
from ROI to EVA. Stern Stewart's Wealth Added Index is a new
addition to this list.
©
IUP. All Rights Reserved.
International
Finance
Credit
Derivatives : Last green bottle
-- Debasis
Mallik, Team Analyst
Credit
derivatives, though a nascent debt instrument, has grown steadily
in spite of turbulent economic conditions. Despite the Enron
debacle and the Argentine debt default having posed threats
to the industry, the market is efficient enough to absorb
the shock.
© IUP. All Rights Reserved.
Financial
Markets
Indian
Debt Markets : Bonding with the times
The
history of the Indian capital markets has been a tumultuous
one replete with the emergence of many new financial instruments
and mechanisms, contributing in good measure to enhanced marketability,
efficiency, transparency and participation. This has also
contributed to making the Indian investor community today
an adaptive, discerning and observant one that rapidly adapts
to any new and innovative investment opportunity, says R Vaidyanath,
General Manager, Debt Markets, The Stock Exchange, Mumbai.
©IUP. All Rights Reserved.
Earnings
Management: Bad practices of the bull era
-- Amit
Singh Sisodiya, Team
Analyst
What's
in a number? A lot, if they happen to be earnings numbers.
And, thanks to the Enron saga, even audited numbers look a
bit colorful now. As more and more revelations about financial
manipulations keep pouring in, it raises a serious concern:
Is financial reporting at a risk of losing its credibility?
© IUP. All Rights Reserved.
Financial
Services
Investment
Banking : Conflicting interests
-- Debasis
Mallik, Team Analyst
The
investment banking profession is passing through an acid test.
Against the backdrop of the inherent conflicts of interest,
implementation of ethical practices seems to be the only savior.
"History
tells us that the money changers have used every form of abuse,
intrigue, deceit and violent means possible to maintain their
control over governments and countries by controlling money
and its issuance."
-
James Madison,Fourth President of the US
© IUP. All Rights Reserved.
Business
Environment
Sales
Tax Reforms : Towards transparency
-- Y
Chandra Sekhar, Team Analyst
The
complicated taxation system in India has hindered the free
flow of trade. At the same time it has made the "Made
in India" goods non-competitive in global markets. For
speedy growth of economy and industry, it is important that
India has a transparent, simple and broad-based tax system.
© IUP. All Rights Reserved.
IMF
: On the reform path
-- D
Satish, Team Analyst
IMF
is in the process of reforming itself
and is trying to focus its operations on its core objectives
mentioned in the mandate. This is an effort to make itself
more acceptable and dispel the controversies surrounding it.
© IUP. All Rights Reserved.
Industry
Healthcare
Business : The next big thing
After
telecommunications and Internet, the healthcare business is
all set to revolutionize the domestic scenario. With the entry
of big corporate houses into the sector in the last two years,
the essential ingredients of the next revolution are all in
place.
© IUP. All Rights Reserved.
Indian Two-wheeler Industry : Changing gears
-- D G Prasuna, Team Analyst
The
Indian two-wheeler industry is experiencing a major shift
in its shape and structure. The established players in the
industry are taking a hard look at their portfolio of products
and are in the process of reshuffling them to meet the expectations
of customers. The beneficiary is of course the consumer, who
has an increased array of products to choose from.
© IUP. All Rights Reserved.
Private Power
Projects : Journey through darkness
-- Y
Chandra Sekhar, Team
Analyst
Plagued
with structural and technical problems, many of the private
power projects may not see the light of the day. The recent
move of the financial institutions may be the final nail on
the coffin.
©
IUP. All Rights Reserved.
Corporate
Finance
HP-Compaq
Merger : Who dares wins
-- Amit
Singh Sisodiya and CSV Ratna Team Analysts
Technology
battles are all about being daring. And, who dares wins as
the likes of Microsoft and SAP suggest. It appears that those
opposing Carly Fiorina ignore the fact that HP is a company
with serious underlying problems. Most businesses she inherited
are aging and in mature markets. Compaq's Michael Capellas
has a similar story to tell. The fate of the merger depends
on how she wins over her adversaries. If she wins, she will
have won half the battle. If she does not, she will still
be remembered as a daring leader.
©
IUP. All Rights Reserved.
Corporate
Indian
Oil Corporation : Acquiring energy
-- D
G Prasuna, Team Analyst
The
acquisition of IBP by Indian Oil Corporation puts the already
formidable IOC on a better footing. The company that has created
records with the highest sales figures ever in the Indian
business scenario is all set to reach new heights.
©
IUP. All Rights Reserved.
Follow
Up
Delisting
of MNCs: The vanishing act
-- D
Satish, Team Analyst
With
more and more MNCs opting for delisting from the Indian stock
exchanges, in times to come the Indian investor would find his
once favorite stock missing.
© IUP. All Rights Reserved.
Perspective
Strong
Dollar: Unfolding the mystery
-- A
V Vedpuriswar, Dean,
ISM; Naveen Das, Dean,
ISFM;
& Rahul Sheoran
Despite
the ongoing recession, the dollar has been by and large steady
and strong. In the absence of any better investment avenues
the appreciation is bound to continue.
Following
the September 11 terrorist attacks, the US plunged into a
state of gloom. Still, the US dollar has appreciated from Yen
119 to Yen 133 and from Euro 1.09 to Euro 1.14 (See graphs).
It is well-known that the Japanese yen is overvalued against
the dollar. A further appreciation of the dollar against the
yen cannot be ruled out, especially in view of Japan's
prolonged recession and a serious crisis in the country's
financial system. But the appreciation against the euro has
been surprising, when we keep in mind that macroeconomic
parameters in the eurozone have generally looked better than
in the US.
©
IUP. All Rights Reserved.
Bioterrorism:
The new threat
-- Dr.
Ajit Kumar, Faculty, IU
This
millennium is witnessing the biological warfare turning into
bioterrorism. Terrorists can take advantage of host country's
technology and wreak havoc on any society they like.
Biological
warfare is in use since a long time. Nations at war always try
to inflict as much damage on the enemy as possible by
destroying each other's infrastructure, agriculture, etc. This
was limited only to the warring nations that too during the
war. But in this millennium this type of warfare faces the
risk of falling into the hands of terrorists. Terrorists can
wreak havoc with these kinds of weapons. The greatest
biological threat facing the world is, in fact, the possible
use of biological weapons by terrorists to wage economic
warfare.
©
IUP. All Rights Reserved.
|
