Docstoc

Magnum - PDF

Document Sample
Magnum - PDF Powered By Docstoc
					                                                                                                         Magnum
     Magnum Connect
   Issue No. 34        June 2011
          Monthly Magazine

                              Index
Cover Story
    FMCG Sector.....................................................2
    Economic Analysis.............................................6
Equity
    Company Research ..........................................9              Dear Friends,
    Stock Update....................................................11
    Corporate News................................................12
                                                                              Till now the FY-12 has been gloomy for the Indian equity markets which has
    Market Snapshot...............................................14
Economy                                                                       witnessed decline for the second consecutive month. Though the global
    Economy News.................................................16           cues continue putting jitters for the markets but there situation is not that
Statistics                                                                    worse as ours. The foreign broking houses that have been bullish on their
    Scorecard FMCG Sector.................................18
    Sales................................................................20   Indian view have gradually turned their side, now stating that a number of
    Dividend Yield..................................................21        emerging markets are showing signs of overheating, which could prompt
    High PE ........................................................... 22
                                                                              slower growth. Crude prices are now deciding the market faith as Asia is
    Low PE ............................................................ 23
    Price Trend...................................................... 24      a net importer of oil and rise in oil prices has quite significant affects on
Mutual Fund                                                                   things like fiscal balances in Asian countries especially India, that is the
    Mutual Fund Analysis....................................... 25
    MF Scorecard................................................... 26        main reason behind the recent perception change of the foreign investors

Study                                                                         and fund managers.
    BRICS Summit - High on Aspiration..................28
    Fiscal Deficit.......................................................30
                                                                              Along with the month the result season too came to an end, this two
Commodity
    Commodity Watch ........................................... 32            months long session brought lots of pleasant surprises as well as
Insurance                                                                     disappointments, overall it was a mixed earnings season that started with
    Life Insurance ..................................................35       worse than expected performance of IT bellwether Infosys and snapped

 Subscription :-                                                              with better than expected numbers from Sun Pharma, Educomp and

 Cover Price: Rs 30/-                                                         some ADAG companies. Information technology along with private sector
 Annual Subscription (12 issues) : India Rs 300/-                             banks, pharmaceuticals and consumer durables came up with satisfactory
 Overseas (Airmail) US$ 150                                                   numbers. However, the Public sector banks with some exceptions showed
 (Cheque/D.D. drawn on Mumbai in favour of                                    the impact of high wage and NPA quality provisions, while auto companies

 Magnum Wealth Management Pvt. Ltd.                                           too have seen margin pressure despite strong demand for last couple of
 Regd. Office :                                                               months.
 Mr. Piyush K. Upadhyay (Correspondent)
 Magnum Connect
 D-13, Empire Mahal,
 806, Dr. B. A. Road,
 Khodadad Circle, Dadar T.T.,
 Mumbai – 400 014.
                                                                                                                                                  Jayesh R. Dedhia
 For General Enquiries Contact :
 +91-22-2415 8686                                                                                                                                           (Director)
 E-mail : mconnect@magnum.co.in                                                                                                                      Magnum Group
 Website : www.magnum.co.in
 Printed at : HariOM Printers, Mumbai.

                          This document has been prepared by M/s Magnum Wealth Management Pvt Ltd and is being distributed in India by
      M/s. Magnum Wealth Management Pvt Ltd a registered broker dealer. The information in the document has been compiled by the research department.
 Due care has been taken in preparing the above document. However, this document is not, and should not be construed, as an offer to sell or solicitation to buy any
       securities. Any act of buying, selling or otherwise dealing in any securities referred to in this document shall be at investor’s sole risk and responsibility.
                    This document may not be reproduced, distributed or published, in whole or in part, without prior permission from the Company
                                                               M/s. Magnum Wealth Management Pvt Ltd
                                                                    Subject only to Mumbai jurisdiction



D e c e 2011
June m b
December e r
August 2010                                                                                                                                                              1
          FMCG Sector                                                                     Magnum
FMCG Sector                                                                    India, which continues to remain highly fragmented, has a
                                                                               strong and competitive MNC presence across the entire
The Indian fast moving consumer goods (FMCG) sector,
                                                                               value chain.
worth Rs130000 crore, has been an important contributor
to the nation’s gross domestic product, accounting to 2.2                      Demand Side Growth drivers
percent of the GDP of the country in 2010. Given the                           • Burgeoning Population: India stands as one of the
inherently essential nature of the products, the sector                        youngest nations of the world, with a median age of 25
is more or less immune to recessionary pressures.                              years as compared to 43 in Japan, 36 in the US and
The sector has been on a steady uptrend over the past                          around 35 in China. India is expected to reach China’s
decade as evident from its sales growth which rose                             current population figure of 1.4 billion by 2020. There are
at a compounded annual growth rate (CAGR) of 12                                multiple ways in which the burgeoning younger population
percent through the period. Though the initial five years                      is resulting into the transition of demand from need based
of the decade witnessed a CAGR of 6 percent, growth                            products to premium products. The profile of the young
momentum picked up substantially through FY2010,                               population reveals more actively employed people. This
registering a CAGR of 16 percent over FY06-FY10. A                             means, increased incomes available in households to
combination of changing lifestyles, higher disposable                          spend on expendables. Young people tend to spend
income, greater product awareness and affordable                               more compared to their parents and grandparents, and
pricing have been instrumental in changing the pattern                         are easily attracted towards ‘high-end’ products. They are
and amount of consumer expenditure leading to robust                           more exposed to the media and its influences, specifically
growth of the FMCG industry, making it the fourth largest                      new platforms such as the internet, mobile phones etc.
sector of the Indian economy. Penetration levels as well                       Their awareness levels are higher, and they are better
as per capita consumption of most product categories like                      informed about developments around them. Continued
jams, toothpaste, skin care and hair wash in India are low,                    favorable age distribution is a driver for premiumization in
indicating the untapped market potential. The growing                          the future as well.
Indian population, particularly the middle class and the rural
segments, present an opportunity to makers of branded                           250,000                                                              18
goods to convert consumers to branded products. The
Indian rural market with its vast size and demand base                          200,000
offers a huge opportunity for investment. Rural India has                                                                                            17.6
                                                                                150,000
a large consuming class with 41 percent of India’s middle-
class and 58 percent of the total disposable income.                            100,000
                                                                                                                                                     17.2
The FMCG sector comprises of consumer non-durable                                50,000
products, which broadly include personal care, household
care and food and beverages. Almost equally divided                                  0                                                               16.8
between the organized and unorganized segments.                                           1995        2000         2005        2010        2015

Well-established distribution networks, as well as intense                                  People in their 20's          As % of total population
competition between the organized and unorganized
segments are the characteristics of this sector. FMCG in
                                                                               • Untapped Rural Market: The Indian rural market with its
                                                                               vast size and demand base offers a huge opportunity for
                        Indian FMCG Sector Growth                              investment. Rural India has a large consuming class with
 1400
                                                                               41 percent of India’s middle-class and 58 percent of the
 1200
                                                                               total disposable income. With population in the rural areas
                                                     +17%                      estimated to have risen to 153 million households by 2009-
 1000                                                                          10 and with higher saturation in the urban markets, future
                                                                               growth in the FMCG sector will come from increased rural
  800                                                                          and small town penetration. Technological advances such
  600                 +6%                                                      as the Internet and e-commerce will aid in better logistics
                                                                               and distribution in these areas. Recently rural India has
  400                                                                          been driving consumption growth on the back of various
                                                                               government stimuli. Rural India buys more than half the
  200                                                                          country’s FMCG sales, including feeder supply from
                                                                               wholesalers in urban India to tertiary markets. Therefore,
   0
        FY01   FY02    FY03   FY04   FY05   FY06   FY07   FY08   FY09   FY10
                                                                               given the current low penetration and high potential for up-
                                                                               trading are expected to bring about super-normal growth


June m b e
D e c e 2011 r                                                                                                                                        2
        FMCG Sector                                                          Magnum
for FMCG companies in the largely untapped Indian rural          future with its share in total retail projected to reach 11
markets.                                                         percent by 2014 and 30 percent by 2020. This growth will
• Evolving Consumer Profile : Lifestyle changes, a               be supported by high economic growth as India’s GDP is
comparatively young population and greater willingness           expected to grow at 8-10 percent in the future, boosting
to spend more on better quality products are expected to         growth in all sectors. While the individual incomes are
boost the consumption-driven economy. Rural markets,             expected to continue to rise, this should further drive
given the current low penetration and high potential for up-     convenience shopping. Increasing urbanization is another
trading are expected to bring about super-normal growth          factor which will drive growth as organized retail will
for FMCG companies. All these factors will combine to            continue to increase presence in Tier 1 and Tier 2 cities,
catapult consumer demand for FMCGs to newer heights.             which are growing faster than metros.
Young population (below age of 30 years) comprises 59            Advent of technological innovation - a key to
percent population currently, and the composition is likely      success
to remain similar over the next decade. This augurs well
for the industry as the young have greater willingness to        Technology, an all-pervasive factor, is significantly
spend more.                                                      impacting all facets of business. In the FMCG sector,

                                                                  Future Growth (2010-20)           Contribution to
       Growth Drivers              Past Growth (2001-10)
                                                                                                  FMCG Transformation
 GDP Growth                    ~7%                             8%-9%
 Population Growth             1.5%                            1.2%
 Per Capita Income Growth      • ~14% annual growth            • >15% annual growth
                               (disposable income)             (disposable income)
                               • Women’s participation 34%     • Women’s participation closer
                                in 2010                        to levels in developed nations
                                                               (70%)
 Lifestyle Changes             • 2.3% urbanization         • 2.5% urbanization
                               • ~60% people in 15-59 age- • Similar age profile
                               group in 2010               • More up-trading in urban and
                                                               rural areas
 Government Policy             • NREGA                         • GST
                               • Farmer loan-waiver            • FDI
                                                               • Right to Education
                                                               • Food Security

Supply Side Drivers                                              technology facilitates front-end processes of business
                                                                 by creating consumer awareness, enables efficient sales
• Growth in Modern trade : Modern trade is still at a
                                                                 and distribution and runs backend processes like market
nascent stage in India; the share of modern trade in retail
last year was only about 5 percent. However, it has been         research, generating shopper insights; gathering business
growing very rapidly displaying approximately 25 percent         intelligence, supply chain management etc. It is believed
annual growth. Several formats exist within modern trade         that in the future, FMCG players will need to significantly
and organized retail, such as, hyper marts, supermarkets,        increase their investments in technology and use it to
and cash-and-carry (which is essentially organized               derive competitive advantage.
wholesaling). While supermarkets have the highest share          Technology options for creating consumer awareness
in terms of the number of stores (approximately 85 percent       and promoting sales have proliferated in the last decade,
of total modern trade stores in 2009), hyper marts account       with increased adoption of broadband the evolution of
for the highest area (approximately 70 percent of the total      social networking sites as major media platforms, and the
area under modern trade). Cash-and-carry is still nascent
                                                                 growth of value-added services on mobiles. Increasingly
with only about eight stores in 2009. In a large and growing
                                                                 young population coupled with increased participation of
market such as India, we expect existing formats to evolve
                                                                 women in workforce have lent support to the adoption
and new formats to come up in the future, driving the
                                                                 of new consumer favoring technologies. While print and
growth of various FMCG categories. Local Indian players
                                                                 television account for 86 percent share in advertising at
have been experimenting with different business models
with mixed success.                                              present, internet advertising has grown at approximately
                                                                 30 percent annually. The Indian youth is spending most of
Modern trade is expected to grow very rapidly in the             their time at the television and on the Internet.


D e c e 2011
June m b
December e r
August 2010                                                                                                             3
         FMCG Sector                                                      Magnum
Lots of established business houses and new players             and is mostly dominated by small local supermarkets and
have started tapping this opportunity, and have came up         “mom and pop” kirana stores. Only a tiny portion (about
with sales through internet as India’s multi-brand retail       one percent of India’s $392 billion retail industry) of Indian
industry still faces issues such as limits on foreign direct    retail business comes from “organised” retailers, and
investment and high rents. Hence this online counterparts       research shows this segment is likely to grow dramatically.
offer lower prices, a wide variety of categories to choose      Alongside a growing economy, rising incomes, and
from, and the convenience of ordering original top-end          increasing consumer spending, industry observers expect
brands from anywhere.                                           this to mean massive opportunities in India for foreign
FMCG players can also leverage technology for driving           retailers. Indian government is contemplating a potentially
greater efficiency in various back-end processes. By            landmark liberalization of foreign direct investment (FDI)
deploying data capturing technologies at point-of-sales,        regulations in India’s retail sector. The current retail
players can understand consumer purchase behavior.              regulations strictly bar foreign companies from having
Similarly, for gathering business intelligence on competitors   a front-end retail presence and limit them to back-end
leveraging technology at the retail end is becoming common      wholesale and supply chain management - constraints
practice. Supply chain management also has tremendous           cited as significant investment deterrents by many
potential for driving efficiencies through tools of demand      industry observers. The FDI liberalisation measures under
forecasting, production scheduling, inventory optimization,     discussion would significantly relax these limits, allowing
logistics planning etc. Several FMCG players have been          foreign companies to own and operate front-end multi-
investing in technologies for back-end processes.               brand retail outlets. Opening up retail FDI regulations is
                                                                believed to be a logical move to inject industry expertise
Macroeconomic Factors                                           and technical know-how, lure new investors to India, and
Favorable macroeconomic drivers such as the growth in           significantly boost investment and economic growth.
GDP, coupled with rising incomes, increased participation       • Goods and Services Tax (GST) : The government
of women in the workforce and the tapping of the rural          is expected to implement GST in the near future. This
markets, are seen to be enabling growth in the FMCG sector.     would help to replace the multiple indirect taxes levied on
Per capita incomes supported by various government              consumer products (by central and state tax authorities).
schemes and policies are expected to rise in both rural         There will be several benefits of implementing GST. A
and urban areas. Favorable government policies such as          uniform and simple tax would help in reducing prices of
the introduction of GST can be expected to substantially        consumer products due to a more efficient supply chain.
decrease supply chain costs. Increased FDI in multi-brand       Currently, FMCG players have warehouses in every state
retail may open up a large channel for sales. Other policy      to avoid certain taxes, which results in a higher cost of
measures such as lower income taxes, the Food Security          operation. Also, logistical delays can be avoided with the
Act, Right to Education, infrastructure schemes etc. too        elimination of multiple levels of taxes, and mitigation of
can act as enablers of higher consumption.                      differences in tax structures across states. Consumption
Areas for Regulatory Intervention                               would grow with reduced prices. Tax collections from
                                                                the FMCG industry will also increase with increased tax
There are some areas in which the government needs to
                                                                compliance and broad-basing of products and services for
come out with appropriate regulations, such as introduction
                                                                which the tax is levied.
of GST, opening of FDI in multi-brand retail, and stricter
norms to curb counterfeit products. These are expected          • National Food Security Act (NFSA): This is expected
to have a significant impact on how the FMCG sector             to ensure that the basic needs of the rural poor are
performs in the coming years.                                   satisfied, and they can have a better lifestyle by spending
                                                                on discretionary products. The NFSA will require the
• FDI liberalisation to allow greater market access
                                                                government to provide 35 kg of foodgrain at Rs 3 per kg to
for foreign retail firms : At present, no FDI is allowed in
                                                                almost everyone in one-fourth of the poorest blocks of the
multibrand retail, which is preventing global retailers from
                                                                country, and will cover 40-50 percent of the people in the
establishing their retail operations in India. It has been
                                                                rest of the country.
seen that in developed markets, large organized retailers
have brought huge benefits to consumers by lowering             • Ramping Labour Laws: India has archaic and
the total cost of supply chain operations. The Indian retail    inefficient labour laws, with strictly defined norms for work
market offers tremendous potential for US and European          hours, over-time, contract employees etc. These result in
retail giants like Wal-Mart, Tesco, and Carrefour, many         inefficient operations for manufacturers. The government
of whom have already expressed their support for the            needs to modernize the labour laws to enable FMCG
proposed regulatory revisions. India’s retail sector is         manufacturers to improve their efficiency and lower costs
poorly developed and consolidated by western standards,         of production.


June m b e
D e c e 2011 r                                                                                                           4
        FMCG Sector                                                         Magnum
Monsoon: a major catalyst in the near term                      as the per capita consumption of almost all products in the
                                                                country is amongst the lowest in the world. The growth
A normal monsoon boosts an economy like India by way
                                                                prospect of the sector is expected to increase further if
of lower inflation, higher farm income and better sales of
                                                                the major players in the space succeed in changing
FMCG goods so it is expected that the rain gods will play a
                                                                consumer’s mindset by offering transformed new-
major role in the decision of fast moving consumer goods
                                                                generation products. With organized food market still in
(FMCG) companies to either raise or maintain prices of their
                                                                infancy the FMCG sector is likely to witness structural
products in the second quarter of the financial year. News
                                                                growth in high teens over the next few years. As a result
of positive monsoon brings cheer to FMCG companies as
                                                                of rising incomes, the FMCG market growth in rural areas
rise in agricultural production will increase rural income
                                                                at 18 percent per annum has recently exceeded that
and revenues. This is because companies that depend
                                                                of the urban markets at 12 percent. While most FMCG
on agriculture for their raw material, like Britannia, Marico
                                                                players have succeeded in establishing sufficient access
and Hindustan Unilever, will see the pressures on their
                                                                to their products in rural areas, the next wave of growth is
margins reducing due to lower commodity prices as supply
                                                                expected to come from increasing category penetration,
of agricultural goods would increase.
                                                                development of customized products for these markets
On the other hand, if the monsoon is not satisfactory, as       and up-trading rural consumers towards higher-priced and
in 2010, then companies would worry about sustaining            better products.
volumes in an environment where consumer spending is
lower. The monthly household expenditure on food alone          The demand for branded healthcare products, branded
is typically around 50 percent. If inflationary pressures       processed food and beverages and toiletries is expected to
on the food front increases, it is bound to impact spends       grow in the future. Many local brands have been finding it
on food as well as allied FMCG products. Last year,             difficult to grow in rural areas because of this shift, thereby
companies had no option but to take price hikes in an           providing increased opportunities to the organized FMCG
inflationary environment, though some companies in the          players to target this market with their products. This trend
FMCG category went slowly on price hikes. The fear of           may eventually erase differentiation between the urban
losing market share, as well as seeing volumes erosion,         and rural brands, with the rural consumers increasingly
was too great a concern for most to allow price hikes.          demanding the same products as urban consumers in the
                                                                next decade. Cheaper brands will however co-exist for
Meanwhile, the Indian Meteorological Department (IMD)           products with wide price differentials between local brands
has announced that the southwest monsoon this year              and well-established brands.
would be 98 percent (normal) of the long period average
with a model error of plus or minus 5 percent. This means       While the overall growth rates may be anticipated to lie
a normal monsoon, which would increase farmers’                 in the 12-17 percent range, many product categories are
incomes, creating higher demand for products of the             likely to grow much faster as consumer incomes increase,
FMCG companies. A bumper crop this monsoon would                behaviors evolve and requirements change. In some
also ease the inflationary pressures that had built up          areas one would expect Indian FMCGs to follow well-
around commodities and agricultural products. The normal        established growth-evolution paths. However, in many
monsoon (102 percent of LPA--long period average) will          product categories growth may be accelerated by the
boost demand due to higher crop output. Besides, higher         explosive economic rise, young consumer base and the
prices of crops such as sugarcane, cotton, pulses, oilseeds     influence of the ubiquitous media. Some of that impact
and vegetables will increase farm incomes.                      is already evident in a category like liquid hand-wash
                                                                which has shown very strong growth driven by increased
The linking of schemes such as NREGA (rural job
                                                                consumer awareness around personal hygiene specifically
scheme) with inflation will further increase rural incomes.
                                                                for children. Given the nascent stage of development
Besides, a revival is expected in urban discretionary
                                                                across many categories even supply-led actions can help
demand in the ensuing economic recovery and the
                                                                trigger rapid growth. For example, many packaged food
FMCG sector’s volume growth trajectory will be strong in
                                                                categories (such as soups, breakfast cereals, and fruit
next 12-18 months. Categories like IMFL (Indian-made
                                                                juices) have seen rapid growth rates driven by increased
foreign liquor), skin care, chilled dairy, malted food drinks
                                                                presence of modern trade.
and processed foods will grow by the mid to high teens,
and low penetration categories like hair colour, sanitary       In conclusion, the FMCG sector in India is poised for rapid
napkins, fruit juices and deodorants are likely to grow by      growth in the next 10 years. Companies will need to evolve,
more than 25 percent.                                           to better meet the rapidly changing consumer needs within
                                                                an increasingly complex operating environment. The
Outlook:
                                                                FMCG industry by 2020 will be larger, more responsible,
The FMCG sector encompasses a huge growth potential             and more attuned to its evolved customers.

D e c e 2011
June m b
December e r
August 2010                                                                                                               5
                          Economic Analysis                                                                                      Magnum
Economic growth and inflation                                                                                          been revised upward from 8.9% and 8.2% to 9.3% and
                                                                                                                       8.3% respectively.
The Indian Economy experienced a slowdown in GDP
growth as the economy grew at its slowest pace during                                                                  The decline in the GDP growth is mainly because of lower
4th quarter in last 5 quarters. The last quarters’ growth                                                              performance in Manufacturing sector (5.5% from 15.2%
was marred by the weakness in mining and factory output                                                                in the same quarter of 2009-10), mining and quarrying
growth that remained below expectation. The slowdown                                                                   (1.7% from 8.9% in the same quarter of 2009-10) and
can also be attributed to slow pace of investment,                                                                     trade, hotels and communication (9.3% from 13.7% in the
poor performance in manufacturing production and                                                                       same quarter of 2009-10). However, services including
increase in fuel prices. The fall in investment and                                                                    banking and insurance grew by 9% compared to 6.3% in
consumption was mainly because of increasing interest                                                                  the corresponding period last year. Farm output showed
rate on RBI’s aggressive monetary policy stance.                                                                       tremendous improvement, growing at 7.5% compared
                                           Industry performance in 2010-11
                                                                                                                       to a meager 1.1% in the same three-month period last
                45                                                                                                     year. The agriculture and allied sectors grew by 6.6% as
                40

                35
                                                                                                                       against a meager 0.4% in the previous year. The growth
                30                                                                                                     of services, including banking and insurance, improved to
In Percentage




                25
                                                                                                                       9.9% in 2010-11 from 9.2% in the previous fiscal.
                20

                15                                                                                                     This slowdown in the 4th Quarter GDP growth was expected
                10
                                                                                                                       and the figure of 7.8% GDP growth is lower than economists
                 5

                 0                                                                                                     and analysts prediction of 8 to 8.2% GDP growth. This
                                                        Electricity,               Trade,   Financing, Communit
                                  Mining & Manufactur                Constructi
                     Agriculture,
                                  quarrying   ing
                                                          gas &
                                                                        on
                                                                                   hotels,   Ins., real y, social &    quarterly drop in the economic growth had increased the
                      forestry &                          water                 transport & est. & bus. personal

                Q4      7.5        1.7        5.5             7.8                       8.2     9.3      9       7     concerns for the future growth of the economy. Recently
                Q3      9.9        6.9         6              6.4                       9.7     8.6     10.8    5.1
                Q2      5.4        8.2         10             2.8                       6.7     10.9    10      7.9
                                                                                                                       most of the national and international organizations had
                Q1      2.4        7.1        12.7            5.6                       7.7     12.6    9.8     8.2    downgraded India’s GDP forecast for 2011-12. However
According to Central Statistics Office (CSO), Ministry of                                                              this drop had hidden indication for the future and alarming
Statistics and Programme Implementation, in the last                                                                   as well, as the Central Statistical Organisation (CSO) data
quarter of 2010-11 financial year Indian economy grew by                                                               indicated that growth drivers investments and consumer
just 7.8% compared to 8.2% in the third quarter. Indian                                                                demand too have started waning. Government will have to
economy experienced growth of 8.5% in 2010-11, it was                                                                  adopt coordinative approach to deal with Inflation which is
just below the government expectation’s of 8.6% and up                                                                 leading to economic slowdown in short term. Because the
from 8% a year earlier. On the same time, the GDP growth                                                               origin of inflation is high global commodity prices, beyond
numbers for the 1st and 3rd quarters of 2010-11 have                                                                   the control of government and even the aggressive stance


                                                                                                       GDP growth Q-o-Q from 2009-10 to 2010-11
                                                                                        10
                                                          Q -0-Q growth in Percentage




                                                                                        8

                                                                                        6

                                                                                        4

                                                                                        2

                                                                                        0
                                                                                              Q1-09-10 Q2-09-10 Q3-09-10 Q4-09-10 Q1-10-11 Q2-10-11 Q3-10-11 Q4-10-11

                      GDP growth from 2009-10 to                                                 6.3           8.6    7.3      9.4        9.3        8.9        8.3        7.8
                      2010-11 in %



June m b e
D e c e 2011 r                                                                                                                                                                6
         Economic Analysis                                                     Magnum
of RBI is not helping much to curb inflation.                      The inflation numbers have seen a minor fall of 0.38%
As per the CSO estimate the gross fixed capital formation          for this month, but it is still much higher than the comfort
for the full year has come in Rs 16.9 lakh crore, experts          level of RBI. India’s inflation is likely to stay elevated in
are looking at this figure as disappointment from capital          the first half of FY2011-12. In addition, the inflation figure
formation point of view. This figure is almost similar to          for March 2011 has also been revised to 9.04% from the
CSO projection of 19.89 lakh crore. The capital formation          earlier estimates of 8.98%. The revision was carried out
in the economy has been slowing down. Last two quarters            as metal products were not incorporated earlier due to a
of previous fiscal year clearly showed that the investment         programming error. The inflation picture is both alarming
activity was severely affected by the number of factors,           and troubling, not only because the rates have been high
interest rate and inflation which is affecting consumption         for over two years, but also as it has started giving mixed
in the economy. This fall in consumption is also from              signals. The government and RBI have to understand
private consumption. Last year private final consumption           the fact that they have to assist and coordinate to keep
expenditure fell from Rs 7.5 lakh crore to 7.1 lakh crore          inflation under control. Interest rate hike and fuel price
but this year the fall seems to be a little sharp. It has fallen   hike can’t go hand in hand.
from Rs 8.2 lakh crore to Rs 7.7 lakh crore, Q-o-Q. This           The decision of fuel price hike and expected diesel & LPG
weak capital formation and low level of consumption we
                                                                   price hike in coming few weeks in order to reduce the
are started this new fiscal year with and it is likely to the
                                                                   expected loss of state owned Oil Marketing Companies
evident from coming IIP numbers.
                                                                   will further increase the Inflation for coming months
The development is significant because it is the first             taking down all the hard work of RBI to fight inflation. The
quarter of sub-8 % growth rate since the crisis. Last four         increased price of petrol by Rs 5 or 8.6%, is going to add
quarters we have been growing above 8% so this is really           20 to 25 basis points in inflation figures, same goes for the
a slow starting point for the next financial year. It won’t        diesel too, and an increase of Rs 2 in the diesel prices will
be a big thing if next two quarters we continue to see             have 25 to 30 basis points upward impact on inflation. If
sub-8 % growth, given weakness globally. Perhaps there             the Empowered Group of Ministers goes by the proposal
will be some acceleration in the second half. Despite this         of Petroleum Ministry i.e. Rs 4, increase in priceit will
slowdown in economic growth Indian economy is still the            have impact of 50 to 60 basis points. Now if we consider
second fastest growth economy among major economies                the combined impact of increased fuel prices it will add
after China backed by the high domestic demand because             somewhere 75 to 90 basis points for the month of May.
of increase in income. However, Prime Minister Manmohan
                                                                   Inflation is likely to peak around somewhere in September-
Singh had expressed the confidence that Indian economy
                                                                   October because the full impact or the second round impact
would achieve 8.5% growth, helped by expectations
                                                                   of the fuel price hike (most likely to happen) will only be felt
of normal monsoon which is very vital for the economic
                                                                   in August-September. This mean the central bank will be
growth.
                                                                   forced to increase its policy rates by another 25 to 50 basis
Turning our focus again on the inflation, with the global          points. In the start of this month, RBI went more hawkish
commodity prices enduring at high levels and the                   and increased its policy rate by 50 bases, and is having
government finally deciding to raise the domestic fuel             a further scope to increase for the 10th time in June. This
prices i.e. petrol and further hike in LPG, Diesel and             lagged impact of policy rate hikes will further increase the
kerosene to follow, the upside pressure on inflation has           cost of funds for banks, owing to a hike in policy rates,
intensified. The expected increase in the transportation           savings rate as well higher as provision requirement for
cost will severely hit the profits margins of the corporate        bad and restructured loans, which is expected to pose
which are already constricted owing to the other higher            downside risk to credit growth. Resulting increase in cost of
input costs.                                                       capital, its cyclical effect will reduce the domestic demand
Though, the headline inflation (WPI) for the month of April        resulting in low growth in GDP, which is expected to grow
has come down to 8.66% from 9.04% in March 2011.                   by 8.75 % to 9.25% as per the union budget. Governor


D e c e 2011
June m b
December e r
August 2010                                                                                                                   7
        Economic Analysis                                                                       Magnum
Duvvuri Subbarao further said that inflation will stay at an    Apart from the improved IIP numbers the Indian economy
“elevated level” until September.                              have done well on export front too, as the export in Asia’s
                                                               3rd largest economy grew by an inspiring 34.4% annually in
On the other hand, last month export and IIP figures and
                                                               April at $23.9 billion whereas imports increased by 14.1%
other economic number were positive, showing that the
                                                               reaching around $32.8 compared to the same month a
Indian economy is on the right track. India’s industrial
                                                               year ago. In April, the balance of trade - the difference
growth has surprisingly jumped to 7.3% in March from
                                                               between a country’s exports and its imports - in April stood
3.6% in February; however the Indian production had
                                                               at $(-) 8.9 billion.
grown 15.5% a year ago. The Industrial output has
remained fragile in the past few months hurt by the central                                                                                 India's Export Performance
bank’s aggressive stance against inflation which has                         35000                                                                                                                                                                              80.0

affected the pace of expansion of the economy. Another                       30000                                                                                                                                                                              60.0

reason for the March numbers looking shoddier is mainly                      25000                                                                                                                                                                              40.0




                                                               ($ million)
on account of a high base effect despite the figures being                   20000                                                                                                                                                                              20.0

better than consensus expectations of around 3.61%.                          15000                                                                                                                                                                              0.0     Exports

The unexpected improvement has came on the back of                           10000                                                                                                                                                                              -20.0   Y/Y

strong performance by the capital goods numbers which                        5000                                                                                                                                                                               -40.0

after three months of contraction increased by 12.91%                           0                                                                                                                                                                               -60.0



                                                                                              Jun-08




                                                                                                                                                    Jun-09




                                                                                                                                                                                                          Jun-10
                                                                                                       Aug-08




                                                                                                                                  Feb-09




                                                                                                                                                             Aug-09




                                                                                                                                                                                        Feb-10




                                                                                                                                                                                                                   Aug-10
                                                                                     Apr-08




                                                                                                                                           Apr-09




                                                                                                                                                                                                 Apr-10
                                                                                                                         Dec-08




                                                                                                                                                                               Dec-09
                                                                                                                Oct-08




                                                                                                                                                                      Oct-09




                                                                                                                                                                                                                                     Dec-10
                                                                                                                                                                                                                            Oct-10


                                                                                                                                                                                                                                              Feb-11
                                                                                                                                                                                                                                                       Apr-11
compared to 36% (Y-o-Y).

Clearly, even as some segments have slowed down, it is
                                                               In April, the nontraditional sectors performed well, exports
the sharp expansion in the capital goods products which
                                                               of engineering grew by 109%, gems and jewellery by 39%,
has pulled up growth in overall IIP. Some of the important
                                                               electronic goods by 48%, petroleum products by 53%.
items of Capital goods that contributed to the high growth
                                                               And on import front, the petroleum product grew by 7.7%,
in this category were Turbines (steam/hydro) rising by
                                                               pearls and precious stones by 19% and gold by 60%.
67.6%, Process control instruments up by 42.9%, Boilers
gaining by 31.5% and Complete tractors which rose by           As per the April figures, the composition of India’s
30.2%. Alarm time pieces up 59.7%, Two wheeler tyres up        exports has shifted from the labour-intensive; traditional
55.5% and Passenger cars up 33.6%.                             items to capital-intensive manufactured items, as well
                                                               as the petroleum products. This change in composition
Manufacturing sector which accounts for almost 80% of the
                                                               is reification of government’s supportive policy, growing
IIP product-mix expanded by 7.9% compared with 16.4%
                                                               demand in abroad for Indian export.
growth seen in the same month a year ago. Electricity
sector also performed well expanding at 7.2% as against        Summing up, the current economic figures are indicating
8.3% growth a year ago. Mining was the only sector that        that, the economy is shaping-up well. But there are many
failed to perform well with growth of just 0.02% compared      headwinds that need to be catered positively, also there
with 12.3% growth a year ago.                                  remains concern on the sustainability of the growth, as
                                                               the high industrial growth may not represent a turnaround
Consumer durables, which were responsible for early
                                                               of weak factory output in the medium and long term.
part of the IIP rally last year, expanded at 12.3% against     Rising input cost driven by commodity and energy prices
23.4% in the year-ago period. Consumer non-durables            could erode the margins of manufacturing firms in India,
on the other hand saw significantly better growth of 5.7%      as the investments have already slowed down in the
as against a growth of 1.5% seen in the same month             manufacturing sector. In the medium term, while superior
of previous year. Intermediate goods showed some               exports may offer some momentum to manufacturing
slowdown with a growth of 5.4% against 13.5% expansion         growth, but the high input prices particularly for coal,
seen last year. Production of basic good grew by 4.3%          coupled with rising interest rates would debilitate overall
versus 10.5% in March 2010.                                    industrial activity.


June m b e
D e c e 2011 r                                                                                                                                                                                                                                                           8
                  Company Research                                                                                                                                                  Magnum
ITC                                                                                                                                                                      Business Overview
Investment overview                                                                                                                                                      ITC, incorporated as Imperial Tobacco Company of India
w	 ITC is the biggest cigarette company of the country and                                                                                                               Limited is having a multi-business portfolio encompassing
   leading FMCG marketer. It is the second largest Hotel                                                                                                                 a wide range of businesses - Cigarettes & Tobacco,
   chain, the market leader in the Indian Paperboard and                                                                                                                 Hotels, Information Technology, Packaging, Paperboards
   Packaging industry and the country’s foremost Agri                                                                                                                    & Specialty Papers, Agri-business, Foods, Lifestyle
   business player                                                                                                                                                       Retailing, Education & Stationery and Personal Care.

w	 The company has entered into a pact with Northern                                                                                                                     The company is more than 100 year old and its first six
   Technologies International Corporation to jointly develop                                                                                                             decades of existence were primarily devoted to the
   and commercialize biopolymer-paper products.                                                                                                                          growth and consolidation of the Cigarettes and Leaf
                                                                                                                                                                         Tobacco businesses. However, seventies witnessed the
w	 Company’s FMCG segment registered robust revenue                                                                                                                      beginnings of a corporate transformation that ushered in
   growth of 23% for the fiscal and                                                                                             demonstrated                             momentous changes in the life of the Company. ITC is the
   improving profitability                                                                                                                                               market leader in cigarettes in India. With its wide range
                                                                                                                                                                         of invaluable brands, it has a leadership position in every
 Stock Data (as on 03/06/11)                                                                                                                                             segment of the market.
 Current Mkt Price (Rs.)                                                                                                                        193.55                   ITC’s Lifestyle Retailing Business Division has established
                                                                                                                                                197.75                   a nationwide retailing presence through its Wills Lifestyle
 52 week High (Rs.)
                                                                                                                                                                         chain of exclusive specialty stores.
 52 week low (Rs.)                                                                                                                              138.05
                                                                                                                                                                         In line with ITC’s aspiration to be India’s premier FMCG
 Mkt Cap (Rs. Cr.)                                                                                                                          1,49,771                     company, recognised for its world-class quality and
                                                                                                                                                                         enduring consumer trust, ITC forayed into the Personal
 Return in last one Month (%)                                                                                                                               3.75         Care business in July 2005. ITC’s Personal Care portfolio
                                                                                                                                                                         comes under the ‘Essenza Di Wills’, ‘Fiama Di Wills’, ‘Vivel
 Share Holding Pattern (as on Mar,2011)                                                                                                         %                        Di Wills’ ‘Vivel UltraPro’, ‘Vivel’ and ‘Superia’ brands.
 Total Promoter                                                                                                                                                   --     ITC Hotels brand has become synonymous with
                                                                                                                                                                         Indian hospitality. With over 100 hotels in more than 90
 FII                                                                                                                                                14.04
                                                                                                                                                                         destinations.
 DII                                                                                                                                                35.89                ITC is also having its presence in the Information
 Others                                                                                                                                             50.07                Technology. ITC Infotech has today carved a niche for
                                                                                                                                                                         itself in the arena of global IT services and solutions.
 Key Ratios                                                                                                                                                              Financial Health
 P/E                                                                                                                                                30.03                ITC posted yet another stellar performance for the year
 Price/Book(x)                                                                                                                                              9.42         ended March 31,2011, Net sales were up by 16.93% to
                                                                                                                                                                         Rs 31423.23 crore from Rs 26874.34 crore in last year.
 Dividend Yield (%)                                                                                                                                         2.30         Net profit of the company stood at Rs 4987.61 crore, up by
 ROCE(%)                                                                                                                                            43.65                22.82% from Rs 4061.00 crore in the year ago period. Net
                                                                                                                                                                         Turnover was at Rs 21167.58 crores up by 17% primarily
 ROE(%)                                                                                                                                             29.33                driven by a 23% growth in the non-cigarette FMCG
                                                                                                                                                                         businesses, 23% growth in Agri business and 18% growth
                                   Performance in the last year                                                                                                          in the Hotels segment.
  250.00
                                                                                                                                                                         For the fourth quarter, net Sales were up by 15.48% to Rs
  200.00                                                                                                                                                                 5836.26 crore from Rs 5053.79 crore in same quarter last
  150.00
                                                                                                                                                                         year, while the net profit zoomed by 24.63% to Rs 1281.48
                                                                                                                                                                         crore from Rs 1028.22 in corresponding previous quarter.
  100.00
                                                                                                                                                                         Net Turnover stood at Rs 5836.26 crores registering a
   50.00                                                                                                                                                                 growth of 15% driven by robust performance in Hotels,
                                                                                                                                                                         non-cigarette FMCG businesses and the Paperboard,
    0.00
                                                                                                                                                                         Paper and Packaging segment.
                                                                        02-Nov-10
           02-Jun-10

                       02-Jul-10




                                                                                                02-Jan-11




                                                                                                                                                             02-Jun-11
                                    02-Aug-10

                                                02-Sep-10




                                                                                    02-Dec-10
                                                            02-Oct-10




                                                                                                            02-Feb-11

                                                                                                                        02-Mar-11

                                                                                                                                    02-Apr-11

                                                                                                                                                02-May-11




                                                                                                                                                                         Industry Scenario
                                                                                                                                                                         India is the second- largest producer of tobacco in the

D e c e 2011
June m b
December e r
August 2010                                                                                                                                                                                                                     9
         Company Research                                                    Magnum
                                                                                                                    (Rs. Cr.)
Particulars                    Mar Qtr-11      Mar Qtr-10      Growth%           FY11             FY10           Growth%
Net Sales                          5959.99         5131.61          16.14        21468.25          18382.24            16.79
Total Income                       6062.15         5190.81          16.79        21986.42          18756.57            17.23
Other Income                        102.16           59.20          72.57          518.17            374.33            38.43
PBT                                1836.77         1504.79          22.06         7268.16           6015.31            20.83
PAT                                1281.48         1028.22          24.63         4987.61           4061.00            22.82
EPS                                   1.66            2.71              --           6.49             10.73                --
                                                                                                                     Standalone
world after China. However, it holds a meagre 0.7 per cent      The revenue in the Hotel business of the company was
share of the $30-billion global trade in tobacco. Tobacco is    up by 17.2% to Rs 300.33 crores in Q4FY11. Construction
one of the important cash crops in the country, and makes       activities of the new super luxury properties at Chennai
a significant contribution to the Indian economy in terms       and Kolkata are progressing satisfactorily. The Chennai
of employment, income and government revenue. Of the            property is expected to be operational in Q1-Q2FY12
total tobacco produced in the country, around 48 per cent       and would add 600 rooms. ITC Gardenia, launched last
is consumed in the form of chewing tobacco, 38 per cent         year, has rapidly established itself as the premier hotel
as bidis, and 14 per cent as cigarettes. Cigarettes account     in Bengaluru and delivered profits in its first full year of
for 85 per cent of the country’s total tobacco exports.         operations. The hotel business is likely to gain momentum
A wide variety of tobaccos are grown in 16 states in India      on account of increasing domestic & foreign tourism,
under diverse agroclimatic conditions. However, most            gradual improvement in ARRs & occupancy levels and
of the varieties grown (other than Virginia, Burley and         strong macro economic conditions.
Oriental) are of non-cigarette types. These include natu,       The paper and pulp business of the company has shown
bidi, chewing, hooka (hookah), cigar and cheroot tobaccos       a good growth of 20% in the passing fiscal and going
and account for about 77 percent of the total output (Table     further the company has entered into a pact with Northern
4.2). Cultivation of FCV tobacco was initially confined         Technologies International Corporation to jointly develop
to the traditional black soil areas of Andhra Pradesh.          and commercialize biopolymer-paper products. The two
However, to suit the quality requirements in internal and       companies will jointly developing solutions in the Indian
export markets, cultivation of FCV was encouraged in light      market towards providing biodegradable/compostable
soils in Karnataka and Andhra Pradesh. In the initial years,    products such as food service ware, food packaging,
the varieties grown were limited to Havana tobacco used         personal care product packaging and other fast-moving
in cigars, and Lanka tobacco used in the manufacture of         consumer goods packaging.
snuff and bidis. Subsequently, other forms, like FCV, were      The non-cigarette FMCG business which contributes
introduced.                                                     close to 50 per cent to the company’s turnover, reported
Tobacco in India, as in many other countries, yields higher     robust growth in FY11 (net sales up 23.1%), led by good
net returns per unit of land than most other cash crops,        performance by all its segments like Branded Packaged
and substantially more than food crops. Currently, there        Foods, Personal Care and Education & Paper Stationery.
are a few specialized crops in various areas that provide       The business sustained its impressive growth in the
similar incomes, but it is estimated that these crops would     Soaps category, achieving a volume market share of 6%.
not remain remunerative if total production increased           The company was able to mitigate the impact of a steep
                                                                increase in input costs through a combination of smart
Investment Rationale
                                                                sourcing, increased internal efficiencies and cost saving
ITC has been able to build on its leadership position           actions across the supply chain.
because of its single minded focus on value creation for
                                                                At the CMP of Rs 194, ITC is trading at a P/E multiple of
the consumer through significant investments in product
                                                                30.06x and 25.20x FY12 (E), we recommend ‘BUY’ in the
design, innovation, manufacturing technology, quality,
                                                                scrip with a price target of Rs 233. All businesses in the ITC
marketing and distribution. The company has recorded
                                                                portfolio are mandated to engage with overseas markets
an impressive topline growth and high quality earnings
                                                                with a view to testing and demonstrating international
for the FY11, reflecting the robustness of its corporate
                                                                competitiveness and seeking profitable opportunities for
strategy of creating multiple drivers of growth. The non-
                                                                growth. Though the main cigarette business is likely to
cigarette FMCG business reported robust growth in FY11
                                                                remain under pressure due to continued discriminatory
(net sales up 23.1%), led by good performance by all its
                                                                taxation, restrictive regulation and hardening competitive
segments like Branded Packaged Foods, Personal Care
                                                                pressures, but as it has diverted its concentration on other
and Education & Paper Stationery, while the Agri business
                                                                business it won’t be of much worry.
profits were up 26% for the year.


June m b e
D e c e 2011 r                                                                                                           10
        Stock Update                                                                    Magnum
   HINDUSTAN UNILEvER                                                        JUBILANT FOODwORkS

                      17.84                                                                         7.52
                                                                                        7.7                           60.23

                                                          Promoter
                                                                                                                                  Promoter
                                                          FII
                                                                                                                                  FII
      12.35                                               DII
                                                                                                                                  DII
                                                          Others
                                                                                24.55                                             Others

              17.26
                                             52.55

  w   Hindustan Unilever (HUL) is India’s largest fast moving               w    One of India’s largest fast food chain operator Jubilant
      consumer goods company. Its distribution covers over 1                     Foodworks, reported in-line 4Q results with sales growth of
      million retail outlets across India directly and its products are          56% yoy and net profit growth of 86% yoy to Rs 19.3 crore,
      available in over 6.3 million outlets in the country, nearly 80%           aided by strong sales at its Dominos Pizza outlets. Same
      of all retail outlets in India. The company’s portfolio includes           store growth that are sales at outlets open for at least one
      leading household brands.                                                  year, was better than expected at 33% despite the tough
                                                                                 base of 38% in 4Q10.
  w   Company’s parent, Unilever has recently announced plans
      to take Knorr soupy noodles to global markets, particularly           w    The company’s EBITDA margins rose by 150bps yoy but
      emerging and developing countries. This development                        were down 30bps qoq, supported by flat qoq gross margins
      reflects the Indian arm’s i.e. Hindustan Unilever increasing               despite food inflation pressures. After adding 14 stores
                                                                                 during the quarter, Jubilant now has 378 stores across 90
      importance in Unilever’s global plans as Knorr soupy noodles
                                                                                 cities and four manufacturing units in India and it is targeting
      is a product developed by company’s subsidiary.
                                                                                 80 store openings in FY12 in Domino’s alongside 20% same
  w   The company has approved the proposal for demerger of fast                 store sales growth.
      moving consumer goods (FMCG) exports business including
      specific exports related manufacturing units of the company
                                                                            w    The company, which signed a master franchisee agreement
                                                                                 with US based coffee chain Dunkin’ Donuts on February
      into its wholly owned subsidiary Unilever India Exports (UIEL),            2011, has plans to open 100 Dunkin Donut stores over
      with effect from April 01, 2011 to fully exploit the opportunity in        5 years in India. Jubilant’s balance sheet and underlying
      export market and to provide necessary focus, flexibility and              cash generation is strong enough to support acceleration in
      speed to the business.                                                     store growth. The company will fund all its expansion from
  w   The company’s net profit for the fourth quarter has declined               internal accruals with Rs 50 crore of cash reserves currently.
      marginally by 2.07% at Rs 569.15 crore as compared to Rs                   Jubilant, which has been facing margin pressure due to rising
      581.20 crore for same quarter previous year. Its total income              commodity costs, hopes to maintain its EBITDA margins at
      has increased by 13.93% at Rs 5022.59 crore for the quarter                17.7% throughout the current fiscal year.
      under review from Rs 4408.65 crore in the corresponding               w    At current market price of 826.40, Jubilant is trading at a P/E
      quarter last year.                                                         ratio of 74.07. Going forward, over FY11-14, we expect the
                                                                                 company’s revenue to be 2.6x and PBT 3.1x. The company
  w   At current market price of 318.30, Hindustan Unilever is
                                                                                 once again demonstrated the inherent superiority of its
      trading at a P/E ratio of 29.81. We recommend a BUY in
                                                                                 business model in the quarter gone by. Negative working
      the stock with a price target of Rs 342 as it showed a good                capital, high capital efficiency ratios and healthy cash
      performance in all segments also all its near term concerns                generation led to Jubilat’s strong market positioning and
      remain largely addressed the company is now focusing on                    robust brand equity. Our target price reflects around a 10%
      strong growth, innovation and category creation. The company               upside return from the current market price. We maintain a
      recently increased the pace of innovations in categories like              BUY recommendation with a target of Rs 910, achievable
      hair, premium skin care and foods.                                         over a medium to long term.

  Last Traded Price (As on June 3, 2011)                        318.30      Last Traded Price (As on June 3, 2011)                      826.40
   Price target                                                 342         Price target                                                910
   Market cap. (Rs cr.)                                      68,735         Market cap. (Rs cr.)                                      5,332
   52 Week H/L                                        329.45/238.00         52 Week H/L                                       862.00/276.30
   Free Float (Rs cr.)                                       34,367         Free Float (Rs cr.)                                       2,133
   BSE code                                                     500696      BSE code                                                533155



D e c e 2011
June m b
December e r
August 2010                                                                                                                                      11
         Corporate News                                                    Magnum
Lupin inks strategic deal with NeuClone for                      manufacturing facilities and new projects.
cell line technology                                             Shipping Corporation of India plans to raise
Pharma major, Lupin has entered into a strategic licensing       $500-600 million through ECBs
agreement with Sydney based private specialty life
                                                                 Shipping Corporation of India (SCI), India’s largest shipping
science company NeuClone for their cell line technology.
                                                                 services firm, is planning to raise $500-600 million through
Under the terms of the agreement, NeuClone will provide
                                                                 external commercial borrowings (ECB) in FY12 to fund its
an exclusive proprietary mammalian CHO cell line which
                                                                 expansion plans. The company has already set aside Rs
will express a specific recombinant protein of interest in
                                                                 3,760 crore of capex for FY12 and is expected to add 17
oncology to its partner. The agreement will also entail the
                                                                 ships during the year to its existing fleet of 79 vessels. The
Lupin Biological Research program scientific research staff
                                                                 company typically funds 80% of its annual capex through
working with NeuClone terms at their facility as per a part of
                                                                 borrowings.
the overall technology transfer arrangements as specified
within the agreement. This exclusive licensing agreement         Mahindra Satyam inks strategic alliance with
with NeuClone is a part of that strategy and would enable        MasterCard
Lupin to capitalize on cutting edge technology to address
                                                                 Mahindra Satyam, a leader in global business and
the biological markets.
                                                                 information technology has entered into global strategic
Tata Steel divests 51% stake in TRL to krosaki                   alliance with MasterCard and announced the establishment
Harima Corporation                                               of a center of excellence for testing at Kuala Lumpur in
                                                                 Malaysia. The center will provide support for global testing
Tata Steel has sold 51% stake in group company Tata
                                                                 for MasterCard business applications, as well as application
Refractories (TRL) to Nippon Steel’s associate Krosaki
Harima Corporation (KHC) and inducted the Japanese               development in Java and Business Intelligence. The
firm as a strategic partner. The 51% stake deal is valued        company’s Testing Center of Excellence for MasterCard
at Rs 576.3 crore, going by the TRL valuation at Rs 1,130        will support the company’s effort around research and
crore. Tata Steel would continue to hold 26.46% stake in         development and facilitate global collaboration. Through
the TRL -- the largest domestic refractories manufacturer.       this collaboration, Mahindra Satyam intends to leverage
Earlier, on April 21, Tata Steel (TSL) and Krosaki Harima        its proven expertise of testing in credit card functionalities
Corporation had signed definitive agreement to induct            and automated process to enhance the customer and
KHC as a strategic partner in Tata Refractories.                 cardholder experience for MasterCard around the world.

Camlin and kokuyo Co enter into a strategic                      valecha Engineering bags Rs 525.58 crore
alliance                                                         worth of orders

Promoters of Camlin and Japanese firm-Kokuyo S&T Co-             Valecha Engineering (VEL), a leading infrastructure
(directly owned 100% share capital by Kokuyo Co) have            development company, has bagged projects of widening
entered into definitive agreements comprising of a Joint         to 2 lane and improvement in 97.20 km length of Barsoor-
Venture Agreement and a Share Subscription Agreement             Geedam-Dantewada-Kirandul-Jagergunda-Mariyagudam
to form a joint venture that will bring together Camlin and      Road under LWE project of Rs 100.58 crore at Chhattisgarh
Kokuyo Co. As per the agreement -Japan’s Kokuyo Co will          in joint venture (JV) and project for improvement and
buy 50.3% stake in office stationary maker Camlin for over       widening of Bhuj-Bhachau Road (SH-42, Km 0/0 to Km
Rs 365 crore in three tranches, after which the Indian firm      77/0) in the state of Gujarat on build, operate and transfer
will be converted into a joint venture. In the first tranche,    (BOT) basis of Rs 425 crore.
the acquisition of 10% of the share capital of the Company
                                                                 DLF sells 10 million sq ft in housing segment
will be done on a fully diluted basis, pursuant to which the
                                                                 in FY11
preferential allotment would be made by the Company as
contemplated by the share subscription Agreement, for a          DLF, the country’s largest realty firm has sold 10 million
price of Rs 85 per share. The said amount of subscription        square feet area worth Rs 6,658 crore in the housing
monies will be utilized for expansion and modernization of       segment during the last fiscal, lower by 20% than that


June m b e
D e c e 2011 r                                                                                                            12
         Corporate News                                                    Magnum
sold in the previous year. The company’s average sales          company is at an early exploratory stage for a possible
realization was higher by 14% in 2010-11. In the financial      plant at Gujarat.
year 2011, sale achieved was 10 million sq ft against
                                                                Crompton Greaves acquires US based QEI,
12.5 million sq ft in financial year 2010. While, sales
                                                                Inc for $30 million
booking in financial year 2011 was marginally lower,
average realization was at Rs 6,500 per sq ft up by 14%         Crompton Greaves has concluded an arrangement for the
from financial year 2010. Delay in approvals that led to        acquisition of US based company QEI, Inc for an enterprise
slowdown in planned launches and inflation uncertainty          value equivalent to $30 million comprising of an upfront
which resulted in moderation in volumes were the reasons        payment of $24 million followed by balance of $6 million to
for decline in sales volume.                                    be paid as a conditional earn out amount. The acquisition
                                                                is subject to certain regulatory approvals in US. With this
Hexaware Technologies bags $25 million
                                                                acquisition, the company has further, fortified its position
worth of order in Europe
                                                                in the SCADA and substation automation domain. Some
Hexaware Technologies, a leading global provider of IT,         areas of complementarities include Data Acquisition;
BPO and consulting services, has signed a new 3-year            Renewable SCADA; Transit; Substation Automation.
contract worth in excess of $25 million for providing
                                                                Suven Life Sciences secures 4 product
Remote Infrastructure Management Services (Remote
                                                                patents for NCE
IMS) to an existing client. The company has registered this
prestigious win in the area of Remote IMS, an emerging          Suven Life Sciences has secured grant of four product
service offering from the company, ahead of competition.        patents, one from Europe, one from New Zealand, one
This win further strengthens its position in a multi-vendor     from Australia and one from Korea corresponding to
scenario. By securing this large annuity deal, the company      the New Chemical Entities (NCE) for the treatment of
has also managed to increase its share of the wallet with       disorders associated with Neurodegenerative diseases
this existing client.                                           and these patents are valid through 2025. The granted
                                                                claims of the patents include the class of selective 5-HT
vA Tech wabag eyeing overseas acquisition
                                                                compounds discovered by Suven and are being developed
VA Tech Wabag is in talks with 3-4 overseas companies           as therapeutic agents and are useful in the treatment of
for acquisition this year which will help the company in        cognitive impairment associated with neurodegenerative
entering into new geographies along with strengthening          disorders like Alzheimer’s disease, attention deficit
its presence. Currently, the company has its presence in        hyperactivity disorder (ADHD) , Huntingon’s disease,
19 countries and will start the due diligence in one or two     Parkinson and Schizophrenia.
months. Some of the companies that VA Tech Wabag is
                                                                M&M’s Jv          to   export      RHD      commercial
eying are from Latin America, Eastern America and North
                                                                vehicles
Africa. Owing to market potential in Turkey and China, last
year the company has converted its branch office into full-     Mahindra & Mahindra’s joint venture (JV) company with
fledged subsidiaries. In addition, the company had also set     Navistar of the US - Mahindra Navistar Automotive is
up subsidiaries in the Philippines and Sri Lanka in 2010.       planning to export right-hand drive (RHD) commercial
                                                                vehicles manufactured in India to overseas markets like
Maruti Suzuki mulling to come up with
                                                                South Africa and SAARC countries. In the first year of
manufacturing unit in Gujarat
                                                                the Mahindra Navistar launch, the company is trying to
Maruti Suzuki, (MSI) the country’s largest car-maker plans      establish its presence across various geographies in the
to set up a manufacturing unit in Gujarat, which could be its   country but want to consolidate its presence in the domestic
first plant outside Haryana where it has been based since       market first. The company aims to sell 50,000 heavy
its inception in 1983. The government has offered land          commercial vehicles (HCVs) and 20,000 light commercial
at three different locations in the state at Sanand, Halol      vehicles (LCVs) in the next three to four years. While the
and Dholera localities. The company has not yet finalized       HCV segment was growing in the country at a rate of 40
any location. However, according to industry sources, the       percent, the LCV segment was growing at 15 percent.


D e c e 2011
June m b
December e r
August 2010                                                                                                            13
         Market Snapshot                                                      Magnum
The domestic markets’ disappointments got extended             BSE Sensex movement for the month of May
to the month of May influenced by various earnings
                                                               19,200.00
underperformance and global jitters. Though, the start of      19,000.00
the month was good with good auto sales number and it          18,800.00
                                                               18,600.00
seemed Indian automobile industry have started the new         18,400.00
fiscal on a positive note with various auto makers such as     18,200.00
                                                               18,000.00
Tata Motors, Maruti Suzuki, Bajaj Auto, Hyundai Motors         17,800.00
                                                               17,600.00
and TVS Motors posting good growth compared with the
                                                               17,400.00
same period of the previous year. However, sequential          17,200.00




                                                                                                                                                                                                                                                           1-Jun-11
                                                                                                                                                                                                                                                                      3-Jun-11
                                                                                                                       10-May-11
                                                                                                                                   12-May-11
                                                                           2-May-11
                                                                                      4-May-11
                                                                                                 6-May-11
                                                                                                            8-May-11




                                                                                                                                               14-May-11
                                                                                                                                                           16-May-11
                                                                                                                                                                       18-May-11
                                                                                                                                                                                   20-May-11
                                                                                                                                                                                               22-May-11
                                                                                                                                                                                                           24-May-11
                                                                                                                                                                                                                       26-May-11
                                                                                                                                                                                                                                   28-May-11
                                                                                                                                                                                                                                               30-May-11
growth slowed down a bit when compared the April 2011
growth figures with March 2011. The industry was seen
lagging behind as customer’s sentiments were hurt by
rise in vehicle prices, fuel costs and loan rates. The other   BSE Sensex Monthly Gainers
supportive news in the early trading days of the month
                                                               Company                                                             Prev Price                                                   Last Price                                         Change
came with India’s manufacturing sector expanding at                                                                                (May 3’11)                                                  (June 3’11)                                          (%)
the fastest pace in last five months, increasing pressure
                                                               Ranbaxy Labs.                                                                               446.75                                                 534.25                                     19.59
on the Reserve Bank of India (RBI) to further tighten its
                                                               Hind.Unil                                                                                   272.65                                                 318.55                                     16.83
monetary stance. The seasonally adjusted HSBC Markit
Purchasing Managers’ Index (PMI) rose to 58 in April from      Hero Honda                                                                          1656.70                                                   1861.10                                         12.34
57.9 in March, indicating a healthy growth in manufacturing    Larsen & Toubro                                                                    1537.40                                                    1712.75                                         11.41
sector. Though the initial jitters for the markets came
                                                               DLF                                                                                    220.75                                                    233.70                                          5.87
with RBI’s monetary policy review, in a move aimed at
remaining ahead the curve on inflation, the Reserve            w Ranbaxy Laboratories is planning to start supplying a
                                                               low-cost version of anti-ulcer drug, sold under the brand
Bank of India (RBI) hiked its key short term lending rate -
                                                               Nexium by AstraZeneca Plc to the British drugmaker,
repo - by 50 basis points (bps). While a 25 bps rate was       towards the end of 2011 and expects to start shipping the
already factored in by markets, the 50 bps outcome was         product in the second half of this year. On consolidated
not completely unexpected but was a bit surprising with        basis, the group’s net profit after tax & minority interest
the significant increase in inflation seen over last couple    has jumped 68.31% at Rs 304.39 crore as compared to
                                                               Rs 960.58 crore for the quarter ended March 31, 2010.
of months and weighed heavily on the rate sensitives. The
                                                               Total income for the quarter has decreased by 22.54% at
rate hike didn’t go down well with the industry and the
                                                               Rs 2270.61 crore as compared to Rs 2931.21 crore for the
markets, but the government strongly backed the RBI after      corresponding previous quarter.
its more-than-expected rate hike, even as it lowered the
                                                               w  Three lending institutions are said to be the front-
growth projection to 8% for FY12. Both the Union Finance       runners for the FMCG major Hindustan Unilever’s (HUL)
Ministry Pranab Mukherjee and the Planning Commission          iconic Churchgate property, which was reportedly put
Deputy Chairman M S Ahluwalia said the move was in             on the block for Rs 500 crore. The seven-storey former
right direction and will help bring down the high inflation.   headquarters of the FMCG major, spread over an area
                                                               of 1,54,320 sq ft is the single largest A-grade commercial
However, the commerce and industry ministry,while
                                                               building in the Nariman Point-Churchgate belt. In January
supported the central bank’s fight against inflation, added
                                                               last year, HUL shifted its operations to an elaborate
at the same time that RBI should ensure that interest rates    12.5-acre campus in Andheri (East), out of their iconic
hiked do not hurt credit availability to the India Inc.        Churchgate headquarters after 46 years.


June m b e
D e c e 2011 r                                                                                                                                                                                                                                                    14
         Market Snapshot                                                  Magnum
                                                               months hurt by the central bank’s aggressive stance
 BSE Sensex Monthly Losers
                                                               against inflation which has affected the pace of expansion
 Company                Prev Price      Last Price   Change    of the economy. The unexpected improvement came
                        (May 3’11)     (June 3’11)    (%)
                                                               on the back of strong performance by the capital goods
 Rel. Infra                   656.50        557.15    -15.13   numbers which after three months of contraction increased
                                                               by 12.91% compared to 36% (Y-o-Y). The month was
 Tata Motors                 1163.10       1023.80    -11.98
                                                               marked by the heavy result announcements and the
 SBI                         2583.70       2312.50    -10.50   numbers kept buzzing the markets whole month, for the
 Hindalco                     206.35        189.15     -8.34   fourth quarter and the fiscal the, results remained a mixed
                                                               bag. Barring the heavyweight Infosys and few other mid
 Grasim Industries           2453.20      2278.75      -7.11   size disappointments, Information technology (IT) along
w The company’s profit after tax dipped 6% to Rs 1080.91       with private sector banks, pharmaceuticals and consumer
crore for the year ended March 31, 2011 as compared to         durables came up with satisfactory numbers. However,
Rs 1151.69 crore for the year ended March 31, 2010. Its        the Public sector banks with some exceptions showed
total income has decreased from Rs 10817.09 crore for          the impact of high wage and NPA quality provisions, while
the year ended March 31, 2010 to Rs 10127.78 crore for         autos too have seen margin pressure despite strong
the year ended March 31, 2011.On consolidated basis, the       demand for last couple of months. Global jitters too kept
group has posted profit after tax, share in associates and     pressurizing the domestic markets on concern of demand
minority interest of Rs 1551.61 crore for the year ended       slowdown, while the worries remained in African and
March 31, 2011 as compared to Rs 1519.39 crore for the         Middle East region, the European debt worries resurfaced
year ended March 31, 2010, up 2%. However the company          with some credit downgrade of the member nations. Rise
has commissioned 103-km second power line of its 1,500-        in commodities such as crude oil prices too disturbed the
km Western Region System Strengthening Scheme. With            domestic markets during the month, though some soft US
nine lines, the project can generate Rs 250 crore in annual    data led the fall in crude prices but it still remains at the
revenue after the commissioning of all lines                   elevated levels, which was considered as one of the major
                                                               reason of rise in inflation. The annual rate of inflation,
w   Tata Motors total sales, including exports, of Tata
                                                               based on monthly WPI, stood at 8.66% for the month of
commercial and passenger vehicles in May 2011 were
                                                               April 2011 as compared to 9.04% seen in the previous
up by 10% over May 2010. But the passenger vehicles
                                                               month and 10.88% during the corresponding month of
business reported a total sale and distribution off take of
                                                               the previous year. The index for primary articles group
21,549 in the domestic market in May 2011, compared to
                                                               rose by 2.2% to 191.6 from 187.4 for the previous month
23,487 in May last year. Sales of Tata passenger vehicles
                                                               while the index for fuel and power group rose by 1.1% to
for May 2011 were at 19,401, lower by 9% over May last
                                                               159.9 from 158.2 for the previous month while the index
year. However, the company plans to launch new variants
                                                               for manufactured products group rose by 1.04% to 135.8
of its small car Nano during FY12. The company is
                                                               from 134.4 for the previous month. Though the expiry of
prepared to launch a diesel variant of Nano and is likely to
                                                               the May series was on a positive note but it proved to be
be rolled out by the end of this year. The company is likely
                                                               a dismal one after closing lower by around six and half a
to introduce host of products in FY12. Future products in
                                                               percentage points from the last series, the rollovers too
pipeline for FY12 are Nano variants, Vista refresh, Manza
                                                               were lower indicating that investors are not very confident
limited edition, New Safari, Aria 2WD, the company
                                                               about the markets in coming month. The other disturbing
mentioned referring to product line up for its passenger
                                                               fact has been investment trends of foreign institutional
vehicles for the ongoing fiscal.
                                                               investors, who were seen curtailing their investments in
The mood of the markets remained somber for most part          the equities market and were instead shifting their focus
of the month despite industrial growth-IIP surprisingly        to debt market. It is being said that going forward, FII flows
moving to 7.3% in March from 3.6% in February; however         may remain moderate to weak because of the natural
the Industrial production had grown 15.5% a year ago.          tendencies of equity market as an asset class becoming
Industrial output has remained fragile in the past few         unfavourable with high interest rate regime.

D e c e 2011
June m b
December e r
August 2010                                                                                                             15
         Economy News                                                     Magnum
RBI turns down banks request for                                The auto industries’ apex body Society of Indian
restructuring securitized papers of MFIs                        Automobile Manufacturers (SIAM) and other industry
                                                                related organizations had raised objection on the inclusion
The Central bank has turned down a request from banks
                                                                of fully built vehicles under the India-EU FTA earlier this
to restructure securitized papers bought from microfinance
                                                                year. After the protest from the industry, commerce ministry
institutions (MFIs). In securitization, MFIs bundle up micro
                                                                had asked for their recommendation on the same subject.
loans while structuring debt papers around it. Microfinance
                                                                The SIAM had argued that, it’s against any exception to
institutions are estimated to have issued securitized papers
                                                                the rule that has so far applied to other FTAs, including the
worth Rs 4,000 crore to banks. Banks lend to MFIs either
                                                                ASEAN, South Korea and Japan. All of them lead to some
directly or by purchasing securitized papers. A number
                                                                tariff reduction on components but did not touch fully built
of private banks had appealed to RBI to restructure
                                                                up vehicles.
securitized papers. However, some private banks and
public banks opposed it on grounds that the reworking           Because of their protest, the SIAM and auto industry
loans would hit financial ratios of MFIs. Bankers against       have been kept out of the loop about the details of the
restructuring of securitized papers said if the central bank    negotiations. Before this, the government and SIAM
had allowed restructuring, it would not be considering as       also had face-off on the tariff issue, the government has
true sale. Banks classify securitized papers purchased          stated that, the Indian auto industry enjoyed too much of
from MFIs as priority sector loan and not direct exposure       tariff protection unlike other sectors. On the other hand
to MFIs. On the other hand, banks in favour said even as        SIAM felt that the EU FTA would seriously impact both
the portfolio is sold to banks, MFIs are servicing the loan     employment and investment in the auto sector.
on behalf of banks that hold the pass through certificate.      The CPI for April remain same as of March
The RBI said in a note to Indian banks’ Association that        The Consumer Price Index based on the retail prices
the securitized portfolio that banks have been acquired         remained stable at 106 points during the month of April.
from microfinance institutions will not be considered for       The general indices for rural and urban consumers stood
restructuring under special dispensation. The central bank      at 108 and 105 points respectively. While in last month, the
did not give any motive for rejecting the request. However it   general indices for rural, urban and combined consumers
said that loans given by banks in consortium to microfinance    had stood at 107, 104 and 106 points, respectively.
institutions may be considered for restructuring.
                                                                Fruits and protein-based items become more expensive
India-EU FTA to include tariff reduction on                     during April, at all India level, the index for fruits increased
import of vehicles                                              by 10% to 131 points in April in comparison to March.
The India and European Union Free Trade Agreement               Likewise the indices for egg, fish and meat increased by
(FTA) might include tariff reduction on import of vehicles as   2% in April vis-à-vis March to 110 points. While milk rose
well as automotives components. It will be for the first time   marginally to 110 points. There was also a 3.6 % increase
when this aspect is being covered in a FTA, India’s other       in retail prices of pan and tobacco to 114 points, while
FTA with auto hubs like Japan, ASEAN and South Korea            condiments and spices were up by 1.75% at 116 points.
had not covered completely-built vehicles from the area of      Whereas, ‘Fuel and light’ went up marginally by 1 point,
FTA. The main reason for this being included in the FTA         from 107 in March to 108 in April, ‘clothing, bedding and
with EU is that many luxury car makers are originally from      footwear’ stood at 112 points on an all-India basis in the
EU countries and Indian car market is important for them.       month under review, marginally up from 110 in the previous
European car majors such as Volkswagen, Mercedes                month.
Benz, BMW, Renault and Fiat have made extensive
investments in India.                                           However, vegetable prices fell by 4% in the month under
                                                                review of 95 points. Overall, the food beverage and
The India and EU FTA negotiation is in final stages and         tobacco segments of CPI moved up to 107 points in April
draft is likely to be announced shortly. Once both the          from 106 in the previous month’. Although the CPI, as per
Indian commerce ministry and EU trade commissioner              the new series , increased to 106 in April this year from
reaches the agreement to sign, the FTA will be formally         a base of 200 in 2010, the government will wait “till the
implemented next year.                                          series gets stabilized “ and adequate timely receipts of


June m b e
D e c e 2011 r                                                                                                            16
         Economy News                                                      Magnum
price data is achieved before it begins to release the retail   the power sector and that producers were not utilizing the
inflation figures from next year.                               entire quantity earmarked for them. He further added, “Spot
                                                                sales were started to meet the needs of small consumers
The CPI for miscellaneous items was attached at 106 points
                                                                and companies that do not have adequate linkages” at
on a countrywide basis in April, up from 105 in March. The
                                                                present Coal India set aside 11.5% of its production for
new CPI is anticipated to replicate the real movement of
                                                                spot sales every year.
prices at the micro-level and help policymakers like the
RBI in better framing of decisions. As per the experts, with    Finance ministry to come up with Infra Debt
passing time the new index would take over Wholesale            Funds guidelines by June
Price Index as the main benchmark to measure inflation          The Ministry of Finance is planning to set guidelines on
These Consumer Indices have been released for five              the Infrastructure Debt Fund by end of this June. This Infra
major groups -- food, beverages and tobacco; fuel and           Debt fund will help to finance the core sector to sustain high
light; housing; clothing, bedding and footwear; and             economic growth. The Infra Debt Funds are planned to be
miscellaneous items. For April month, with 111 points           structured either as a trust or a company, depending upon
Mizoram witnessed the highest CPI and Manipur was the           the nature they would be regulated either by RBI or SEBI.
lowest with 102 points.                                         Department of Economic Affairs’ secretary is scheduled to
Ministry of Power recommends stopping of                        meet all the stakeholders including the central bank RBI,
e-auction by Coal India                                         market regulator SEBI and insurance sector watchdog
                                                                IDRA to discuss the guidelines and the Capital Adequacy
The Ministry of Power has proposed to Prime Minister
                                                                Ratio for the companies to be helped also the exposure
Manmohan Singh that Coal India (CIL) should be directed
                                                                limits. Matters connecting to regulators, possible debt
to stop the premium sale of thermal coal through e-auction
                                                                seekers, and credit rating may also come up in the
route and switch the supply to power plans facing fuel
                                                                meeting.
shortage in spite of coal linkage. The producer can be
allowed to make a comprehensive hike in its notified coal       The ministry of finance is of the view that instead of an
prices so that it is able to make up for the lost revenue.      owned funds for the infra investment, it should be pooled
Prime Minister hold a meeting on May 19, 2011 with all          funds, as discussed in internal meeting. Since both
stakeholders to review progress in power and coal mining        companies and trust might be allowed in this space, they
projects and Ministry of Power discussed this issue with        would issue bonds and units accordingly & SEBI can
the Prime Minister.                                             regulate companies and RBI can regulate trust.

The Ministry of Power’s suggestion is backed by the lobby       In this year’s union budget, Finance Minister P Mukherjee
of private power developers, having the view that it will       had announced setting up the funds through special
be difficult to raise coal production immediately to meet       purpose vehicles for attracting foreign investment in
current requirements. Hence, CIL should stop spot sales         the infrastructure sector. In his Budget speech FM said
of thermal coal, so that they can get extra coal for their      “To attract foreign funds for financing of infrastructure, I
thermal plants. The power ministry feels that Coal India        propose to create special vehicles in the form of notified
should respect commitment to supply quantities agreed           infrastructure debt funds.”
under letters of assurance for new units commissioned           Recently, planning commission deputy chief, Montek Singh
during 2009-12 before resorting to e-auction of thermal coal.   Ahluwalia had said, “India needs $1 trillion investment
CIL has been selling a part of its annual coal production       in infrastructure creation to continue to grow at 9% over
through the e-auction route to maximize its revenue. In the     the next five year”. The Finance Ministry and Planning
financial year 2010-11, the company sold nearly 40 million      Commission is planning to invest $1trillion in creation of
tonnes of thermal coal with average price realization about     ports, highways, power utilities and telecom infrastructure
80% higher compared to the notified price.                      in next Five Year Plan starting from 2013. An inclusive
On this issue, CIL Chairman N. C. Jha said, “Current spot       policy framework for PPP in building Physical infra and
market prices are about 80% higher than the notified price      social sectors such as health and education is on the list.
of Rs 800 - 1,200 per ton”. Spot sales account for 9% of        It will place guidelines for the entry of private players and
Coal India’s revenue. There was no shortage of coal for         implementation of infrastructure projects.


D e c e 2011
June m b
December e r
August 2010                                                                                                             17
             Scorecard - FMCG Sector                                                Magnum
                                                             F u l l Ye a r

Company             Year            Equity    Promoter     BV      RONW        Sales      Sales    OPM     NP Rs.    NP Var     DIV       CPS
                             NOM           FV
Name                End            Rs. Mn.     Stk %       Rs.      (%)       Rs. Mn.    Var (%)   (%)      Mn.       (%)       (%)       (Rs.)

Ador Multiprod     201103    12      24.28   10   26.02    18.66     9.53       109.77    -11.79    4.48      2.24     -46.92    10         1.59

Agro Tech          201103    12     243.69   10   48.11    61.83    17.93      7207.10     10.41    4.77    317.80      26.41    15        14.93

Ajanta Soya        201003    12     118.97   10   46.07    16.87     2.28      2320.44    -12.22    1.15      2.96     252.38         -     1.24

Amar Remedies      201006    12     261.64   10   40.03    67.64    19.89      4724.05     27.97   14.60    322.52      22.40    10        16.26

Amrit Corp         201103    12      32.13   10   69.61    91.56     9.11       454.31     25.08   16.16    183.35     606.28    20        60.75

Anik Industries    201103    12     277.53   10   50.17    74.13     5.50     12722.31      4.76    4.03    112.25      11.13     6         5.70

ANS Ltd            201003    12      92.56   10   55.54    14.97     4.08       130.54    -27.06    7.53      5.53     -84.40         -     1.06

AVT Natural        201103    12      76.14   10   69.60    64.89    13.73      1384.10     66.82   17.57    106.90      63.96    30       18.24

Bambino Agro       201009    12      80.91   10   74.19    29.09     7.31      1930.35      8.28    6.47     16.25     334.49         -     3.99

BCL Inds & Infra   201103    12      61.50   10   44.16    67.43     5.53      4793.58     57.42    2.31     54.04     382.07         -    12.17

Camson Bio Tech Ltd 201103   12     160.50   10   31.08    43.22    26.24       991.44     23.44   25.17    220.34      46.78    10        15.30

Chaman Lal Setia   201103    12      93.96   10   74.60    33.81    24.03      1668.94     -8.81    8.00     62.24      -6.45    16         7.94

Chordia Food       201103    12      29.80   10   48.78    77.13     8.13       305.94    -12.56   13.74     18.77       4.39         -     9.25

Colgate Palmoliv   201103    12     135.99    1   51.00    23.98   156.07     22968.60     12.86   24.27   4025.80      -4.89 2000         32.12

DFM Foods          201103    12      99.72   10   69.02    16.46    27.74      1198.40     66.01   13.46     83.20      97.62    15         9.73

Flex Foods         201103    12     124.40   10   58.99    38.32     8.12       465.70     22.62   20.57     34.70      -6.22    20         5.52

Gillette India     201006    12     325.85   10   88.76   175.23    25.82      8524.80     28.87   26.43   1371.00      21.19   150        45.91

GKB Ophthalmics    201103    12      41.54   10   66.20    39.57     7.35       271.67    -27.64   12.41      7.56     -51.72    12         4.05

Glaxo.Cons. Health 201012    12     420.56   10   43.16   228.28    32.15     23737.50     19.64   20.82   2998.50      28.81   500        80.74

Gokul Refoils      201103    12     263.79    2   69.76    28.87    11.77     45361.53     60.93    3.67    622.49      44.93    15         7.01

GRM Overseas       201003    12      36.90   10   73.62    64.69    16.75      2760.42      0.77    3.51     36.59      16.49    20        12.78

Guj Ambuja Exports 201103    12     276.70    2   63.95    30.38    16.61     19510.15     38.31    7.95    940.98      56.74    20         8.91

Himalya Internl.   201103    12     405.82   10   29.69    27.95    16.63       853.23     17.49   33.54    214.64      33.94         -     4.84

Hind Inds          201003    12      86.36   10   42.60    71.31     4.07      1224.56      3.10    9.05     19.74     -41.00     5         5.35

Hind.Unil          201103    12    2181.70   1    52.55    11.82    90.56 197128.70        11.21   14.97 23059.70        7.45   650        11.70

Jubilant FoodWorks 201103    12     636.22   10   60.23    18.27    46.64      6783.29     59.92   18.00    720.01     118.38         -    15.70

Jyothy Laboratories 201103   12      72.57    1   63.16    54.97    21.31      6080.19      4.85   17.54    802.67       0.27   400        11.29

Kaveri Seed        201103    12     137.02   10   63.74   110.10    21.07      2336.86     44.13   23.48    424.75      46.14    20        38.44

 Scorecard Legends : NOM - Number of Months for which P& L a/c is prepared by the companies, Equity Rs.Mn - Latest Paid Up
 Capital of the Company, FV-Latest Face values of equity Shares, Promoter Stk % - Its promoter holding in the equity capital of the
 company as per latest shareholding pattern, BV Rs. - Book Value Per Share is calculated as (Equity + reserves ) / No of Equity
 shares, RONW - Return on Net Worth is calculated as {(Net profit - preference capital)/ Shareholder’s Fund }*100.Share- holders
 funds includes Equity Paid Up + Reserves excluding revaluation reserves - Misc Expenditures Not written off, Sales Rs. Mn - Sales ,
 Turnover & Income from operations,Sales Var% - Percentage Change in Sales over previous period Sales, OPM% - Operating Profit
 after interest expended as a % of Interest income & income from operation, NP Rs. Mn - Net Profit as reported after Tax, NP Var% -
 Percentage Change in Net profit over previous period Net profits, Div% - Total % of Dividend Declared during latest Financial year.



June m b e
D e c e 2011 r                                                                                                                             18
          Scorecard - FMCG Sector                                                        Magnum
                         Latest Quarter                               TTM                                     Market Data

 EPS       Sales      Sales    OPM      NP          NP                EPS       NP        Price                                     Mkt. Cap
                                                             Ended                                  H52W       L52W     PE
 Rs.      Rs. Mn.    Var (%)   (%)     Rs. Mn.     Var(%)             Rs.     Var (%)    02/06/11                                   (Rs. Mn.)

  0.92       36.18     1.15     5.56        1.00    -58.68   201103    0.92     -88.39     22.10      45.20     16.10       23.95     53.65217

 13.04     1779.80     4.36     9.25      109.80    25.49    201103   13.04     20.89     364.40     404.00    232.75       27.94    8880.0636

  0.25      602.00     5.82     1.31        0.60    27.66    201103    0.45     44.36      10.89      19.92      8.81       24.35 129.5539522

 12.33     1454.54    21.91    14.50       97.06    10.91    201103   14.14    100.00     109.60     171.00     62.00        7.75   2867.59084

 57.06      111.21    26.97    15.70        8.90   103.20    201103   57.05     85.75     285.00     345.00    185.10        5.00   915.770835

  4.04     4060.09     -1.22    3.34       14.67   427.70    201103    4.04     10.01      39.15      73.90     37.10        9.68 1086.548977

  0.60       19.00    -33.12    8.21        0.44    -73.33   201012    0.79   -425.44        9.88     11.44      7.20       12.51    91.445328

 14.04      536.40   101.58    18.18       51.20   105.62    201103   14.04     43.69     147.05     167.75     88.40       10.47   1119.66811

  2.03      452.74    15.99     8.38        5.94   100.68    201103    2.48     68.24      31.00      52.80     28.65       12.49   250.822426

  8.79     1520.73    56.68     2.77       29.59 1074.21     201103    8.79     79.26      31.50      58.75     24.00        3.58      193.725

 13.73      230.57    21.50    30.64       61.80   161.98    201103   13.73     31.88     114.95     252.00     89.25        8.37    1844.9475

  6.55      398.69    -20.75   15.69       28.26     1.84    201103    6.55      -6.57     33.35      53.00     27.55        5.09 313.3479223

  6.30       78.04     -5.73    8.44       -0.35   -117.77   201103    6.30      4.21      51.00     102.95     42.00        8.10     151.9851

 29.60     6012.20    12.17    25.30   1140.60       -0.29   201103   29.60      -5.14    920.10     996.00    775.00       31.08 125127.1593

  8.32      351.40    71.83    15.22       25.80   303.13    201103    8.32     49.40     128.30     149.00     40.50       15.42   1279.36911

  2.79      136.90    25.25    27.68       19.10    20.13    201103    2.79      -6.92     27.30      36.00     24.25        9.79   339.613365

 42.07     2631.10    18.62    13.69      207.30    -51.45   201103   31.38     -53.16   1850.00    2038.20 1487.30         58.96 60282.65145

  1.82       61.85    -30.14   20.81        3.24    -40.88   201103    1.91    -118.66     40.15      79.50     35.20       21.03   166.766237

 71.30     7274.20     9.54    24.65   1106.20      15.04    201103   74.74     22.04    2310.10    2460.00 1600.00         30.91 97152.41055

  4.72    11540.51    34.60     2.38      101.67    23.72    201103    4.68    100.00      94.70     111.60     64.80       20.24   12490.4565

  9.92      456.15    16.41     3.09        4.84    88.33    201012    6.96      -5.45     30.10      57.75     28.85        4.32    111.05395

  6.80     6209.57    71.16     6.30      275.58    35.79    201103    6.80     47.62      29.65      51.30     22.00        4.36    4102.0775

  4.26      178.73    10.50    32.75       36.16   105.10    201103    4.26     24.63      22.45      41.80     19.35        5.28   911.068145

  2.29      450.39    17.13     8.23        2.04    -73.09   201103    2.80      -5.99     48.20     104.20     23.05       17.20   416.266768

 10.68    49622.10    13.29    14.16   5691.50       7.57    201103   10.68      6.93     320.90     329.45    238.00       30.05    700107.53

  11.16    1936.86    56.13    17.55      193.28    85.77    201103   11.16     54.21     818.55     862.00    276.30       73.36 52077.54254

  9.95     1584.30    -18.93   16.28      222.07    -18.08   201103    9.95      0.27     216.95     321.95    174.80       21.79 15743.84455

 31.00      172.98    36.26    24.44       49.93   785.28    201103   31.00     31.57     388.00     429.95    235.10       12.52 5316.447392

CPS Rs. - Cash Profit per Shares, EPS Rs. - Earning Per Shares is calculated as Net Profit / Number of Equity Shares, Sales Rs.
Mn - Sales ,Turnover & Income from operations for Latest Quarter, Sales Var% - Percentage Change in Sales for Latest Quarter over
previous Corresponding Quarter Sales, OPM% - Operating Profit after interest expended as a % of Interest income & income from
operation for Latest Quarter,NP Rs. Mn - Net Profit as reported after Tax for Latest Quarter,NP Var% - Percentage Change in Net
profit for Latest Quarter over Previous quarter Net profits, Ended - Trailing Twelve months Ended On, TTMEPS - Earning Per Shares
is calculated as TTM Net Profit / Number of Equity Shares,TTMNP Var% - Percentage Change in TTM Net profit over Corresponding
previous TTM Net profits, H52 - High Price during last 52 Week,L52 - Low Price during last 52 Week,PE - Market Price / TTM Earning
Per Shares,Market cap Rs.Mn - Market Capitalisation is calculated as Latest price multiplied by No of Equity Shares outstanding.


D e c e 2011
June m b
December e r
August 2010                                                                                                                              19
       Sales                                                       Magnum
                                                                                                          Rs. in million
                             Net Sales           Change In % Change        Net Profit        Change In % Change in
Company Name
                       201103 Qtr 201003 Qtr       Sales    in Sales   201103     201003     Net Profit Net Profit
Dhunseri Petrochem        5443.48       255.57     5187.91   2029.94     250.86     -167.21     418.07             -
Unisys Software            898.34        73.22       825.12  1126.91      15.55        -0.15     15.70             -
Chromatic India            550.16        52.40       497.76   949.92      -3.87        -0.94     -2.93             -
Gayatri Sugars             758.16        81.74       676.42   827.53      64.21       -56.49    120.70             -
SPIC                      8680.85       946.58     7734.27    817.08     809.28     -210.53   1019.81              -
Oberoi Realty              898.80        99.90       798.90   799.70     448.80        53.90    394.90     732.65
Bhatia Inds & Infra       1201.37       156.01     1045.36    670.06      71.60         5.45     66.15   1213.76
Cimmco                    1081.42       155.47       925.95   595.58     120.23    6259.59 -6139.36        -98.08
Kolte Patil Devp           773.17       115.75       657.42   567.97     335.88        61.39    274.49     447.13
GMR Infrastructure        3815.90       575.00     3240.90    563.64     397.60       -31.30    428.90             -
Centrum Electronics        497.97        79.69       418.28   524.88       6.15         3.94      2.21      56.09
Jaypee Infratech          7148.90      1151.60     5997.30    520.78    2500.50       885.40  1615.10      182.42
Ausom Enterprises         4130.42       677.74     3452.68    509.44      24.33         0.32     24.01   7503.12
Genesys Intl               573.97        95.14       478.83   503.29     339.74        40.27    299.47     743.66
Empee Sugars               898.34       151.03       747.31   494.81    -201.99        -9.83   -192.16             -
Sezal Glass                854.76       144.53       710.23   491.41    -247.89         0.40   -248.29             -
Future Capital             879.46       160.93       718.53   446.49     106.85        31.53     75.32     238.88
Metrochem Industries       228.90        51.20       177.70   347.07      66.60       -34.90    101.50             -
Infronics Systems          248.07        55.84       192.23   344.25      14.31         4.40      9.91     225.23
Acclaim Inds.              925.70       209.60       716.10   341.65       4.35         2.35      2.00      85.11
Kothari Products          8716.70      2027.20     6689.50    329.99     318.40       259.70     58.70      22.60
Adani Power               8555.70      2012.67     6543.03    325.09    1743.20       983.14    760.06      77.31
Allied Computer            278.92        66.16       212.76   321.58       1.36        16.19    -14.83             -
India Steel Works         1128.03       272.39       855.64   314.12     -12.05     -119.87     107.82             -
Emmsons Intl              6246.16      1537.74     4708.42    306.19      50.73        20.89     29.84     142.84
Khaitan Chem & Fert.      1390.67       361.62     1029.05    284.57      28.31        29.69     -1.38      -4.65
Guj Terce Lab              222.62        60.17       162.45   269.99       2.54         0.60      1.94     323.33
CHD Developers             397.31       110.10       287.21   260.86      23.74         0.75     22.99   3065.33
Spectacle Infotek          467.48       131.14       336.34   256.47       0.28         2.09     -1.81     -86.60
Money Matters Fin         1545.11       462.76     1082.35    233.89     -24.98       227.72   -252.70
Divya Jyoti Inds.          704.10       213.44       490.66   229.88       2.05         2.29     -0.24     -10.48
Gamm.Infra                 481.33       149.96       331.37   220.97     265.12        59.35    205.77     346.71
VLS Finance               2311.46       722.39     1589.07    219.97      -4.92        19.87    -24.79             -
Websol Energy System       641.25       202.81       438.44   216.18       8.91       -37.74     46.65    -123.61
Ludlow Jute & Spec         793.90       258.80       535.10   206.76     -15.70       -15.20     -0.50             -
Subhkam Capital            570.26       196.12       374.14   190.77     -42.31       -14.59    -27.72             -
Cheviot Company            781.19       271.61       509.58   187.62      35.36       -13.46     48.82
UTV Software              1555.07       545.58     1009.49    185.03     237.88       177.34     60.54      34.14
Liberty Phosphate          660.08       233.80       426.28   182.33      88.09         3.62     84.47   2333.43
Aurionpro Solutn           372.94       133.20       239.74   179.99      29.93        -2.34     32.27             -
Clarus Finance & Sec       170.04        60.79       109.25   179.72      -9.21         9.89    -19.10             -
Gloster                    841.30       303.30       538.00   177.38      -5.50         6.70    -12.20             -
Uttam Sugar Mills         1812.90       654.20      1158.70   177.12     198.00     -554.00     752.00             -
Polyplex Corp             2151.80       795.30     1356.50    170.57     179.00        85.60     93.40     109.11
Lords Chemicals            145.87        53.92        91.95   170.53       2.32        -0.32      2.64             -
Logix Microsystems         187.21        70.17       117.04   166.80       9.10         1.20      7.90     658.33
Neha International         153.53        59.05        94.48   160.00       2.60         6.33     -3.73     -58.93
Nectar Lifesciences       3413.60      1424.65     1988.95    139.61     318.27       102.86    215.41     209.42



June m b e
D e c e 2011 r                                                                                                    20
            Dividend Yield                                                               Magnum
                                           Price                                                  TTM                    52-Wk     52-Wk
                                 Year               Yield    EPS
Company Name                               (Rs.)                      FV   PE     Year       NP         EPS      PE      High       Low
                                 End                 (%)     (Rs.)
                                          (02/06)                                 End      Rs. ml       (Rs.)            (Rs.)     (Rs.)

Indiabulls Securities Ltd        201003    14.77     13.54     2.66    2   5.55   201103     373.73       1.62    9.19     30.60     13.10

HCL Infosystems Ltd.             201006   105.85      7.09    11.98    2   8.83   201103    2407.10      10.80    9.88    139.50     83.50

PSL Ltd.                         201003    70.95      5.64    16.52   10   4.30   201103     758.60      14.19    5.03    146.10     64.50

JK Cement Ltd.                   201003   116.00      5.17    32.32   10   3.59   201103     640.45       9.16   12.67    199.90    106.30

Dena Bank                        201003    94.05      2.34    17.82   10   5.28   201103    6116.30      18.35    5.18    151.00     84.80

Geodesic Ltd.                    201003    80.65      2.17    18.96    2   4.25   201103    2415.43      26.80    3.02    142.75     67.25

Deccan Chronicle Holdings Ltd.   201003    65.65      4.56    10.77    2   6.09   201103    1624.50       6.67    9.97    150.00     55.55

SRF Ltd.                         201003   309.00      4.50    51.14   10   6.04   201103    4834.40      80.01    3.89    444.30    217.00

Balmer Lawrie & Company Ltd.     201003   594.70      4.35    72.02   10   8.26   201103    1210.90      74.35    7.98    769.90    499.05

HEG Ltd.                         201003   231.05      4.33    37.27   10   6.20   201103    1288.60      30.20    7.73    369.40    176.40

Electrosteel Castings Ltd.       201003    29.80      4.19     6.31    1   4.72   201103    1546.37       4.73    6.49     56.00     28.50

Marg Ltd.                        201003    96.65      2.07    29.22   10   3.31   201103     589.50      15.46    6.30    243.80     87.00

Andhra Bank                      201103   144.00      3.82    22.64   10   6.36   201103   12670.73      22.64    6.46    190.15    124.35

SJVN Ltd.                        201003    21.30      3.76     2.37   10   9.00   201103    9121.30       2.21    9.66     28.00     19.40

Graphite India Ltd.              201003    93.30      3.75    13.54    2   6.89   201103    1723.20       8.82   10.70    109.70     79.00

Corporation Bank                 201003   547.95      3.65    81.58   10   6.72   201103   14132.68      95.41    5.73    814.85    497.25

Finolex Industries Ltd.          201003    83.90      3.57    10.67   10   7.86   201103     761.71       6.14   13.83    128.50     66.85

Vijaya Bank Ltd                  201003    72.50      3.45    11.70   10   6.20   201103    5238.20      11.08    6.64    115.35     59.00

Bank Of Maharashtra              201103    58.55      3.42     6.86   10   8.54   201103    3303.88       6.86    8.57     84.95     51.60

Indian Bank                      201003   220.50      3.41    36.18   10   6.09   201103   17140.75      39.88    5.59    316.50    197.00

Mastek Ltd.                      201006   101.25      3.21    13.73    5   7.37   201103      25.90       0.96 106.24     311.50     88.70

Syndicate Bank                   201103   118.05      3.13    18.28   10   6.46   201103   10479.46      18.28    6.48    164.20     90.25

State Bank Of Bikaner & Jaipur   201003   529.35      3.10    91.03   10   5.81   201103    5508.80      78.70    6.73    781.62    397.43

3I Infotech Ltd.                 201103    49.50      3.02     6.22   10   7.96   201103    1194.10       6.22    8.06     72.15     38.15

Allahabad Bank                   201103   199.10      3.01    29.88   10   6.66   201103   14231.05      29.88    6.74    270.90    156.10

JK Tyre & Inds. Ltd.             201003    99.25      3.01    39.81   10   2.49   201103     613.20      14.93    6.69    202.60     75.50

Oriental Bank Of Commerce        201103   346.30      3.01    51.51   10   6.72   201103   15028.68      51.51    6.72    545.00    303.60

Jindal Poly Films Ltd.           201003   336.70      2.97    90.52   10   3.72   201103    5906.30     128.28    2.66    700.00    185.05

Kesoram Industries Ltd.          201003   185.60      2.96    51.88   10   3.58   201103   -2102.10     -45.95    0.00    342.00    175.00

Peninsula Land Ltd.              201003    57.50      2.96    11.82    2   4.86   201103    2457.80       8.80    6.53     79.50     47.00

Indian Oil Corpn. Ltd.           201003   331.45      2.86    42.10   10   7.87   201103   74454.80      30.67   10.83    458.90    290.00

Jammu & Kashmir Bank Ltd.        201003   793.00      2.77   105.69   10   7.50   201103    6152.00     126.90    6.30    938.00    694.80

IFCI Ltd.                        201003    47.20      2.12     9.08   10   5.20   201103    7062.50       9.57    4.98     80.55     44.30

IDBI Bank Ltd                    201103   132.20      2.65    16.76   10   7.89   201103   16503.19      16.76    7.96    202.25    109.30

Bharat Bijlee Ltd.               201103   956.90      2.61   130.10   10   7.36   201103     735.25     130.10    7.46   1316.20    735.65



D e c e 2011
June m b
December e r
August 2010                                                                                                                          21
       High PE                                                        Magnum
Company Name                                    Year End     Price (02/06) Rs.     EPS         FV       PE
GMR Infrastructure Ltd.                           201003               33.15            0.04        1   903.74
Essar Oil Ltd.                                    201003              129.30            0.23    10      554.53
Oberoi Realty Ltd.                                201003              241.20            0.81    10      296.38
ABB Ltd.                                          201012              858.20            2.98        2   287.62
Sunteck Realty Ltd.                               201003              310.00            1.15        2   269.64
Jindal South West Holdings Ltd.                   201003             1064.30            3.95    10      269.52
Bajaj Finserv Ltd                                 201003              513.20            2.35        5   218.51
Indiabulls Real Estate Ltd.                       201003              116.35            0.56        2   208.15
Fortis Healthcare (India) Ltd.                    201003              167.10            0.96    10      174.35
Hindustan Copper Ltd.                             201003              280.70            1.67        5   167.90
GVK Power & Infrastructure Ltd.                   201003               22.55            0.14        1   164.20
Jubilant FoodWorks Ltd.                           201003              818.55            5.18    10      157.96
Mercator Lines Ltd.                               201003               41.55            0.27        1   153.31
Adani Power Ltd.                                  201003              115.10            0.78    10      146.91
United Breweries Ltd.                             201003              545.35            4.04        1   135.00
Adani Enterprises Ltd.                            201003              627.60            5.11        1   122.85
Kwality Dairy (India) Ltd.                        201003              112.50            0.99        1   114.09
Indiabulls Power Ltd.                             201003               21.05            0.19    10      112.79
Religare Enterprises Ltd                          201003              475.00            4.34    10      109.36
Reliance Power Ltd                                201003              116.70            1.14    10      102.37
Delta Corp Ltd                                    201003               86.30            0.88        1    98.41
IRB Infrastructure Developers Ltd                 201003              156.40            1.68    10       93.09
Gammon Infrastructure Projects Ltd                201003               16.40            0.19        2    84.93
Bombay Dyeing & Manufacturing Co Ltd.             201003              357.50            4.49    10       79.57
Titan Industries Ltd.                             201003             4309.90           56.39    10       76.43
Godrej Industries Ltd.                            201003              186.75            2.55        1    73.30
Karuturi Global Ltd                               201003               12.75            0.18        1    71.07
Coal India Ltd.                                   201003              403.00            5.98    10       67.34
Entertainment Network (India) Ltd.                201003              247.00            3.75    10       65.90
Arshiya International Ltd.                        201003              170.80            2.62        2    65.16
Glenmark Pharmaceuticals Ltd.                     201003              308.95            4.76        1    64.90
Den Networks Ltd.                                 201003              100.20            1.59    10       62.86
TTK Prestige Ltd.                                 201003             2783.90           46.21    10       60.25
Hindustan Oil Exploration Company Ltd.            201003              187.35            3.19    10       58.78
EIH Ltd.                                          201003               83.00            1.46        2    56.99
Development Credit Bank Ltd.                      201103               59.40            1.07    10       55.49
Bharat Forge Ltd.                                 201003              316.50            5.71        2    55.47
DLF Ltd.                                          201003              236.10            4.50        2    52.46

EPS    Earning Per Shares is calculated as Net Profit / Number of Equity Shares (Rs)
FV     Latest Face values of equity Shares (Rs)
PE     Market Price / Trailing Twelve Months Earning Per Shares


June m b e
D e c e 2011 r                                                                                               22
       Low PE                                                           Magnum
Company Name                                    Year End     Price (02/06) Rs.     EPS          FV       PE
Allied Digital Services Ltd.                      201003               49.65            20.79        5    2.39
JK Lakshmi Cement Ltd.                            201003               48.75            19.71        5    2.47
JK Tyre & Inds. Ltd.                              201003               99.25            39.81    10       2.49
Orbit Corporation Ltd.                            201003               44.90            17.46    10       2.57
Subex Ltd                                         201003               64.05            23.60    10       2.71
Bharati Shipyard Ltd.                             201003              136.55            47.99    10       2.85
Bartronics India Ltd.                             201003               62.50            19.10    10       3.27
Marg Ltd.                                         201003               96.65            29.22    10       3.31
Prakash Industries Ltd.                           201003               72.40            21.87    10       3.31
Nava Bharat Ventures Ltd.                         201003              230.20            65.18        2    3.53
Kesoram Industries Ltd.                           201003              185.60            51.88    10       3.58
JK Cement Ltd.                                    201003              116.00            32.32    10       3.59
Jindal Poly Films Ltd.                            201003              336.70            90.52    10       3.72
SREI Infrastructure Finance Ltd.                  201003               39.65             9.56    10       4.15
Geodesic Ltd.                                     201003               80.65            18.96        2    4.25
PSL Ltd.                                          201003               70.95            16.52    10       4.30
Punjab & Sind Bank                                201103              102.00            23.59    10       4.32
Central Bank Of India                             201003              118.55            26.18    10       4.53
ICSA (India) Ltd.                                 201003              117.75            25.77        2    4.57
Electrosteel Castings Ltd.                        201003               29.80             6.31        1    4.72
KS Oils Ltd.                                      201003               26.65             5.49        1    4.86
Peninsula Land Ltd.                               201003               57.50            11.82        2    4.86
Great Offshore Ltd.                               201003              229.75            46.90    10       4.90
JSL Stainless Ltd.                                201003              101.25            20.39        2    4.96
State Bank Of Travancore                          201103              750.55           145.55    10       5.16
Birla Corporation Ltd.                            201003              375.00            72.36    10       5.18
IFCI Ltd.                                         201003               47.20             9.08    10       5.20
Dena Bank                                         201003               94.05            17.82    10       5.28
Aptech Ltd.                                       201003               98.70            18.57    10       5.32
UCO Bank                                          201003               98.00            18.42    10       5.32
Rei Agro Ltd.                                     201003               26.35             4.92        1    5.35
Sasken Communication Technologies Ltd.            201003              151.00            28.04    10       5.38
Indiabulls Securities Ltd                         201003               14.77             2.66        2    5.55
Chennai Petroleum Corporation. Ltd.               201003              231.85            40.51    10       5.72
Punj Lloyd Ltd.                                   201003               64.25            11.06        2    5.81
State Bank Of Bikaner & Jaipur                    201003              529.35            91.03    10       5.81
State Bank Of Mysore                              201103              628.00           106.97    10       5.87
Orchid Chemicals & Pharmaceuticals Ltd.           201003              281.70            47.04    10       5.99

EPS    Earning Per Shares is calculated as Net Profit / Number of Equity Shares (Rs)
FV     Latest Face values of equity Shares (Rs)
PE     Market Price / Trailing Twelve Months Earning Per Shares

D e c e 2011
June m b
December e r
August 2010                                                                                                   23
                               Price Trends                                                                                                                                                                                                                             Magnum
  Date                                                                             Price Rs.                                                                                                                  25000


  3-Jun-11                                                                         22310.85                                                                                                                   20000
  3-May-11                                                                         22350.00
  4-Apr-11                                                                         20860.10                                                                                                                   15000

  3-Mar-11                                                                         20964.15                                                                                                                   10000
  3-Feb-11                                                                         19837.85
  3-Jan-11                                                                         20683.35                                                                Gold                                               5000

  3-Dec-10                                                                         20458.75
                                                                                                                                                                                                                        0
  3-Nov-10                                                                         19645.00




                                                                                                                                                                                                                                                                                                                                 3-Nov-10
                                                                                                                                                                                                                            3-Jun-10




                                                                                                                                                                                                                                                                                                                                                               3-Jan-11




                                                                                                                                                                                                                                                                                                                                                                                                                           3-Jun-11
                                                                                                                                                                                                                                                  3-Jul-10


                                                                                                                                                                                                                                                                        3-Aug-10


                                                                                                                                                                                                                                                                                              3-Sep-10




                                                                                                                                                                                                                                                                                                                                                                            3-Feb-11


                                                                                                                                                                                                                                                                                                                                                                                        3-Mar-11
                                                                                                                                                                                                                                                                                                                3-Oct-10




                                                                                                                                                                                                                                                                                                                                                                                                   3-Apr-11
                                                                                                                                                                                                                                                                                                                                                 3-Dec-10




                                                                                                                                                                                                                                                                                                                                                                                                              3-May-11
  4-Oct-10                                                                         19142.50
  3-Sep-10                                                                         19060.00
  3-Aug-10                                                                         17905.00
  3-Jul-10                                                                         18520.00                                                                                                                                                                                                                                                     Date                                               Price Rs.
  3-Jun-10                                                                         18565.00
                                                                                                                                                                                                                                                                                                                                                3-Jun-11                                           53150.00
                                                                                                                                                                                                                                                                                                                                                3-May-11                                           66100.00
 80000                                                                                                                                                                                                                                                                                                                                          4-Apr-11                                           57025.00
 70000                                                                                                                                                                                                                                                                                                                                          3-Mar-11                                           51700.00
 60000
                                                                                                                                                                                                                                                                                                                                                3-Feb-11                                           43546.85
 50000
                                                                                                                                                                                                                                                                                                                                                3-Jan-11                                           47040.00
 40000
                                                                                                                                                                                                                                                                                                                                                3-Dec-10                                           43800.00
 30000

 20000
                                                                                                                                                                                                                                                        Silver                                                                                  3-Nov-10                                           37422.00
                                                                                                                                                                                                                                                                                                                                                4-Oct-10                                           33380.30
 10000
                                                                                                                                                                                                                                                                                                                                                3-Sep-10                                           30888.00
            0
                                                                                                                                                                                                                                                                                                                                                3-Aug-10                                           29071.35
                                                                                                              3-Nov-10
                 3-Jun-10




                                                                                                                                         3-Jan-11




                                                                                                                                                                                                   3-Jun-11
                                       3-Jul-10


                                                             3-Aug-10


                                                                               3-Sep-10




                                                                                                                                                    3-Feb-11
                                                                                               3-Oct-10




                                                                                                                                                               3-Mar-11
                                                                                                                            3-Dec-10




                                                                                                                                                                          3-Apr-11


                                                                                                                                                                                      3-May-11




                                                                                                                                                                                                                                                                                                                                                3-Jul-10                                           28759.50
                                                                                                                                                                                                                                                                                                                                                3-Jun-10                                           29304.00

  Date                                                                             Price Rs
                                                                                                                                                                                                        48
  3-Jun-11                                                                             44.80
                                                                                                                                                                                                        47
  3-May-11                                                                             44.42
  3-Apr-11                                                                             44.44                                                                                                            46

  3-Mar-11                                                                             44.96                                                                                                            45

  3-Feb-11                                                                             45.62
                                                                                                                                        Currency
                                                                                                                                                                                                        44
  3-Jan-11                                                                             44.68
  3-Dec-10                                                                             45.10                                                                                                            43


  3-Nov-10                                                                             44.28                                                                                                            42
                                                                                                                                                                                                                                                                                                                           3-Nov-10
                                                                                                                                                                                                                 3-Jun-10




                                                                                                                                                                                                                                                                                                                                                            3-Jan-11




                                                                                                                                                                                                                                                                                                                                                                                                                             3-Jun-11
                                                                                                                                                                                                                                       3-Jul-10



                                                                                                                                                                                                                                                             3-Aug-10



                                                                                                                                                                                                                                                                                   3-Sep-10




                                                                                                                                                                                                                                                                                                                                                                          3-Feb-11
                                                                                                                                                                                                                                                                                                         3-Oct-10




                                                                                                                                                                                                                                                                                                                                                                                       3-Mar-11
                                                                                                                                                                                                                                                                                                                                            3-Dec-10




                                                                                                                                                                                                                                                                                                                                                                                                   3-Apr-11


                                                                                                                                                                                                                                                                                                                                                                                                               3-May-11
  3-Oct-10                                                                             44.45
  3-Sep-10                                                                             46.52
  3-Aug-10                                                                             46.15
  4-Jul-10                                                                             46.58
  3-Jun-10                                                                             46.74                                                                                                                                                                                                                                                    Date                                                Price $
                                                                                                                                                                                                                                                                                                                                                3-Jun-11                                              100.22
                                                                                                                                                                                                                                                                                                                                                3-May-11                                              111.05
120                                                                                                                                                                                                                                                                                                                                             4-Apr-11                                              108.47
100
                                                                                                                                                                                                                                                                                                                                                3-Mar-11                                              101.91
                                                                                                                                                                                                                                                                                                                                                3-Feb-11                                               90.54
 80
                                                                                                                                                                                                                                                                                                                                                3-Jan-11                                               91.55
 60                                                                                                                                                                                                                                                                                                                                             3-Dec-10                                               89.19
 40
                                                                                                                                                                                                                                                       Crude                                                                                    3-Nov-10                                               84.69
                                                                                                                                                                                                                                                                                                                                                4-Oct-10                                               81.47
 20
                                                                                                                                                                                                                                                                                                                                                3-Sep-10                                               74.60
  0
                                                                                                                                                                                                                                                                                                                                                3-Aug-10                                               82.55
                                                                                                          3-Nov-10
      3-Jun-10




                                                                                                                                       3-Jan-11




                                                                                                                                                                                                      3-Jun-11
                            3-Jul-10


                                                  3-Aug-10



                                                                        3-Sep-10




                                                                                                                                                    3-Feb-11
                                                                                          3-Oct-10




                                                                                                                                                               3-Mar-11
                                                                                                                         3-Dec-10




                                                                                                                                                                           3-Apr-11


                                                                                                                                                                                        3-May-11




                                                                                                                                                                                                                                                                                                                                                3-Jul-10                                               72.14
                                                                                                                                                                                                                                                                                                                                                3-Jun-10                                               74.61


June m b e
D e c e 2011 r                                                                                                                                                                                                                                                                                                                                                                                                            24
        Mutual Fund Analysis                                                                                                               Magnum
ICICI Pru FMCG (G)                                                                                              Fund allocation
ICICI Pru FMCG (Growth) is ICICI Prudential Asset
Management Company, managed open-ended Equity -
FMCG scheme.
The fund was launched on March 31, 1999 and its fund
manager is Prashant Kothari.
The benchmark index of the fund is CNX FMCG and the
custodian of the fund is HDFC Bank Limited.
The current net asset value (NAV) of the fund as on June                                                              Market cap-wise Allocation Style
3, 2011 was Rs 70.25; while the 52 week high NAV was                                                                  Average Mkt Cap (Rs Cr)                          22856.08
Rs 69.06 on September 24, 2010 and the 52 week low                                                                    Market Capitalization                         % of Portfolio
NAV for the scheme was Rs 53.28 on June 1, 2010.                                                                      Large                                                52.78
                                                                                                                      Mid                                                    9.45
The minimum investment to the fund is Rs 5000 and
                                                                                                                      Small                                                23.99
additional investments can be made in multiples of Rs 500.
                                                                                                                      Note: Large-Cap = 5000 Crs. and above, Mid-Cap = 2000 Crs.
The investment objective of the scheme is to generate                                                                 to 5000 Crs. and Small-Cap = less than 2000 Crs.
long-term capital appreciation through investments
                                                                                                                 Outlook
predominantly in equity and related securities of FMCG
companies. Around 90 per cent of the corpus would be                                                             ICICI Prudential FMCG (Growth) is ICICI Prudential
invested in the equities of FMCG companies, with the                                                             AMC, managed open-ended Equity - FMCG scheme,
balance 10 per cent invested in the debt and money                                                               being managed by Prashant Kothari. ICICI Prudential
market instruments.                                                                                              FMCG Fund is an open-ended equity fund that invests in
                                                                                                                 companies, which will benefit from increasing consumption
The top five holdings of the fund are:
                                                                                                                 in the country. It is a diversified sector fund that holds scrips
 Company                  ITC             HUL             VST             Pidilite           Page                across sub-sectors like food, retail distribution, apparel
                                                          Inds.            Inds.             Inds.
                                                                                                                 and consumables. This fund seeks to optimize the risk-
% Holding                 24.67             8.52           7.95              6.54              5.75              adjusted return by a ‘Bottom-up’ strategy, to identify and
                                                                                                                 pick stocks in the FMCG Sector. The portfolio comprises
As far as market capitalization-wise companies are
                                                                                                                 of a smaller number of scrips to reflect the prospects of the
concerned, the scheme’s portfolio consists of 52.78%
                                                                                                                 FMCG sector and also holds stocks across various sub-
from Large-cap, 9.45% from Mid Cap and 23.99% from
                                                                                                                 sectors, within the broad definition of the sector. A smaller
Small cap stocks.                                                                                                allocation to other sectors is permitted purely for defensive
The fund has given a return of 17.35% since inception and                                                        considerations. This is one of the best performing fund in
a return of 29.25% in last one year, while the category                                                          its segment and allows an investor to allocate his equity
average in the same period has been 17.41% and 27.87%                                                            assets in accordance to his sectoral preference and
respectively.                                                                                                    implement his views on the sector.

                                                                                              ICICI Pru FMCG (G)
  80.0000

  70.0000

  60.0000

  50.0000

  40.0000

  30.0000

  20.0000

  10.0000

   0.0000
                                                                                                01-Nov-2010
            01-Jun-2010



                            01-Jul-2010




                                                                                                                             01-Jan-2011




                                                                                                                                                                                                    01-Jun-2011
                                            01-Aug-2010



                                                            01-Sep-2010




                                                                                                              01-Dec-2010




                                                                                                                                            01-Feb-2011


                                                                                                                                                          01-Mar-2011
                                                                              01-Oct-2010




                                                                                                                                                                        01-Apr-2011



                                                                                                                                                                                      01-May-2011




                                                                                            Last one year NAV Graph

       Duration                           1 Week % 1 Mth %                                  3 Mth % 6 Mth % 1 Year % 3 Year % 5 Year %                                                    Since Inc. %
 Scheme Return %                               3.26    4.09                                    12.80    7.75    29.25    14.34    14.37                                                           17.35
 Category Avg %                                3.20    4.67                                    12.47    6.13    27.87    18.31    15.43                                                           17.41


D e c e 2011
June m b
December e r
August 2010                                                                                                                                                                                                25
        MF Scorecard                                                     Magnum
                                                                                           Returns As on June 3rd, 2011
                                    AUM        NAV     Absolute %                CAGR %
Fund                              Rs.Crore      Rs      1       6       1        2       5      10          Since    Launch
                                  March 2011 03/06/11 Month Months     Year    Years   Years   Years       Launch     Date
Equity - Diversifited
Birla SL India Opportunities(G)      50.73    52.13   -1.25    -8.04    2.26   19.15    4.70   19.01        10.68   02-Mar-95
DSPBR Opp-Reg(G)                    765.38    84.95    0.24    -8.62    8.86   19.25   14.23   27.52        21.35   16-May-00
DSPBR India T.I.G.E.R-Reg(G)      2,300.89    43.74   -0.90   -14.16   -3.11    5.64   11.95           -    23.54    11-Jun-04
Fidelity Equity(G)                3,062.96    34.98   -0.17    -7.70   9.81    21.86   16.90           -    22.98   16-May-05
ICICI Pru Dynamic(G)              3,005.30   107.25   -0.20    -2.55 10.92     23.92   16.72           -    31.79   31-Oct-02
Kotak Opportunities(G)              942.99    44.83   0.16    -10.29   4.80    13.52   13.72           -    24.95   09-Sep-04
SBI Magnum Contra(G)              3,105.91    54.67   0.20     -9.64   0.28     8.84   12.79           -    21.94   06-May-05
SBI Magnum Multicap(G)              506.49    17.09   -0.23   -11.63   -0.70    8.34    6.18           -     9.83   16-Sep-05
Reliance Equity Oppor-Ret(G)      2,837.87    35.61   0.23     -5.41 13.08     31.90   16.30           -    22.82   31-Mar-05
Reliance Vision-Ret(G)            2,936.09   265.38   -0.70    -8.16    4.94   14.60   13.53   33.14        23.28   08-Oct-95
Sundaram S.M.I.L.E Fund(G)          651.34    30.53   -1.25   -14.55   -2.68   13.93   13.86           -    19.39   15-Feb-05


Equity - ELSS
Birla SL Tax Relief '96(G)         1488.72    10.86   -0.09   -11.92   0.28    12.18       -           -     2.97   10-Mar-08
SBI Magnum TaxGain'93(G)           5413.99    58.44   -1.10    -9.88   2.65    11.14       -           -     6.55   07-May-07
ICICI Pru Tax Plan(G)              1251.55   139.74   -0.59    -5.22 10.01     26.53   11.73   29.07        25.05   19-Aug-99
DSPBR Tax Saver(G)                  859.19    16.66    0.03    -9.84 4.65      18.63       -           -    12.38   18-Jan-07
HDFC TaxSaver(G)                   2823.02   231.35    0.69    -7.19 10.07     25.72   14.23   29.83        31.60   31-Mar-96
Reliance Tax Saver (ELSS)(G)       2070.93    20.76   -1.31    -7.28 9.73      19.52   12.36           -    13.67   22-Sep-05
Sundaram Tax Saver(G)              1446.50    42.11   -0.11   -11.77   4.19     9.23   13.71           -    20.97   02-May-05
Franklin India Taxshield(G)         796.63   209.27   0.74     -4.24 13.89     21.27   14.31   24.60        28.42   10-Apr-99

Equity - Large Cap
Birla SL Frontline Equity(G)       2749.14    86.55   -0.22    -7.74 8.21      16.02   18.36       -        28.20   27-Sep-02
Birla SL Dividend Yield Plus(G)     771.61    84.86    0.56    -5.96 11.82     25.95   18.28       -        29.50   26-Feb-03
DSPBR Top 100 Equity-Reg(G)        2802.07    99.52    0.49    -5.25 9.87      16.28   17.76       -        32.17   10-Mar-03
DSPBR Equity-Reg(G)                2351.65    16.34    0.05    -5.59 9.94      19.71       -       -        13.09   07-Jun-07
HDFC Growth(G)                     1273.93    86.29    0.00    -6.87 10.79     21.45   18.19   27.69        22.24   11-Sep-00
HDFC Top 200(G)                    9591.25   207.85   -0.13    -8.10 11.27     20.82   18.92   30.61        22.83   03-Sep-96
Kotak 50(G)                         864.57   100.75   -0.33    -8.22 6.99      13.84   12.41       -        29.11   05-Feb-03
SBI Magnum Equity(G)                422.59    42.64   -0.23    -7.24 7.62      15.22       -       -        10.35   24-Nov-06
Reliance Growth-Ret(G)             7165.97   447.74   -1.06   -10.92 0.55      15.69   15.76   35.77        27.18   08-Oct-95

Equity - Mid Cap
Birla SL Midcap(G)                 1687.81   106.24    0.95   -13.03 1.55      17.20   15.56       -        31.48   16-Oct-02
ICICI Pru Discovery(G)             1625.81    49.15    0.94    -3.46 10.60     33.28   15.97       -        26.38   16-Aug-04
Sundaram Select Midcap(G)          2126.69   150.13    1.70    -7.32 11.42     19.49   13.80       -        35.67    19-Jul-02
Reliance Reg Savings-Equity(G)     3263.70    29.82   -0.69   -10.43 4.82      16.38   20.79       -        20.03   10-Jun-05
Franklin India Prima(G)             821.05   273.34    2.41    -9.36 7.34      22.26    9.50   30.10        20.79   01-Dec-93
Kotak Midcap(G)                     277.76    24.92    1.11   -10.51 6.84      22.79    7.80       -        15.66   24-Feb-05


Equity - Pharma
Franklin Pharma(G)                  147.62    63.69   0.75     -2.37 12.55     47.62   20.07   21.56        16.41   31-Mar-99
Reliance Pharma(G)                  551.69    56.88   2.74      0.67 13.03     47.49   27.52       -        28.24   08-Jun-04


June m b e
D e c e 2011 r                                                                                                            26
         MF Scorecard                                                          Magnum
                                                                                                Returns As on June 3rd, 2011
                                        AUM        NAV     Absolute %                 CAGR %
Fund                                  Rs.Crore      Rs      1       6        1        2       5      10          Since    Launch
                                      March 2011 03/06/11 Month Months      Year    Years   Years   Years       Launch     Date
Finance Sector
ICICI Pru Banking & Fin Serv-Ret(G)     147.43    18.02    0.61    -11.54 15.36     26.28       -           -    23.59    22-Aug-08
Reliance Banking(G)                    1660.68   100.17    -1.32   -13.94 17.18     28.29   28.03           -    33.28    28-May-03
Sundaram-Select Thematic Funds-         268.57    19.26    -0.56   -14.33 13.63     21.50       -           -    24.59    10-Jun-08
Fin Serv Oppor(G)


Commodities - Gold
DSPBR World Gold-Reg(G)                1106.65    17.98    -3.66    -7.45 15.69     14.16       -           -    17.07    14-Sep-07
Kotak GOLD ETF                          257.98 2169.54     0.05     8.72 19.43      21.54       -           -    26.38     27-Jul-07
Reliance Gold ETF                       434.38   2111.73   0.07     8.81 19.51      21.56       -           -    22.67    22-Nov-07

                                        AUM        NAV     Absolute %                 CAGR %
Fund                                  Rs.Crore      Rs      1       6        1        2       3       5          Since    Launch
                                      March 2011 03/06/11 Month Months      Year    Years   Years   Years       Launch     Date
Balanced - Equity Oriented
HDFC Balanced(G)                        238.78    56.74    2.18     0.35 15.58      24.67   17.79   16.17        17.56    11-Sep-00
HDFC Prudence(G)                       5808.18   213.09    0.71     -3.60 11.97     25.32   19.15   18.86        19.29     1-Feb-94
Birla SL '95(G)                         391.65   308.90    0.14     -3.74 10.51     16.69   14.15   15.76        23.42    17-Feb-95


Balanced - Debt Oriented
Reliance Reg Savings-Balanced(G)        843.38    21.83    -0.89    -7.86   5.93    17.07   16.05   14.81        13.94    10-Jun-05
HDFC Children's Gift - Investment       265.89    43.73    2.84     2.19 21.48      28.73   17.48   14.88        15.46     2-Mar-01
ICICI Pru Child Care Plan-Gift Plan     160.98    55.08    -0.25    -9.60   0.16    20.16    6.19   10.02        19.10    31-Aug-01

                                        AUM        NAV         Absolute %           CAGR %
Fund                                  Rs.Crore      Rs      1     3       6     1     3     5                    Since     Launch
                                      March 2011 03/06/11 Month Months Months Years Years Years                 Launch      Date
Liquid Funds
Birla SL Cash Plus-Ret(G)             16348.85    26.27    0.71    2.07      3.90    6.60    5.98     6.65        7.16    16-Jun-97
HDFC Cash Mgmt-Savings(G)              3977.71    20.80    0.72    2.16      4.10    7.18    6.63     7.14        6.52    03-Jan-00
Reliance Liquid-Treasury-Ret(G)        2228.68    23.76    0.70    2.11      3.99    6.79    6.40     6.80        6.77    23-Mar-98
Reliance Liquid-Cash(G)                6725.23    16.13    0.72    2.18      4.21    6.90    5.01     5.38        5.17    07-Dec-01
Templeton India CMA(G)                  446.05    16.84    0.53    1.67      3.16    5.38    4.67     5.39        5.29    23-Apr-01
UTI Money Market(G)                    2087.83   2763.95   0.68    2.03      3.91    6.70    6.41     6.83        7.47    23-Apr-97
SBI Magnum InstaCash-Cash(G)           3829.36    22.09    0.70    2.09      4.03    7.17    6.34     6.82        6.80    19-May-99


Monthly Income Plans
Birla SL MIP II-Savings 5(G)            818.37    17.67    0.44    1.94      2.64    6.07   10.70     9.89        8.43    22-May-04
Birla SL Monthly Income(G)              675.43    36.76    0.42    1.87      1.63    6.46    9.65     9.41        11.64   10-Aug-99
Reliance MIP(G)                        8393.45    21.76    0.02    2.09      0.73    6.00   14.65    11.28        11.06   13-Jan-04
HDFC MIP-LTP(G)                       10099.87    23.09    0.39    2.35      0.64    7.41   12.56    11.39        11.90   26-Dec-03
ICICI Pru MIP 25(G)                     872.34    19.55    0.66    2.17      0.59    5.95    8.43     8.31        9.79    30-Mar-04
SBI Magnum MIP(G)                       434.53    20.20    0.31    1.77      0.86    4.50    3.68     4.92        7.13    23-Mar-01
UTI MIS(G)                              708.20    19.83    0.24    1.54      1.16    5.12    8.72     8.76        8.24    11-Oct-02


D e c e 2011
June m b
December e r
August 2010                                                                                                                    27
        BRICS Summit – High on Aspirations                                Magnum
                                  BRICS Summit – High on Aspirations
In a recent gathering of rapidly sprouting economies viz.       through consensus or by the pressure of China. The
Brazil, Russia, India and China, South Africa commonly          induction remains mystery for many because the South
called the BRICS, which is touted to eclipse the combined       African economy remains far from being inspiring when
economies of the current richest countries of the world         compared to other members of the BRIC combination.
by 2050, the grouping came to “a broad consensus” not           South Africa’s current GDP, $268 billion, is almost a quarter
only on key international economic and financial issues         that of Russia. While another set of critics argue that there
but also on certain global political issues. The third BRICS    are other economies like Turkey, Indonesia, Mexico and
summit which was held in the resort city of Sanya on the        Korea which have much more justification if they were to
island of Hainan, China, on April 14 marked the formal          really look at similar potential to the BRICS.
induction of South Africa as its latest member thereby          Many believe the motive behind South Africa’s inclusion
renaming the “BRIC” as “BRICS” to reflect the now five          into the club was due to one of its main exports – bullion.
nation membership. Sanya Summit underscored the                 The message was simple: prop the dollar or we will
need for effective implementation of G20 decisions, the         buy gold. However, they have no intentions of doing so
demand for the reform of financial institutions of global       because the metal doesn’t pay interest, and a further
governance to enable developing countries to enjoy a            erosion of the dollar is not economically appealing. And
greater say in them and the most imperative monetary            if that was to become the chosen route, a lower dollar
reform. Another fundamentally vital topic of discussion         would be splattered across trading monitors, and the
included the re-drafting of Special Drawing Rights (SDR).       complaining would get even louder.
The idea of a broad-based reserve currency which serves
                                                                Even as cynics continue to debate on how small
as an alternative to, but not a substitute for, the US dollar
                                                                an economy South Africa is compared to its BRICS
would also be studied further. The decision in principle to
                                                                counterparts, the argument misses one vital point
establish payment of credits in local currencies instead
                                                                completely and that is - Africa is the third biggest market
of the dollar was also highlighted. All five states also
                                                                after China and its richness in largely unexploited mineral
continued their calls for reform of global monetary and
                                                                and other natural resources which make the continent
financial institutions and also pledged greater cooperation
                                                                much more strategically important. South Africa is now
amongst themselves.
                                                                part of a club that is going to rule the world economically
Overview                                                        in coming days. Though the nation has its own set of
                                                                problems, but South Africa is steadily but surely making
The economic potential of Brazil, Russia, India and China
                                                                waves on the international stage. The seat on the United
is said to have the ability of becoming the most dominant
                                                                Nations’ Security Council is a good example of this. It gives
economic powerhouses by the year 2050. The group
                                                                Africa a voice to discuss political and security matters on
symbolizes the shift in global economic power away
                                                                the biggest international stage. The BRICS membership
from the developed G7 economies. The BRICS nations
                                                                equally gives Africa the voice on the podium of economic
encompass around 30% of the world’s land, 40% of the
                                                                and financial developmental and trade architecture.
world’s population, 18% of world’s GDP and 15% of the
world’s trade volume. Given that the countries come             Russia and wTO
together from different geographies, the BRICS have very        The Sanya summit also witnessed Russia’s growing
little in common. The wealth per head is very different,        clout in its global posture and it got endorsement for its
the politics is very different, and the philosophy and their    accession to the World Trade Organization (WTO) in the
natural economic edge are different. However, the BRICS         current year. The leaders of China, India, Brazil and South
has never remained static; it has matured into some sort        Africa threw their support behind Russia’s 18-year-old bid
of an alliance that looks at key global political, economic     to join the World Trade Organization, urging an “early
and trade issues from the perspective of the developing         accession” for Moscow. Russia has complained it has had
world and offers an emerging model for global economic          to negotiate longer than any other country to join the WTO
cooperation and competition.                                    and that its accession process has been unnecessarily
South Africa and the BRICS                                      politicized by countries such as the United States. The
                                                                accession process was also held up by the United States
The entry of South Africa into the grouping raised many         in August 2008 after Russia’s brief war with Georgia,
eyebrows and it is still uncertain whether this was done        but it was revived in talks last year following a thaw in


June m b e
D e c e 2011 r                                                                                                          28
         BRICS Summit – High on Aspirations                                Magnum
US-Russian relations under the Obama administration.            Second, the use of local BRICS currencies could facilitate
In 2009, Prime Minister Vladimir Putin announced that           the development of these currencies as global reserve
Russia would seek accession as a customs bloc with              currencies. As the BRICS economies’ share of global
Belarus and Kazakhstan, a decision that stunned the             trade continues to increase, its currencies could be used
WTO and further complicated the talks. The United               more in international trade, thereby adding to the pool of
States endorsed Russia’s bid to join last October, and          currencies that could act as global reserve currencies.
Russia said in December it had wrapped up a deal with           Third, the use of BRICS currencies in cross-border trade
the European Union that should enable it to become a            will help reduce transaction costs and exchange rate
member this year.                                               variability, thereby promoting greater intra-BRICS trade,
                                                                which will result in more sustainable growth. Fourth,
Russia, which opened its bid to join the WTO in 1993,
                                                                greater use of local currencies in intra-BRICS trade will
is the last major world power not to be a member of the
                                                                help increase the influence of the BRICS economies in a
global trade body. With Russia’s entry to the WTO, the
                                                                multi-polar world and give it influence in multilateral bodies
clout of Brics vis-à-vis developing economies is likely to
                                                                such as the IMF, World Bank and WTO. Fifth, the use of
increase in the global financial bodies. This is also an
                                                                local currencies in intra-BRICS trade could be a precursor
opportunity for Russia to make its presence felt at a time
                                                                to the formation of a BRICS monetary union.
when its economy is still struggling to be on par with those
of China and India.                                             There are three approaches the BRICS economies could
                                                                consider when using local currencies for intra-BRICS
Single Currency
                                                                trades. The BRICS economies could (1) select a particular
Despite the increasing trend of intra-BRICS trade, the bulk     currency of one of its members to use as the vehicle
of these trades are still denominated in US dollars, rather     for intra-BRICS trade, (2) use the local currency of the
than the currencies of the BRICS economies. There are           exporting or importing country in bilateral trade, and (3)
several factors contributing to the popularity of the dollar    consider setting up a BRICS common currency to settle
as a vehicle currency in international trade, such as the       intra-BRICS bilateral trades.
size, economic strength and stability of the US economy.
                                                                The five BRICS nations also welcomed discussions
As a consequence of using the dollar in intra-BRICS
                                                                about the global role of the Special Drawing Right, the
and international-BRICS trades, the BRICS economies
                                                                International Monetary Fund’s in-house accounting unit
have amassed a sizeable portion of its foreign reserves
                                                                and reserve asset. SDRs are essentially a ‘basket of
denominated in US dollars. BRICS economies hold 40%
                                                                currencies’ – the euro, Japanese yen, pound sterling and
of the world’s currency reserves, the majority of which is
                                                                US dollar. If the world starts using them more and the
denominated in US dollars. Thus the BRIC economies
                                                                dollar less, then US economic status declines.
have signaled their intention to move away from the use
of the dollar toward the use of local currencies in cross-      Bottom line
border trade settlements. In November 2010, Russia and
                                                                The Sanya declaration clearly reiterates the need for a
China have already agreed to use their currencies in
                                                                greater ‘global financial decision-making’ structure and
bilateral trade.
                                                                reform of the IMF. The rise of Brics could help China
There are several reasons why it would be worthwhile for        achieve numerous global objectives, overcoming the
the BRICS group to substitute the use of the dollar in intra-   pressures from the western and European powers. On
BRICS trades. First, it will help the BRICS economies to        issues like climate change, Doha talks and bringing
diversify their foreign reserve exposure away from the          transparency to the global financial structure, the Chinese
dollar. In the aftermath of the global financial crisis, the    need the support of India and Brazil. Brics nations were
stability of the US is being threatened as evidenced by the     among those who abstained during the recent UN Security
increased risk of a downgrade or default of US government       Council veto on supporting military intervention in Libya.
debt, thereby threatening the role of the dollar as a global    BRICS has voiced support for a comprehensive reform
reserve currency. In the event of a US debt downgrade or        of the UN, including the Security Council. In this context,
default, BRICS economies would suffer significant losses        Russia and China have underlined the importance they
due to their exposure to the dollar. Furthermore, policies      attach to the status of India, Brazil and South Africa in
adopted by the US such as quantitative easing could lead        international affairs, committing themselves “to understand
to future inflation, thereby eroding the value of the dollar    and support” the three countries’ “aspiration to play a
reserves maintained by the BRICS economies.                     greater role in the UN.”

D e c e 2011
June m b
December e r
August 2010                                                                                                              29
                Fiscal Deficit                                                                                                                        Magnum
Fiscal deficit target of 4.6% for 2011-12 high                                                                                              A high fiscal deficit is generally linked to inflation. This is
on hopes                                                                                                                                    because that the part of the fiscal deficit which is financed
India’s success story is heading towards a few hurdles that                                                                                 by borrowing from the RBI leads to an increase in the
may place temporary brakes on its economic growth. This                                                                                     money stock and a higher money stock automatically
uncertainty has emerged in the wake of rising crude oil                                                                                     leads to inflation since “more money chases the same
and commodity prices that may thwart the government’s                                                                                       goods”. In a bid to rein in the growth threatening Inflation,
goal of reducing the budget deficit to a four-year low                                                                                      RBI in its annual monetary policy review on May 3, 2011,
i.e. 4.6% of GDP in the fiscal year to March 2012, from                                                                                     not only raised interest rates for the ninth time since March
5.1% (revised target) in the previous year. Finance                                                                                         2010, by a sharper-than-expected 50 basis points, but
minister Pranab Mukherjee had in his Budget presentation                                                                                    also reduced the growth estimates to 8% from the earlier
in February, revised downwards the fiscal deficit number                                                                                    forecast of 9% for the current financial year. However, the
for 2010-11 to 5.1%, against an earlier estimate of 5.5%,                                                                                   government and Reserve Bank of India has projected that
on the back of higher-than-expected realisations from the                                                                                   in the months to come, inflationary pressure would be
auctioning of 3G and BWA spectrum.                                                                                                          more from core (non-food) items on account of high global
Lets us first deal with the meaning and significance of                                                                                     prices of commodities, particularly crude.
fiscal deficit, it is basically the difference between the                                                                                  Crude and fertiliser prices have gone up ever since the
government’s total expenditure and its total receipts                                                                                       Budget announcements as the Finance Minister mandated
(excluding borrowing). The elements of the fiscal deficit are                                                                               Government to avoid issuing bonds in lieu of subsidies
(a) the revenue deficit, which is the difference between the                                                                                to oil and fertiliser companies, similar to its previous year
government’s current (or revenue) expenditure and total                                                                                     budget announcement. Despite this India’s subsidy bill is
current receipts (that is, excluding borrowing) and (b) capital                                                                             expected to jump by more than 100% during the four-year
expenditure. The fiscal deficit can be financed by borrowing                                                                                period ending 2011-12 to Rs 1.43 lakh crore mainly on
from the Reserve Bank of India (which is also called deficit                                                                                account of rising outgo towards petroleum and food items.
financing or money creation) and market borrowing (from                                                                                     International crude price, which at present is hovering
the money market that is mainly from banks).                                                                                                over and around $100 a barrel have surged ever since the
India’s fiscal deficit has risen sharply in recent years on loan                                                                            political unrest in Egypt and Libya which led to the protests
waivers for poor farmers, subsidies and stimulus packages                                                                                   in Middle East countries. Meanwhile, the average price
to boost the economy. Higher Fiscal Deficit implies a                                                                                       for crude oil in May has been estimated at $110 a barrel,
growing risk of adverse change in market sentiment,                                                                                         compared with $118 per barrel in April and the annual
which leads to an increase in inflation, high interest rates                                                                                subsidy bill for fuel products is likely to remain above $8
and low private and public investment, thereby hurting                                                                                      billion.
growth. To reduce the Fiscal Deficit government borrows                                                                                     Finance Minster Mukherjee placed the target for next
from the money market. Large amount of borrowings by                                                                                        year’s deficit at 4.6% of GDP, lower than his own target of
government results in higher interest rates and higher                                                                                      4.8% as indicated in the fiscal roadmap presented in the
interest rates crowds out the private investment. This rise                                                                                 last budget, thereby signaling government commitment
in interest rate in turn impacts sectors like realty. Also,                                                                                 to fiscal consolidation and its intent to help the Reserve
higher borrowings by Govt. suck out liquidity, leaving less                                                                                 Bank of India (RBI) to contain inflation pressures since
scope for banks to lend to private players.                                                                                                 higher fiscal deficit adds on to the Inflationary pressures.
                                                                                                                                            But many analysts termed the government’s ambitions
                                Gross Fiscal Deficit Trend
                                  Gross Fiscal Deficit trend                                                                                towards the fiscal deficit as “aggressive”. Meanwhile,
           450,000                                                                                                                          in the medium term fiscal policy, Mukherjee pegged the
           400,000
           350,000
                                                                                                                                            rolling target of fiscal deficit at 4.1% for 2012-13, and 3.5%
           300,000                                                                                                                          for 2013-14.
           250,000                                                                                                                          However, the expectation is that the India’s fiscal deficit
           200,000
(Rs.cr.)




           150,000                                                                                                                          in FY12 could rise to 5.1-5.5% of gross domestic product,
           100,000                                                                                                                          which is much higher than the government’s target, due
            50,000                                                                                                                          to subsidy burden and lower tax collection. Also unlike in
                 0
                                                                                                                                            the previous fiscal year, it will also not have any one-off
                     2002-03

                               2003-04

                                         2004-05

                                                   2005-06

                                                                2006-07

                                                                          2007-08

                                                                                    2008-09

                                                                                              2009-10




                                                                                                                     2010-11
                                                                                                        2010-11 RE




                                                                                                                               2011-12 BE




                                                                                                                                            revenues to fall back on (In fiscal 2010-2011, the government
                                                                                                                                            benefited from revenues from 3G licensing and proceeds
                                                                                                                                            from divestment of state-owned corporations. Such inflows
                                                             Gross Fiscal deficit                                                           had boosted 2010-2011 revenues by about 1.5% of GDP).


June m b e
D e c e 2011 r                                                                                                                                                                                        30
         Fiscal Deficit                                                       Magnum
 Rs. Crore                    2009-10            2010-11 BE          2010-11 RE             2010-11           2011-12 BE
 Revenue Deficit                  -338,998              -276,512        -269844.00               244853              -307270
 Percent of GDP                     -5.20%                -3.50%             -3.40%                3.11%              -3.40%
 Fiscal Deficit                   -418,482              -381,408        -400998.00               369043              -412817
 Percent of GDP                     -6.40%                -4.80%             -5.10%                4.69%              -4.60%
Possible Solutions for delivering the biggest                      borrowing in the second half of the current financial year.
challenge i.e. Fiscal Deficit of 4.6% of the                       As during the current fiscal, the government has resorted
GDP for 2011-12                                                    to gross market borrowing of Rs 4.47 lakh crore, which
Arguably the biggest challenge before the Finance Minister         is Rs 10,000 crore lower than the Budget estimate of Rs
will lie down in the area of containing the government’s           4.57 lakh crore.
fiscal deficit. However, the following are the available           Further, despite GDP registering slower-than-expected
options as per some key personnel’s that can pay off to            growth of 7.8% during January-March, as against 9.4% in
risk of this magnitude, thereby restoring fiscal balance.          corresponding period of the previous year and 8.3% in the
                                                                   previous quarter, the year ended GDP grew at 8.5% from
w Chief Economic Advisor Kaushik Basu is of the view               8% in 2009-10 due to better farm output and construction
that if the Fiscal Deficit number comes under pressure
                                                                   activities and financial services performance. Meanwhile,
from factors like rise in commodity prices, it will have to
                                                                   in an encouraging development, India’s fiscal deficit for
go for reforms such as deregulating diesel prices. He said
                                                                   the FY11 that ended on March 31, 2011 came at Rs
that, “this option will not be ruled out if the pressure is
                                                                   369043 crore i.e. 4.69% of gross domestic product, lower
sufficiently high and we feel that the fiscal deficit will go
                                                                   than the government’s revised target of 5.1%, providing
out of control, which will mean in the long run inflation will
                                                                   much-needed comfort to the Centre in fighting inflation.
come back”.
                                                                   According to data released by the Controller General of
w Reserve Bank of India (RBI) Governor Duvvuri Subbarao            Accounts, the fiscal deficit was lower by around Rs 32,000
is of the view that since the crude fertiliser prices have gone    crore which translates to 92% of the revised estimates for
up since the Budget announcements, some adjustment                 2010-11 of Rs 4,00,998 crore on the back of better revenue
needs to made, either on the expenditure side or the tax           realizations and expenditure compression. In February,
side, in order to deliver on a 4.6 % target.                       the government had revised its fiscal deficit estimate for
In 2011-12, tax revenues are estimated to grow by 18%,             the year 2010-11 to Rs 400998 crore.
on the back of GoI’s expectation that real economic growth         Conclusion:
would be as high as 9%; additionally, GoI has introduced
                                                                   Though, the possibility of fiscal deficit target at 4.6% for
proposals such as a reduction in exemptions related to
                                                                   FY11-12 remains doubtful but Finance Minister Pranab
central excise duty, enhancement in the lower rate of
                                                                   Mukherjee has exuded confidence that the fiscal deficit
central excise duty to 5% from 4% (even as the peak
                                                                   target would be achieved, thereby conveying sense
rate remains at 10%) and an increase in the coverage of
                                                                   of continuity and stability in its approach to policy
service tax (with the rate remaining at 10%) to align the
                                                                   management of the economy. He said during budget that
same with the proposed GST, which would support growth
                                                                   the government during the current fiscal spent Rs 50,000
of indirect tax collections. GoI has forecast that indirect
                                                                   crore on social projects as it received revenues from sale
taxes would display healthy buoyancy, with customs duty,
                                                                   of spectrum. However, he added, “As I may not have that
excise collections and service tax collections estimated
                                                                   bonanza next year, I will have no compulsion to spend
to expand by 15%, 19% and 18%, respectively in 2011-
                                                                   more. Given the impact of rising crude oil prices in the
12. GoI has estimated that income tax collections would
                                                                   international market, the government is closely monitoring
expand by 15% in 2011-12, despite an increase in the
                                                                   the global oil prices though it has not set any subsidy for
exemption limit for tax payers.
                                                                   any such eventuality. The oil prices would remain high
Further, the focus of expenditure remains on promoting             due to global causes and the Reserve Bank of India has
inclusive growth and infrastructure development, with              indicated inflation to appear at elevated levels this year.
48.5% of the Plan allocation being devoted to infrastructure       However, India’s economic growth could slow down if
and an increase in the allocation towards Bharat Nirman.           the central bank tightens monetary policy further, on the
On the same time, Subbarao’s comments of making an                 same time more tightening could impact the government’s
adjustment either on Expenditure side or tax side have             revenue collections, ultimately impacting the optimistic
also led to the speculations of government increasing its          fiscal deficit target.


D e c e 2011
June m b
December e r
August 2010                                                                                                               31
         Commodity Watch                                                 Magnum
Cardamom export to get a push with price                       during the ongoing 2011-12 Rabi marketing season.
decline                                                        This is 8.6% more than the 217.43 lt bought during the
                                                               corresponding period of 2010-11. Procurement has so
The traders and farmers’ fraternity are worried about a
                                                               far been higher in Punjab with 107.43 lt against 101.52 lt,
sudden plunge in cardamom prices in the ongoing lean
                                                               Haryana with 67.09 lt against 63.22 lt, Madhya Pradesh
season. After hitting a high of Rs 1,500 per kg in last two
                                                               with 37.87 lt against 32.83 lt, Uttar Pradesh with 13.82 lt
years, cardamom prices are fluctuating between Rs 750
                                                               against 13.71 lt and Rajasthan with 8.70 lt against 4.61 lt.
and Rs 800. On the other hand, low prices could augur
                                                               The government is targeting a procurement of 26.2 MT
well for exports. The prices which were hovering around
                                                               in the 2011-12 marketing year on the back of projected
Rs 1,000 per kg last week has dropped to around Rs 700
                                                               record wheat production of 84.27 MT in 2010-11 crop year
per kg. The price drop can be attributed to heavy supplies
                                                               (July-June).
during the May lean season. An early rain during the year
adds incremental supply in the lean season. Cardamom           Haryana has exceeded the target for 65 lakh metric tonnes
harvest normally starts in month of July but early rains       of wheat procurement in the ongoing rabi marketing year.
may advance the harvest in month of June, resulting in         The state had recorded the highest-ever wheat arrival of
low prices in the next few weeks.                              69.24 lakh metric tonnes in 2009-10. Punjab too has set
                                                               a new record in wheat procurement for the central pool,
In May last year, Cardamom prices were hovering around
                                                               with crop purchases touching 107.43 lakh metric tonnes
Rs 1,100 per kg. They climbed to Rs 1,500 per kg before
                                                               (MT) in the ongoing rabi marketing season. Punjab had
stabilizing around Rs 1,000 per kg. With the expectation of
                                                               previously recorded an all-time high in wheat procurement
better prices in May, planters have held over their stocks
                                                               for the central pool at 107.36 lakh MT in 2009-10.
but are now forced to sell them at lower prices before
                                                               Ferozepur district led in procurement of wheat with 13.19
the next season. This low price gives a push to exports.
                                                               million tonnes, whereas Sangrur with 1.018 million tonnes
Cardamom export fell to 865 tonne for the 11-month period
                                                               was second and Ludhiana with 854,000 tonnes third. In
ended February 2011 compared with a record 1,975-tonne
                                                               the entire 2010-11 marketing year (April-March), Punjab
shipment in 2009-10.
                                                               and Haryana had together procured about 73.53% of the
The largest cardamom producer - Guatemala, is step ahead       total purchase of 22.51 MT of wheat.
of India in the international market with low prices during
                                                               However, in case of rice procurement during the 2010-
the year. Guatemala sold cardamom for around $23 per
                                                               11 marketing season (October-September) has declined
kg, which was $3-4 lower than the Indian prices. However,
                                                               marginally by 0.33%, so far to 272.20 lt compared to
the country will not be able to take full advantage of the
                                                               273.13 lt purchased during the same period of the
drop in domestic prices till the new crop arrives. Besides
                                                               preceding season. The purchases till now have been
huge stocks remaining with planters are getting released
                                                               higher in Andhra Pradesh at 50.59 lt against 46.86 lt,
to the market now but most of them are not of exportable
                                                               Chhattisgarh 35.33 lt against 30.78 lt, Tamil Nadu 12.70
quality as the inventory has been with the producers for
                                                               lt against 10.12 lt, Uttarakhand 3.64 lt against 3.48 lt and
some time. Cardamom with faded green colour doesn’t
                                                               Madhya Pradesh 3.26 lt against 1.68 lt, while trailing in
have good demand, in the main market of Saudi Arabia.
                                                               Punjab 86.34 lt against 92.90 lt, Uttar Pradesh 23.34 lt
In the last two years the planters made a lot of money due     against 26.35 lt, Orissa 18.35 lt against 19.63 lt, Haryana
to high prices, so most of the planters are now reluctant to   16.87 lt against 18.16 lt, West Bengal 8.44 lt against 10.15
sell below Rs 1,000 per kg. Better stock will be available     lt and Bihar 7.17 lt against 8.09 lt.
for exports when supplies pick up by July. Spices Board
                                                               Food Ministry not in favour of accepting
is closely monitoring the situation as the price plunge was
                                                               CACP’s recommendation for hike in paddy
unexpected.
                                                               MSP
wheat procurement for the 2011-12 Rabi                         The Commission for Agriculture Costs and Prices (CACP),
marketing season increases by 8.6%                             which suggests minimum support price (MSP) of 40 agri-
The Food Corporation of India (FCI), the nodal agency          commodities, has recommended support price for paddy
for procurement and distribution of foodgrains and State       (common grade) at Rs 1,080 a quintal and on top of it a
agencies have procured 236.19 lakh tonnes (lt) of wheat        bonus of Rs 80 a quintal for the 2011-12 crop year (July-


June m b e
D e c e 2011 r                                                                                                        32
         Commodity Watch                                                   Magnum
June). Though, the Food Ministry is in favour of the paddy      tyre industry. Nonetheless, the import of natural rubber is
MSP of Rs 1,080 a quintal but not a bonus of Rs 80 a quintal    expected to improve as global prices start cooling down.
as it may cause pressure on food inflation. The ministry        Also, the high demand from the tyre and non-tyre industry
is also of the view that higher paddy MSP will increase         will also encourage higher imports in the coming months.
government’s subsidy burden. Meanwhile, the Agriculture         Meanwhile, in view of the fact that new capacities and
Ministry has been reported to have recommended paddy            major expansion plans undertaken by tyre companies
MSP of Rs 1,160 a quintal excluding the bonus part, in line     to cater to booming automobile industry will lead to an
with CACP.                                                      increase in consumption by 150,000 tonne, in this fiscal;
But putting its point, the CACP has argued that higher          the Union government has been urged by the natural
paddy MSP is necessary as cost of production has risen          rubber consuming industries to allow duty free import of
by 20 per cent in last one year. The country’s rice output      200,000 tonne of rubber on Tariff Rate Quota (TRQ) basis
cannot be enhanced to meet demand of the proposed               and 5,000 tonne of latex in this financial year in order to
National Food Security Act unless farmers are paid              bridge the gap between domestic supply and demand.
remunerative price, it noted.                                   However, there is good news for the rubber industry in the
Earlier, the Chief Minister of Andhra Pradesh, N Kiran          country, as according to the provisional figures released by
Kumar Reddy requested the Union Minister of State               the Rubber Board, the production of rubber has increased
(Independent Charge) for Consumer Affairs, Food and             by 6.2% to 56,800 tonnes in April against 53,500 tonne
Public Distribution to increase MSP to paddy by at least        in same month last year, though consumption too had
Rs 200 per quintal and grant permission for export of 25        grown but marginally to 82,500 tonnes. The stocks have
lakh metric tonnes of rice (15 lakh tonnes of boiled rice       depleted to 2,50,250 tonnes as against 2,76,110 tonnes
and 10 lakh tonnes of raw rice) to other countries.             at the end of last fiscal. The Rubber Board, has further
                                                                said that the total production in the country in 2010-11 was
The Union Government will soon take a “favourable”
                                                                8,61,950, while consumption grew to 9,49,205 tonnes.
decision on increasing minimum support price (MSP) for
                                                                The last month’s production rise was mainly contributed
paddy, according to Prof K V Thomas, Minister of State for
                                                                by the regular rains throughout the month amid high rates
Food, Consumer Affairs and Public Distribution.
                                                                that induced farmers to bring maximum area under rain-
Recently, central government decided to provide Rs 50           guarding for uninterrupted tapping. Further going, rising
per quintal bonus on wheat to the farmers over Rs 1,120         consumption of rubber in India is expected to provide firm
minimum support price. Though, the agriculture ministry         support for rubber prices.
had long been in favour of a bonus, the food and consumer
                                                                For the next fiscal (2011-12) Rubber Board expects the
affairs department was averse of a bonus for wheat too
                                                                production to increase by 4.6% to 9,02,000 tonnes, and
citing that at this juncture it could fuel food inflation and
                                                                consumption by 2.9% to 9,77,000 tonnes. Meanwhile,
inflate the food subsidy bill as procurement was expected
                                                                imports are slated to fall this year even as exports are
to be good in 2010-2011.
                                                                expected to grow. The year is likely to end with a stock of
India’s natural rubber import plunges 92% in                    2,71,000 tonnes, marginally higher than last year’s level.
April
                                                                On the international front, the Association of Natural
India’s natural rubber imports plunged 92% to 843 tonne         Rubber Producing Countries (ANRPC) has estimated
in April compared with 10,876 tonne imported in the same        that Rubber production this year could be around
period last year, according to the Rubber Board data. This      10.025 million tonnes, lower than an earlier forecast of
sharp decline is being attributed to high global prices as      10.060 million tones. Countries which form ARRPC are
the price gap between the global and the domestic price         Cambodia, China, India, Indonesia, Malaysia, Papua New
was Rs 30-50 per kg, hence the natural rubber consuming         Guinea, Philippines, Singapore, Sri Lanka, Thailand and
industries preferred to source the raw material from the        Vietnam, accounting for more than 95%. Supply of Rubber
local market.                                                   from these rubber producing countries are likely to fall by
Although India is fourth largest producer of the raw material   around 0.4% mainly because of a revision of estimates in
in rubber, tyre makers still have to depend on imports as       Thailand, major contributor to rubber. ANRPC uses only
domestic production is not enough for rapidly growing           official sources for gathering updated trends from the 11


D e c e 2011
June m b
December e r
August 2010                                                                                                            33
         Commodity Watch                                                    Magnum
countries which are its members and account for more than         from $55.81 million in the year ago period, while in terms
92% of the commodity’s global supply, so some variation           of rupee the value was Rs 554.80 crore from Rs 264.81
in actual numbers can be expected, though the Thailand            crore in the corresponding period of the previous year.
impact is likely to put pressure on the total production.         According to the latest data released by the Coffee Board of
Govt permits 91,685 tonne of sugar exports                        India, the per tonne value realization for Indian coffee was
As the saying goes ‘better late than never’, the government       higher in April, 2011, at Rs 1,30,201 per tonne, compared
has finally given its approval for export of 91,685 tonne         with Rs 93,466 per tonne in the year ago period. Exports
of sugar as a part of planned 500,000 tonne of overseas           of the brew rose 46.13% to 1,44,383 tonne in the first four
sales. Traders have been for long forcing the government          months of the current year from 98,801 tonne in the year
to take a decision in this regard soon as international           ago period.
prices were as high as Rs 3,500 per quintal in January,           During the period of January-April 2011 period, the
which has now declined to below Rs 3,000 per quintal.             total value earned in dollars terms more than doubled
Though the traders may not be able to reap full benefits          to $442.50 million, compared to $211.30 million in the
of high international prices, this decision will still help the   corresponding period of the previous year. In rupee terms
sugar mills to profit from the export to an extent.               also, the export more than doubled in the period under
Meanwhile, the government have been shying away                   review to Rs 2,041.36 crore from Rs 1,005.88 crore in the
to grant its permission in view of high inflation and was         same period of the previous year. Italy continues to be the
waiting for the final output figures of sugar for the current     largest buyer of Indian coffee, accounting for 23.92% of
season from October for taking further decisions in this          the total exports from the country, followed by Germany at
matter. Now, the permission for export has been given to          14.70% and Belgium at 9.20%.
83 mills, while the other nine mills have not been given the      With the prediction of a normal production on account of
approval for export due to problems in their agreements           normal monsoon this year, prospects for the Indian coffee
or applications. Further, out of 5 lakh tonne allowed for         sector are bullish in the short term even as bean prices
export, 51,500 tonne has been reserved for neighboring            are rising on global shortage. However, exports may be
countries.                                                        impacted a bit in the near future on the back of ongoing
Nevertheless, the international prices of sugar are further       political crisis in West Asia and lower carry-over stock as
expected to go down as sugar from Thailand has already            compared with the last financial year.
captured the market and Indian sugar is receiving orders
                                                                  Govt extends deadline for sugar mills to
at a lower price and with the possibility of Brazil also
                                                                  apply for exports by 15 days
exporting sugar, it could result in losses for sugar exporters
of India and increase in cane arrears.                            The government has decided to extend the deadline for
                                                                  sugar mills to apply for permits to export sugar under the
The sugar production of India - the world’s second largest
                                                                  open general license scheme (OGL) by 15 days. Hence,
producer after Brazil is estimated to rise to 24.5 million
                                                                  for those mills exporting their own sugar, the new deadline
tonne (MT) in the 2010-11 sugar year (October-September)
                                                                  will be June 2 for applying for permit to Food Ministry; while
from 19 MT in the previous year; while the country’s
                                                                  deadlines for factories sourcing sugar from third party is
annual demand is pegged at 22 MT. Higher output is likely
                                                                  June 17. Earlier, for mills exporting their own sugar, the
to enhance the profitability of sugar companies as higher
                                                                  food ministry had set the May 18 deadline and for factories
cane crushing means more byproducts and co-generation
                                                                  sourcing sugar from third party, the deadline was June 2.
of power, by burning byproduct bagasse will yield more
                                                                  However, the government has decided not to give any
revenues and profit for sugar companies.
                                                                  further extensions on this front. Meanwhile, the Food
India’s coffee exports jump 50% to touch                          Ministry on April 19 had notified exports of 5 lakh tonne of
42,611 tonne in April 2011                                        sugar under Open General License (OGL), out of which
India’s coffee exports jumped 50% to touch 42,611 tonne           51,500 tonne were reserved for neighboring countries and
in April this year compared with 28,332 tonne in the same         the quota of 4,48,500 tonne was allocated to mills based
month for the year ago period. The value in dollar terms          on the average production for three years. The permission
grew two fold and touched $125.58 million in April, 2011,         was given to 83 mills.


June m b e
D e c e 2011 r                                                                                                             34
         Life Insurance                                                         Magnum
ICICI Pru LifeStage wealth II                                       Automatic Transfer Strategy: Helps to eliminate the need
                                                                    to time one’s investment
ICICI Pru LifeStage Wealth II is a unit linked insurance plan
that offers multiple choices to decide how your savings             Tax Benefits: On premiums paid and benefits received, as
would be invested based on your risk appetite. Further, it          per prevailing tax laws
provides you with an insurance cover to help you realize            working of the policy
your dreams without compromising your family’s protection.
LifeStage Wealth II is very good ULIP plans which has low           One need to choose the premium amount, mode of
charges and provides many investment options to choose              premium payment, premium payment option, policy term,
and provides liberty to shift to another whenever one want.         portfolio strategy and Sum Assured for which one wish to
Above all the loyalty bonuses get added regularly which             take the policy. The premium amount will be invested in
does increase the maturity amount.                                  the portfolio strategy of investors choice

Major benefits of the plan                                          At maturity, the Fund Value, including Top-up Fund Value,
                                                                    if any, will be paid. Alternatively, settlement option can be
Multiple portfolio strategies: Option        to   choose    a       chosen.
personalized portfolio strategy from
                                                                    In the unfortunate event of death of the Life Assured
a. Fixed Portfolio Strategy: Option to allocate savings in          during the term of the policy, the nominee will receive Sum
the funds of choice                                                 Assured plus Fund Value, including Top up Fund Value, if
b. Life Cycle based Portfolio Strategy: A unique and                any, subject to Minimum Death Benefit
personalized strategy to create an ideal balance between            Choice of multiple portfolio strategies:
equity and debt, based on your age
                                                                    With ICICI Pru LifeStage Wealth II, one has the option to
c. Trigger Portfolio Strategy: A unique portfolio strategy          choose from three unique portfolio strategies:
to protect gains made in equity markets from any future
equity market volatility while maintaining a pre-defined            1. Fixed Portfolio Strategy
asset allocation Flexible premium payment options: One              2. LifeCycle based Portfolio Strategy
can either pay premium throughout the policy term or for
                                                                    3. Trigger Portfolio Strategy
a limited period
                                                                    If one wishes to manage his investment actively, the plan
Top up: Flexibility to invest surplus money over and above
                                                                    has a Fixed Portfolio Strategy. Under this strategy, the
the regular premiums
                                                                    person will be prompted to choose his own asset allocation
Loyalty Additions: Paid at the end of every policy year,            from any of the eight fund options. The investor can switch
starting from the 10 th policy year, on payment of all due          between these funds using its switch option. The details of
premiums.                                                           the funds are given in the table below:
 Fund Name & Its Objective                                   Asset Allocation      (Min) %    (Max) %     Risk-Reward Profile
 Opportunities Fund: To generate superior long-
 term returns from a diversified portfolio of equity     Equity & Equity Related     80%          100%
 and equity related instruments of companies             Securities
                                                                                                                  High
 operating in four important types of industries viz.,   Debt, Money Market &
 Resources, Investment-related, Consumption-             Cash                         0%          20%
 related and Human Capital leveraged industries.
 Multi Cap Growth Fund: To generate superior long- Equity & Equity Related
 term returns from a diversified portfolio of equity Securities                      80%          100%
 and equity related instruments of large, mid and                                                                 High
                                                     Debt, Money Market &
 small cap companies.                                                                 0%          20%
                                                     Cash
 Bluechip Fund: To provide long-term capital Equity & Equity Related                 80%          100%
 appreciation from equity portfolio predominantly Securities
 invested in NIFTY scrips.                                                                                        High
                                                  Debt, Money Market &
                                                  Cash                                0%          20%


D e c e 2011
June m b
December e r
August 2010                                                                                                                 35
        Life Insurance                                                     Magnum
 Multi Cap Balanced Fund: To achieve a balance         Equity & Equity Related     0%        60%
 between capital appreciation and stable returns       Securities
 by investing in a mix of equity and equity related                                                            Moderate
 instruments of large, mid and small cap companies     Debt, Money Market &
 and debt and debt related instruments.                Cash                       40%       100%
 Income Fund: To provide accumulation of income
 through investment in various fixed income Debt Instruments
 securities. The fund seeks to provide capital                                    100%      100%                 Low
 appreciation while maintaining a suitable balance Money Market & Cash
 between return, safety and liquidity.
 Money Market Fund: To provide suitable returns Debt Instruments                   0%        50%
 through low risk investments in debt and money
                                                                                                                 Low
 market instruments while attempting to protect the
 capital deployed in the fund.                      Money Market & Cash           50%       100%
 Return Guarantee Fund*: To provide guaranteed Debt Instruments
 returns through investment in a diversified portfolio                            100%      100%                 Low
 of high quality fixed income instruments.             Money Market & Cash


 Fund Name & Its Objective                       P / E Range         Allocation in Equity and         Risk-Reward Profile
                                                                     Equity related securities

 Dynamic P/E Fund: To provide long term                <14                 90% to 100%
 capital appreciation through dynamic as-
 set allocation between equity and debt.              14 - 16              80% to 100%
 The allocation in equity and equity related
                                                      16 - 18              60% to 100%                         High
 securities is 1 determined by reference
 to the P/E multiple on the NIFTY 50; the             18 - 20              40% to 80%
 remainder is to be invested in debt instru-
 ments, money market and cash.                         >20                  0% to 40%

Benefits detail
Maturity Benefit:
At maturity, the Fund Value including the Top up Fund Value, if any, shall be payable. Alternatively, one can opt for the
Settlement Option available.
Death Benefit:
In the unfortunate event of death of the life assured during the term of the policy, the nominee shall receive Sum Assured
plus Fund Value, including Top up Fund Value, if any, subject to Minimum Death Benefit.
Loyalty Additions:
Starting from the end of the tenth policy year, provided all due premiums have been paid, a loyalty addition shall be allo-
cated at the end of every policy year. This Loyalty Addition will be calculated as a percentage of the average of Fund Values
on the last day of eight policy quarters preceding the said allocation. The Loyalty Addition for various Premium Payment
Options is shown below:

 Premium Payment Option\End of Policy Year                       Year 10                         Year 11 Onwards

 Regular Pay*                                                       2%                             0.75% p.a

 Limited Pay 5, Limited Pay 7, Limited Pay 10*                      2%                              0.5% p.a



June m b e
D e c e 2011 r                                                                                                            36

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:68
posted:8/26/2011
language:English
pages:36