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      Magnum Connect
    Issue No. IX         May 2009
           Monthly Magazine

 Cover Story
     Cement ............................................................. 2
     Company Research........................................... 5               Dear Friends,
     Stock Update..................................................... 7
                                                                                 Another good month for the market has passed, we would like
     Corporate News................................................. 8
     Market Snapshot...............................................10
                                                                                 to see the markets swaying in the same direction for some more
                                                                                 time, but the turbulent phase cannot be avoided just by doing
 Economy                                                                         your part. Lots of things depend upon the external factors that are
     Quick Review of Economy................................12
                                                                                 beyond our control and one such factor, which we are currently
     Economy News.................................................16
                                                                                 facing, is the ongoing general elections in the country. We are
 Statistics                                                                      half-way through the mega event and still everything seems
     Scorecard : Banking......................................... 18             blurred with no clear conviction or clear consensus of any single
     Dividend Yield..................................................20          party or group appearing on the forefront to form the government.
     Sales............................................................... 21     Our today’s requirement is a stable government that can lead us
     High PE ........................................................... 22      to the path of growth amid this slowdown and guide the nation
     Low PE ............................................................ 23
                                                                                 to stability.
     Price Trend...................................................... 24
                                                                                 Friends, in the passing month India’s central bank – Reserve
 Mutual Fund                                                                     Bank of India – announced its annual review of monetary policy
     Sectoral Mutual Fund Analysis......................... 25
                                                                                 where the bank cut the repo and reverse repo rates by 25 basis
     MF Scorecard................................................... 26
                                                                                 points each, as a means to give signal to the markets that the
 Study                                                                           apex bank will continue the aggressive stand. However, the apex
     Currency Futures...............................................31           bank left the cash reserve ratio (CRR) unchanged at 5%. While
     FII Trends ..........................................................33     the banks considered it as meager, it has further given strength
 Insurance                                                                       to the interest sensitive sectors like reality and auto .Though the
     Systematics Investment Plan............................ 35                  rate cuts were more or less in line with market expectations,
     ICICI Lombard - Car Insurance ........................ 36                   the most striking points that came from the policy was that the
 Subscription :-                                                                 apex bank has pegged the GDP forecast for the FY10 at about
                                                                                 6%. This estimate though was on the optimistic side but has
 Cover Price: Rs 30/-                                                            represented the fact that the current slowdown has seriously
 Annual Subscription (12 issues) : India Rs 300/-                                affected developing nations like, India, too.
 Overseas (Airmail) US$ 150                                                      The results season is on, though the trends so far has been
 (Cheque/D.D. drawn on Mumbai in favour of                                       mixed with no any major setbacks barring few and further
                                                                                 announcements will show how good or bad the final quarter was
 Magnum Wealth Management Pvt. Ltd.                                              and the just-concluded fiscal for different companies. In this month,
 Regd. Office :                                                                  all the election formalities will get completed and the picture will
 Mr. Piyush K. Upadhyay (Correspondent)                                          get clear as to who will form the government at the Centre. A
 Magnum Connect                                                                  fractured mandate and a fragile government will definitely mar
 D-13, Empire Mahal,                                                             the sentiments of the market and can give a serious setback in
 806, Dr. B. A. Road,                                                            coming months, on the same side if the mandate comes for a
 Khodadad Circle, Dadar T.T.,                                                    stable government, it will boost the sentiments.
 Mumbai – 400 014.
 For General Enquiries Contact :                                                                                                                   VIJAY B. SHAH
 +91-22-2415 8686                                                                                                                                           (Director)
 E-mail :                                                                                                                    Magnum Group
 Website :
 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
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                     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

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           Cover Story - Cement                                                                                   Magnum
Cement: India’s construction story                                                 commodity, competition is also localized because the cost
                                                                                   of transportation of cement to distant markets often results
1. Introduction: The Indian cement industry with a total
                                                                                   in the product being uncompetitive in those markets.
capacity of about 211.8 million tonne (MT) at the beginning
of fiscal 2010 is the second largest market after China. Al-                       3.2 Energy Intensive: The cement industry is highly
though consolidation has taken place in the Indian cement                          energy intensive and power costs form the most critical
industry with the top five players controlling almost 50%                          cost component in cement manufacturing, contributing
of the capacity, the balance capacity still remains pretty                         about 35% to total cost of production. This also results in
fragmented.                                                                        emphasis on technology and hence importance of scale
                                                                                   economies. As a result, the market structure of cement
The industry had been on a roll for 4-5 years till second half
                                                                                   has developed into typical oligopoly with small number of
of FY09. Driven by a booming housing sector, global de-
                                                                                   large firms in direct competition with each other along with
mand and increased activity in infrastructure development
                                                                                   large number of small companies playing role of atomistic
such as state and national highways, the cement industry
outpaced itself, ramping up production capacity, attracting
the top cement companies of the world, and sparking off a                          3.3 Seasonal Demand: Another distinguishing charac-
spate of mergers and acquisitions to spur growth.                                  teristic of the Indian cement industry is its cyclical nature,
                                                                                   as the market and consumption is closely linked to climatic
2. A brief history of Indian cement industry: The
                                                                                   and agricultural cycles. In India, cement production nor-
attempt to produce cement in India dates back to 1889
                                                                                   mally peaks in the month of March while it is at its lowest in
when a Calcutta firm attempted to produce cement from
                                                                                   the month of August and September (monsoon months).
argillaceous (kankar). But the first organized effort on
                                                                                   The cyclical nature of the industry has also helped the
mass scale to manufacture Portland cement commenced
                                                                                   cause of consolidation in the industry as the large players
in Madras (now Chennai) in 1904, by South India Indus-
                                                                                   are able to easily withstand the cyclic downturn in demand
tries. However, the effort did not succeed. It was in 1914
                                                                                   due to their economies of scale, operational efficiencies,
that the first cement manufacturing unit in India was set up
                                                                                   centrally controlled distribution systems and geographical
and commissioned by India Cement Company at Porban-
                                                                                   diversification etc.
dar in Gujarat, with an installed capacity of 10,000 tonnes.
Subsequently two plants; one at Katni (Madhya Pradesh)                             4. Growth of the industry in liberalised period:
and another at Lakheri (Rajasthan) were set up.                                    The cement industry has been on a high growth path ever
                                                                                   since liberalisation of the economy took place in early
The industry grew rapidly in the pre-independence era
                                                                                   1990s. In recent years, the infrastructure development de-
with supply often off-stripping demand resulting in a price
                                                                                   rive of the government has also helped the industry pick
war. However, in the early years of independence, huge
                                                                                   up rapid pace.
growth in infrastructure construction resulted in demand
rising sharply and soon the supply side bottlenecks ap-                                                  Year        Installed Capacity      Production      Per Capital
peared. To ensure a smooth supply of cement and to                                                                    (Million Tonnes)          (MT)        Consumption
bring in more regional balance, government controls were                               1991-92                                    66.56            53.61                  63
implemented through 1969 to 1982. Though this period                                   1995-96                                    97.25            69.57                  72
witnessed increase in supply, significant disequilibrium in
various aspects of industry forced the government to first                             1999-00                                     119.1          100.45                  97
partially (1982) and then fully (1989) deregulate the indus-                           2003-04                                   157.48            123.5                 110
try. Since then the industry has been growing rapidly in a                             2007-08                                       198              168                150
competitive atmosphere.                                                            Table 1: Growth of Cement Industry in Post-liberalisation Era
3. Characteristic of Indian cement industry: The
Indian cement industry is characterised by its regional and                                              Fig 1 : Capacity and Production of Cement
seasonal nature due to vast geography of the country and
high energy intensity.
                                                                                   (millions of tonne)

3.1 Regional nature: The viability of the location plays                                                 200
a major role in the economics of cement manufacturing.
As such, a major defining feature of the Indian cement                                                                                                      Installed capacity
industry is the location of limestone reserves in select                                                 100                                                Production
parts of country, which has resulted in it’s evolution in the
form of clusters. The proximity to coal deposits constitutes                                              50
another important factor in determining the location. As a
result, the cement industry has strong regional character-
                                                                                                                1991-92 1995-96 1999-00 2003-04 2007-08
istics. Further, since cement is a high bulk and low value
 Small or atomistic producers are typically characterized by their lack in influencing either the industry supply or price and take these variables as given.

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                             Cover Story - Cement                                                                 Magnum
All the performance metrics have shown tremendous                           Production of cement in the full fiscal 2008-09 stood at
growth over the period. Installed capacity increased from                   181.42 MT, showing a growth of nearly 8% compared with
63.9 MT to 193.8 MT by 2007-08, showing a CAGR of                           168.31 MT of production in the previous fiscal. Despatches
7.3%. Production over the same period increase from                         during FY09 stood at 181.01 MT, a growth of 8% against
48.76 MT to 168.3 MT, showing a CAGR of 8.1%. Per                           the figure of 167.68 MT in the previous fiscal.
capita consumption as a result increased from 56 kg to                      5.2 Regional distribution: Looking at the regional
150 kg, showing a CAGR of 6.3%.                                             breakdown of growth witnessed in cement production, one
Figure 1 makes the things further clear. It reflects the con-               finds that highest growth was observed in the northern re-
sistency that the Indian cement industry has shown in the                   gion at 13%, followed by southern and eastern region at
post liberalised era in terms of growth in both installed ca-               10% and 9% respectively. However, the western region
pacity as well as production.                                               constituted by Gujarat and Maharashtra, which contributes
                                                                            maximum cement production to the country, witnessed a
Current Scenario                                                            decline in production by 1% over FY09.
Atmosphere in cement industry was very bullish till the first
half of FY09. Riding on the real estate boom and infra-                                                     Fig : 3 Region Wise Growth in Production
structural investment, the industry showed sharp growth                                                14
in the proceeding 4-5 years. However, as the global finan-                                             12

                                                                            (% change Y-o-Y)
cial crisis and resulting downturn took the centre stage in                                            10
affairs of economy, cement industry witnessed consider-                                                8
able slowdown. Apprehensions of demand supply going                                                    6
forward too have come into light as the GDP growth slows                                               4
down to a six year low. December quarter witnessed con-                                                2
siderable slump in demand as well as prices.                                                           0

Nevertheless, in wake of the stimulus packages launched                                                -2
                                                                                                                Northern   Southern     Eastern     Central      Western
by the government and increased public expenditure to
boost the slowing economy in the first few months of 2009,                  5.3 Capacity addition: A number of new cement plants
the industry has turned around the slowdown blues spec-                     were commissioned in the fiscal 2009, resulting in sub-
tacularly. Demand for cement has been bullish throughout                    stantial capacity addition. Most of these projects were
the March quarter, which helped the industry keep prices                    started in FY07 and FY08 when the real estate was boom-
firm and margins high. In the following paragraphs we will                  ing and outlook of cement looked extremely bullish. How-
trace the developments in the cement industry in the most                   ever, things changed somewhat with the onset of slow-
recent period.                                                              down in the economy and particularly in the real estate
5.1 Demand rides on stimulus packages: Cement                               sector. Nevertheless, cement companies added a capac-
demand and production had slowed down towards the                           ity of 13.51 MT, constituted by 9.85 MT from new plants
end of calendar year 2008. However, riding on the stimu-                    and 3.66 MT from expansion of existing plants, taking total
lus packages launched by the government and intensified                     capacity at the end of FY09 to 211.8 MT from 198.3 MT at
public investment in infrastructural sector, cement demand                  the end of previous fiscal.
recovered in early months of 2009. As a result, production                  5.4 Exports: Despite the ongoing slump in the global
during March 2009 stood at 18.10 MT, registering a growth                   economy and resulting downsizing impact of Indian ex-
of 10.43% as compared to 16.39 MT in the same month                         ports in general, cement exports have been buoyant. Dur-
last year. Cement despatches, too, showed buoyancy and                      ing the month of March 2009, cement export stood at 0.35
posted a growth of 10.35% at 18.12 MT against 16.42 MT                      MT, recording a growth of 9.38% as compared with 0.32
last year.                                                                  MT of exports in the same month last year.

                             Fig 2 : Cement Production ( 2008-09)                                                 Fig: 3 Cement Exports ( 2008-09)
                       200                                                                                  4
 (millions of tonne)

                                                                                  (million of tonne)

                       150                                                                                  3
                       100                                                                                  2
                       50                                                                                   1
                        0                                                                                   0
                                 FY08      FY09     March--08   March--09                                           FY08         FY09         March--08       March--09

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             Cover Story - Cement                                       Magnum
Total exports during the fiscal 2009 however have shown       during 2007-08.
de-growth of 12.3%. India exported a total of 3.20 MT of      However, the upturn witnessed in the March quarter is rid-
cement in FY09 compared with 3.65 MT of cement export-        ing primarily in stimulus packages provided by the govern-
ed in the previous fiscal. The decline primarily shows the    ment and intensifying of public construction works in wake
impact of subdued exports in the first half of fiscal when    of the general elections. While the new government, which
commodity prices were soaring in India, local demand was      will take the office in June 2009 is expected to continue
surging.                                                      with measures to boost the economy, investment in the
5.5 Capacity utilisation shoots up in March: Buoy-            construction sector will come down from its exceptionally
ant cement demand during last few months, riding on           intense levels witnessed in January-March quarter.
higher demand from the infrastructure sector has pushed       As a result, the medium term prospects of cement do not
up capacity utilisation from poor levels witnessed towards    look very strong at present. Demand supply mismatch,
end of calendar year 2008.                                    which was expected to hit the sector in early 2009, has
                                                              only been delayed and as the demand softens in third
                      Capacity utilisation
                                                              quarter of current calendar, there may be significant over
                                                              capacity, resulting in falling of capacity utilisation and
       100                                                    hence margins.

                                                              The net effect of such demand-supply gap, however, will
                                                              depend on nature and quantum of stimulus launched by the

       90                                                     next government. Nevertheless, we expect the consump-
                                                              tion growth in FY10 to slowdown by about 100-150 basis
                                                              points compared with average of previous few years.
               FY08       FY09       March--08   March--09
                                                              Talking of long term prospects with a time horizon of say
                                                              more than couple of years, the cement industry possess-
Further, increase in demand in March resulted in excep-       es excellent potential of returning to the high growth path
tional rise in capacity utilisation to 103% from 92% in the   witnessed over 4-5 years till FY09. Potential in growth of
month of February. Capacity utilisation in the full fiscal;   cement consumption is well reflected in the fact that even
however, has been lower at 88% compared with 94% in           after recording around CAGR of 10% for last five years,
the previous fiscal, reflecting the impact of slowdown in     per capita consumption of about 150 kg in India remains
cement industry during last quarter of 2008.                  much below the world average of over 260 kg and more
                                                              than 450 kg in China.
Outlook:                                                      Further, as the global economy recovers and India moves
After facing slowdown in last quarter of 2008, the cement     back to growth rates of 8-9%, infrastructure investment
industry has been performing very well in the first quarter   too will grow at a rate in excess of 7-8%, thus providing
of 2009. While demand from the real estate sector contin-     ample scope of growth for the cement industry for many,
ues to remain poor due to the ongoing severe downturn         many years to come. We may conclude the study by ob-
in the property market, increased investment in infrastruc-   serving that the cement industry has been one of the fast-
ture sector by the government has boosted the demand          est growing sectors in the liberalised history of India. Even
for cement from this segment.                                 though some doubts have been cast on the near term
                                                              performance of the industry due the ongoing slowdown
As a result, there has been robust growth in both produc-
                                                              in global economy and its resulting downsizing impact on
tion and dispatches in the January-March quarter. Cement
                                                              Indian economy, long run prospects of cement remains
prices, which were facing a lot of downside pressure to-
                                                              extremely healthy.
wards the end of 2008, have also stabilised in 2009, due
to buoyant demand.
The country has witnessed cement dispatch growth of
9.98% at 18.06 million tonne (MT) during March this year,
as against 16.42 MT during the corresponding month
last year, according to Cement Manufacturers’ Associa-
tion (CMA).The report says the total cement production in
the country during March 2009 was 18.04 MT, up 10.06%
over the figure of 16.39 MT reported during March 2008.
The annual cement dispatch for fiscal 2008-09 posted a
growth of 7.91% at 180.95 MT, compared to 167.68 MT

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            Company Research                                                                                        Magnum
UltraTech Cement                                                              Sell                    six grinding units and three terminals – two in India and
UltraTech Cement was incorporated on August 24, 2000 as                                               one in Sri Lanka.
L&T Cement. Now, a $28 billion Aditya Birla Group company,                                            Management
it is the country’s largest exporter of cement clinker. The                                           The management of the company is led by Kumar
Aditya Birla Group that operates in 25 countries across                                               Mangalam Birla-Chairman, K C Birla is the Executive
the world is the 11th largest cement producer globally, the                                           President & CFO, while other directors include Rajashree
seventh largest in Asia and the second largest in India.
                                                                                                      Birla, R C Bhargava, G M Dave, Y M Deosthalee, N J
UltraTech Cement has an annual capacity of 18.2 million                                               Jhaveri and few others. S Misra is the Managing Director
tonnes. It manufactures and markets ordinary portland                                                 of the company.
cement, portland blast furnace slag cement and portland
pozzalana cement. It also manufactures ready mix                                                      Business Overview
concrete (RMC). The company has five integrated plants,                                               UltraTech Cement is the country’s largest exporter of
                                                                                                      cement clinker. The export markets span countries around
 Stock Data (as on 29/04/09)                                                                          the Indian Ocean, Africa, Europe and the Middle East.
 Current Mkt Price (Rs.)                                               567.60                         Individually it is the second biggest cement producer of the
                                                                                                      country, while together with Grasim it is the largest cement
 52 week High (Rs.)                                                                785                producer in India.
 52 week low (Rs.)                                                                 250                The company’s products include ordinary portland cement,
                                                                                                      portland pozzolana cement and portland blast furnace slag
 Mkt Cap (Rs. Cr.)                                                    7065.81                         cement
 Return in last one Month (%)                                                  6.93                   The company ensures a flawless operation in every stage,
                                                                                                      right from selecting raw materials to batching and mixing,
 Share Holding Pattern(as on Dec31,08)                                 %                              transportation, placing of concrete till testing of concrete,
                                                                                                      putting together the right ingredients for perfect world class
 Total Promoter                                                             54.78
 Institutions                                                                11.19                    The composite plants of the company are located at
 Non Institutions                                                           33.88                     Tadipatri (Andhra Pradesh), Hirmi (Chhattisgarh), Jafrabad
                                                                                                      (Gujarat), Kovaya (Gujarat) and Awarpur (Maharashtra).
 Depository Receipt                                                                0.15               The grinding units of the company are located at Magdalla
                                                                                                      (Gujarat), Ginigera (Karnataka), Ratnagiri (Maharashtra),
 Key Ratios                                                                                           Jharsuguda (Orissa), Arakkonam (Tamil Nadu) and
 P/E                                                                          7.23                    Durgapur (West Bengal)

 Price/Book(x)                                                                3.60                    Investment Rationale
                                                                                                      The transport of concrete from its place of mixing to the
 Dividend Yield (%)                                                           0.88                    delivery point is very critical, as there is possibility of the
 ROCE(%)                                                                   35.67                      concrete drying out and losing its workability and plasticity.
                                                                                                      The company has got an edge on this point as the
 ROE(%)                                                                    37.37                      UltraTech Concrete transports concrete from its ready mix

                                                                    Performance in the last year

















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         Company Research                                                 Magnum
                                                                                                                    (Rs. Cr.)
 Particulars               March Qtr-09      March Qtr-08      Growth %           FY08             FY07         Growth%
 Net Sales                      1875.01           1601.66           17.07          6436.96          5508.78           16.85
 Total Income                   1888.86           1628.69           15.97          6486.64          5609.07           15.64
 Other Income                     13.85             27.03          -48.76            49.68           100.72          -50.68
 PBT                             437.18            431.19            1.39          1361.46          1507.01            -9.66
 PAT                             309.46            282.88            9.40           977.02          1007.61            -3.04
 OPM                              29.96             27.56               --           28.12            33.03                --
 NPM                              16.50             14.56               --           15.18            18.29                --
 EPS                              24.86             45.40               --           78.48            80.91                --
concrete plants to the site through transit mixers. Further,    The Indian cement industry comprises of 134 large cement
the concrete is pumped to the actual point of concreting        plants with an installed capacity of 173.08 million tonnes
using high efficiency concrete pumps, Placing the concrete      and more than 350 operating mini-cement plants across
is expedited scientifically by specialised delivery trucks.     the country.
Qualified and experienced engineers monitor the entire          Cement demand has a direct correlation with the GDP
operation.                                                      growth and had registered a growth of nearly 9% between
UltraTech Concrete is equipped with computerised                FY06-FY08 driven primarily by strong demand from
batching and mixing plants to strictly monitor the quality      construction, infrastructure and real estate projects.
of the concrete. It uses a computerised recipe for the raw
mix design and quantities of raw materials are weighed          Latest developments
automatically as per the design mix.                            Defending champions of IPL, Rajasthan Royals has signed
There has been a good appreciation in the cement                a sponsorship deal with Ultratech Cement.
dispatch figures for March keeping with growth trend seen       Buoyed by improved demand, the Aditya Birla Group
in February, January, December and November. Industry           companies, Grasim Industries and UltraTech Cement,
observers expect the trend to continue in this quarter.         have recently raised prices by Rs 5-7 per bag.
Latest result analysis                                          The Aditya Birla Group’s cement production for the period
F   The company has posted a decline of 3.01% in its            April-February 2009 has moved up by 5.23% at 290.09
    consolidated net profit for the financial year ended        lakh mt as against 275.67 lakh mt during April-February
    March 31 at Rs 979.62 crore as compared to Rs               2008. Dispatches grew by 5.25% at 289.71 lakh mt
    1,010.05 crore in the previous financial year.              in April-February 2009 vis-a-vis 275.24 lakh mt in the
                                                                corresponding period last year.
F   Net sales of the company during the year increased
    by 17.69% to Rs 6618.32 crore from Rs 5623.38 crore         Recommendation Factors
    last year.                                                  In its outlook, the company has said that a slow down in
F   The earning per share stood at Rs 78.57 against Rs          economic growth will aggravate the inevitable surplus in
    81.14 last year.                                            production capacity. The expected commissioning of an
F   The company reported a rise in its net profit after two     additional 50 million tonnes in FY10 and a further 15 million
    consecutive quarters of decline.                            tonnes in the following year is likely to result in a reduction
F   The net profit for the March quarter moved up by            in capacity utilisation with adverse impact on margins.
    9.39% to Rs 309.46 crore compared with Rs 282.88            Additionally, the likely release of around 100 million
    crore in same quarter last year.                            tonnes capacity in a phased manner over the next two
F   Net sales during the three-month period improved by         years coincides with slower economic growth. This will put
    17.06% to Rs 1,875.01 crore from Rs 1,601.66 crore          pressure on sales realisation and margins in FY10.
    in last year.
                                                                Volume increase to come up from commissioning of new
F   The company reported a 230 basis points fall in             capacities Cement prices currently ruling firm but likely to
    operating margins at 29.2% in the fourth quarter.           witness decline from Q1FY10.
F   High input costs offset the company’s estimated 8.1%
    rise in cement realisations to Rs 4,166 per tonne in        At current market price of Rs 569 (as on April 22, 2009),
    the fourth quarter of FY09.                                 the stock is trading at a P/E of 7.3x and EV/EBITDA of
                                                                4.8x. We recommend a SELL on the stock as by the end of
INDUSTRY SCENARIO                                               2009-10 cement prices could start trending down as more
India is the world’s second largest producer of cement after    capacity is commissioned and as new and smaller players
China with industry capacity of over 200 million tonnes.        look to establish themselves

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        Stock Update                                                       Magnum
   ACC : Buy                                                       Shree Cements: Buy

          21.18%                             Promoter                                                       Promoter
                         46.21%              Inst .                                                         Inst.
                                             Non Instt.                13.39%
                                                                                                            Non Instt
         32.61%                                                                                             Public

  F ACC has posted Q4 pre-exceptional net profit at               F Shree Cements has reported Q4 FY09 net profit of
      Rs4.08 bn owing to lower expenditure and lower                  Rs 235.6 crore from Rs 41 crore year-on-year. The
      power and fuel cost. Revenue for the quarter                    company’s net sales spiked to Rs 806.2 crore as
      surged 14.4% to Rs20.5bn, mainly driven by 6.1%                 against Rs 662.5 crore YoY. Realization per bag is
                                                                      Rs 1 lower than last year’s overall realization. Volume
      improvement in cement volumes (5.73mnt) and 7.9%
                                                                      growth is 28%. So, the realization is not per tonne,
      increase in realizations to Rs3,587 per ton. It had a           but the overall turnover is also higher by 28%. The
      pre-exceptional EBIDTA for the quarter has spiked               cement prices have increased across the board and
      up 33.4% year-on-Year (y-o-y) basis to Rs6.28bn,                the rise has been undertaken on bagged cement.
      while EBIDTA margins increased by 433 bps y-o-y to          F   Excise duty relief has been given on the bulk cement
      30.5%,mainly on account of lower other expense.                 and but the price increase is on the pack cement and
  F It has witnessed a reduction in power & fuel cost by              in the pack cement no excise benefit has come. The
                                                                      price increase has been there on the retail sector.
      13.7% on quarter-on-quarter (Q-o-Q) basis on drop in
                                                                      This maybe because of multiple things but the sector
      international coal prices. ACC capacity expansion at            where the prices have not really increased, is the bulk
      Bargarh for 1.18 mtpa together with a 30 MW captive             cement, which is hardly 10% of the total production of
      power plant is expected to be completed by mid                  the company.
      CY2009.                                                     F   Due to the higher spending by the government in
  F ACC remained firmed to keep its total cost per ton                infrastructure projects, north India has successively
      of cement to Rs2491, which is a meager 1.5% y-o-y               posted a higher volume growth rate in the last quarter,
                                                                      compared to other regions and Shree Cement is
      increase thus clearly reflecting significant cost savings
                                                                      expected to be the main beneficiary, as it has a strong
      during the quarter. Further, the company continued to           presence in north India and also due to its relatively
      benefit on account of strong dispatch numbers and               early expansion. On the back of strong demand, Shree
      higher realizations on account of increase in cement            Cement has raised cement prices by Rs4 to Rs6 per
      prices on a pan India basis.                                    bag in the past couple of months (February-March).
  F Trading at a PE multiple of 10.1, the stock has an            F   At the current market price of Rs776, the stock trades
      upside potential of 12% upsurges in near term,                  at 5.3 multiple and 8.8 multiple its FY2009 and FY2010
      translating to the level of Rs 695-700. It is expected          earnings estimate respectively, an enterprise value
                                                                      (EV)/earnings before interest, depreciation, tax and
      that ACC revenue to grow by a CAGR of 9.7% due
                                                                      amortisation (EBIDTA) of 3.2x FY2010 and EV/tonne
      to high fixed cost and low EBITDA per tonne, ACC’s              of $63 on expanded capacities of 10.1 million tonne.
      earnings are highly sensitive to cement prices. It has          The stock has appreciated by over 45% since our last
      been observed that for every 1% decline in cement               update on January 30, 2009. We maintain our Buy call
      prices, the EPS of the company reduces by 7.4%.                 on the stock with a revised 12-month price target of
                                                                      Rs825 (EV/tonne of $70 on expanded capacity).

   Last Traded Price (as on 29/04/09)           Rs. 653.00        Last Traded Price (as on 29/04/09)           Rs. 776.00
   Price target                                      Rs 695        Price target                                     Rs 815
   Market cap. in Rs cr.                           12082.21        Market cap. in Rs cr.                            2702.85
   52 Week H/L                                      790/369        52 Week H/L                                   1045/330
   Free Float                                        53.79%        Free Float                                         53.79
   BSE code                                          500410        BSE code                                         500387

May e m
D e c2009 b e r                                                                                                            7
        Corporate News                                                   Magnum
GMR Group to exit non-core businesses                          coal blocks in India. The potential partners include Adani
                                                               Power, KSK Power, Monnet Ispat and Sophia Power.
The GMR Group, which has a strong presence in the
infrastructure sector and has completed upgrading of           NMDC had recently invited expression of interest’s (EoI) to
domestic and international airports, is looking at exiting     develop the coal blocks jointly in the country. However, the
non-core business. The group has taken the decision in         company has not yet decided to take in multiple or single
the wake of an overall cash crunch that has impacted infra     partners for the proposed joint venture. This depends on
projects in the country.                                       the allotment of fresh coal blocks.
The group has already hived off its ferro alloys business to   RIL begins gas production at KG-D6 block
Dubai-based Cronimet Mercon Invest for a consideration         The Mukesh Ambani-led Reliance Industries (RIL) is
of around Rs 22 crore last year. It is currently in the        reported to have started gas production at its Krishna-
process of offloading 30% stake in its sugar business to       Godavari basin field creating a landmark in the history of
multinational Bunge, and plans to exit the sugar business      oil and gas production in the country.
in due time.
                                                               The gas generated from the KG-D6 block is expected to
The GMR Group has interests in agri business, ferro            boost the power supply from electricity generators starved
alloys, IPL, infrastructure and SEZ.                           of fuel and produce cheaper urea for agriculture.
Sahara takes Jet to court over non-payment                     BHEL plans JV with foreign firm for Rs 1,200 cr
of dues
                                                               Bharat Heavy Electricals (BHEL) is planning to invest
The Sahara Group, promoter of Air Sahara, which was            around Rs 1,200 crore to form a joint venture with
acquired by Jet Airways in 2007, has taken the latter to       an international firm for manufacturing transmission
court over default of dues worth Rs 1,450 crore that was       equipment by June 2009.
part of the buyout deal.
                                                               The company is currently in talks with a French equipment
As per the deal, Jet was to pay Rs 900 crore to Sahara         maker Areva and a Japan based Toshiba for forming a
upfront, while Rs 137.5 crore was to be paid in yearly         transmission joint venture by June 2009. The joint venture
instalments over four years. Jet has reportedly defaulted on   will manufacture transmission equipments having a
the annual instalments. Jet’s payout to Sahara in a single
                                                               capacity of 765 kilo volt (KV) and 1,200 KV.
year’s default could be in the range of Rs 550 crore.
                                                               L&T to exit from infrastructure projects with
Larsen & Toubro bags orders worth Rs 1100                      minority stake
crore in Q4
                                                               Larsen & Toubro (L&T) is planning to exit from those
Turnkey engineering major Larsen & Toubro (L&T) has
                                                               infrastructure projects in which it holds minority stake
bagged a slew of large-value orders aggregating Rs 1100
                                                               (less than 50%). However, the company might bid in a
crore in the electrical construction sector in the fourth
                                                               consortium and take less than a 50% stake to diversify the
quarter of 2008-09.
                                                               risk in large and complex projects like urban metro.
The orders have come from leading public sector
organizations like Power Grid Corporation of India (PGCIL)     Bajaj Auto gets patent for its ExhausTEC
and the Rail Vikas Nigam and involve setting up high end       technology
transmission lines and substations as well as a project for    Bajaj Auto has finally received a patent for its ‘ExhausTEC’
the Indian Railways.                                           invention vide Patent No 231498 dated March 5, 2009
RCom gets TDSAT nod for use of dual                            from the Indian Patent Office.
technology                                                     The Pune-based company was involved in a controversy
The Telecom Disputes Settlement and Appellate Tribunal         with TVS Motors as the two companies had clashed on
(TDSAT), while hearing a petition filed by the Cellular        issues related to technology infringement in 2007 when
Operators Association of India (COAI) that challenged the      TVS developed the 125cc Flame using a technology
government’s decision to allow Reliance Communications         similar to that of Bajaj.
to use dual technology (GSM and CDMA) for mobile               Videocon to mop up Rs 200 cr though
services, cleared the latter’s use of dual technology.         preferential issue
Criticising the COAI, the tribunal stated that GSM operators   Videocon Industries has chalked out a plan to mop up Rs
were not eligible for spectrum beyond 6.2 MHz. TDSAT also      200 crore through a preferential issue. The company’s
flayed the Telecom Regulatory Authority of India (TRAI) for    has approved the issue of 1,17,65,000 crore warrants to
mooting subscriber-linked criteria for allocating additional   Bennett, Coleman & Company (BCCL), which would be
spectrum, which it claimed was not transparent.                converted into equal number of equity shares, at a price
NMDC identifies potential partners for new                     of Rs 170 a piece.
coal blocks                                                    Upon conversion, BCCL’s holding in Videocon would
National Mineral Development Corporation (NMDC) has            rise to 6.13%. As on December 31, 2008 the former held
identified four prospective partners for developing new        1.01% in Videocon, as per BSE data.

May e m
D e c2009 b e r                                                                                                       8
         Corporate News                                                     Magnum
Shareholders, creditors approve RIL-RPL                          airline has now sought a second extension of 10 days to
merger                                                           settle the dues.
The Mukesh Ambani-led Reliance Industries (RIL) has              The airline owes around Rs 1,000 crore to oil marketing
announced that the shareholders and the creditors of the         companies like Hindustan Petroleum Corp (HPCL) and
company have approved the Scheme of Amalgamation of              Bharat Petroleum Corp (BPCL) along with IOC. It has to
Reliance Petroleum (RPL) with RIL.                               settle dues amounting Rs 90 crore to IOC.
Equity shareholders and secured and unsecured creditors          L&T expects a 25-35% growth in order inflows
of RIL took part in the meeting held on Saturday, April 4,       for FY 2009-10
2009 and voted on the proposal. As per the media release         Larsen & Toubro (L&T) has come up with a strong order
by the company, 98.86% of the shareholders present in            inflow outlook for 2009-10. The company recorded a
person/proxies, representing 99.9998% of the total value         healthy growth in order inflows during the fiscal 2008-
of the equity shares held by them, voted in favour of the        09 and has bagged a number of prestigious orders, both
Scheme of Amalgamation.                                          domestic and international, from diverse sectors totalling
Govt to finance Tata Motors’ Myanmar foray                       approximately Rs 52,000 crore as compared to Rs 42,000
The government, which had signed an agreement with               crore in the previous year.
Myanmar offering the neighbouring country a $20 million          Wockhardt will finally sell minority stake in
line of credit, will finance Tata Motors’ plan of setting up a   Wockhardt Hospitals
facility to assemble Tata Heavy Trucks in that country.
                                                                 The Wockhardt Group has finally decided to sell its
The auto major is in the process of garnering a proper           minority stake in Wockhardt Hospitals, the hospital chain
understanding of the project scope. The proposed plant           of the group, to reduce its debt burden of around Rs 3,700
will have an initial capacity of 1,500 trucks per year, with a   crore.
provision for increasing the capacity as demand picks up.
                                                                 SBI to provide Rs 10,000 crore loan to
Govt appoints former AAI chief Ramalingam                        Vodafone-Essar for 3G services
as Maytas Infra chairman                                         State Bank of India (SBI) has decided to provide a loan
The ministry of corporate affairs, on April 9, announced the     of Rs 10,000 crore to Vodafone-Essar for financing the
appointment of K Ramalingam as the chairman of Maytas            company’s foray into third generation (3G) telecom
Infra, the company owned by the family of B Ramalinga            services, expansion of its broadband operations and
Raju – the founder of the fraud-ridden Satyam Computer           various other business purposes.
Services. Ramalingam is the former chief of the Airports
Authority of India (AAI).                                        It will be a five-year loan carrying an interest rate of
                                                                 13.25% for the first 2 years. Subsequently, the rate will be
The Centre has also appointed Anil K Agarwal on the              re-adjusted on the basis of the average prime lending rate
board of Maytas Infra.                                           of four public sector banks.
Last month the Company Law Board had appointed noted             Tech Mahindra completes the fund raising
tax lawyer O P Vaish and past president of Institute of          process for Satyam acquisition
Chartered Accountants of India Ved Jain on the board of
Maytas Infra.                                                    The new owner of scandal hit IT Company Satyam,
                                                                 Venturbay Consultants, a subsidiary of Tech Mahindra
Infosys Technologies reports 28.5% rise in                       has informed that it has deposited Rs 2,910 crore in the
consolidated profit                                              escrow account.
IT services major Infosys Technologies, in its consolidated      Venturbay is set to acquire total 51% stake in Satyam. It
results for the year ended March 31, 2009, has posted            has raised the funds through non convertible debentures,
a net profit after tax & minority interest rise of 28.52%        commercial papers and borrowing from non-banking
to Rs 5,988 crore for the year ended March 31, 2009 as           financial companies as well as partial funding from a special
compared to Rs 4,659 crore in previous fiscal.                   purpose vehicle and Rs 700 crore is raised internally.
Total income of the group has increased by 27.42% to Rs          Tech Mahindra had agreed to buy Satyam for Rs 58 per
22,166 crore from Rs 17,396 crore in the previous year.          share on April 13, 2009.
Infosys Technologies has also given a guidance for fiscal        GAIL among the 12 shortlisted for Nigeria
2010, the revenues of the company is expected to grow            gas field
by 1.7% to 5.7%; to decline by 6.7% to 3.1% in US dollar
terms.                                                           GAIL India has been shortlisted as prospective investors
                                                                 in Nigeria’s vast gas field. Besides GAIL, 11 foreign
Kingfisher again misses deadline to payback                      companies have also been short listed.
dues to IOC; seeks 10 days extension
                                                                 The list of potential investors includes Russia’s Gazprom
Kingfisher Airlines has missed deadlines of March 31             Oil and Gas, Germany’s E.ON Ruhrgas AG, UK based BG
and April 10 to payback the dues to state-run Indian Oil         Group and Centrica Energy, Spain’s Gas Natural SDG SA
Corporation (IOC) for jet fuel supplied by the refiner. The      and Union Fenosa and GAIL India.

May e m
D e c2009 b e r                                                                                                          9
               Market Snapshot                                                                                                                                                                                           Magnum
Indian equities markets ended on a positive note for the                                                                                                                                                       Domestic markets also took negative connotations amid
second consecutive month on the back of on the back                                                                                                                                                            rising uncertainties and gauged inflation figures adversely
of supportive global cues and continued buying interest                                                                                                                                                        as heavy selling was witnessed in metal, realty, capital
shown by foreign institutional investors. This sudden ar-                                                                                                                                                      goods and power counters. Selling pressure was evident
rival of foreign funds was perhaps a key reason for the                                                                                                                                                        from dumping shares in hurry as the benchmark indices
strong rally witnessed by the local markets in the month.                                                                                                                                                      along with midcaps and smallcaps counters have taken a
One thing evident was that there has been a considerable                                                                                                                                                       backseat and tweaked in tandem.
decrease of risk aversion, which was seen since last year.                                                                                                                                                     The 30-share Bombay Stock Exchange’s (BSE) Sensex
A fair amount of risk taking appetite was observed across                                                                                                                                                      gained 1,694.75 points or 17.46% to 11,403.25, while
all sections of investors.                                                                                                                                                                                     the broader S&P CNX Nifty added 453 points or 15% to
Indian markets also took heart as the world leaders reaching                                                                                                                                                   3473.95 in the month of April 2009.
a $1.1-trillion deal to embark upon the global economic crisis                                                                                                                                                 Similarly, the BSE Mid-cap index surged 557.63 points or
at the G-20 summit added to optimism that the worst might                                                                                                                                                      18.86% to 3,513.86 and the BSE Small-cap index rose
be over for the world economy. Stock specific action was ob-                                                                                                                                                   694.27 points or 21.38% to 3,940.90.
served in the markets on account of announcement of profit
numbers for the quarter and year ended March 2009.                                                                                                                                                             All sectoral indices on the BSE ended on a positive note in
                                                                                                                                                                                                               the month. Realty up 36.49%, Bankex up 26.59%, Capital
Though the benchmarks finally finished the month with                                                                                                                                                          Goods (CG) up 22.31%, Metal up 18.82% and TECk up
positive gains, volatility did exist in the markets as inves-                                                                                                                                                  17.12% were the main gainers.
tors were seen booking profits after a rally in the past
couple of weeks. Interestingly, there has been a sort of                                                                                                                                                       Top gainers on the Sensex during the during the period be-
disconnect between the rally in the equities markets seen                                                                                                                                                      tween March 31, 2009 and April 29, 2009 were Jaiprakash
since past eight weeks and the continuing barrage of pes-                                                                                                                                                      Associates 76.82%, ICICI Bank up 41.37%, Tata Motors
simistic economic forecasts. Stock markets across the                                                                                                                                                          up 40.66%, DLF up 39.47% and Rel Infra up 38.36%.
globe have seen an upmove, while the economic data                                                                                                                                                             Jaiprakash Associates has announced its result for the
shows that most economies continue to contract. Retail                                                                                                                                                         quarter and year ended March 31, 2009. The unaudited
investors were seen cautious before making moves as                                                                                                                                                            result for the quarter shows a net profit surge of 83% to
they were aware that a sudden plunge in markets could                                                                                                                                                          Rs 385.32 crore against Rs 210.41 crore on Year on Year
be seen if the outcome of the general elections turns out                                                                                                                                                      (YoY) basis. The total income stood at Rs 2,194.57 crore
to be something unexpected.                                                                                                                                                                                    against Rs 1,345.28 crore showing a jump of 63% on YoY
Sensing a great opportunity from strong global cues, trad-                                                                                                                                                     basis.
ing on the local bourses have extended their gains fur-                                                                                                                                                        ICICI Bank responded positively to the Reserve Bank of
ther and substantiated by heavy buying in interest rate                                                                                                                                                        India’s (RBI) measure of reducing the benchmark repo and
sensitive sectors like realty and banking in the mid of the                                                                                                                                                    reverse repo rates by 25 basis points (bps). The bank has
month.                                                                                                                                                                                                         slashed its prime lending rate (PLR) by 50 bps to 16.25%
            Sensex movement during April 2009                                                                                                                                                                  effective April 22, 2009 and has also decided to reduce the
12000                                                                                                                                                                                                          deposit rates across various maturities by 25 to 50 bps,
11500                                                                                                                                                                                                          which will be applicable from April 24, 2009.
11000                                                                                                                                                                                                          On the other hand, Hindustan Unilever, down 2.03%, was
10500                                                                                                                                                                                                          the sole loser on the Sensex during the said period.
                                                                                                                                                                                                               For the third time with in two months, state-run oil market-
 9500                                                                                                                                                                                                          ing companies (OMCs) on Wednesday raised prices of jet
 9000                                                                                                                                                                                                          fuel, or ATF, this time by about 6.7%, in line with rising

                                                                                                                                                                                                               international rates.
                                                                                                                                                                                                               Indian Oil Corporation, Bharat Petroleum and Hindustan
                                                                                                                                                                                                               Petroleum hiked ATF prices by 10% on April 1 after a mar-
                                                                                                                                                                                                               ginal Rs 158 per kl increase two weeks earlier. ATF in Del-
 Stocks in limelight on BSE Mid-cap index in April
                                                                                                                                                                                                               hi will now cost Rs 31,926 per kilo litre (kl) from April 16, as
                                                                                                                                                   Change (%)                                                  against Rs 29,925.97 per kl earlier. In Mumbai, ATF rates
 Jai Corp                                                                                                                                                         115.99                                       rose to Rs 32,855 per kl from Rs 30,784.81 per kl.
 Anant Raj Inds                                                                                                                                                  105.98                                        The earnings and growth of the pharmaceutical sector is
 BF Utilities                                                                                                                                                         93.18                                    likely to take a hit in the last quarter of the just-concluded
                                                                                                                                                                                                               fiscal, as compared to the previous three quarters and is
 HDIL                                                                                                                                                                 87.24
                                                                                                                                                                                                               expected to be an underperformer during the fourth quar-
 Puravankara Projects                                                                                                                                                 74.38                                    ter of FY09.

May e m
D e c2009 b e r                                                                                                                                                                                                                                                          10
          Market Snapshot                                                 Magnum
After the Reserve Bank of India (RBI) gave permission to       However, the good news was immediately followed by
domestic companies to buy back foreign currency con-           more bad news, raising serious doubts about any chances
vertible bonds (FCCBs) in December 2008, a dozen com-          of an early recover.
panies reacted in hurry to redeem such bonds worth $340        Adding to the woes of the policymakers, the country’s In-
million at deep discounts to the conversion price in the       dex of Industrial Production (IIP) has again slipped in the
melted markets, giving them a room for windfall gains.         negative zone to touch -1.2% vs 9.5% on a year-on-year
On one hand, buying back FCCBs companies pay off a             (Y-o-Y) basis. February consumer durable goods also
loan at a discount, on the other hand they also earn a         witnessed a negative growth at 3% as against 11.7% on
substantial windfall gain. To top it up, the deferment of      Y-o-Y basis. The capital goods index, however, showed
AS11 mandate has relieved them from carrying the mark-         signs of strength posting a growth of 10.40% vs 10.70%
to-market (MTM) losses for the redeemed FCCBs.                 on Y-o-Y basis, which is looking sustainable as the indus-
Buying back FCCBs helps the domestic companies bring-          try has a robust order book.
ing down the liabilities on the company’s books as well        India’s banking regulator Reserve Bank of India (RBI) has
as MTM losses provided for against the FCCBs. Hence,           lowered its growth forecast for the current fiscal to 5.7%,
companies redeeming FCCBs are likely to gain from the          down from 6% forecast of expansion that the bank had
practice and it will help them posting better results in the   made three months ago.
fourth quarter of the fiscal.                                  The RBI announced annual review of its monetary policy
As mentioned earlier, key reason of markets moving up          on April 21, 2009. The review came in back drop of sharp
at surprising speed in the month is that foreign institu-      slowdown in economic activity in India, in line with the
tional investors (FIIs) have been coming back in droves.       global economy suffering from severe slowdown.
The month saw of April saw a strong buying activity from       The bank cut the repo and reverse repo rates by 25 basis
FIIs, wherein the gross purchase of equities stood at Rs       points (bps) each, primarily as a means to give signal to
38,871.55 crore against gross sales Rs 33,311.43 crore.        the markets that the apex bank will continue the aggres-
As a result the FIIs emerged as net buyers of equities         sive stance it has taken since September last year to pro-
worth Rs 5,560.12 crore in the month.                          tect growth and stimulating the slowing Indian economy.
The world economy showed some mixed signals over last          New repo and reverse repo rates will be 4.75% and 3.25%
one month. There were good developments in US and              respectively. The bank however left the cash reserve ratio
China, suggesting the economy may be bottoming-out.            (CRR) unchanged at 5%.

                          Close as on March 31 Close as on April 29      Change (points)          Change (%)
 Sensex                   9,708.50                 11,403.25             1,694.75                 17.46
 Nifty                    3020.95                  3473.95               453.00                   15.00
 Mid-cap                  2,956.23                 3,513.86              557.63                   18.86
 Small-cap                3,246.63                 3,940.90              694.27                   21.38

Indices                   Close as on March 31 Close as on April 29      Change (points)          Change (%)
FMCG                      2,036.24                 2,095.00              58.76                    2.89
CD                        1,625.45                 1,757.58              132.13                   8.13
HC                        2,830.11                 3,067.98              237.87                   8.40
PSU                       5,230.17                 5,863.56              633.39                   12.11
Auto                      3,061.67                 3,498.24              436.57                   14.26
Power                     1,847.10                 2,112.76              265.66                   14.38
Oil & Gas                 7,053.04                 8,132.62              1,079.58                 15.31
IT                        2,285.68                 2,663.35              377.67                   16.52
TECk                      1,846.83                 2,163.00              316.17                   17.12
Metal                     5,795.07                 6,885.81              1,090.74                 18.82
CG                        6,466.03                 7,908.75              1,442.72                 22.31
Bankex                    4,490.97                 5,685.22              1,194.25                 26.59
Realty                    1,560.83                 2,130.41              569.58                   36.49

May e m
D e c2009 b e r                                                                                                      11
         Quick Review of Economy                                                         Magnum
Monetary Policy                                                  the CRR unchanged at 5%. The bank rate was also left
                                                                 unchanged at 6%.
India’s central bank Reserve Bank of India (RBI) announced
the annual review of its monetary policy on April 21. The                                                                  Repo Rate since 2001
review came in the backdrop of a sharp slowdown in                     10
economic activity in India, in line with the global economy             8
suffering from a severe slowdown. The Indian economy                    7

has slowed down to a six-year low with the quarterly                    5
expansion coming down to 5.3% for three months ending                   3
December 2008. In this wake, RBI was under a lot of                     2
pressure to take some further stimulus measures in its                  0












annual review, even if these come as a token of general
stance. Before reviewing the monetary policy, it will be
good to recall the conduct of monetary policy by the RBI
since September 2008, when the US sub-prime problem
officially turned into a global financial crisis impacting the
                                                                                                        Reverse Repo Rate since 2001
world as well as the Indian economy.
The fall of Lehmann Brothers resulted in freezing of global            7
financial markets in the month of September last year.                 5
While Indian banks were not affected by the problem of
toxic assets, the global deleveraging and resulting outflow            3
of capital and frozen international markets resulted in                1
acute cash crunch in Indian markets, too, forcing the RBI              0









to loosen its monetary policy.




Since September till the eve of annual review, the RBI had
already cut the repo, the rate at which it infuses the short-
term liquidity into markets and reverse repo, the rate at        The special repo facility that the RBI introduced in
which it absorbs the excess liquidity from markets, by 400       September last year to provide financing to banks for
and 250 basis points (bps) respectively. The bank had also       meeting monetary needs of mutual funds arising out of
cut the cash reserve ratio (CRR) by 400 basis points from        excessive redemption pressure has been extended to
9% of net demand and time liabilities (NDTL) of banks            March 31, 2010. The bank will conduct this repo on a
to 5%. Together with CRR cut, increase in export credit          weekly basis.
refinance, special refinance Facility for banks and NBFCs
etc, RBI had infused a total liquidity of Rs. 4,22,793 crore.    The apex bank also extended a special refinance facility
As such, at the time release of monetary policy annual           that was introduced on November 1, 2008 to provide
review the bank had already taken significant measures to        funding to scheduled commercial banks up to 1% net
keep the liquidity situation comfortable.                        demand and time liabilities (NDTL) as on October 24,
                                                                 2008, to March 31, 2010.
Annual Review for 2009-10
                                                                 The RBI has also extended the relaxation on all-in-cost
The main thrust of the RBI’s policy was to ensure a policy       ceilings for external commercial borrowings (ECB) up to
regime that will enable credit expansion while preserving        December 31, 2009.
credit quality so as to support the return of the economy
                                                                 In view of the ongoing current global turmoil in the financial
to a high growth path as well as preserve the price and
                                                                 markets, the RBI has decided to continue, for the time
financial stability of the system in wake of challenges
                                                                 being, with the current policy and procedures governing
being posed by the global financial crisis and its impact on
                                                                 the presence of foreign banks in India. As per the ‘roadmap
the Indian economy. As such, the following are the main
                                                                 for presence of foreign banks in India’ which the apex bank
features of the annual review announced by the RBI on
                                                                 has been following since beginning of FY065, the RBI was
April 21.
                                                                 expected to review and expand the presence of foreign
Major Policy Measures: The RBI cut the repo and                  banks by allowing them to own controlling stakes in private
reverse repo rates by 25 bps each, primarily as a means to       Indian banks and enter into merger and acquisition with
give a signal to the markets that the apex bank will continue    the latter. However, the review has been proposed and will
the aggressive stance it has taken since September last          be taken up after due consultation with all stakeholders
year to protect growth and stimulating the slowing the           once there is greater clarity regarding the stability of the
Indian economy. New repo and reverse repo rates stand            global financial system and a shared understanding on the
at 4.75% and 3.25% respectively. The bank, however, left         regulatory and supervisory architecture around the world.

May e m
D e c2009 b e r                                                                                                                                                                                                                                                                       12
         Quick Review of Economy                                           Magnum
Monetary Projections: The RBI strongly mentioned                half of FY10.
its commitment to keep ample liquidity in the system in         Union Finance: RBI expects the consolidated fiscal
order the help the cause of growth. The bank observed           deficit of centre and state governments to reach the 9%
that the liquidity overhang emanating from the surge in         mark, out of which 3% may be the contribution of states
capital inflows witnessed during FY08 had substantially         while the fiscal deficit of the Centre is expected around
moderated in FY09. Further, the upside risks to inflation       6%. After including the off-budget and special securities
had declined substantially. As such, the bank placed            issued by the central government outside the market
money supply (M3) growth target for FY10 at 17.0%.              borrowing programme, the total fiscal deficit may reach
Growth in non-food credit consistent with the monetary          about 10.8% of GDP.
expansion has been targeted at 20%. The bank also
projected the deposits of scheduled commercial banks to         Assessment
witness growth of 18% over FY10.                                Overall the credit policy was much in line with the market
Growth Projection: Regarding the growth prospects               expectations. While the RBI avoided big ticket changes in
of the Indian economy, the RBI observed that the fiscal         policy stance in order to keep greater space with itself to
and monetary stimulus measures initiated during 2008-           manoeuvre the monetary policy once full budget for FY10
09, coupled with lower commodity prices, could cushion          was out after the elections, it nevertheless did provided
the downturn in the growth momentum during 2009-10              the signal markets were looking for through the 25 bps cut
by stabilising domestic economic activity to some extent.       in both the policy rates.
Nevertheless, it also added that any upturn in the growth       Further, RBI avoided placing any cap on deposits by
momentum was unlikely in view of the projected contraction      commercial banks through the reverse repo window,
in global demand during 2009.                                   a measure that was in talks among many quarters as
The bank in this wake placed its projection of GDP growth       means to check the yield on government securities. Such
at 6% for the current fiscal. It may be mentioned that the      a measure could have proved overly distortionary and
median forecast in the survey of professional forecasts         therefore it was probably in best interest that the RBI did
conducted by the RBI stood at 5.7% with respect to growth       not consider it.
in FY10.                                                        Another important detail in the policy was regarding the
Government borrowing programme: RBI said in the                 market borrowing programme of the government. The
annual policy review that one of the major challenges facing    policy clearly specified that out of the total government
it was managing government borrowing. It mentioned that         borrowings in the first half of current fiscal, Rs 205,000
total borrowing need of the government during first half of     crore and Rs 120,000 crore was going to be through Open
FY10 was currently placed at Rs 2,07,364 crore.                 Market Operation (OMO) and Market Stabilisation Scheme
                                                                (MSS) respectively, which leaves just Rs 85,000 crore
However, the bank also signalled that ultimate supply           to be raised incrementally through securities. While the
of new securities into the market will be much less than        announcement was aimed at calming the bond markets,
the borrowing figure and also what was being expected           it also reflected the commitment of RBI to keep the bond
by markets in recent months. The bank mentioned that            rates in check.
after adjusting for MSS (market stabilisation scheme)
unwinding and the Reserve Bank’s support by way of              Another important issue in the annual review is with
open market operations, net supply of fresh securities was      regard to targeted (RBI however calls these indicators and
expected to be of the order of Rs 85,364 crore. Although        not targets) monetary and credit expansions. The targets
the fresh supply of securities would be higher than the first   have been set at 17% and 20%, respectively, for growth
half of the last year, it would be of a much lower order as     in M3 and credit for FY10 against actual growth of 18.7%
compared with the first half of 2007-08.                        and 17.3% in FY09.

Inflation: With regard to inflation, the bank observed          Over past few years, there has been a wide deviation
that the headline inflation measured by wholesale price         between targeted rates and the actual growth rates.
index will remain negative during early part of the fiscal.     For instance, target for of money supply expansion was
However, RBI clearly said that the negative WPI inflation       at 14%, 15% and 17-17.5% for FY06, FY07 and FY08,
should not be interpreted as deflation and it had only          respectively. However, riding on the bullish economy, the
statistical significance, not to be reflected in demand         actual growth was above 20% in each of these years.
contraction in any way. RBI also observed that the sharp        Similarly, the growth for bank credit was anticipated around
decline in WPI inflation had not been commensurately            20% in FY06 and FY07, whereas actual growth in credit
matched by a similar decline in inflation expectations,         was around 30% in both the fiscals.
thus suggesting that RBI will have to continue to anchor        The target growth was revised upwards to 25% in FY09,
inflationary expectation in the, particularly in the second     bank credit grew merely 17%, suggesting the cautious

May e m
D e c2009 b e r                                                                                                        13
         Quick Review of Economy                                            Magnum
behaviour of banks in view of slowing global economy.             Reserve Bank of India (RBI) has said that slowdown was
As such, it appears that monetary expansion has been              deepening in the Indian economy as the main indicators of
overshooting or undershooting the RBI’s expectations              growth showed significant moderation in a report prepared
depending on direction of trade cycle movement. As such,          by the banking regulator. ‘Macroeconomic outlook of the
now that the economy is moving downwards, one may                 Indian Economy’, based on various business expectations
expect that the anticipated growth in money supply as well        surveys, continues to exhibit the persistence of less
as credit delivery may fall short of targets or indicators set    than normal sentiments’, said the bank in its quarterly
in the annual review.                                             Macroeconomic and Monetary Developments report.
Finally, the bank has kept the economic growth projections        The professional forecasters’ survey conducted by the
and money supply and credit growth targets within                 bank in December 2008 suggested further moderation
reasonable reach. The bank has substantially lowered              in economic activity in 2008-09. ‘As reported by the
its growth target from 7% in previous review to 6% in the
                                                                  respondents, the downside risks to growth seem to have
present one. This step indicates that the bank is keeping
                                                                  amplified due to the projected global economic recession,
its feet on the ground and will approach the growth in a
                                                                  deterioration in global financial markets and slowdown
realistic way, which is a positive indication as far as RBI’s
                                                                  in domestic demand. The knock-on impact of the global
efforts to push the growth are concerned.
                                                                  downturn is visible as the main drivers of the growth
On the whole we may observe that although the annual              process in the Indian economy have moderated during the
review might sound at some places a bit more bearish              third quarter of 2008-09’ said the bank.
than expected, it nevertheless clearly outlines the fact that
the bank will continue the aggressive stance to promote           The business expectations survey conducted by the
growth, a signal which the various players in economy             central bank showed that the optimism for the quarters
desperately wanted.                                               January-March 2009 and April-June 2009 based on major
                                                                  business sentiment indicators such as overall business
Impact                                                            situation, overall financial situation, production, order
 The major question facing the Indian economy at this             books, capacity utilisation, employment, exports, imports
stage is will and to what extent the policy rate cuts will        and profit margin significantly declined as compared to a
lead to decline in banks’ retail rates. In this respect, the 25   year ago.
bps rate cuts are not going to do much in terms of cutting        India’s growth trajectory has been hit hard by the ongoing
the cost of funding for banks. Nevertheless, the RBI has          economic slowdown and the capital outflows, sharp
by now cut the repo and reverse repo by 425 bps and
                                                                  decline in exports and worsening sentiments have started
275 bps respectively and some substantial correction in
                                                                  telling on the actual economic expansion. Quarterly growth
the retail rates is due. What the rate cuts in policy review
                                                                  slowed down to lowest in more than five years in the three
signify is that the RBI will uphold the aggressive policy
                                                                  months ending December 2008 and most economists
stance it has been following to help the cause of growth.
                                                                  see the growth going further down for at least two more
With regard top the retail rates being offered by commercial      quarters before recovering.
banks, most likely there will be a reduction going forward,
although this may not be immediate. Banks have been               India’s banking regulator Reserve Bank of India (RBI) said
parking a record daily average of Rs 1 lakh crore with            that there was more space with the monetary authority to
the central bank through the reverse repo window, which           further cut the policy rates even as it slashed key policy
fetch a return of 3.5% after the rate cut. While the decline      rates by 25 basis points (bps) in its annual review of
of 25 bps in this rate is not large enough, it does give a        monetary policy.
signal to banks that his channel may not remain profitable        RBI Governor Duvvuri Subbarao said in an interview that
in medium term and therefore may force them to enhance            there was more room for rate adjustments. “The room for
credit delivery in markets.                                       adjustment has come down but that should not be read as
The main reason why the rate cuts by the RBI have not             a signal that there is no scope for further rate adjustment,’
transformed into the proportionate reduction in retail rate       he said.
cuts by banks is that the financing costs of banks continue       However, he also added that this did not mean the RBI
to remain relatively high. The fact is that banks have got        will necessarily cut rates in the near term. Earlier the apex
locked into high cost medium-term deposits around the             bank cut its key lending rate for the sixth time in seven
time of Lehman crisis and the average cost of deposits            months on Tuesday and urged commercial banks to follow
would go down as and when these high cost deposits run
                                                                  suit to promote the growth in a slowing economy that has
off. This is a process which will take place slowly and as the
                                                                  taken a much bigger hit than was expected from the going
average cost of deposits comes down, there will certainly
                                                                  global downturn.
be more fall in prime lending rates (PLR) of banks

May e m
D e c2009 b e r                                                                                                           14
         Quick Review of Economy                                            Magnum
The RBI cut its repo rate, the rate at which it infuses          to October 31, 2009’. However the announcement may fall
short term liquidity into banks, to 4.75% from 5% and its        short of exporters expectations who have been asking for
reverse repo rate, at which it absorbs surplus cash from         credit at 7% without linking with the prime lending rate.
the banking system, to 3.25% from 3.50%.                         Majority of India’s export revenue comes from the US,
India’s monetary authority Reserve Bank of India (RBI) said      Europe and the Middle East and exporters have been hit
that short term prospects of growth of the Indian economy        by a fall in demand in all these countries. For the first time
were expected to be mixed as it had taken a more than            in five years, India’s exports fell by 12.1% in October 2008
anticipated hit from the ongoing global economic crisis.         and have been unable to recover since.
“India has sustained a greater than expected impact              The Reserve Bank of India has also announced to extend
from the global economic crisis and has ‘mixed’ growth           the concessional interest rate scheme for a further six
prospects for now,’ said D Subbarao, Governor of the             months giving respite to exporters hit by shrinking global
central bank. He also added that GDP growth was slowing          demand. The announcement came in wake of the deadline
down, reflecting deceleration in production, negative            as the upper limit of interest on pre-shipment rupee export
export growth, shrinking corporate margins and slowing           credit of up to 270 days and post-shipment credit of up to
credit delivery growth.                                          180 days at BPLR minus 2.5% was due to terminate in
Earlier the bank had lowered its projection of GDP growth        the next few days.
at 6% for the current fiscal, in its annual review of monetary   In a memo to scheduled commercial banks the RBI said,
policy announced on April 21. While the RBI strongly             ‘It has been decided to extend the validity of the scheme
mentioned its commitment to keep ample liquidity in the          to October 31, 2009’. However the announcement may fall
system in order the help the cause of growth, it accepted        short of exporters expectations who have been asking for
that there were signals of sharp slowdown in economy.            credit at 7% without linking with the prime lending rate.
The median forecast for growth in FY10 in the survey             Majority of India’s export revenue comes from the US,
of professional forecasts conducted by the RBI stood at          Europe and the Middle East and exporters have been hit
5.7%, lowest in six years.                                       by a fall in demand in all these countries. For the first time
Mounting non-performing assets (NPAs) of the banks               in five years, India’s exports fell by 12.1% in October 2008
have led them to restructure loans worth Rs 80,000 crore         and have been unable to recover since.
in the last fiscal.                                              these things have been taken from Monthly Eco Review
Tight liquidity conditions in the wake of the global financial   dated 20 April--
crisis has prompted the Reserve Bank to give regulatory          The outlook of the Indian economy continues to remain
concession on restructuring to provide a breather to the         uncertain. India is getting increasingly coupled with the
corporate India.                                                 global economic downturn, through both the real as well
Analysts believe that around 3% of the outstanding loans         as financial channels. However, the global scenario itself
(Rs 80,000 crore) are to be restructured in the forth            is uncertain and highly unpredictable at the moment. While
quarter of the last fiscal. It is believed that at over 3% of    some strength in expected in the near term to come from
the outstanding credit, the incidence of restructuring is        stimulus package being launched by the US government
expected to be higher for PSU banks, as against 2% for           as well as some other developed countries, there remains
private banks.                                                   doubts on how the governments will behave regarding
Inflation for the week ended April 18 stood up at 0.57%          foreign trade with some protectionism being already
from 0.26%. Manufacturing index was up 0.3% and fuel             visible.
index spiked up 0.1% (WoW), while primary articles index         Further, any meaningful recovery in Indian economy,
rose 1.7% (WoW).                                                 global economy will have to improve too. International
The Reserve Bank of India has also announced to extend           Monetary Fund has already said that the year 2009 would
the concessional interest rate scheme for a further six          be very difficult and recovery may be expected in 2010 if
months giving respite to exporters hit by shrinking global       the global leaders pursue a coherent set of stimulus related
demand. The announcement came in wake of the deadline            policies while at the same time avoiding the protectionist
as the upper limit of interest on pre-shipment rupee export      tendencies.
credit of up to 270 days and post-shipment credit of up to       Overall, we feel that outlook of Indian economy and the
180 days at BPLR minus 2.5% was due to terminate in              developing world in general has shown some improvement
the next few days.                                               over the last one month. However, it is too early to reach
In a memo to scheduled commercial banks the RBI said,            any conclusion and one will have to wait for at least couple
‘It has been decided to extend the validity of the scheme        of quarters for some robust results to be discovered.

May e m
D e c2009 b e r                                                                                                           15
         Economy News                                                     Magnum
RBI hints at regulating NBFC holding cos                        ARCs are mulling such a deal with the banks and the new
On instance of the report compiled by the tax authorities,      system should be in place in a couple of months. The new
it has been found that many of NBFCs have transferred           norm will automate the transfer of ownership and all the
surplus funds earned earlier to their holding companies,        rights associated with such transfer to ARCs. The change
which are currently regulated under the Companies Act,          will be reflected in books of RoCs automatically too.
in the form of loans or dividends, the Reserve Bank of          India seeks G-7 anti-money laundering
India (RBI) has decided in principle to bring under its ambit   membership
NBFC holding companies floated by business groups and           India has urged the G-7 nations for membership of the
companies.                                                      Financial Action Task Force (FATF), an inter-governmental
The move was prompted by the fact that the NBFCs had            body developing policies to combat money laundering and
been frequently complaining of an acute shortage of funds       terror financing.
despite receiving liquidity support from the government in      At the Paris summit of G-7 in 1989, FATF, having 34
consultation with RBI.                                          members today, was created for the purpose of developing
Govt defers AS 11 till FY 11                                    and promotion of national and international policies to
Conceding to the suggestions of the National Advisory           combat money laundering and terrorist financing.
Committee on Accounting Standard (NACAS), the                   Corporate India mops up $14 bn via debt
government has decided to defer the accounting standard         instruments in 2008-09
11 (AS-11) mandate deals with foreign exchange losses.          According to a latest data released from economic think
The government is expected to come up with a notification       tank Center for Monitoring Indian Economy (CMIE), India
that will give relief to India Inc on AS 11 stipulating to      Inc has raised nearly $14 billion via debt instruments
recognize foreign exchange losses in the profit and loss        from the domestic primary market, mostly non-convertible
accounts every year. AS 11 suggests for mark-to-market          debentures (NCDs) in the current fiscal 2008-09.
provisioning in profit and loss account for foreign exchange
                                                                Debt papers issuance in the domestic primary market rose
related gains and losses.
                                                                46.7% to $13.95 billion in the last fiscal, as compared to
S&P, Fin Min discuss outlook downgrade issue                    $9.51 billion in the previous fiscal.
Global rating agency Standard & Poor’s and officials            Civil aviation ministry asks carriers to cut
from the ministry of finance have held talks to discuss the     capacity
grounds for the rating agency downgrading India’s outlook
                                                                Domestic air carriers have been directed by the civil
from stable to negative.
                                                                aviation ministry not to compete unfairly with each other
Late last month, S&P had downgraded its outlook on India’s      and align schedules of their flights for better returns, as
long-term sovereign credit rating to negative from stable.      the domestic aviation industry is grappling with capacity
It claimed that worsening government finances could             woes and mounting losses.
increase the overseas borrowing costs for companies and
weaken the Indian rupee.                                        The civil aviation ministry has directed air-carriers to do
                                                                away with the excess capacity on both foreign and domestic
Govt directs cement cos to roll back price hike                 sectors and also reduce transit time to save on operational
Cement companies have come under the wrath of                   costs in the wake of losses incurred by different players in
government for charging higher prices despite asking            the industry including Indian Airlines and Jet Airways.
for stimulus package. The government has also warned
                                                                Highway developers now securitize toll
these companies it will not allow stimulus package to the
industry unless it reduces the price of the commodity.
                                                                projects to raise funds
                                                                As cash-starved highway developers are finding it difficult
Recently, cement companies increased the price by up to
                                                                to fund their ambitious plans, they have got a new lease of
Rs 7 per 50 kg bag. The department of industrial policy
                                                                life by keeping their completed toll road projects as security
and promotion (DIPP), in a strongly worded message told
                                                                with banks and financial institutions to raise money to fund
the Cement Manufacturers’ Association (CMA) that their
decision of price increase was uncalled for.                    new projects.
ARCs to benefit from new NPA transfer                           Many highway developers are resorting to securitize their
norms                                                           road projects developed under build-operate-transfer
                                                                (BOT) model in order to benefit the lender by the cash
Asset reconstruction companies (ARC) – companies
                                                                flow through toll collections.
that deal in buying non-performing assets (NPAs) from
banks and turning them into earning assets – may get an         Auto ancillary to shift production mix to
automated route through which the transfer of ownership         aerospace, defence sector
of distressed assets that these buy from banks will be          The Indian auto ancillary industry, facing idle capacity
recognized by registrar of companies (RoC).                     concerns in the wake of the worldwide economic slump, is

May e m
D e c2009 b e r                                                                                                          16
         Economy News                                                      Magnum
now lured by the opportunities in making products for the       ADB projects Asian equity markets recovery
emerging aerospace and defence sectors.                         in HY 09
Companies including Bharat Forge, Amtek Auto, Tata              According to the Asian Development Bank (ADB) report,
Automobile, Lumax Auto, Mahindra Systech, the JBM               Asian equity markets are likely to recover in the second
group and Sundram Fasteners, having more than half              half of 2009 on the back of aggressive central bank
of the total revenue generated by the auto component            policies including fiscal and monetary stimulus packages
industry, have now been shifting the production portfolio.      by various governments.
Iron ore exports surge by 17% in February                       Stimulus policies resorted by government is expected to
Buoyant demand from China has led India’s iron ore              strengthen the current rally and contribute to better equity
exports rising by 17% in the month of February. Total iron      performance in the second half of the calendar year. Citing
ore exports of India touched 12.6 million tonne in February     the rally witnessed in recent weeks, the report says the
2009 compared with 10.8 million tonne in the same month         rally is mainly due to rising hopes of an early revival for
last year.                                                      the global economy.
Major reason for the increase has been revival of demand        RBI introduces Basel-1 norms for RRBs
from Chinese steel producers. Chinese government’s              RBI, in a move to bring regional rural banks (RRBs) at
massive stimulus package has boosted the demand of              par with international conformity of Basel-I framework, has
steel in China resulting in higher demand for Indian iron       announced introducing capital to risk-weighted assets ratio
ore too.                                                        norms (CRAR) for RRBs, after consultation with National
Govt sets up committee for revival of jute                      Bank for Agriculture and Rural Development (NABARD).
industry                                                        The move has come in the wake of recommendation
Concerned over the prospects of the ailing jute industry, the   made by Rakesh Mohan Committee for Financial Sector
government has set up a high-level committee comprising         Assessment (CFSA). Unlike commercial banks which are
members from finance and labour ministries, labour unions       exposed to systematic risks in the economy, RRBs are
and the The Indian Jute Mills Association (IJMA).               relatively distant from such risks given their small size
The newly established committee is expected to examine          of operation. However, the CFSA report has emphasize
issues related with costing, statutory obligations and          woes over their asset quality and their sub standard debt
agreement, and training in the jute industry, under three       recovery mechanism.
different sub-committees.                                       Disbursal under stimulus package worth Rs
RBI pegs GDP forecast for FY10 at 6%                            9K cr to MSMEs sector
The Reserve Bank of India (RBI) has cut the repo and            Banks have sanctioned nearly Rs 8,500-9,000 crore to
reverse repo rate by 25 basis points each. The repo rate        micro, small and medium enterprises (MSMEs) in the last
has been cut to 4.75 % from the existing 5 % while the          few months as a part of the stimulus packages announced
reverse repo has been cut to 3.25 % from the existing           by the government. The MSME sector contributes nearly
3.5%, on the same time the CRR rate has been left               45% to the country’s total industrial production.
untouched at 5%.                                                On recommendation of SIDBI, banks are expected to
Though the rate cuts were more or less on the lines of the      double the amount released to the MSME sector. The
market expectations, the most striking points that came         government had announced various stimulus packages
from the policy is that the apex bank has pegged the GDP        to the industry, mainly to the export units, MSMEs and
forecast for the FY10 at about 6%.                              commercial vehicles to combat the impacts of the global
RBI to extend greater credit to exporters                       economic slowdown.
The Reserve Bank of India announced on Tuesday that             Core sector posts highest growth in March
it would extend the concessional interest rate scheme           since Sept.
for a further six months giving respite to exporters hit by     India has witnessed production growth in the six core
shrinking global demand. The announcement came in               infrastructure industries during the month of March at
wake of the deadline as the upper limit of interest on pre-     2.9%, which is the highest since September last year. The
shipment rupee export credit of up to 270 days and post-        March figures indicate some amount of recovery in the
shipment credit of up to 180 days at BPLR minus 2.5%            Indian economy.
was due to terminate in the next few days.                      The figures of March are expected to cushion the fall in
In a memo to scheduled commercial banks the RBI said,           Index of Industrial Production (IIP), as it constitutes 27%
‘It has been decided to extend the validity of the scheme       of the index. IIP shrank by 1.2% in February 2009, the
to October 31, 2009’. However the announcement may fall         most in the last two decades. During the period of April-
short of exporters expectations who have been asking for        March 2008-09, the sector witnessed a growth of 2.7%, as
credit at 7% without linking with the prime lending rate.       against 5.9% in the year-ago period.

May e m
D e c2009 b e r                                                                                                        17
          Scorecard : Cement                                                                           Magnum
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.)
ACC                    200812       12     1876.80     10      46.21 262.55        26.71     74741.53         6.66     27.05 12127.84        -15.70       200      80.29

Ambuja Cement          200812       12     3045.20       2     46.46    37.23      27.17     62817.10       10.11      31.10 14022.70        -20.74       110      10.92

Andhra Cements         200903       18     1258.53     10      72.99     0.95         ----    3711.20      -16.14      16.39     630.10      -14.81        ----     4.84

Anjani Portland        200803       12      183.90     10      61.44    23.03      45.54      1030.68       15.90      31.76      163.11      30.47        15      10.57

Barak Valley           200803       12      221.60     10      60.49    32.91      18.47        703.14         ----    28.57      110.03         ----      20       7.08

Binani Cement          200903       12     2031.01     10      64.91    20.56      48.92     14973.20       53.00      20.46    1086.60      -38.19        25       9.30

Binani Inds            200903       12      295.96     10      51.28    54.59       9.42        470.60         ----    60.75      211.10      41.39        30       7.24

Birla Corp             200803       12      770.05     10      62.90 129.41        47.61     17247.80       10.08      35.58    3935.70       20.64        40      56.49

Burnpur Cement         200803       12      430.04     10      47.29    12.70       4.07        270.34         ----    16.38       14.18         ----      ----     0.49

Chettinad Cement       200803       12      295.00     10      85.03 133.05        49.95      9301.80       28.25      37.30    1637.70       42.77       100      83.13

Dalmia Cement          200803       12      161.69       2     56.19 132.94        39.68     14806.70       50.10      42.78    3471.50       51.64       200      53.56

Deccan Cements         200803       12       70.04     10      54.63 198.22        41.33      2092.15       21.85      38.00     479.66       68.75        30      76.78

Everest Industries     200803       12      148.00     10      50.09    95.50      10.38      2851.40        -6.13     11.35     143.20       22.81        40      16.19

Heidelberg Cem.(I) 200812           12     1580.10     10      68.55    20.53      35.43      8044.99       35.31      16.54    1255.26       28.54        ----     6.48

Hyderabad Inds.        200803       12       74.63     10      42.19 195.08         9.99      4827.10         9.78      8.36     140.80      -18.38        50      33.77

India Cements          200803       12     2818.67     10      28.02    91.26      32.48     35544.70       73.41      31.81    6856.80       52.54        20      28.81

J K Cement             200803       12      699.27     10      63.80 108.72        41.63     14583.00       18.24      29.05    2652.00       48.49        50      43.80

JK Lakshmi Cem.        200803       12      611.80     10      45.66 103.74        43.70     11076.60       31.27      30.42    2236.70       25.58        25      46.13

Kakatiya Cem. Sugar 200903          12       77.74     10      48.32 135.30        17.28      1702.93         3.51     23.07     213.12       36.35        24      37.86

Katwa Udyog            200803       12       51.24     10      58.81    12.08      15.47        157.56      91.03      15.19        9.59    161.31         10       2.73

KCP                    200803       12      128.92     10      46.26 147.28        40.01      4035.60       37.12      27.53     635.30       31.56       100      55.67

Mangalam Cement        200903       12      282.47     10      27.07    76.72      63.27      5661.36       11.03      28.62     971.64      -14.43        50      43.32

NCL Industries         200803       12      325.04     10      43.26    30.48      34.42      1927.30       20.28      36.35     295.69       10.21        25      11.98

OCL India              200803       12      113.80       2     69.77    97.20      25.32      8928.20       10.46      24.62    1138.00       58.58       125      24.62

Prism Cement           200903         9    2982.50     10      61.74    22.18      15.04      6298.60          ----    28.55     962.30          ----      15       4.04

Rain Commodities       200812         9     321.10     10      42.89    99.86      12.32     11121.60      140.70      17.29     850.60       -0.56        28      15.18

Ramco Inds.            200803       12       43.33     10      50.54 567.57        10.82      3444.30       17.51      24.57     254.80        4.77       150     123.88

Sagar Cement           200803       12      133.37     10      44.16    78.55      34.91      2231.43       98.35      25.81     309.56       11.89        25      23.39

Sanghi Industries      200803       12     2199.80     10      51.01    26.92      19.77      8465.10          ----    33.95    1063.90          ----      ----     8.49

Saurashtra Cement      200812       18      511.91     10      64.42     0.10         ----    7286.51          ----     7.56     -481.53         ----      ----    -4.17

Shree Cement           200803       12      348.37     10      65.41 193.13        46.19     21091.18       54.18      44.36    2992.56       69.07        80     223.33

Shree Digvijay Cem 200803           12     1413.74     10      73.63     2.04         ----    2540.80        -0.46     -2.62     -140.20 -126.24           ----    -0.54
Ultratech Cement       200903       12     1244.90     10      54.78 216.58        45.18     64369.60       16.85      28.12    9770.20       -3.04        50     104.43

Vinay Cements          200803       12      189.00     10       0.00    39.97       5.03        406.98     -16.77      17.07       29.42     -71.19        ----      ----

Visaka Inds.           200803       12      158.81     10      37.70 100.28         4.87      4331.31       14.22      10.29       76.73     -67.67        30      14.69

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.

May e m
D e c2009 b e r                                                                                                                                                     18
             Scorecard : Cement                                                                          Magnum
                                Latest Quarter                                         TTM                                           Market Data
  EPS          Sales       Sales OPM                            NP                     EPS         NP          Price                                         Mkt. Cap
                                                   % NP                    Ended                                           H52W        L52W        PE
  Rs.         Rs. Mn.     Var (%) Rs. Mn.                      Var(%)                  Rs.       Var (%)      29/04/09                                       (Rs. Mn.)
   64.62      20817.00      15.92       33.54      4047.64       13.21     200903      67.13       -14.04      653.00       783.00     369.00       9.73      122555.04

    9.21      18626.60      12.56       30.37      3340.50        2.41     200903        9.26        -6.70       80.75      115.25      43.00       8.72      122949.95

    4.75       1112.20      35.53       13.18       142.00      -17.97     200903        4.76        -5.51       18.75       32.86      11.50       3.94         2359.75

    8.87        299.20      29.65       25.29        35.45      -30.57     200812        9.55        -0.51       26.40       37.75      15.00       2.76          485.49

    4.97        195.72        7.28      24.40        19.80       16.13     200812        4.83      100.00        17.86       42.10      10.00       3.70          395.78

    5.35       4980.80      48.24       19.37       200.70      -68.70     200903        5.35      -99.34        37.10       82.00      24.95       6.93         7535.06

    7.13         56.60         ----     48.41         11.20    -131.11     200903        7.13       29.28        46.90      146.90      25.80       6.58         1388.07

   51.11       4562.40        5.40      26.51       813.80      -23.52     200812      41.49       -27.78      199.75       227.00      71.00       4.81       15381.81

    0.33         35.93         ----        ----       -7.17         ----   200812        0.00          ----      10.26       23.70        7.15        ----        441.22

   55.51       2596.70        9.27       8.65       163.90      -60.46     200812      44.24       -18.19      479.95       525.00     360.15      10.85       14158.53

   42.89       4099.40      12.83       23.75       237.10      -78.93     200812      22.78       -83.86        88.60      305.00      67.20       3.89         7162.87

   68.49        538.27        9.16      29.95        91.56      -19.82     200812      56.46       -13.83      167.00       292.00     109.25       2.96         1169.63

    9.68       1281.60      85.63        9.85        -34.10    -149.14     200812        1.64     -587.60        64.65      124.50      43.50      39.54          956.82

    5.54       3205.59     135.70       14.98       543.53     192.42      200812        5.54       22.20        25.00       39.75      11.01       4.51         3950.25

   18.87       1300.20      16.52       12.68        66.00     -447.37     200812      52.80        65.74      180.60       207.90      89.00       3.42         1347.75

   24.28       8776.60        2.71      22.12       619.10      -51.27     200812      17.38       -37.08       115.05      178.10      68.50       6.62       32428.84

   37.93       3633.51       -6.81      19.47       286.72      -64.25     200812      20.36       -87.40        58.95      159.00      34.80       2.90         4122.21

   36.56       2977.30        5.45      26.39       560.40       -8.28     200812      30.93       -39.45        62.00      120.50      30.25       2.00         3793.13

   27.41        422.32     -21.21       27.37        70.30       -7.67     200903      27.43        26.79        77.65      108.00      46.10       2.83          603.64

    1.87         39.53        5.22      40.93          0.54     -41.94     200812        0.00          ----      11.01       24.80        8.21        ----          56.42

   49.28        795.80     -24.97       35.57       148.30      -23.20     200812      39.71       -40.87      181.30       485.40     111.25       4.57         2337.34

   34.66       1696.28      35.90       33.70       385.74       13.07     200903      34.66       -16.86        79.50      141.95      38.15       2.29         2245.61

    8.74        825.60      62.99       27.70        87.18       35.08     200812        9.45       27.06        30.50       51.00      19.00       3.23          991.37

   20.00       3099.90      36.95       23.59       322.00        4.61     200812      21.90        18.35        69.75      145.00      33.00       3.18         3968.78

    3.23        252.30     -88.97          ----    -107.90     -116.77     200903        3.23     -155.33        26.90       43.90      13.50       8.34         8022.93

   12.01       2666.80      38.45       24.18       331.20        8.77     200903      12.39       -65.85        91.00      255.00      52.25       7.35         2922.01

   58.80        824.40        6.69      22.27        29.90      -18.75     200812      74.82        16.29      464.15       883.00     326.00       6.20         2011.23

   20.63        798.58      30.82       22.52        53.65      -39.65     200812      10.39       -98.27      160.25       421.45      85.10      15.43         2137.30

    4.84       1879.50       -6.50      30.45       178.80      -14.61     200812        3.02     -103.24        24.00       78.00      17.05       7.96         5279.52

   -9.41       3544.19     220.05          ----    -323.42 -7161.57 200812              -9.41      135.39        20.35       39.15        9.27        ----       1041.74

   85.90       8116.41      24.85       42.81      2356.37     473.67      200903 165.91            48.22      775.85     1040.00      330.00       4.68       27028.44

   -0.99        692.50      14.33       13.40        48.20      -50.82     200812       -2.67      211.98         8.56       23.50        4.23        ----       1210.16

   78.48      18750.10      17.07       29.96      3094.60        9.40     200903      78.48         -3.13     590.00       785.00     250.00       7.52       73449.10

      ----       70.40       -2.68       5.70         -5.80    -240.78     200812         ----    -543.27        40.05       47.00      22.00         ----        756.94

    4.83       1212.68      19.64       15.25        62.53 1062.27         200812      19.95        68.77        52.85       84.45      31.70       2.65          839.31

 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% - Percent-
 age 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.

May e m
D e c2009 b e r                                                                                                                                                      19
           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.)
                                           (29/04)                               End     Rs. ml      (Rs.)            (Rs.)     (Rs.)
Prajay Engineers Syndicate        200803    17.30     14.45   25.91   10   0.67 200812     54.18       1.36   12.68    275.00     12.50
Varun Shipping Company            200803    45.95     10.88   15.05   10   3.05 200812    843.36       5.62    8.17     88.40     38.25
Shipping Corpn. Of India          200803    82.15     10.35   28.83   10   3.16 200812   9886.00      23.35    3.52    200.60     67.00
Gujarat N R E Coke Ltd.           200803    25.30      9.88    5.13   10   4.93 200812   2746.10       5.82    4.35    117.57     16.80
I V R Prime Urban Dev.            200803    41.60      9.62   27.40   10   1.52 200812    553.20       8.62    4.82    245.00     24.05
Graphite India                    200803    31.40      9.55    8.85    2   3.55 200812   1445.90       9.57    3.28     80.75     20.55
N I I T Technologies              200803    69.50      9.35   24.38   10   2.85 200812   1203.70      20.50    3.39    161.45     42.50
Alok Industries                   200803    13.49      8.90   10.61   10   1.27 200812   1786.70       2.95    4.57     64.40     11.33
Bank Of Maharashtra               200803    23.35      8.57    7.63   10   3.06 200812   2938.30       6.83    3.42     55.30     18.90
H C L Infosystems                 200806    93.70      8.54   17.81    2   5.26 200903   2577.60      15.06    6.22    210.60     64.05
J K Cement                        200803    58.95      8.48   37.92   10   1.55 200812   1423.68      20.36    2.90    159.00     34.80
Ganesh Housing Corpn.             200803    53.90      8.35   32.48   10   1.66 200812    488.92      14.97    3.60    365.00     30.00
HEG                               200803 120.00        8.33   33.02   10   3.63 200812    303.90       7.17   16.74    320.00     94.00
Balaji Telefilms                  200803    44.20      7.92   13.48    2   3.28 200812    648.01       9.94    4.45    221.70     24.80
Orbit Corporation                 200803    71.95      7.64   45.94   10   1.57 200812    935.11      25.78    2.79    569.70     38.05
Vijaya Bank                       200803    26.20      7.63    8.33   10   3.14 200812   1780.30       4.11    6.38     57.25     19.85
Lakshmi Machine Works             200803 595.85        7.55 195.89    10   3.04 200812   1589.09     128.47    4.64   1773.00   415.10
Great Eastern Shipping Co.        200803 205.25        7.31   89.11   10   2.30 200812 14341.10       94.17    2.18    537.20   138.60
Andhra Bank                       200803    55.45      7.21   11.87   10   4.67 200812   5760.91      11.88    4.67     87.80     34.80
Tamil Nadu Newsprint & Pap.       200803    63.35      7.10   16.30   10   3.89 200812   1135.50      16.41    3.86    110.85     51.30
Mastek                            200806 141.65        7.06   34.77    5   4.07 200903   1035.20      38.48    3.68    418.80     97.00
Ashok Leyland                     200803    21.40      7.01    3.53    1   5.91 200812   3259.91       2.45    8.73     44.05     12.45
Binani Cement                     200803    37.10      6.74    8.66   10   4.29 200903   1086.60       5.35    6.93     82.00     24.95
Tata Steel                        200803 238.05        6.72   64.15   10   3.89 200812 52964.00       72.50    3.28    925.00    146.35
Greaves Cotton                    200806    90.15      6.66   22.56   10   4.43 200903    692.00      14.17    6.36    260.95     50.10
Kolte Patil Developers            200803    26.30      6.65   17.08   10   1.54 200812   1087.99      14.44    1.82    136.50     18.50
Sobha Developers                  200803    98.85      6.58   31.32   10   3.16 200812   1772.00      24.31    4.07    649.90     67.45
Kalyani Steels                    200803    61.90      6.46   18.15   10   3.41 200812    349.02       8.00    7.74    314.00     36.10
Guj. Nar. Vall. Fertilizers Co.   200803    67.25      6.32   23.99   10   2.80 200812   2607.30      16.78    4.01    177.20     48.00
Parsvnath Developers              200803    48.30      6.21   22.13   10   2.18 200812   2083.71      11.28    4.28    245.00     30.55
Tata Motors                       200803 242.35        6.19   52.63   10   4.60 200812   9480.80      21.08   11.50    734.00    122.00
Megasoft                          200712    19.45      6.17    5.51   10   3.53 200903    103.50       2.34    8.32     98.30      9.00
Electrosteel Castings             200803    20.50      6.10    1.85    1   5.12 200812    742.69       2.59    7.93     60.55     13.03
Karnataka Bank                    200803    82.10      6.09   19.92   10   4.12 200812   2443.40      20.10    4.09    218.00     55.15
Prithvi Information Solution      200803    50.20      5.98   46.27   10   1.09 200812    270.02      14.94    3.36    183.95     30.00
Vakrangee Softwares               200803    33.95      5.89   23.34   10   1.45 200812    520.22      24.31    1.40    290.75     19.00
SRF                               200803    85.00      5.88   20.44   10   4.16 200812   1431.30      23.65    3.59    152.45     62.15
Great Offshore                    200803 273.85        5.84   53.31   10   5.14 200812   1526.40      41.10    6.66    774.50   200.00
Allahabad Bank                    200803    52.50      5.71   21.82   10   2.41 200812   6740.20      15.09    3.48     94.90     36.85
Tata Investment Corpn.            200803 263.90        5.68   53.93   10   4.89 200812   1803.98      52.35    5.04    609.00   182.15

May e m
D e c2009 b e r                                                                                                                    20
        High PE                                                         Magnum
Company Name                                    Year End     Price (29/04) Rs.     EPS         FV     PE
Fortis Healthcare Ltd.                            200803                68.05        0.12        10   575.57
IRB Infrastructure Developers Ltd                 200803               95.40            0.18    10    535.87
B F Utilities Ltd.                                200809              589.30            1.23     5    479.75
G M R Infrastructure Ltd.                         200803              112.85            0.34     2    327.70
Reliance Power Ltd                                200803              123.30            0.42    10    294.34
U T V Software Communications Ltd.                200803              300.70            1.80    10    166.90
K S K Energy Ventures Ltd.                        200703              165.40            1.11    10    149.28
New Delhi Television Ltd.                         200803              101.55            0.68     4    148.48
Reliance Natural Resources Ltd.                   200803               56.65            0.42     5    134.87
Gammon Infrastructure Projects Ltd                200803               63.70            0.48    10    129.75
Jindal South West Holdings Ltd.                   200803              373.05            3.01    10    124.09
Religare Enterprises Ltd                          200803              318.40            3.08    10    103.31
Future Capital Holdings Ltd                       200803              126.05            1.41    10     89.66
Bombay Dyeing & Manufacturing. Co. Ltd.           200803              173.95            4.07    10     87.89
Mundra Port & Special Economic Zone Ltd           200803              386.00            5.33    10     76.66
Bajaj Finserv Ltd                                 200803              217.10            3.04     5     71.47
Edelweiss Capital Ltd                             200803              274.35            3.84     5     71.44
Nirlon Ltd.                                       200803               25.95            0.28    10     67.86
Advanta India Ltd.                                200712              515.55            7.79    10     66.15
Strides Arcolab Ltd.                              200812               96.65            1.53    10     63.09
Educomp Solutions Ltd.                            200803             2474.25           40.62    10     60.91
Max India Ltd.                                    200803              141.10            2.79     2     50.54
Reliance Industrial Infrastructure Ltd.           200803              725.60           14.43    10     50.28
Hindustan Copper Ltd.                             200803              161.00            3.21     5     50.18
Tata Communications Ltd                           200803              547.75           10.68    10     49.45
Asahi India Glass Ltd.                            200803               41.45            0.85     1     49.10
Ispat Industries Ltd.                             200803               13.21            0.28    10     46.37
Entertainment Network (India) Ltd.                200803              150.75            3.40    10     44.36
G V K Power & Infrastructure Ltd.                 200803               27.95            0.65     1     43.25
Hindustan Oil Exploration Company Ltd.            200803               79.45            1.85    10     43.02
Nagarjuna Fertilizers & Chemicals Ltd.            200803               22.35            0.53    10     42.53
I L & F S Investsmart Ltd.                        200803               92.75            2.23    10     41.57
Onmobile Global Ltd                               200803              322.00            8.29    10     38.86
United Breweries Ltd.                             200803              110.45            2.89     1     38.20
Shree Renuka Sugars Ltd.                          200809               97.90            2.70     1     36.24
B O C India Ltd.                                  200703              142.10            9.09    10     34.34
Arshiya International Ltd.                        200803               75.50            2.17     2     33.89
Adani Enterprises Ltd.                            200803              420.30           12.66     1     33.20
P T C India Ltd.                                  200803               70.95            2.14    10     33.12
Television Eighteen India Ltd.                    200803               83.75            2.55     5     32.84
Everest Kanto Cylinder Ltd.                       200803              151.55            4.67     2     32.44
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

May e m
D e c2009 b e r                                                                                          21
       Low PE                                                          Magnum
Company Name                                    Year End     Price (29/04) Rs.     EPS          FV       PE
Aftek Ltd.                                        200803                 9.22        8.66            2     1.06
Prithvi Information Solutions Ltd.                200803               50.20           46.27     10        1.09
Amtek India Ltd.                                  200806               34.05           30.93         2     1.10
Alok Industries Ltd.                              200803               13.49           10.61     10        1.27
I F C I Ltd.                                      200803               25.15           13.36     10        1.33
Sujana Towers Ltd.                                200809               16.15           11.13         5     1.45
Vakrangee Softwares Ltd.                          200803               33.95           23.34     10        1.45
I V R Prime Urban Developers Ltd.                 200803               41.60           27.40     10        1.52
Chennai Petroleum Corporation. Ltd.               200803              114.85           75.41     10        1.52
Kolte Patil Developers Ltd                        200803               26.30           17.08     10        1.54
J K Lakshmi Cement Ltd.                           200803               62.00           36.56     10        1.55
J K Cement Ltd.                                   200803               58.95           37.92     10        1.55
Orbit Corporation Ltd.                            200803               71.95           45.94     10        1.57
Ashapura Minechem Ltd.                            200803               27.50           17.19         2     1.60
Ganesh Housing Corpn. Ltd.                        200803               53.90           32.48     10        1.66
Ajmera Realty & Infra India Ltd                   200803               36.35           20.76     10        1.75
Kei Industries Ltd.                               200803               12.54            7.16         2     1.75
Kesoram Industries Ltd.                           200803              154.15           83.80     10        1.84
K L G Systel Ltd.                                 200803               90.20           44.75     10        2.02
Vishal Retail Ltd.                                200803               37.10           18.14     10        2.04
Dalmia Cement (Bharat) Ltd.                       200803               88.60           42.94         2     2.06
Bharati Shipyard Ltd.                             200803               81.20           38.97     10        2.08
Marg Ltd.                                         200803               55.15           26.34     10        2.09
Indage Vintners Ltd                               200803               57.70           27.36     10        2.11
Ansal Properties & Infrastructure Ltd.            200803               30.80           14.24         5     2.16
Parsvnath Developers Ltd.                         200803               48.30           22.13     10        2.18
Housing Development & Infrastructure Ltd.         200803              146.80           65.83     10        2.23
Great Eastern Shipping Company Ltd.               200803              205.25           89.11     10        2.30
Hindalco Industries Ltd.                          200803               53.85           23.31         1     2.31
Man Industries (India) Ltd.                       200803               31.80           13.36         5     2.38
Omaxe Ltd.                                        200803               54.75           22.98     10        2.38
Mascon Global Ltd.                                200803                3.49            1.46     10        2.39
Allahabad Bank Ltd                                200803               52.50           21.82     10        2.41
Gujarat Alkalies & Chemicals Ltd.                 200803               74.65           30.51     10        2.45
Unity Infraprojects Ltd.                          200803              110.40           44.92     10        2.46
Oriental Bank Of Commerce Ltd                     200803              131.25           33.57     10        2.47
Videocon Industries Ltd.                          200809              109.10           37.23     10        2.55
Maytas Infra Ltd.                                 200803               37.25           16.93     10        2.55
Asian Electronics Ltd.                            200803               22.60           -51.57        5     2.73
Gujarat Fluorochemicals Ltd.                      200803               76.90           27.68         1     2.78
Gujarat Narmada Valley Fertilizers Co.Ltd.        200803               67.25           23.99     10        2.80
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

May e m
D e c2009 b e r                                                                                             22
        Sales                                                                Magnum
                                                                                                              Rs. in million
                            200903 Qtr    200803Qtr    Change In % Change 200903 Net 200803 Net Change In % Change in
Company Name
                             Net Sales    Net Sales      Sales    in Sales  Profits    Profits  Net Profits Net Profits
Jindal Drilling                3336.40      1022.70      2313.70    226.23    151.50      54.90      96.60     175.96
Seamec                         1001.20        348.50       652.70   187.29    619.50    -170.28    789.78     -463.81
Raj Television                   194.94        86.44       108.50   125.52    -30.76      -3.42     -27.34     799.42
Deep Industries                  108.75        61.01        47.74     78.25    12.22      15.26      -3.04     -19.92
Granules India                   868.62       494.67       373.95     75.60    11.44      20.17      -8.73     -43.28
Areva T & D                    8450.00      5029.00      3421.00      68.03   514.00     541.00     -27.00       -4.99
Jaiprakash Assoc              21516.70     12960.00      8556.70      66.02 3853.20    2100.00   1753.20        83.49
Siemens Healthcare Diagno        406.26       248.99       157.27     63.16   -21.15      22.73     -43.88    -193.05
A K Capital                      433.77       271.28       162.49     59.90   138.71      70.63      68.08      96.39
Mphasis                        7681.60      4841.90      2839.70      58.65 1873.70      569.00  1304.70       229.30
Alstom Projects                8092.30      5109.00      2983.30      58.39   261.90      15.00    246.90    1646.00
United Breweries Hdg           1030.90        656.60       374.30     57.01   126.80     138.50     -11.70       -8.45
Bartronics India               1145.28        732.75       412.53     56.30    21.45     164.21   -142.76      -86.94
Strides Arcolab                1860.21       1196.88       663.33     55.42   214.81    -160.48    375.29    -233.86
Shaw Wallace                     639.90       412.00       227.90     55.32    35.60     203.90   -168.30      -82.54
Nagarjuna Agrichem             1436.80        925.80       511.00     55.20   110.90      25.90      85.00     328.19
Bajaj Hind Sugar                 959.00       626.20       332.80     53.15   488.40      68.20    420.20      616.13
Gruh Finance                     955.90       624.90       331.00     52.97   224.90     204.00      20.90      10.25
Era Infra Engg                 9525.81      6250.65      3275.16      52.40 1076.26      367.64    708.62      192.75
Facor Alloys                   1022.46        672.18       350.28     52.11   -34.37     259.64   -294.01     -113.24
Petronet LNG                  26548.80     17526.50      9022.28      51.48 2043.53    1200.38     843.15       70.24
Axis Bank                     30392.20     20154.30     10237.90      50.80 5814.50    3614.00   2200.50        60.89
J Kumar Infraproject           1496.72        992.78       503.94     50.76   119.81     106.08      13.73      12.94
Jhagadia Copper                  630.70       421.50       209.20     49.63  -782.00    -559.80   -222.20       39.69
Binani Cement                  4980.80      3360.00      1620.80      48.24   200.70     641.30   -440.60      -68.70
Coromandel Fertilisers         8568.60      5844.30      2724.30      46.61  -124.70      33.60   -158.30    -471.13
Oil Country Tubular            1529.49      1049.15        480.34     45.78   119.86     -52.37    172.23    -328.87
Yes Bank                       5663.10      3884.80      1778.30     45.78    801.10     645.00    156.10       24.20
IDBI                          32622.10     22497.40     10124.70     45.00  3136.70    2449.90     686.80       28.03
HDFC Bank                     42508.30     29561.80     12946.50     43.79  6308.80    4711.10   1597.70        33.91
Idea Cellular                 28324.60     19724.00      8600.60     43.60  3042.80    2782.00     260.80         9.37
Mah Seamless                   5495.60      3843.10      1652.50     43.00    646.30     540.50    105.80       19.57
Upper Ganges Sugar               972.29       688.48       283.81    41.22     90.99     145.17     -54.18     -37.32
AMD Industries                   318.73       226.61        92.12    40.65     -4.57      -2.60      -1.97      75.77
Rain Commodities               2666.80      1926.20        740.60    38.45    331.20     304.50      26.70        8.77
Bharati Shipyard               2842.72      2064.05        778.67    37.73    353.77     326.51      27.26        8.35
Indian Bank Ltd               18563.70     13599.90      4963.76     36.50  3940.74    2416.70   1524.04        63.06
Corporation Bank Ltd          17063.80     12535.20      4528.65     36.13  2604.91    2056.00     548.91       26.70
Mangalam Cement                1696.28      1248.18        448.10    35.90    385.74     341.16      44.58      13.07
Supreme Industries             4421.58      3262.01       1159.57    35.55    285.59      82.60    202.99      245.75
Andhra Cements                 1112.20        820.60       291.60    35.54    142.00     173.10     -31.10     -17.97
Aban Offshore                  2652.71      1963.87        688.84    35.08    468.43     345.49    122.94       35.58
Maruti Suzuki India           64329.00     47629.10     16699.90     35.06  2431.30    2976.80    -545.50      -18.33
Andhra Sugars                  1456.37       1080.11       376.26     34.84    94.57     122.66     -28.09     -22.90
Pochiraju Industries             155.81       115.93        39.88     34.40    41.91      31.43      10.48      33.34
LIC Housing Finance            7904.75      5895.90      2008.85      34.07 1575.58    1181.00     394.58       33.41
Zandu Pharm                      383.49       288.01        95.48     33.15    79.72      11.40      68.32     599.30
Power Finance Corp            18169.40     13651.80      4517.53      33.09 3905.84    2954.00     951.84       32.22
Glaxo.Cons.Healthcare          5393.70      4106.00      1287.70      31.36   838.90     566.00    272.90       48.22
Sterling Biotech               3512.06      2690.36       821.70     30.54      477.28    550.89     -73.61       -13.36

May e m
D e c2009 b e r                                                                                                      23
                               Price Trends                                                                                                                                                                                                                                        Magnum
  Date                                                                       Price Rs.                                                                                                                               18000

  29-Apr-09                                                                  14543.35
  28-Mar-09                                                                  15125.00
  28-Feb-09                                                                  15400.00
  29-Dec-08                                                                  13700.00                                                                                                                                  8000
  28-Nov-08                                                                  13075.00                                                                                                                                  6000
  29-Oct-08                                                                  12150.50                                                                                Gold                                              4000
  29-Sep-08                                                                  13136.50                                                                                                                                  2000
  28-Aug-08                                                                  11938.20                                                                                                                                              0
  29-Jul-08                                                                  12795.00








  25-Jun-08                                                                  12274.15
  28-May-08                                                                  12392.85
  29-Apr-08                                                                  11617.00
                                                                                                                                                                                                                                                                                                                                                       Date                                                      Price Rs.
                                                                                                                                                                                                                                                                                                                                                       29-Apr-09                                                 21100.00
25000                                                                                                                                                                                                                                                                                                                                                  30-Mar-09                                                 21978.00
                                                                                                                                                                                                                                                                                                                                                       28-Feb-09                                                 21500.00
                                                                                                                                                                                                                                                                                                                                                       29-Dec-08                                                 17915.75
15000                                                                                                                                                                                                                                                                                                                                                  28-Nov-08                                                 17314.45
                                                                                                                                                                                                                                                                                                                                                       27-Oct-08                                                 16444.85
                                                                                                                                                                                                                                                                       Silver                                                                          29-Sep-08                                                 20687.00
 5000                                                                                                                                                                                                                                                                                                                                                  28-Aug-08                                                 20793.35
                                                                                                                                                                                                                                                                                                                                                       29-Jul-08                                                 24685.00
                                                                                                                                                                                                                                                                                                                                                       25-Jun-08                                                 23823.35








                                                                                                                                                                                                                                                                                                                                                       28-May-08                                                 23967.85
                                                                                                                                                                                                                                                                                                                                                       29-Apr-08                                                 22575.00

  Date                                                                       Price Rs.                                                                                                                                 60

  29-Apr-09                                                                      49.97
  30-Mar-09                                                                      51.18
  27-Feb-09                                                                      51.33                                                                                                                                 40

  29-Dec-08                                                                      48.51                                                                                                                                 30
  28-Nov-08                                                                      49.58
  29-Oct-08                                                                      49.61                                                       Currency                                                                  20

  29-Sep-08                                                                      47.67                                                                                                                                 10
  29-Aug-08                                                                      43.93
  29-Jul-08                                                                      42.49                                                                                                                                    0








  29-Jun-08                                                                      42.80
  29-May-08                                                                      42.55
  29-Apr-08                                                                      40.41
                                                                                                                                                                                                                                                                                                                                                       Date                                                          Price $
160                                                                                                                                                                                                                                                                                                                                                    29-Apr-09                                                        50.72
140                                                                                                                                                                                                                                                                                                                                                    30-Mar-09                                                        48.95
120                                                                                                                                                                                                                                                                                                                                                    27-Feb-09                                                        43.60
                                                                                                                                                                                                                                                                                                                                                       29-Dec-08                                                        37.93
                                                                                                                                                                                                                                                                                                                                                       28-Nov-08                                                        53.93
                                                                                                                                                                                                                                                                                                                                                       29-Oct-08                                                        67.66
                                                                                                                                                                                                                                                                                                                                                       29-Sep-08                                                        99.00
                                                                                                                                                                                                                                                                                                                                                       29-Aug-08                                                       116.10
 20                                                                                                                                                                                                                                                                                                                                                    29-Jul-08                                                       121.76
 0                                                                                                                                                                                                                                                                                                                                                     30-Jun-08                                                       141.06








                                                                                                                                                                                                                                                                                                                                                       29-May-08                                                       126.62
                                                                                                                                                                                                                                                                                                                                                       29-Apr-08                                                       115.63

May e m
D e c2009 b e r                                                                                                                                                                                                                                                                                                                                                                                                                                  24
         Sectoral Mutual Fund Analysis                                                                                                                                                                   Magnum
ICICI Prudential Infra (G)                                                                                                                                           ing of 0.50%, IOC with holding of 0.07% were the latest to
ICICI Prudential Infrastructure (Growth) scheme is a ICI-                                                                                                            be included in the schemes portfolio. On the other hand
CI Prudential Mutual Fund Asset Management managed                                                                                                                   HDFC with holding of 0.25%, Kotak Mahindra bank with
open-ended Equity – Infrastructure scheme.                                                                                                                           holding of 0.59%,ONGC with holding of 2.34% and Axis
                                                                                                                                                                     bank with holding of 1.69% made their way out from the
The fund was launched on September 12, 2005 and its cur-                                                                                                             scheme.
rent net asset as on March 31, 2009 is Rs 2689.67 crore.
                                                                                                                                                                     The fund has given a return of 19.66% since inception
The benchmark index of the fund is S&P CNX Nifty and                                                                                                                 and a negative return of 31.34% in last one year, while the
the custodian of the fund is the Hongkong and Shanghai                                                                                                               category average in the same period has been -13.69%
Banking Corporation.                                                                                                                                                 and -40.61 respectively.
The current net asset value (NAV) of the fund as on April
29, 2009 is Rs 20.05; while the 52 week high NAV was Rs
29.49 on May 5, 2008 and the 52 week low NAV for the
scheme was Rs 14.11 on October 27, 2008.
The minimum investment to the fund is Rs 5,000 and additional
investments can be made in the multiples of Rs 500.
The investment objective of the fund is to invest in equity/
equity related securities of the companies belonging to in-
frastructure development and the balance in debt securi-
ties and money market instruments including call money.
The fund charges an entry load of 2.25% for investment                                                                                                                   Market cap-wise Allocation Style
below Rs 5 crore, and Exit load of 1% for investment less                                                                                                                Average Mkt Cap (Rs Cr)                                                                               24064.26
than Rs 5 crores if redeemed within 6 months from the                                                                                                                    Market Capitalization                                                                                 % of Portfolio
date of allotment.                                                                                                                                                       Large                                                                                                 49.71
The portfolio of the fund comprises 62.081% in domestic                                                                                                                  Mid                                                                                                   4.29
equities, 27.24% in futures and remaining 10.679 % is of                                                                                                                 Small                                                                                                 8.07
cash and cash equivalents.                                                                                                                                               Note: Large-Cap = 5000 Crs. and above, Mid-Cap = 2000 Crs.
The top five holdings of the fund are:                                                                                                                                   to 5000 Crs. and Small-Cap = less than 2000 Crs.
                                                 Bharti                             HDFC                                          ICICI                              Outlook
 Company                RIL                                                                                     SBI
                                                 Airtel                             Bank                                          Bank                               ICICI Prudential Infrastructure (Growth) is one of the best
  % Holding 9.64           8.49      6.51    4.36 3.09                                                                                                               performing fund in its category .The fund is being managed
On the sectoral basis the fund has the maximum contribu-                                                                                                             by Sankaran Naren and Mrinal Singh. The fund is an open-
tion from Capital Goods sector followed by ferrous metals                                                                                                            ended equity fund focused on capturing the opportunity
and Telcom services while Cement sector holds 3.28% in                                                                                                               presented by the long term growth potential of the Indian
the fund.                                                                                                                                                            Infrastructure sector. It invests across infrastructure
                                                                                                                                                                     sectors such as Cement, Power, Telecom, Oil and Gas,
As far as market capitalization-wise companies are con-                                                                                                              Construction, Banking etc and seeks to optimise the risk
cerned, the scheme’s portfolio consists of 49.714 % from                                                                                                             adjusted return by a mix of top-down macro and bottom-
Large-cap, 4.29% from Mid-cap and 8.07% from Small-                                                                                                                  up micro research to pick up stocks providing long term
cap companies.                                                                                                                                                       potential. It is a multi-sector fund and therefore has a much
Crompton Greaves with holding of 1.47%, ACC with hold-                                                                                                               lesser concentration risk than a typical sector fund
       Duration                                             1 Week                               1 Mth                            3 Mth                              6 Mth                               1 Year                       3 Year                          5 Year                           Since Inc.
 Scheme Return %                                                2.98                               13.02                            21.59                              32.52                              -31.34                         7.45                             NA                                19.66
 Category Avg %                                                 1.70                               13.02                            16.96                              18.23                              -40.61                        -4.16                           11.17                              -13.69
                                                                                                              Performance in the last one year


















May e m
D e c2009 b e r                                                                                                                                                                                                                                                                                                              25
        MF Scorecard                                                            Magnum
                                                                                                  Returns as on 28th April, 2009

                                                                               Absolute %                         CAGR %
Scheme Name                                                 AUM       1M       3M      6M       1Y       3Y        5Y        Since
                                     (Rs.)      Date
                                                           (Rs. cr)                                                         Inception

Equity - Diversified
Birla Sun Life India Opp(G)           27.06 21-Jan-95          25     15.94    22.11    8.72    -45.98   -18.80   -0.33         7.25
Birla SL Special Situations(G)         6.01 15-Jan-08         361     14.88    18.60   20.78    -36.82        -       -       -30.07
DSPBR Opportunities(G)                45.78 10-Apr-00         675     11.50    18.47   21.09    -33.07    -2.72   13.48        14.11
Fidelity Equity(G)                    18.27 19-Apr-05        1711     10.71    18.14   19.83    -29.84    -0.02       -         8.30
ICICI Pru Dynamic(G)                  56.80 18-Oct-02        1046     13.50    18.02   23.67    -28.18     2.20   16.79        21.27
Kotak Opportunities(G)                25.31 25-Aug-04         603     11.56    16.29   20.17    -39.15    -0.47       -        13.09
Magnum Comma(G)                       14.21 25-Jul-05         397      9.48    21.14   22.71    -37.73    -2.15         -        2.46
Magnum Multicap(G)                    11.02 16-Sep-05         443     11.76    20.04   17.36    -37.06    -8.59         -       -2.52
Reliance Equity Oppor-Ret(G)          15.14  7-Mar-05        1054     11.23    18.63   17.24    -36.53    -6.18         -        4.45
Reliance Natural Resources(G)          6.90 30-Jan-08        3246      9.92    18.49   25.39    -32.44        -         -      -25.11

Equity - ELSS
Birla Sun Life Tax Relief '96(D)      41.86   29-Mar-96       436     -11.59   -8.74   -40.73   -58.87    -6.53    7.89        28.76
DSPBR Tax Saver(G)                     8.91   26-Dec-06       378      12.38   17.71    17.23   -36.05        -       -        -9.64
Fidelity Tax Advantage(G)             11.08   31-Jan-06       675      10.61   18.15    19.72   -29.65        -       -        -2.43
Franklin India Taxshield(G)          112.25   10-Apr-99       406      13.20   19.73    18.45   -29.87    -4.20   12.45        22.18
HDFC Long Term Adv(G)                 68.30   27-Dec-00       498      14.77   17.24    13.04   -33.80    -9.94   12.38        21.12
Principal Personal Tax saver(G)       54.89    1-Jan-96       296      14.14   21.90    18.78   -42.05    -6.49    7.98        19.99
Reliance Tax Saver (ELSS)(G)          10.99   23-Aug-05      1339      12.67   16.74    16.82   -28.51    -6.86       -        -1.73
Sundaram Taxsaver (D)                 26.27   22-Nov-99       621      12.96   14.58    14.07    27.34    -0.37   24.76        19.23

Equity - Large-cap
Birla Sun Life Equity(G)             145.45   27-Aug-98       671     13.66    18.85    16.71   -36.84    -3.44   15.90        22.84
Birla Sun Life Frontline Equity(G)    47.72   30-Aug-02       394     12.60    18.82    23.63   -28.71     3.72   14.62        18.37
DSPBR Equity(D)                       32.51   15-Apr-97       868     10.97    14.39    15.97   -30.61     1.83   21.93        22.02
DSPBR Top 100 Equity(G)               58.18   21-Feb-03      1090      9.70    15.90    19.48   -25.31     6.76   17.09        25.34
JM Large Cap(G)                       13.14    9-Jun-04         5     19.00    18.80     2.92   -32.39   -10.39       -         2.00
Kotak 30(G)                           61.70   21-Dec-98       639      9.73    14.55    16.67   -33.48     1.58   16.65        26.47
Magnum Equity(D)                      16.94   30-Nov-90       218     -9.27    -5.04   -37.61   -50.00    -0.39   13.82        10.09
Reliance Equity-Ret(G)                10.25    7-Mar-06      1678      8.03    15.95    12.30   -27.78     0.00    0.00        -3.69
Reliance Vision-Ret(G)               150.80    7-Oct-95      2399     10.01    17.74    17.92   -31.96    -1.84   13.28        18.21
Sundaram BNPP Growth(G)               52.04   15-Feb-97        93     13.52    14.67     8.49   -41.85    -4.29   11.24        14.88

Equity - Mid-cap
Birla Sun Life Midcap(G)              51.07    1-Oct-02       298     17.51    18.49   16.36    -39.92    -5.88   13.72        19.73
ICICI Pru Emerging S.T.A.R.(G)        15.48 25-Sep-04         234     13.41    16.92   12.01    -53.03   -15.95         -        4.46
Kotak Mldcap(G)                       12.00   28-Jan-05         75    12.63    12.94   13.80    -46.24   -12.63         -        1.28
Reliance Growth-Ret(G)               242.88    7-Oct-95      3240     16.30    21.58   16.57    -34.15    -0.90    20.65       21.93
Reliance Reg Sav-Equity(G)            15.43   10-Jun-05       648     13.23    22.88   19.93    -34.98    5.79          -        3.89
Sundaram BNPP S.M.I.L.E(G)            15.92   21-Jan-05        115    19.37    21.41   21.01    -37.95    -5.74         -        4.96
Sundaram BNPP Slct Midcap(G)          66.19    19-Jul-02      855     17.61    19.49   11.21    -39.69    -4.33   17.61        23.45

Equity - Auto
JM Auto Sector(G)                     14.13    9-Jun-04          5    16.80    36.06   31.48    -28.52   -17.88         -        0.41

May e m
D e c2009 b e r                                                                                                                  26
         MF Scorecard                                                          Magnum
                                                                                                Returns as on 28th April, 2009

                                                                            Absolute %                          CAGR %
Scheme Name                                               AUM       1M      3M       6M       1Y       3Y        5Y        Since
                                    (Rs.)      Date
                                                         (Rs. cr)                                                         Inception

Equity - Small-cap
DSPBR Micro-Cap(G)                    5.61 25-May-07        126     20.28   12.67     -0.37   -49.44        -         -     -20.38
HSBC Small Cap(G)                     5.67   3-Mar-08         35    18.90   13.90     6.41    -46.83        -         -     -29.10
ICICI Pru CCP-Gift                  28.71    6-Aug-01         74    15.95   15.72     8.30    -43.56    -9.25    4.84        10.60
Sundaram BNPP Slct Small Cap(G)       5.59   24-Jan-07      145     16.49   15.31     4.89    -47.80        -         -     -21.47

Equity - Banks & Fin Srvs
JM Fin Services Sector(G)             6.32 20-Nov-06          26     5.98   -11.32   -12.74   -56.82        -         -       -9.46
Reliance Banking(G)                 43.71 21-May-03         602     16.42   17.83    20.96    -24.22    4.37    16.71        19.96

Equity - Contriarian
JM Contra(G)                          3.60 14-Aug-07        224     10.40   11.85     -4.61   -68.26        -         -     -32.45
Kotak Contra(G)                     12.25     1-Jul-05        61    11.51   16.60    18.97    -29.78    -5.69         -        0.25
Tata Contra(G)                        8.92   25-Oct-05        71    13.62   20.64    24.52    -37.82   -11.95         -       -6.50
UTI-Contra(G)                         8.65 22-Mar-06        173     10.05   15.49    21.83    -22.28        -         -       -7.66

Equity - Dividend Yield
Birla Sun Life Divi Yield Plus(G)   39.51    7-Feb-03       177     10.64   11.17    18.86    -21.42    -3.26    9.89        19.60
Principal Dividend Yield(G)         12.14 27-Sep-04           68     9.96   11.99    11.68    -36.37   -11.84         -        1.04
Tata Dividend Yield(G)              15.76    27-Oct-04        78    12.99   18.63    20.73    -32.88    -5.55         -        4.47
UTl-Dividend Yield(G)               16.78    3-May-05       932      9.03   14.62    19.52    -21.26    1.77          -        7.34

Equity - Energy / Power
Reliance Diver Power Sector(G)      46.77    15-Apr-04     3440     14.54   20.90    23.50    -30.58   16.07          -      24.69
Sundaram BNPP Energy Oppor(G)         5.19 11-Dec-07       1153     11.61   16.50    10.78    -39.51        -         -     -34.13

Equity - FMCG
Franklin FMCG(G)                    33.79 31-Mar-99           21     9.78   10.57    16.60    -14.96    -0.56   14.76        10.83
ICICI Pru FMCG(G)                   33.16    5-Mar-99         44     6.73    6.45    11.73    -33.32    -2.37   20.56        10.89
Magnum FMCG                         13.67     3-Jul-99         6     9.62   14.20    19.39    -14.83    -5.07   10.30          4.71

Equity - Global
Fortis China-India(G)                 6.00    1-Oct-07        82     8.28   19.26    28.32    -32.35        -         -     -21.42
Birla Sun Life Intl. Equity-A(G)      7.25   16-Oct-07      134      0.39    3.40     5.05    -27.19        -         -     -12.36
Birla Sun Life Intl. Equity-B(G)      5.96   16-Oct-07      387      9.10   14.17    11.28    -32.97        -         -     -20.43
DSPBR Natural Res-Reg(G)              7.91 31-Mar-08        182     11.12   22.01    26.44    -23.90        -         -     -20.91
Fidelity International Oppor(G)       7.22   30-Apr-07      548     12.73   18.66    15.46    -33.99        -         -     -16.48
Franklin Asian Equity(G)              7.66 18-Dec-07        346      5.88   18.56    26.60    -21.15        -         -     -20.99
Mirae Assel GIbl Comdty Stock(G)      7.52   23-Jul-08        45     6.66   24.24    29.39    -28.22        -         -     -24.69
Templeton India Equity Income(G)    10.48    20-Apr-06      754     11.17   24.67    27.61    -34.40        -         -       -5.31

Equity - Pharma & HC
Franklin Pharma(G)                  24.69 31-Mar-99           36    14.36   15.45    15.39    -15.13    -7.37    5.14          7.01
Reliance Pharma(G)                  20.05 26-May-04           88     9.28   13.21    15.82    -17.00    -2.21         -        9.67

May e m
D e c2009 b e r                                                                                                                27
        MF Scorecard                                                         Magnum
                                                                                             Returns as on 28th April, 2009

                                                                            Absolute %                         CAGR %
Scheme Name                                               AUM       1M      3M      6M      1Y        3Y        5Y        Since
                                   (Rs.)      Date
                                                         (Rs. cr)                                                        Inception

Equity - Infrastructure
Birla Sun Life Infrastructure(G)     9.44   18-Feb-06       258     14.98   20.87   21.96   -37.89         -         -       -6.69
DSPBR India T.I.G.E.R-Reg(G)        28.78   20-May-04      2322     12.17   22.02   26.59   -35.20    -0.21          -      14.67
ICICI Pru Infrastructure(G)         20.05   10-Aug-05      2690     13.02   21.59   32.52   -31.34    7.88           -        9.19
Sund BNPP CAPEX Oppor(G)            12.56    5-Sep-05       307     13.91   16.36   -1.57   -47.38    -4.08          -        1.12

Equity - Media
Reliance Media & Ent(G)             15.46   27-Sep-04         99    12.56   12.20   12.98   -47.01    -5.91          -        5.20

Equity - MNC
Birla Sun Life MNC(G)               95.80   22-Apr-94         99    12.32   19.09   21.76   -23.43    -8.12     8.80        20.77
Kotak MNC                           20.92   24-Mar-00         21     9.36   14.60   19.72   -26.08    -9.47    10.16          8.73

Equity - Quant
Religare AGILE(G)                    4.71   23-Nov-07       165      5.61   11.61   19.85   -39.69         -         -     -26.01
Reliance Quant Plus-Ret(G)           7.78   18-Apr-08         38    11.70   20.79   26.59   -25.55         -         -     -21.64

Equity - Service Inds
ICICI Pru Services Inds(G)           9.75   18-Nov-05       256     15.93   18.61   15.38   -45.50    -8.92          -       -4.58
Principal Services Inds(G)           8.84   31-Jan-06         94    13.04   19.30   23.46   -35.00         -         -       -8.27
Tata Service Inds(G)                12.31   10-Mar-05         78    13.75   19.64   11.73   -43.01   -13.79          -       -0.30

Equity - TECk
Birla Sun Life New Millennium(G)    11.12   15-Jan-00         36    19.44   19.44    6.31   -43.15   -12.57     5.51         -1.04
DSPBR             16.07   10-Apr-00         53    17.73   17.68    5.92   -43.68    -5.51    10.59          2.90
Franklin Infotech(G)                28.38   22-Aug-98         70    15.30   20.72    3.05   -32.80   -16.78     1.96        13.08
ICICI Pru Technology(G)              7.27   28-Jan-00         46    19.57   18.60   10.65   -47.81   -16.93     1.57         -5.19
JM Telecom Sector(G)                 6.54   20-Nov-06          3    19.83   23.44   10.38   -44.96         -         -      -15.11
Kotak Tech                           4.88   24-Mar-00         13    12.89   16.73   11.42   -41.09   -19.60    -2.13         -8.71
Magnum IT                           10.00     3-Jul-99        26    25.47   27.55   -5.30   -51.15   -20.91     1.28          0.14

Equity - Sensex Linked Index
Franklin India Index-Sensex(G)      32.12   27-Aug-01         27    13.27   23.02   25.28   -34.05    -2.91     7.86        10.49
HDFC Index-Sensex Plus(G)          130.09    10-Jul-02        30    13.53   20.26   20.17   -28.90    -0.03    11.34        33.83
HDFC Index-Sensex(G)                96.72    10-Jul-02        39    13.26   22.01   22.13   -35.91    -5.55     6.16        28.56
UTI-SUNDER                         364.60    11-Jul-03         7    11.52   22.75   28.67   -31.56    -1.18     9.16        16.34

FOF - Debt
Birla Sun Life AA-Cons(G)           16.44   23-Jan-04          5     3.47    4.40    6.88    2.20     8.04           -        7.83

FOF - Overseas
ICICI Pru Indo Asia Eq(G)            5.99   21-Sep-07       363     12.17   19.09   26.91   -37.47         -         -     -21.27
Sundaram BNPP Global Adv(G)          7.38    31-Jul-07      135      5.28   23.48   28.84   -31.12         -         -     -14.81

May e m
D e c2009 b e r                                                                                                               28
         MF Scorecard                                                           Magnum
                                                                                                Returns as on 28th April, 2009

                                                                              Absolute %                        CAGR %
Scheme Name                                                 AUM       1M      3M      6M      1Y       3Y        5Y        Since
                                      (Rs.)      Date
                                                           (Rs. cr)                                                       Inception

Equity - Nifty Linked Index
Birla Sun Life Index(G)                34.82 17-Sep-02          26    11.50   23.42   28.61   -33.61   -3.40     6.78        13.05
Magnum Index(G)                        29.70   16-Jan-02        15    11.75   23.27   27.36   -34.64   -4.13     6.07        10.90
Nifty BeES                            351.02 18-Dec-01         118    11.67   22.94   28.95   -32.31   -2.49     7.83        12.37
Reliance Banking ETF                  518.08 30-May-08           9    16.62   17.70   19.94        -        -         -     -35.76

Arbitrage Funds
ICtCI Pru Eq & Deriv-lnc-Ret(G)        12.14   7-Dec-06       250      0.50    1.00    3.06    6.58         -         -        6.18
SBI Arbitrage Opportunities(G)         12.20   13-Oct-06      348      0.47    0.80    2.96    6.89         -         -        4.85
UTI-SPrEAD(G)                          12.82   22-Jun-06      259      0.86    2.19    5.00    9.74         -         -        5.86

Balanced - Equity Oriented
Kotak Balance                          17.41 25-Nov-99          55    10.26   12.73   14.03   -24.84   0.64     15.01        11.88
Sundaram BNPP Balanced(G)              28.72 25-May-00          28     8.67   13.07   12.26   -27.59   -3.36     7.56          9.42

Balanced - Debt-Oriented
HDFC Children's Gift - Savings         17.00   2-Feb-01         51     4.54    5.84    9.87    1.66    2.85      6.26          8.50
ICICI Pru CCP-Study                    21.65   6-Aug-01         25     6.07    4.30    6.51    -2.95   6.21      8.27          8.51

FOF - Equity
Birla Sun Life AA-Aggr(G)              19.92   23-Jan-04         6    11.65   14.15   15.07   -16.16   2.43           -        9.47
FT India Dyn PE Ratio FOFs(G)          27.05   31-Oct-03        38    12.43   19.48   21.24   -11.78   4.75     12.77        11.77
ICICI Pru Advisor-Very Aggr(G)         21.24 28-Nov-03           6    10.56   17.79   22.32   -28.16   -1.96    10.35          8.17
Kotak Equity FOF(G)                    21.28   19-Jul-04        33    12.16   19.22   20.07   -31.55   -4.19          -        9.46

Commodities - Gold
Gold BeES                            1438.85 23-Feb-07        303     -4.17    4.27   19.86   24.79         -         -      11.33
Kotak GOLD ETF                       1442.24    4-Jul-07        56    -4.15    4.25   19.82   24.73         -         -      11.42
DSPBR World Gold-Reg(G)                11.65 23-Aug-07       1796     -7.78   12.10   66.15   -12.30        -         -        0.68
Reliance Gold ETF                    1401.73   1-Nov-07       190     -4.16    4.11   19.40   22.86         -         -      10.42
UTI-Gold ETF                         1439.90 16-Mar-07        187     -4.17    4.28   19.68   24.62         -         -      11.35

Floating Rate - Long Term
Birla Sun Life FRF-LT(G)               14.73    4-Jun-03      242      0.81    1.93    4.09    8.88    8.04      6.89          5.38
Sundaram BNPP Flexible-FIP-Reg(G)      13.15 24-Dec-04           3     0.71    1.77    3.61    7.66    7.09           -        4.35

Floating Rate - Short Term
Birla Sun Life FRF-ST(G)               14.50    4-Jun-03        69     0.50    1.63    3.48    8.41    7.74      6.70          5.20
ICICI Pru FRF-Option A(G)              13.69 28-Mar-04       1940      0.49    1.42    3.55    8.14    7.80           -        5.11
LICMF FRF-STP(G)                       14.39 29-Mar-04        839      0.45    1.75    4.23    9.45    8.71           -        5.92
Magnum FRF-STP(G)                      13.59   14-Jul-04        15     0.63    1.65    6.46    9.09    7.33           -        4.94

Gilt - Short Term
Birla Sun Life Gilt Plus-Liquid(G)     20.29   11-Oct-99        12     0.56    1.09    2.65    4.23    5.85      5.39          6.53

May e m
D e c2009 b e r                                                                                                                29
        MF Scorecard                                                           Magnum
                                                                                               Returns as on 28th April, 2009

                                                                               Absolute %                       CAGR %
Scheme Name                                                  AUM       1M      3M      6M      1Y      3Y        5Y        Since
                                      (Rs.)      Date
                                                            (Rs. cr)                                                      Inception

Gilt - Long Term
Birla Sun Life Gilt Plus-PF(G)         24.13   11-Oct-99         76    4.10    -2.65    7.85    8.25    8.25     5.60          8.74
ICICI Pru Gilt-lnvest(G)               31.65    9-Aug-99       806     6.16     0.35   12.66   30.54   15.17     9.88         11.17

Liquid Funds
Birla Sun Life Cash Mgr-Ret(G)         21.62   14-May-98       615     0.48     1.61    3.72    8.28    7.68     6.56          6.49
Birla Sun Life Cash Plus-Ret(G)        23.66   13-Jun-97      7856     0.44     1.43    3.38    8.01    7.75     6.58          6.73
Kotak Liquid(G)                        17.25    6-Oct-00      2115     0.43     1.43    3.48    7.98    7.30     6.21          5.45
LICMF Liquid(G)                        16.15   13-Mar-02     11023     0.52     1.73    4.09    9.04    8.23     7.06          5.93
Magnum InstaCash-Cash(G)               19.73   19-May-99      2837     0.47     1.54    3.69    8.22    7.68     6.58          6.22
Reliance Liquid-Cash(G)                14.69    4-Dec-01         53    0.14     0.63    2.02    5.98    6.22     5.50          4.29
UTI-Money Mkt(G)                       24.74   23-Apr-97      1515     0.52     1.67    3.93    8.68    7.79     6.65          7.07

Liquid Plus
Birla Sun Life Savings-Ret(G)          16.44   26-Nov-01    14578      0.55     1.61    3.84    8.54    7.91     6.72          5.47
DSPBR Money Mgr-Reg(G)               1228.17    18-Jul-06     1445     0.67     1.85    4.35    8.56        -         -        4.76
ICICI Pru Flexible Income(G)           16.38   21-Sep-02      9261     0.60     1.70    4.04    8.94    8.07     6.22          6.12
Principal Ultra ST-Reg(G)              11.34    6-Nov-07       130     0.60     1.70    4.04    8.85        -         -        3.66

Long & Medium Term Income
Reliance Reg Savings-Debt(G)           12.00   10-Jun-05          2    4.15     3.64    4.54    7.72    4.41          -        3.02
UTI-Invest Bond-I(G)                   10.46   31-Dec-07          1    -0.08    0.22    0.39    1.76        -         -        2.18

Monthly Income Plans
Birla Sun Life MIP II-Savings 5(G)     15.30   30-Apr-04         32    3.36     1.68    7.79   18.46   11.63          -        7.14
Birla Sun Life MIP II-Wealth 25(G)     14.61   30-Apr-04         57    8.41     9.23   18.98    1.61    3.05          -        4.92
Birla Sun Life MIP(G)                  22.66   10-Nov-00         83    6.21     7.27   16.85    7.76    6.36     6.55          7.74
Birla Sun Life Monthly Income(G)       30.27    14-Jul-99       119    6.21     7.20   15.89    7.82    7.90     7.42          9.95
DBS Chola MIP(G)                       16.92    1-Aug-98         18    1.40     1.72    5.13   -1.28   10.17     8.76          5.18
DSPBR Savings Plus-Agg(G)              15.75   20-May-04         60    2.04     3.99    7.92    3.88    7.47          -        7.12
ICICI Pru Income Multiplier(G)         15.85    5-Mar-04       180     9.03    10.13   19.49    1.25    4.34          -        6.17
Magnum Income Plus-Savings(G)          10.53   22-Oct-03          2    -0.16    0.15    0.82   -0.64    0.40     0.82          0.71
UTI-MIS(G)                             16.39   11-Oct-02       121     3.37     5.17   11.23    5.57    6.97     6.48          5.70

Short Term Income Plans
Birla Sun Life ST-Ret(G)               15.99   19-Apr-02      5599     0.56     1.56    3.72    8.32    8.59     6.95          5.82
DSPBR ST(G)                            15.22    4-Sep-02         37    0.69     1.68    4.05    8.40    7.39     6.33          5.15
Sund BNPP Slct Dbt-STAP(G)             14.97   30-Aug-02          0    0.16     0.59    1.69    5.47    7.32     6.22          5.09

Real Estate Securities
ICICI Pru Real Estate Sec-Ret(G)        9.09   14-Dec-07       340     2.08     3.25    5.60   -5.75        -         -       -4.18

May e m
D e c2009 b e r                                                                                                                30
                           Currency Futures                                                                                                                                                                                                                                                            Magnum
‘Future’ is Bright for Currency Trading                                                                                                                                                                                                                                                     on other currencies as well, the exchanges may also be
                                                                                                                                                                                                                                                                                            allowed to decide the timing of the trading session and
The Indian economy is integrating at a faster pace with
                                                                                                                                                                                                                                                                                            products which they desire to start.
the rest of the world. Indian Financial Markets have also
been growing significantly; the equity markets have shown                                                                                                                                                                                                                                   Currently there are three exchanges which offer currency
a growth of almost 35-40% in past one and a half month.                                                                                                                                                                                                                                     futures trading; the National Stock Exchange (NSE), the
And the currency futures market is no exception to the                                                                                                                                                                                                                                      Bombay Stock Exchange (BSE) and the Multi Commodity
story, the average daily turnover in the segment has in-                                                                                                                                                                                                                                    Exchange (MCX-SX) and a new exchange will go live in
creased from $60 million to $700-800 million and show-                                                                                                                                                                                                                                      July, 2009 which is being floated by MMTC.
ing the signs of crossing the magical figure of $1 billion                                                                                                                                                                                                                                  As we can see in the above mentioned chart 1, since
in consonance with the increasing interest of the traders                                                                                                                                                                                                                                   January 1, 2009 to till date currency market has shown a
in currency future transactions. Liberalization has helped                                                                                                                                                                                                                                  reasonable move upward as well as downward leaving an
the Indian forex markets in various ways; the extensive                                                                                                                                                                                                                                     enough room for traders and investors to take their call.
fluctuations of exchange rates have attracted a great deal                                                                                                                                                                                                                                  The dollar-rupee rates increased from sub 48.73 levels
of interest from policymakers and investors.                                                                                                                                                                                                                                                to the highs of 52.06 on March 5, 2009 the period dur-
The SEBI has made a welcome move in the month of                                                                                                                                                                                                                                            ing which the stock market was under pressure as shown
March, 2009 by increasing the daily forex futures limits by                                                                                                                                                                                                                                 in Chart 2 when the CNX Nifty-50 came down from sub
100% to $10 million for traders and $50 million for brokers                                                                                                                                                                                                                                 3,033 levels to 2,573 indicating a more selling by Foreign
this is going to help in the long way to the currency futures                                                                                                                                                                                                                               Institutional Investors (FIIs) which total to Rs 6,681.90
market. The initiative will help in addressing the concerns                                                                                                                                                                                                                                 crore worth of FII selling during January, 2009 to Febru-
of entities which are engaged in bulky forex transactions                                                                                                                                                                                                                                   ary, 2009; because of which demand for dollar increased
and will increase the liquidity in this segment. Apart from                                                                                                                                                                                                                                 resulting in a sharp up move in dollar as indicated in the
this the policy makers are going to take a final call to al-                                                                                                                                                                                                                                Chart 1. Since March first week CNX Nifty-50 has shown
low Foreign Institutional Investors (FIIs) and Non Resident                                                                                                                                                                                                                                 a sharp up move during which the index has increased al-
Indians (NRIs) in the currency futures market in coming                                                                                                                                                                                                                                     most 35% resulting in depreciation in dollar from the high
three to four months, the move will provide the much                                                                                                                                                                                                                                        of 52.06 to around 49.50 levels. In the past four months
needed depth to the market.                                                                                                                                                                                                                                                                 the dollar and the equities are showing an inverse relation-
Currently, only dollar-rupee contracts are available for trad-                                                                                                                                                                                                                              ship with each other which can be concluded by looking at
ing because there is hardly any demand for contracts on                                                                                                                                                                                                                                     both the charts together.
other currencies however a SEBI-RBI led technical com-                                                                                                                                                                                                                                      Difference between Base Currency and Terms
mittee has already given its nod to introduce the contracts                                                                                                                                                                                                                                 Currency
 Chart 1= Dollar-Rupee Exchange Rates: Since January, 2009                                                                                                                                                                                                                                  In foreign exchange markets, the base currency is the first
                                                                                                                                                                                                                                                                                            currency in a currency pair and the second currency is
                                                                                                              $ v/s Rs.                                                                                                                                                                     called as the terms currency. Exchange rates are quoted
   52                                                                                                                                                                                                                                                                                       in per unit of the base currency. E.g. the expression Dollar
  51.5                                                                                                                                                                                                                                                                                      – Rupee, tells you that the Dollar is being quoted in terms
   51                                                                                                                                                                                                                                                                                       of the Rupee. The Dollar is the base currency and the Ru-
  50.5                                                                                                                                                                                                                                                                                      pee is the terms currency.
  49.5                                                                                                                                                                                                                                                                                      Exchange rates are constantly changing, which means that
   49                                                                                                                                                                                                                                                                                       the value of one currency in terms of the other is constantly
  48.5                                                                                                                                                                                                                                                                                      in flux. Changes in rates are expressed as strengthening
   48                                                                                                                                                                                                                                                                                       or weakening of one currency vis-à-vis the second curren-














                                                                                                                                                                                                                                                                                            cy. Changes are also expressed as Appreciation or depre-
                                                                                                                                                                                                                                                                                            ciation of one currency in terms of the second currency.
                                                                                                                                                                                                                                                                                            Whenever the base currency buys more of the terms cur-
                            Chart 2= CNX Nifty-50: Since January, 2009                                                                                                                                                                                                                      rency, the base currency has strengthened / appreciated
                                                                                                                                                                                                                                                                                            and the terms currency has weakened / depreciated. E.g.
                                                                                                CNX Nifty-50                                                                                                                                                                                If Dollar – Rupee moved from 50.00 to 50.50. The Dollar
                                                                                                                                                                                                                                                                                            has appreciated and the Rupee has depreciated.
 3,300.00                                                                                                                                                                                                                                                                                   Clearing & Settlement of Currency Future
 3,000.00                                                                                                                                                                                                                                                                                   The clearing and settlement of all trades executed on the
                                                                                                                                                                                                                                                                                            Currency Derivatives Segment of the National Stock Ex-
                                                                                                                                                                                                                                                                                            change (NSE) is done through National Securities Clear-
 2,600.00                                                                                                                                                                                                                                                                                   ing Corporation (NSCCL). It also acts as legal counterpar-
 2,500.00                                                                                                                                                                                                                                                                                   ty to all trades on the Currency Derivatives segment and





                                                                                                                                                                                                                                                                                            guarantees their financial settlement. The NSCCL takes









                                                                                                                                                                                                                                                                                            help of clearing members and clearing banks for clearing
                                                                                                                                                                                                                                                                                            and settlement of trades.

May e m
D e c2009 b e r                                                                                                                                                                                                                                                                                                                                     31
         Currency Futures                                                 Magnum
Clearing Members                                                is debited/ credited to the relevant CM’s clearing bank ac-
                                                                count on trading plus two (T+2) working day following the
In the Currency Derivatives segment, trading member-
                                                                Contract expiry Day.
cum-clearing member, clear and settle their own trades
as well as trades of other trading members (TMs). Be-           Settlement Prices for Futures
sides, there is a special category of members, called pro-      Daily settlement price on a trading day is the closing price
fessional clearing members (PCM) who clear and settle           of the respective futures contracts on such day. The clos-
trades executed by TMs. The members clearing their own          ing price for a futures contract is currently calculated as
trades and trades of others, and the PCMs are required to       the last half an hour weighted average price of the con-
bring in additional security deposits in respect of every TM    tract in the Currency Derivatives Segment of NSE. The
whose trades they undertake to clear and settle.                final settlement price is the RBI reference rate on the last
Clearing Banks                                                  trading day of the futures contract. All open positions shall
                                                                be marked to market on the final settlement price. Such
Funds settlement takes place through clearing banks.
                                                                marked to market profit / loss shall be paid to / received
For the purpose of settlement all clearing members are
                                                                from clearing members.
required to open a separate bank account with NSCCL
designated clearing bank for Currency Derivatives seg-          The main difference between currency futures and equity
ment. The Clearing and Settlement process comprises of          futures is the final settlement price. For equity futures the
the following three main activities:                            final settlement price is the spot price of its underlying at
1) Clearing                                                     the time of expiry whereas for currency futures the final
                                                                settlement price is the RBI’s reference rate which is con-
2) Settlement                                                   sidered as a spot rate for the currency.
3) Risk Management                                              Reasons for Traders to Trade in Currency Futures
Clearing Mechanism
The clearing mechanism essentially involves working out
                                                                • Decent Intra DayaVolatility: The past of around 43 paisa
                                                                  have witnessed intraday volatility
                                                                                                        six to eight months

open positions and obligations of clearing (trading-cum-          and 52 paisa in the currency futures segment of NSE
clearing/professional clearing) members. This position is         and MCX, which leaves an handsome opportunity for
considered for exposure and daily margin purposes.                the traders to make most out of it.
All futures contracts are cash settled, i.e. through ex-
change of cash in Indian Rupees. The settlement amount
                                                                • Low Margins: by almost 50% whichtrades oninNSE have
                                                                  been slashed
                                                                               The margins on the
                                                                                                    results margin of
for a CM is netted across all their TMs/clients, with respect     3 to 3.5% of contract value for currency futures against
to their obligations on mark to mark (MTM) settlement.            the average margin of 10 to 15% on index or stock fu-
Settlement Mechanism
Currency futures contracts have two types of settlements,       • Low Brokeragebasis points depending on volumes and
                                                                  tween 3 to 10
                                                                                 Rates: The brokerage rates vary be-
the mark to market (MTM) settlement which happens on
                                                                  holding period.
a continuous basis at the end of each day, and the final
settlement which happens on the last trading day of the
futures contract.
                                                                • Soundseen earlierand clearing andMechanism: process
                                                                                                               As we

                                                                  followed by NSE is very sound and it is similar to one
Mark to Market settlement (MTM Settlement):
                                                                  which is followed for index and stock futures settle-
All futures contracts for each member are marked-to-              ment.
market (MTM) to the daily settlement price of the relevant
futures contract at the end of each day. The profits/losses     • Increasing Volumes: The volumes haveofbeen currency
                                                                  ing consistently since the introduction the
are computed as the difference between:
                                                                  futures trading on the exchanges in August. With SEBI’s
1. The trade price and the day’s settlement price for con-        move to increase the daily forex futures limits by 100%
tracts executed during the day but not squared up.                for traders and brokers will provide more liquidity and
2. The previous day’s settlement price and the current            make trading more feasible in days to come.
day’s settlement price for brought forward contracts.           Conclusion
3. The buy price and the sell price for contracts executed      When there are two markets in existence for the same
during the day and squared up.                                  commodity and if there is no integration between both of
After completion of daily settlement computation, all the       them then it creates an arbitrage opportunity for the arbi-
open positions are reset to the daily settlement price. Such    tragers which brings about convergence in both the mar-
positions become the open positions for the next day.           kets, as there can not be two different prices for the same
                                                                commodity with the same features, the same opportunity
Final Settlement for Futures                                    lies in currency forward and currency futures market which
On the last trading day of the futures contracts, after the     leaves a tremendous opportunity for the volumes in the
close of trading hours, NSCCL marks all positions of a          currency futures market to rise exponentially in coming
CM to the final settlement price and the resulting profit/      days which will create more and more trading and hedg-
loss is settled in cash. Final settlement loss/profit amount    ing opportunities for the market participants.

May e m
D e c2009 b e r                                                                                                         32
         FII Trends                                                          Magnum
TECHNICAL ANALYSIS:                                               identify the fundamental shocks that accounted for these
                                                                  significant market moves is difficult to reconcile with the
The Voodooism of Stock Markets                                    view that such shocks account for most of the variation in
Markets move in a zigzag manner: rallying, leveling off,          stock returns.
and surging again, only to be hit by a wave of profit-tak-        B) Prices follow in trends
ing before settling into a trading range, awaiting the next
reason to advance or retreat. This activity carries on in         Technical analysts believe that prices follow certain trends.
the general direction of the trend, easily seen on a price        Technicians say that markets trend up, down, or sideways.
chart.                                                            This basic definition of price trends is the one put forward
                                                                  by Dow Theory.
Technical analysis, as opposed to the fundamental school
of thought, finds its roots in the behavioral pattern of price    Each time the stock rises, sellers would enter the mar-
following trends which claims to forecast the future move-        ket and sell the stock; hence the zig-zag movement in the
ment in prices. Technical analysis ignores and rubbishes          price. The series of lower highs and lower lows is a tell tale
the intrinsic/fundamental value of a stock as propounded          sign of a stock in a down trend. In other words, each time
                                                                  the stock edged lower, it fell below its previous relative low
by fundamental analysis. Technical analysis is frequently
                                                                  price. Each time the stock moved higher, it could not reach
contrasted with fundamental analysis, the study of eco-
                                                                  the level of its previous relative high price.
nomic factors that influence prices in financial markets.
Technical analysis holds that prices already reflect all such     C) History repeats itself
influences before investors are aware of them, hence the          Technicians believe that investors collectively repeat the
study of price action alone.                                      behavior of the investors that preceded them. To a techni-
Technically, the trend should be considered up as long as         cian, the emotions in the market may be irrational, but they
the market unfolds with a series of higher lows and higher        exist. Because investor behavior repeats itself so often,
highs. Similarly, the trend is considered down if the price       technicians believe that recognizable (and predictable)
action is a series of lower lows, with lower highs before         price patterns will develop on a chart.
each new low. A market is considered not to be in a trend         Technical analysis is not limited to charting, but it always
if the price movement manifests itself in a series of fits        considers price trends. For example, many technicians
and starts or if it fails to sustain levels beyond the previous   monitor surveys of investor sentiment. These surveys
extreme points, often reversing and forming the range.            gauge the attitude of market participants, specifically
Technical analysts (popularly called technicians) seek to         whether they are bearish or bullish. Technicians use these
identify price patterns and trends in financial markets and       surveys to help determine whether a trend will continue or
attempt to exploit those patterns. As technicians use vari-       if a reversal could develop; they are most likely to antici-
ous methods and tools, the study of price charts is of ut-        pate a change when the surveys report extreme investor
most importance.                                                  sentiment.
Technical analysis is based on certain tenets under which         Support and resistance are the key junctures where the
there are many approaches to study the price pattern in           forces of supply and demand meet. In the financial mar-
order to make a valuable judgement for the future.                kets, prices are driven by excessive supply (down) and
Assumptions                                                       demand (up). Supply is synonymous with bearish, bears
                                                                  and selling. Demand is synonymous with bullish, bulls and
Technicians opine that a market price of the stock reflects       buying. As demand increases, prices advance and as sup-
all relevant information, so their analysis looks more at in-     ply increases, prices decline. When supply and demand
ternals than at externals such as news events. Price ac-          are equal, prices move sideways as bulls and bears slug
tion also tends to repeat itself because investors collec-        it out for control.
tively tend toward patterned behavior – hence technicians’
focus on identifiable trends and conditions.
                                                                  Support is the price level at which demand is thought to be
A) The action of the markets discounts everything
                                                                  strong enough to prevent the price from declining further.
As all relevant information is already reflected by prices,       The logic dictates that as the price declines towards sup-
pure technical analysts believe it is redundant to do funda-      port and gets cheaper, buyers become more inclined to
mental analysis and hold that news events do not signifi-         buy and sellers become less inclined to sell. By the time
cantly influence price, and cite supporting research.             the price reaches the support level, it is believed that de-
On most of the sizable return days the information that           mand will overcome supply and prevent the price from fall-
the press cites as the cause of the market move is not            ing below support.
particularly important. Press reports on adjacent days also       Support levels are usually below the current price, but it is
fail to reveal any convincing accounts of why future prof-        not uncommon for a security to trade at or near support.
its or discount rates might have changed. Our inability to        Technical analysis is not an exact science and it is some-

May e m
D e c2009 b e r                                                                                                            33
         FII Trends                                                         Magnum
times difficult to set exact support levels. In addition, price   comes the support of the new price pattern.
movements can be volatile and dip below support briefly.          Fibonacci Ratio
Sometimes it does not seem logical to consider a support
level broken if the price closes 1/8 below the established        Reverend mathematician Leonardo Fibonacci, through
support level. For this reason, some traders and investors        the process of solving a mathematical riddle, discovered a
establish support zones.                                          unique mathematical sequence or series wherein the ratio
                                                                  of any two consecutive numbers approximates 1.618 or its
Resistance                                                        inverse, 0.618. The Fibonacci sequence is the sum of any
Resistance is the price level at which selling is thought to      two adjacent numbers that forms the next number in the
be strong enough to prevent the price from rising further.        series. The first 14 terms in the sequence are 1, 1, 2, 3, 5,
The logic dictates that as the price advances towards re-         8, 13, 21, 34, 55, 89, 144, 233, 377. The ratios of each two
sistance, sellers become more inclined to sell and buyers         consecutive numbers from the series are 1, 0.50, 0.666,
become less inclined to buy. By the time the price reaches        0.60, 0.625, 0.615, 0.619, 0.618, 0.618..., and between al-
the resistance level, it is believed that supply will over-       ternate numbers, the ratio is 2.618 and its inverse, 0.382.
come demand and prevent the price from rising above               The Fibonacci ratio is also referred to as the Golden Ratio
resistance.                                                       or the Golden Mean.
Resistance does not always hold and a break above resis-          As far as applications of the Fibonacci number is con-
tance signals that the bulls have won out over the bears.         cerned in the technical analysis, the golden ratio is trans-
A break above resistance shows a new willingness to buy           lated into three different percentages- 38.2%, 50% and
and/or a lack of incentive to sell. Resistance breaks and         61.8%. Apart from applying the golden ratio for retrace-
new highs indicate buyers have increased their expecta-           ments, arcs and fans, it is also used in determining the
tions and are willing to buy at even higher prices. In addi-      time zones.
tion, sellers could not be coerced into selling until prices      Time zones are typically a series of vertical lines that are
rose above resistance or above the previous high. Once            constructed by dividing a chart into segments with vertical
resistance is broken, another resistance level will have to       lines spaced in increments in accordance with the Fibo-
be established at a higher level.                                 nacci sequence (1,1,2,3,5,8,13,21,34, etc.). Time zones
Support & Resistance levels of Nifty                              represent the sensitive areas from where major price
                                                                  movements can be expected.

In the chart of Nifty during the period January to April, the
support and resistance levels have been shown. Starting           In the given chart of Nifty spanning January to April, three
from the lowest level, the support level is hovering around       time zones have been drawn following Fibonacci se-
2550 in March. The next support level is visible at the level     quence. As the time zone has divided the chart into three
tad lower from 2700.                                              parts, major price changes can be traced from the pattern
At the level of nearly 2950, a resistance level is estab-         of the breakup of the chart.
lished, which precedes the 3100 level as the new support          The first part is conclusive of fresh low ahead days to
level. Every resistance becomes the next support level if         come. Time zone, however, is not the facilitator of an up-
the market improves, just as 3100 was a resistance, it be-        tick or downtick, rather, it gives a direction of the price pat-
comes the new support level when Nifty advances further           tern. In the second part of the time zone, it ends up with a
to the level 3300, which is a resistance level. Again, when       new incentive for a price transformation after taking a dip
Nifty breakouts towards 3500 level, previous resistance           in the middle. Later, in the third part, it touches new highs
level of 3300 becomes the support level for the range             in conformity with a directional move as propounded by
bound market in the bracket 3300-3500.                            the Fibonacci sequence.
After the resistance level tastes a breakout, a new resis-        However, the results of Fibonacci ratio must be applied in
tance level is formed and the former resistance level be-         conjunction with other tools to make meaningful insights.

May e m
D e c2009 b e r                                                                                                             34
         (SIP) - Insurance                                                Magnum
Systematic Investment Plan (SIP)                               the units after a year of buying, he does not have to pay
                                                               capital gains tax but if he sells before a year, capital gains
The formula for getting your dreams come true –
                                                               tax of 10% is applicable.
start early & invest regularly
                                                               SIP is a process of compounding and the power of com-
A systematic investment plan (SIP) is a method of in-
                                                               pounding underlines the essence of making money work,
vesting a fixed sum, on a regular basis, in a mutual fund
                                                               if only invested at an early age. The longer one delays in
scheme – almost similar to regular saving schemes like a
                                                               investing, the greater the financial burden to meet desired
recurring deposit. In simple words it’s a drop of water to
                                                               goals. Saving a small sum of money regularly at an early
create an ocean.
                                                               age makes money work with greater power of compound-
One time lump sum investment means that you just hand          ing with significant impact on wealth accumulation.
over the cheque and you get your fund units depending on
                                                               Advantages of SIP
the value of the units on that particular day.
                                                               The investments we make are ultimately for some objec-
But in the periodic investments, or SIP, one has to commit
                                                               tives such as to buy a house, children’s education, mar-
to invest a regular sum at a regular interval of time. For
                                                               riage etc; and many of them require a huge one-time in-
example if one puts Rs 1,000 monthly in a fund, then at
                                                               vestment. SIP offers a disciplined way to invest a portion of
the end of a year, he would have invested Rs 12,000. Let
                                                               one’s income at regular intervals without trying to second-
us suppose that the NAV on the day of investment in the
                                                               guess the market, protecting the investor from extreme
first month is Rs 20; one will get 50 units. The next month,
                                                               fluctuations in the market and providing an opportunity to
the NAV is Rs 25 then same fund will add 40 units similarly    build the corpus over a longer period of time.
if the NAV goes down the following month to Rs 18 then it
will accumulate 55.56 units.                                   Qualified and experienced professionals who have the
                                                               expertise of investment techniques, backed by dedicated
So, after three months, there will be total of 145.56 units.   investment research team, manage mutual fund invest-
On an average, one would have paid around Rs 21 per            ments. One can purchase a scheme’s units at a lesser
unit. This is because, when the NAV is high, one get fewer     cost as most asset management companies (AMCs)
units while when the NAV falls, one get more units.            charge less ‘entry load’, while some scheme do not even
The SIP investment is meant for common investors who           charge anything for SIP investments, as compared to nor-
lack market knowledge, expertise of investing and do not       mal purchases in the scheme.
have the big pool of money. It is an ultimate solution for     The power of compounding underlines the essence of
different worries, instead of timing the market. Investing     making money work if only invested at an early age. The
month after month will ensure that one is invested at the      longer one delays in investing, the greater the financial
high and the low, and make the best out of an opportunity      burden to meet desired goals. Saving a small sum of
that could be tough to predict in advance, comparatively       money regularly at an early age makes money work with
lower risk and a possibility of much, much higher return       greater power of compounding with significant impact on
then recurring deposits like saving schemes.                   wealth accumulation.
It offers a disciplined way to invest a portion of one’s in-   SIP gives an advantage that even with small amounts one
come at regular intervals without trying to second-guess       can enjoy the benefits of diversification as diversification
the market, protecting the investor from extreme fluctua-      reduces the overall impact on the returns from a portfolio.
tions in the market.
                                                               SIP is disciplined investing, irrespective of the state of the
The method of SIP is very simple – one have to identify        market making the market timing totally irrelevant.
the funds he want to invest in and the amount required to      The Systematic Investment Plan (SIP) is a simple and
achieve his financial goals, and after payment through the     time honored investment strategy for accumulation of
agency on a regular interval, the units gets allotted to the   wealth in a disciplined manner over a long-term period.
fund based on the NAV on the date of each transaction,         It makes the volatility in the market work in favour of the
which reflects to the fund account.                            investor. Since a fixed amount is invested, more units are
One thing will have to be kept in mind is that liquid funds,   purchased when a scheme’s NAV is low and fewer units
cash funds and floating rate debt funds do not offer an SIP.   when the NAV is high. As a result, over a period of time
These are funds that invest in very short-term fixed-return    these market fluctuations are generally averaged. Thus
investments. Floating rate debt funds invest in fixed return   the average cost of investment is often reduced.
investments where the interest rate moves in tandem with       The method aims at a better future for its investors as a
interest rates in the economy.                                 SIP investor gets good rate of returns compared to a one
As far as the tax implications are concerned if one sells      time investor

May e m
D e c2009 b e r                                                                                                         35
         (ICICI Lombard) - Insurance                                          Magnum
ICICI Lombard - Car Insurance                                       premium of Rs 1500)
The number of road accidents in India is estimated to be            Towing charges can be claimed up to Rs 1,500. Cashless
three times vis-a-vis developed countries. The number of            claim settlement is available at ‘All India Cashless Garage
accidents for 1000 vehicles in India is as high as 35 while         List’ all across India.
the figure ranges from 4 to 10 in developed countries.              Apart from this, there are lots of bonuses and discounts
Comprehensive insurance cover type of insurance includes            available with the policy like
all the risks covered in the Motor Vehicles Act plus loss or        No Claim Bonus (NCB): If one do not make a claim during
damage caused to the vehicle due to different vagaries like         the policy period, a NCB is offered on renewals, this
accident, fire, explosion, self-ignition, lightning, burglary,      discount can go as high as 50%, and it can be transferred
house-breaking, theft riots & strikes, earthquakes, etc.            in full when one shift his motor insurance policy to another
Comprehensive insurance serves as an add-on to the                  company.
mandatory third-party cover and protects the vehicle                Voluntary Excess Discount: A further discount on the
owner from financial losses, caused by damage or theft              premium is available if one opts for a Voluntary Excess in
ICICI Lombard has launched a comprehensive package                  addition to the Compulsory Excess. (Compulsory Excess
policy for four-wheelers in India, covering Third Party             is the amount of loss, which the insured has to bear in
Liability (TPL) for bodily injury and/or death, personal            each and every claim.)
accident cover for owner-driver and loss or damage to the           Additional discounts: Apart from above, one can also avail
vehicle insured (Own Damage or OD). This policy gives an            of additional discounts if on is a member of a recognized
unique advantage so that now you can insure your vehicle            Automobile Association in India.
against acts of terrorism, even when you’re away.
                                                                    There are certain Policy Exclusions that includes
Policy Coverage
                                                                    •   Normal wear, tear and general aging of the vehicle
The policy provides coverage against loss or damage to
the vehicle or its accessories due to natural and man-
                                                                    •   Depreciation or any consequential loss

made calamities.                                                    •   Mechanical/ electrical breakdown

Natural calamities include fire, explosion, self-ignition or        •   Wear and tear of consumables like tyres and tubes
lightning, earthquake, flood, typhoon, hurricane, storm,            •   Vehicle being used other than in accordance with
tempest, inundation, cyclone, hailstorm, frost, landslide               limitations as to use
and rockslide.
                                                                    •   Damage to/ by a person driving the vehicle without a
The man made calamities cover burglary, theft, riot, strike,            valid license
malicious act, accident by external means, terrorist activity,
any damage in transit by road, rail, inland waterway, lift,
                                                                    •   Damage to/ by a person driving the vehicle under the
                                                                        influence of drugs or liquor
elevator or air.
The policy gives an advantage to customise the insurance
                                                                    •   Loss/ damage due to war, mutiny or nuclear risk

with additional covers for electrical and/ or non-electrical        Motor Claim Procedure
items fitted to the vehicle, which can be insured separately.       In case of motor insurance claim, one can avail cashless
For example: fog lights, music system, seat covers, etc.            facility for the repair of the car in any of the company’s All
Above all, the policy is governed by the Indian Motor Tariff Act.   India Cashless Garage List. However, if the car is serviced
                                                                    in a garage outside the purview of its network, one can
Key Benefits                                                        claim reimbursement for the same.
The policy not only covers the vehicle, but also provides
                                                                    In case of an accident, it is advised to note the number of
a compulsory personal accident cover of Rs 2 lakh for
                                                                    the other vehicle involved in the accident, if any. Jot down
individual owners of the vehicle while driving. One can
                                                                    the names and contact details of witnesses, if any. File
also opt for a personal accident cover for passengers.
                                                                    an FIR at the nearest police station in case of property
A digitally signed policy is issued immediately through             damage, bodily injury, theft and major damages.
online facility and it also has an online payment option
                                                                    Register the claim to the insurance company’s office and
through ICICI Bank, HDFC Bank and Citibank EMI through
                                                                    after registering the claim, the customer service manager
credit card is available without any extra charge.
                                                                    will contact the policyholder within 24 hours of registering
(EMI option is available subject to minimum annual                  the claim.

May e m
D e c2009 b e r                                                                                                              36

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