Fiscal Weekly

October Issue #1 07.10.2013

Weekly Newsletter by the unit of Fiscal Pages

Vol #6

Evalueserve
Evalueserve is a provider of business and technology research, data analytics and investment research services to companies worldwide. Evalueserve is a global specialist in knowledge processes with a team of more than 2,600 professionals worldwide. As a trusted partner, they analyze, improve, and execute information-laden work streams. In doing so, they leverage their proven methodologies and proprietary technologies. They enhance productivity and capabilities to give their clients an edge in the market. They serve Fortune 500 Companies. The company was started by Alok Aggarwal and Marc Vollenweider (ex-Partner at) in Dec, 2000. In 2003, the company coined the term KPO (Knowledge Process Outsourcing). Since 2008, Nand Gangwani (ex-CFO Napster) serves as Evalueserve's CFO.In 2011, supported by the German design agency Incorporate; Evalueserve updated its corporate design, including a relaunch of the corporate website and a changed company logo. Evalueserve has won several awards, including: In 2011, Marc Vollenweider was selected as one of the influential executives in nearshore outsourcing. India Business Law Journal LPO Awards 2009, 2010, 2011 and 2012 Deloitte Technology Fast 500 Asia 2006 and 2007

Contents
Inside story Evalueserve Highlights Top 10 News of the week, Key Highlights during the week, Stock Market,, Sectorial Analysis Market Indicators Articles: Food Security 2013 Act,

NASSCOM IT Innovations Award for its Innovative Business Model

Top Pick for Boutique Asia/ Emerging Markets Expert Network Specialist by Integrity Research in 2008 Marico Innovation Foundation Award for Business Model in 2008

Marc Vollenweider
Marc Vollenweider is the CEO and Co-founder of Evalueserve. Prior to this, he was a partner with McKinsey & Co. Marc has extensive consulting experience in various industries including telecom, banking and pharmaceuticals, and is a renowned expert on the outsourcing industry. Marc holds an MSc in Telecommunications Engineering from the Swiss Federal Institute of Technology (ETH), Zrich, and an MBA from INSEAD, Fontainebleau.
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Top 10 News of the week

Gold demand in India improved on Friday as prices fell more than 1% to the lowest in nearly seven weeks on a stronger rupee Market regulator Securities and Exchange Board of India (SEBI) has approved new rules aimed at streamlining the registration process for foreign investors, aiming to attract vital inflows needed to narrow a record high current account deficit. Cooper Tire & Rubber Co (CTB.N) on Friday said it has filed a complaint in a U.S. court to push India's Apollo Tyres (APLO.NS) to close its $2.5 billion acquisition of the American company in a timely manner. The Himachal Pradesh government Saturday agreed to Uttar Pradesh's proposal to pay arrears of Rs. 157crore for electricity supplied to it in 2011. India's foreign exchange (forex) reserves fell by $1.11 billion to $276.26 billion for the week ended Sep 27 as compared to $277.38 billion in the previous week due to a sharp drop in the value of foreign currency assets. The rupee rose to a near two-month high on Friday, ending the week with 1.8% gains, as the dollar struggled against global currencies due to the continued political impasse that has shut down the U.S. government. Mercedes-Benz premium auto brand posted its best-ever sales month in September, growing volume by 15.9 % to 142,994 cars, the company said on Friday. The Indian Railways will soon be using natural gas instead of diesel to power its locomotives, Railways Minister Mallikarjun Kharge said Thursday and plan to add 4,000 km of new lines besides over 7,500 km of doubling, 5,500 km of gauge conversion and 6,500 km of electrification. Tata Power announced it has begun construction work for the first phase of its joint venture 400 MW hydro-power project in Georgia.

Shares in Jet Airways (India) Ltd(NSI:JETAIRWAYS) rose as much as 7.2 % after the cabinet approved on Thursday a $330 million deal by Abu Dhabi's Etihad Airways to buy a stake in Jet Airways.

Surbhi chaudhary
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During Last Week:

India's current account deficit (CAD) in the first quarter of the current fiscal (April-June of 2013-14) was $21.8 billion, which works out to a disconcerting 4.9 per cent of GDP. High imports of gold and oil largely led to a worsening of the trade deficit during the quarter, coupled with a slow recovery in net invisibles (income and services), resulting in the sharp widening of the CAD to $21.8 billion in the latest reported quarter from $16.9 billion (or 4.4 per cent) in the corresponding quarter of the previous fiscal. India's manufacturing sector activity contracted for the second consecutive month in September as both output and new orders witnessed a decline. The overall rate of contraction was, however, marginal and eased since August, when it had slipped sub 50.0 reading (below which it indicates contraction) for the first time since March 2009. Car sales continued to remain under pressure due to an uncertain economy and high interest rates as companies reported weak numbers ahead of the crucial festive season that begins later this week. Only companies with new models like Honda and Ford reported a double-digit growth in volumes as others like Hyundai, Mahindra, Toyota and Tata Motors reported a year-on-year decline in volumes in September, while market leader Maruti managed a 2% growth. The services PMI contracted for the third time in a row in September and stood at 46.1 points from 47.6 points in August, according to the widelytracked HSBC Purchasing Managers' Index (PMI). The services PMI has been deteriorating since July this year. The HSBC India Composite Output Index, which maps both services and manufacturing activity fell to 46.1 in September from 47.6 in August, signaling a sharp deterioration in business activity across the country's private sector.

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10/7/2013

Stock Market
Nifty Top 5 (Weekly)
Company Bharat Petroleum... Ranbaxy Laboratories Ltd. Sun Pharmaceutical... National Aluminium Company... Prev. Close Current 305.5 332.1 569 341.45 360.2 600.45 % Change Company 6.11 Reliance Energy Ltd. Reliance Communications 5.11 Ltd. 3.5 Oil & Natural Gas... Hindalco Industries Ltd. 32.15 33.45 2.54

Nifty Bottom 5 (Weekly)

Prev. Close Current % Change 408.1 160.75 279.45 375.9 147.2 264.7 8.57 8.08 6.48 5.34

116.8 118.05

Siemens Ltd.

477.1

496

2.24 Tata Steel Ltd.

291.1 288.45

5.32

Important Exchange Rate

27-Sep-13 04-Oct-13 20-Sep-13

As of As of Percentage As of Percentage 27-Sep-2013 04-Oct-2013 change 20-Sep-2013 change

USD / INR GBP / INR EUR / INR 62.49 100.55 84.42 61.44 98.53 83.48 1.7% 2.0% 1.1% 62.28 99.85 84.33 -0.3% -0.7% -0.1%

JPY / INR
AUD / INR SGD / INR

0.63
58.16 49.77

0.63
57.90 49.28

0.0%
0.4% 1.0%

0.63
58.77 49.91

0.0%
1.0% 0.3%

CNY / INR 10.21 10.03 1.8% 10.18 -0.3% Positive percentage change implies that INR has appreciated against the other Fiscal Weekly - Finalyst -d Finance Club - NDIM, New Delhi 4 currency
Source: www.Bloomberg.com,

Market Indicators:

FII & DII Trend

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10/7/2 013

FOOD SECURITY BILL

The Indian National Food Security Act, 2013 (also Right to Food Bill), was signed into law September 12, 2013. This law aims to provide subsidized food grains to approximately two thirds of Indias population. The National Food Security Bill follows from the National Food Security Ordinance, 2013 that was promulgated by the government on July 5. Under the provisions of the bill, beneficiaries are to be able to purchase 5 kilograms per eligible person per month of cereals at the following prices:

Rice at Rs. 3/- Per kg.

Wheat at Rs. 2/- Per kg. Coarse: Grains (millet) at Rs. 1/- Per kg.

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10/7/20 13

SAILENT FEATURES
75% of rural and 50 percent of the urban population are entitled for three years from enactment to five kg food grains per month. Pregnant women and lactating mothers are entitled to a nutritious "take home ration" of 600 Calories and a maternity benefit of at least Rs 6,000 for six months; Children 6 months to 14 years of age are to receive free hot meals or "take home rations"; The central government will provide funds to states in case of short supplies of food grains; The current food grain allocation of the states will be protected by the central government for at least six months; The state governments will provide a food security allowance to the beneficiaries in case of non-supply of food grains; There will be state- and district-level redress mechanisms; and State Food Commissions will be formed for implementation and monitoring of the provisions of the Act. How much food grain will beneficiaries be entitled to? The poorest of the poor (the AAY group) will receive 35 kg of food grain/family/month while others (the priority group) will receive 5 kg of food grain/person/month. How will beneficiaries be identified? The central government will be responsible for determining the total number of persons to receive food security in each state. When is the government not liable for ensuring food security? The bill specifies that the Centre and states shall not be liable for failure to supply food grains in conditions such as war, flood, drought, earthquake, etc.

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10/7/20 13

What are some of the reforms to the public distribution system? The bill allows for reforms to TPDS that include using technology and introducing cash transfers and food coupons to ensure food grain entitlements for beneficiaries. Pitfalls Cost Of The Bill : 1,25,00,00,00,00,000 As our major exports are of grains, FSB will hamper our exports, leading to more Current Account Deficit. More CAD = more rupee fall i.e. more expensive imports, means more inflation. Government will need to borrow high amounts from Banks to finance such huge project, which in turn, will hamper private sector growth. Less growth means loss of jobs, less production and that implies more of imports which puts pressure on our foreign exchange. v. F.S.B will create another platform for corruption. There is high chance of black marketing of food grains, corruption in issuing cards to BPL. vi. The very low prices of the subsidized food will distort the market and farmers who cant sell to the government-assured program will lose out on the open market because prices will be forced down. vii. Moreover, the proposed entitlement of 5 kg per month per person implies the supply of only 165gms per person per day .

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10/7/20 13

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