tag:blogger.com,1999:blog-28008796897591100492024-03-29T09:00:15.619+05:30Eravandieravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.comBlogger73125tag:blogger.com,1999:blog-2800879689759110049.post-13611988722416517822012-04-07T18:44:00.000+05:302012-04-07T18:46:02.164+05:30Is Speculation Good??<!--[if !mso]> <style> v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} </style> <![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves>false</w:TrackMoves> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> <w:donotpromoteqf/> <w:lidthemeother>EN-US</w:LidThemeOther> <w:lidthemeasian>X-NONE</w:LidThemeAsian> 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Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-ansi-language:EN-IN;} </style> <![endif]--><!--[if gte mso 9]><xml> <o:shapedefaults ext="edit" spidmax="2050"> </xml><![endif]--><!--[if gte mso 9]><xml> <o:shapelayout ext="edit"> <o:idmap ext="edit" data="1"> </o:shapelayout></xml><![endif]--> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif";mso-ansi-language: EN-US">Investment versus Speculation</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Speculation </span><span style="font-family: "Times New Roman","serif"" lang="EN-IN">is the process of selecting investments with higher risk in order to profit from an anticipated price movement. <span class="apple-style-span"><span style="color:black">Speculation should not be considered purely a form of gambling, as speculators do make an informed decision before choosing to acquire the additional risks. Additionally, speculation cannot be categorized as a traditional investment because the acquired risk is higher than average.</span></span><span class="apple-converted-space"><span style="color:black"> </span></span><span class="apple-style-span"><span style="color:black">More sophisticated investors will also use a hedging strategy in combination with their speculative investment in order to limit potential losses.</span></span></span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Economic Benefits of Speculation</span></b></p> <h3 style="margin-top:0in;margin-right:0in;margin-bottom:.05in;margin-left: .5in;text-align:justify;text-indent:-.25in;mso-list:l12 level1 lfo1"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings; mso-bidi-font-family:Wingdings;color:black;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-list:Ignore">Ø<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="mw-headline"><span style="font-family:"Times New Roman","serif";color:black;font-weight:normal; mso-bidi-font-weight:bold" lang="EN-IN">Sustainable consumption level</span></span><span style="font-family:"Times New Roman","serif";color:black;font-weight: normal;mso-bidi-font-weight:bold" lang="EN-IN"></span></h3> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span style="font-size: 11.0pt;line-height:115%;color:black" lang="EN-IN">Speculators play an important role in maintaining the balance between the supply and the demand by taking advantage of shortages and surpluses. When a harvest is too small to satisfy consumption at its normal rate, speculators come in, hoping to profit from the scarcity by buying. Their purchases raise the price, thereby checking consumption so that the smaller supply will last longer. Producers encouraged by the high price further lessen the shortage by growing or importing to reduce the shortage. On the other side, when the price is higher than the speculators think the facts warrant, they sell. This reduces prices, encouraging consumption and exports and helping to reduce the surplus.</span></p> <h3 style="margin-top:0in;margin-right:0in;margin-bottom:.05in;margin-left: .5in;text-align:justify;text-indent:-.25in;mso-list:l12 level1 lfo1"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings; mso-bidi-font-family:Wingdings;color:black;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-list:Ignore">Ø<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="mw-headline"><span style="font-family:"Times New Roman","serif";color:black;font-weight:normal; mso-bidi-font-weight:bold" lang="EN-IN">Market efficiency and liquidity</span></span><span style="font-family:"Times New Roman","serif";color:black;font-weight: normal;mso-bidi-font-weight:bold" lang="EN-IN"></span></h3> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span style="font-size: 11.0pt;line-height:115%" lang="EN-IN">Another service provided by speculators to a market is that by risking their own<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Capital_%28economics%29" title="Capital (economics)"><span style="font-size:11.0pt;line-height:115%; color:windowtext;text-decoration:none;text-underline:none">capital</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%" lang="EN-IN"> </span></span><span style="font-size:11.0pt; line-height:115%" lang="EN-IN">in the hope of profit, they add<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Liquidity" title="Liquidity"><span style="font-size:11.0pt;line-height:115%;color:windowtext;text-decoration:none; text-underline:none">liquidity</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%" lang="EN-IN"> </span></span><span style="font-size:11.0pt; line-height:115%" lang="EN-IN">to the market and make it easier for others to offset<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Risk" title="Risk"><span style="font-size: 11.0pt;line-height:115%;color:windowtext;text-decoration:none;text-underline: none">risk</span></a></span><span style="font-size:11.0pt; line-height:115%" lang="EN-IN">, including those who may be classified as<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Hedge_%28finance%29" title="Hedge (finance)"><span style="font-size:11.0pt;line-height:115%;color:windowtext;text-decoration:none; text-underline:none">hedgers</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%" lang="EN-IN"> </span></span><span style="font-size:11.0pt; line-height:115%" lang="EN-IN">and arbitrageurs.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span style="font-size: 11.0pt;line-height:115%" lang="EN-IN">In the absence of speculators there would be only producers and consumers in the market. With fewer players in the market, there would be a larger<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Bid/offer_spread" title="Bid/offer spread"><span style="font-size:11.0pt;line-height:115%; color:windowtext;text-decoration:none;text-underline:none">spread</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%" lang="EN-IN"> </span></span><span style="font-size:11.0pt; line-height:115%" lang="EN-IN">between the current bid and ask price of pork bellies. Any new entrant in the market who wants to either buy or sell would be forced to accept an<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Market_liquidity" title="Market liquidity"><span style="font-size:11.0pt;line-height:115%; color:windowtext;text-decoration:none;text-underline:none">illiquid market</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%" lang="EN-IN"> </span></span><span style="font-size:11.0pt; line-height:115%" lang="EN-IN">and market prices that have a large bid-ask spread or might even find it difficult to find a co-party to buy or sell to. A speculator may exploit the difference in the spread and, in competition with other speculators, reduce the spread, thus creating a more<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Efficient_market" title="Efficient market"><span style="font-size:11.0pt;line-height:115%; color:windowtext;text-decoration:none;text-underline:none">efficient market</span></a></span><span style="font-size:11.0pt;line-height:115%" lang="EN-IN">.</span></p> <h3 style="margin-top:0in;margin-right:0in;margin-bottom:.05in;margin-left: .5in;text-align:justify;text-indent:-.25in;mso-list:l12 level1 lfo1"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings; mso-bidi-font-family:Wingdings;color:windowtext;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-list:Ignore">Ø<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="mw-headline"><span style="font-family:"Times New Roman","serif";color:windowtext;font-weight:normal; mso-bidi-font-weight:bold" lang="EN-IN">Bearing risks which in turn leads to production</span></span><span style="font-family:"Times New Roman","serif";color:windowtext; font-weight:normal;mso-bidi-font-weight:bold" lang="EN-IN"></span></h3> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span style="font-size: 11.0pt;line-height:115%" lang="EN-IN">Speculators also sometimes perform a very important risk bearing role that is beneficial to society. For example, a farmer might consider planting corn on some unused farmland by selling his crop in advance at a fixed price to a speculator. The farmer can hedge the price risk and is now willing to plant the corn.</span></p> <h3 style="margin-top:0in;margin-right:0in;margin-bottom:.05in;margin-left: .5in;text-align:justify;text-indent:-.25in;mso-list:l12 level1 lfo1"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings; mso-bidi-font-family:Wingdings;color:windowtext;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-list:Ignore">Ø<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="mw-headline"><span style="font-family:"Times New Roman","serif";color:windowtext;font-weight:normal; mso-bidi-font-weight:bold" lang="EN-IN">Finding environmental and other risks</span></span><span style="font-family:"Times New Roman","serif";color:windowtext; font-weight:normal;mso-bidi-font-weight:bold" lang="EN-IN"></span></h3> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span style="font-size: 11.0pt;line-height:115%" lang="EN-IN">Hedge funds that do fundamental analysis "are far more likely than other investors to try to identify a firm’s off-balance-sheet exposures", including "environmental or social liabilities present in a market or company but not explicitly accounted for in traditional numeric valuation or mainstream investor analysis", and hence make the prices better reflect the true quality of operation of the firms.</span></p> <h3 style="margin-top:0in;margin-right:0in;margin-bottom:.05in;margin-left: .5in;text-align:justify;text-indent:-.25in;mso-list:l12 level1 lfo1"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings; mso-bidi-font-family:Wingdings;color:windowtext;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-list:Ignore">Ø<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="mw-headline"><span style="font-family:"Times New Roman","serif";color:windowtext;font-weight:normal; mso-bidi-font-weight:bold" lang="EN-IN">Shorting</span></span><span style="font-family:"Times New Roman","serif";color:windowtext;font-weight:normal; mso-bidi-font-weight:bold" lang="EN-IN"></span></h3> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Shorting" title="Shorting"><span style="font-size:11.0pt;line-height:115%;color:windowtext;text-decoration:none; text-underline:none">Shorting</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%" lang="EN-IN"> </span></span><span style="font-size:11.0pt; line-height:115%" lang="EN-IN">may top unsustainable practices earlier and thus reduce damages and forming market bubbles.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span style="font-size: 11.0pt;line-height:115%" lang="EN-IN">In all speculation is beneficial on two levels: First, without speculation, untested new companies (like Amazon.com, in earlier times, the Edison Electric Light Co.) would never be able to raise the necessary capital for expansion. The alluring, long-shot chance of a huge gain is the grease that lubricates the machinery of innovation. Secondly, risk is exchanged (but never eliminated) every time a stock is bought or sold. The buyer purchases the primary risk that this stock may go down. Meanwhile, the seller still retains a residual risk – the chance that the stock he sold may go up!<sup><span style="color:black"></span></sup></span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Why do Speculators Fail?</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">This can be explained with the help of the Speculator Emotional Cycle</span></p> <p class="MsoNormal" style="text-align:center" align="center"><span style="font-family:"Times New Roman","serif";mso-ansi-language:EN-US; mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.jpg" alt="http://www.ritholtz.com/blog/wp-content/uploads/2010/04/speculation.jpg" border="0" height="265" width="301" /></span><span style="font-family: "Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1" lang="EN-IN">The causes are rooted in basic human emotions that work against making the proper decisions to profit in a speculative market. The moment a speculative asset is purchased and the speculator has taken a position in the market, emotions are immediately in play. If the potential resale price in the market is rising, the natural reaction is to want more. Greed takes over and the asset is strongly coveted by the speculator. If possible, the speculator will go out and purchase more of the asset in question. This was common in the bubble when people would take the equity from one property and purchase even more residential real estate. The problem with this natural emotional reaction is that it prevents the speculator from selling the asset and taking profits when they are available. People who make a living participating in speculative markets have learned to override this natural instinct and sell when their emotions are telling them to buy more. The average residential real estate speculator does not have this discipline or awareness. They will hold the asset through the good times.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1" lang="EN-IN">When prices begin to fall in a speculative market, most speculators immediately lapse into denial. They were so emotionally rewarded by purchasing and holding the asset, they see no reason to believe the first signs of a declining market are anything other than a temporary aberration. As prices continue to fall, the emotions change: fear begins to creep in, and the battle between denial and fear goes on well past the breakeven point where the speculator could have closed the position without losing any money. As prices fall further, the fear begins to take an emotional toll and the speculator starts to feel pain. The further prices drop, the more pain is inflicted on the speculator. What is the natural reaction to pain? Push it away. As a speculative investment becomes painful, the natural reaction is to want to get rid of it. This prompts the speculator to sell the asset – only after they have lost money. <span style="mso-spacerun:yes"> </span><span style="mso-spacerun:yes"> </span>A speculator’s emotions always work against them. When the asset is rising in price they want more of it, and when it is falling in price they want less. This is a natural reaction, and it is the cause of all losses in speculative markets. This is why most speculators fail.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">SPECULATION IN STOCK MARKET</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Speculation is commonly used in the stock market. Many investors who tend to make money by speculating are known as speculators. This kind of action persists in the stock market due to different investors have different views about the same stock. Speculation can only exist if there is a variation in the price or the price is very volatile. Volume also plays a vital role in price creation. If there is a selling pressure the price tends to fall and vice versa in buying scenario. Speculation increases the consumption level in the stock market by pumping cash. The speculators bring liquidity in the market.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">The major drawback with speculation is that it can emphasize sharp movements. Speculation causes deviation of price form their intrinsic value. Excessive of buying followed by selling pressures might lead to extreme downside of a particular stock.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><u><span style="font-size: 11.0pt;line-height:115%;color:black" lang="EN-IN">Candle stick chart</span></u><span style="font-size:11.0pt;line-height:115%" lang="EN-IN">: <span class="apple-style-span">A style of</span><span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Bar-chart" title="Bar-chart"><span style="font-size:11.0pt;line-height:115%;color:windowtext;text-decoration:none; text-underline:none">bar-chart</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-size:11.0pt;line-height:115%" lang="EN-IN">used primarily to describe price movements of a</span></span><span class="apple-converted-space"><span style="font-size:11.0pt;line-height:115%" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Security_%28finance%29" title="Security (finance)"><span style="font-size:11.0pt;line-height:115%; color:windowtext;text-decoration:none;text-underline:none">security</span></a></span><span class="apple-style-span"><span style="font-size:11.0pt;line-height: 115%" lang="EN-IN">,</span></span><span class="apple-converted-space"><span style="font-size:11.0pt;line-height:115%" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Derivative" title="Derivative"><span style="font-size:11.0pt;line-height:115%;color:windowtext;text-decoration:none; text-underline:none">derivative</span></a></span><span class="apple-style-span"><span style="font-size:11.0pt;line-height:115%" lang="EN-IN">, or</span></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Currency" title="Currency"><span style="font-size:11.0pt;line-height:115%;color:windowtext;text-decoration:none; text-underline:none">currency</span></a></span><span class="apple-style-span"><span style="font-size:11.0pt;line-height:115%" lang="EN-IN"> over time.</span></span><span style="font-size:11.0pt;line-height:115%" lang="EN-IN"></span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: .5in;text-align:justify;text-indent:-.25in;line-height:115%;mso-list:l7 level1 lfo3"><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN"><span style="mso-list:Ignore">-<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt; line-height:115%;color:black" lang="EN-IN">Buy on Greed, Sell on Fear</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt; margin-left:0in;text-align:center;line-height:115%" align="center"><span style="font-size: 11.0pt;line-height:115%;color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.jpg" border="0" height="295" width="247" /></span><span style="font-size: 11.0pt;line-height:115%;color:black" lang="EN-IN"></span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">Suppose you are a trader observing the bullish rally of Stock XYZ at the beginning of the 3rd bullish green candlestick, and considering an entry.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">You have witnessed the stock rally huge for two days and know that each trader who entered on the first two days is now a big winner.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">Based on the emotion of greed you decide to enter at that beginning of the 3 day, and mentally count your profits as the price rallies to a new high.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">After the stock closes, you brag to your friends at the golf course regarding the great trade that you made that day.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">You go home from the golf course and celebrate the victory with your spouse and maybe even discuss how you will use the extra money that you have earned through the trade.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">Now keep in mind that the profit is only on paper and not one penny has been earned yet.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">The next morning you check the price of your position, with expectations that your bullish stock will rocket to the moon! Now imagine the emotion that goes through your mind when your position not only fails to go higher, but also opens below your entry price.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">What is the emotion that flows through your body as you not only see your profits erode before your eyes, but now rob your account of precious capital?</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">The emotion that you will experience is undoubtedly fear and will prompt you to scramble to liquidate your position as soon as possible to minimize your losses.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">Now consider that there were also 2 or 3 thousand additional traders who entered the same stock at around the same price with the hopes of the gaining the same<br />profit.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">All of these traders will be tripping over themselves trying to get out of the stock.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">As was illustrated in the previous section, this increase in fear results in an increase in supply of the stock relative to the increase in demand, and triggers the sharp decline in the price.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">The deeper the red candlestick cuts into the bullish green candlesticks, the more traders are thrown into loosing positions and thus the further the price decline.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">Perhaps you are beginning to realize the power of emotions in price movements of a stock.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:11.0pt;line-height:115%;font-family:"Arial","sans-serif"; mso-fareast-font-family:Arial;color:black" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN">The technical analyst through candlestick reading is trained to read this greed and fear emotions in the market and capitalize on them.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span style="font-size: 11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN">This phenomenon works because of the<span class="apple-converted-space"> </span><b>greater fool theory</b><span class="apple-converted-space"> </span>(also called<span class="apple-converted-space"> </span><b>survivor investing</b>) which is the belief held by one who makes a questionable<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Investment" title="Investment"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1; text-decoration:none;text-underline:none">investment</span></a></span><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN">, with the assumption that they will be able to sell it later to "a greater fool"; in other words, buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to someone else at an even higher<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Price" title="Price"><span style="font-size: 11.0pt;line-height:115%;color:black;mso-themecolor:text1;text-decoration:none; text-underline:none">price</span></a></span><span style="font-size: 11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN">.<sup> </sup>It is similar in concept to the<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Keynesian_beauty_contest" title="Keynesian beauty contest"><span style="font-size:11.0pt;line-height: 115%;color:black;mso-themecolor:text1;text-decoration:none;text-underline:none">Keynesian beauty contest</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN"> </span></span><span style="font-size:11.0pt;line-height: 115%;color:black;mso-themecolor:text1" lang="EN-IN">principle of stock investing. Some consider it a valid method of making money in the<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Stock_market" title="Stock market"><span style="font-size:11.0pt;line-height:115%;color:black; mso-themecolor:text1;text-decoration:none;text-underline:none">stock market</span></a></span><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN">, particularly<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Technical_analysis" title="Technical analysis"><span style="font-size:11.0pt;line-height:115%; color:black;mso-themecolor:text1;text-decoration:none;text-underline:none">momentum investors</span></a></span><span style="font-size:11.0pt;line-height: 115%;color:black;mso-themecolor:text1" lang="EN-IN">; however,<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Value_investing" title="Value investing"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1; text-decoration:none;text-underline:none">fundamental investors</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN"> </span></span><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN">believe that market participants eventually realize that the price level is too outrageous (too high or too low) and the<span class="apple-converted-space"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Speculation" title="Speculation"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1; text-decoration:none;text-underline:none">speculative</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Economic_bubble" title="Economic bubble"><span style="font-size:11.0pt;line-height:115%; color:black;mso-themecolor:text1;text-decoration:none;text-underline:none">bubble</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN"> </span></span><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN">pops. The greater fool theory relies on market optimism and market momentum concerning a particular stock, an industry, or the market as a whole.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><span style="font-size: 11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN"> </span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:115%"><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN">SOME SPECTACULAR CRAZES</span></b></p> <p style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN">A Bubble exists when an asset’s price is driven by speculation – by the prospect of future price increases without regard for fundamentals.</span></p> <p style="text-align:justify;line-height:115%"><b style="mso-bidi-font-weight: normal"><span style="font-size:11.0pt;line-height:115%;color:black; mso-themecolor:text1" lang="EN-IN">Tulip Bubble</span></b></p> <p style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN">In seventeenth century Holland, investors speculated wildly on tulips, putting up as little as 2.5% of their own cash. In 1637, at the height of the tulip mania, just one Semper Augustus bulb changed hands for 12 acres of land. </span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">South Sea Bubble</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">In the South Sea Bubble of 1711, the English government needed to find a way to fund the huge debts it had incurred in the War of Spanish Succession. So the Lord Treasurer, Robert Harley, created the South Sea Trading company to help finance the government's debts. The company got exclusive trading rights in the South Atlantic plus a perpetual government annuity of over a half million pounds per year. In exchange, its investors agreed to assume responsibility for about £10 million of the government's debt.</span></p> <p style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN">It seemed like a win-win. But the government's sponsorship and the company's monopoly led to big trouble. The company's managers, thinking they had the government's largesse to fall back on, were complacent and ignored signs of economic troubles. They took excessive risk. And ultimately, investigations turned up massive fraud at the company and pervasive corruption in the government.</span></p> <p style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN">In 1720, investors drove up shares in the South Sea Company from 125 to 960 in six months and back down again to 180 in less than three months.</span></p> <p style="text-align:justify;line-height:115%"><b style="mso-bidi-font-weight: normal"><span style="font-size:11.0pt;line-height:115%;color:black; mso-themecolor:text1" lang="EN-IN">Internet Bubble</span></b></p> <p style="text-align:justify;line-height:115%"><span class="apple-style-span"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN">The "<span style="mso-bidi-font-weight:bold">dot-com bubble</span>" was a</span></span><span class="apple-converted-space"><span style="font-size:11.0pt;line-height:115%;mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast;color:black;mso-themecolor:text1" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Economic_bubble" title="Economic bubble"><span style="font-size:11.0pt;line-height:115%; color:black;mso-themecolor:text1;text-decoration:none;text-underline:none">speculative bubble</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt;line-height:115%;mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast;color:black;mso-themecolor:text1" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-size:11.0pt;line-height: 115%;color:black;mso-themecolor:text1" lang="EN-IN">covering roughly 1995–2000 during which</span></span><span class="apple-converted-space"><span style="font-size:11.0pt; line-height:115%;mso-fareast-font-family:"Times New Roman";mso-fareast-theme-font: major-fareast;color:black;mso-themecolor:text1" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Stock_markets" title="Stock markets"><span style="font-size:11.0pt;line-height:115%; color:black;mso-themecolor:text1;text-decoration:none;text-underline:none">stock markets</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt;line-height:115%;mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast;color:black;mso-themecolor:text1" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-size:11.0pt;line-height: 115%;color:black;mso-themecolor:text1" lang="EN-IN">in industrialized nations saw their equity value rise rapidly from growth in the more recent </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Quaternary_sector_of_industry" title="Quaternary sector of industry"><span style="font-size:11.0pt;line-height: 115%;color:black;mso-themecolor:text1;text-decoration:none;text-underline:none">Internet sector</span></a></span><span class="apple-converted-space"><span style="font-size:11.0pt;line-height:115%;mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast;color:black;mso-themecolor:text1" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-size:11.0pt;line-height: 115%;color:black;mso-themecolor:text1" lang="EN-IN">and related fields.</span></span></p> <p style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN">A combination of rapidly increasing stock prices, market confidence that the companies would turn future profits, individual </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Speculation" title="Speculation"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1; text-decoration:none;text-underline:none">speculation</span></a></span><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN"> in stocks, and widely available </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Venture_capital" title="Venture capital"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1; text-decoration:none;text-underline:none">venture capital</span></a></span><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN"> created an environment in which many investors were willing to overlook traditional metrics such as </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/P/E_ratio" title="P/E ratio"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1; text-decoration:none;text-underline:none">P/E ratio</span></a></span><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor: text1" lang="EN-IN"> in favour of confidence in technological advancements.</span></p> <p style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;color:black;mso-themecolor:text1" lang="EN-IN"> </span></p> <p style="text-align:justify;line-height:115%"><b style="mso-bidi-font-weight: normal"><span style="font-size:11.0pt;line-height:115%;color:black; mso-themecolor:text1" lang="EN-IN">HOUSING BUBBLE - </span></b><b><span style="font-size: 11.0pt;line-height:115%;color:black;mso-themecolor:text1;mso-ansi-language: EN-US">ONE OF THE BIGGEST SPECULATIVE MANIAS</span></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:115%"><em><b><span style="font-size:11.0pt;line-height:115%;mso-fareast-font-family: "Times New Roman";mso-fareast-theme-font:major-fareast;color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN">Debt</span></b></em><b style="mso-bidi-font-weight:normal"><i style="mso-bidi-font-style:normal"><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN"></span></i></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Debt is the fuel of speculation. Without it, speculative bubbles cannot emerge. With it, prices can be inflated beyond the wildest imagination. By mid-year 2008, the Federal Reserve reported a grand total of $14.8 trillion in U.S. mortgages outstanding — 40% more than the entire national debt and triple the total of all the mortgages in America just a dozen years earlier. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">It was not just the supersized<span class="apple-converted-space"><span style="color:black"> </span></span><em><span style="color:black;border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in; padding:0in">quantity</span></em><span class="apple-converted-space"><span style="color:black"> </span></span>of debt that was so dangerous but also the substandard quality of debt.</span></p> <p style="margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in; margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:115%; mso-list:l6 level1 lfo4"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;color:black" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><strong><span style="font-size:11.0pt; line-height:115%;color:black;border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in; padding:0in" lang="EN-IN">Millions of Americans bought homes with zero money down</span></strong><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt; line-height:115%;color:black" lang="EN-IN"></span></b></p> <p style="margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in; margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:115%; mso-list:l6 level1 lfo4"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;color:black" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><strong><span style="font-size:11.0pt; line-height:115%;color:black;border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in; padding:0in" lang="EN-IN">Millions of homeowners were allowed to pay interest only or even less than full interest</span></strong><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height:115%;color:black" lang="EN-IN"></span></b></p> <p style="margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in; margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:115%; mso-list:l6 level1 lfo4"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;color:black" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><strong><span style="font-size:11.0pt; line-height:115%;color:black;border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in; padding:0in" lang="EN-IN">The mortgages were mostly held by non-lenders — institutions and investors that were far removed from the borrowers.</span></strong><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt; line-height:115%;color:black" lang="EN-IN"></span></b></p> <p style="margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in; margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:115%; mso-list:l6 level1 lfo4"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;color:black" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><strong><span style="font-size:11.0pt; line-height:115%;color:black;border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in; padding:0in" lang="EN-IN">Millions were allowed to borrow huge sums without a scintilla of proof that they had the wherewithal to make the payments.</span></strong><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt; line-height:115%;color:black" lang="EN-IN"></span></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:115%"><strong><span style="font-size:11.0pt;line-height:115%;color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"> </span></strong></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:115%"><strong><span style="font-size:11.0pt;line-height:115%;color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN">Beyond the $14.8 trillion in residential and commercial mortgages in America, there are another $20.4 trillion in consumer and corporate debts. This meant that mortgages represent only 42% of the private-sector debt problem in the country.</span></strong><strong><span style="font-size:11.0pt;line-height:115%;color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"></span></strong></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:115%"><strong><span style="font-size:11.0pt;line-height:115%;color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"> </span></strong></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:115%"><strong><span style="font-size:11.0pt;line-height:115%;color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;font-weight:normal;mso-bidi-font-weight: bold" lang="EN-IN"> </span></strong></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:115%"><strong><span style="font-size:11.0pt;line-height:115%;color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN">Investor Frenzy</span></strong></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN">During housing boom, homes were increasingly bought with an intention of investment instead of primary residences. </span><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;mso-fareast-language:EN-IN; mso-bidi-font-weight:bold" lang="EN-IN">This resulted in homes being purchased while under construction, and then sold for a profit without the seller having resided in them. Many investors also assumed highly leveraged positions in multiple properties relying on a bullish real estate boom.</span><span style="font-family:"Times New Roman","serif";border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN"></span></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;mso-bidi-font-weight:bold" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN">This kind of speculation was traditionally just a small niche in the giant U.S. housing market. But at the peak of the housing boom, it nearly took over: An astounding 40% of houses and condos were bought as second homes or investments. The yearly rate of appreciation on existing homes catapulted from 3.6% in January 2001 to 16.6% in November 2005. On new homes, meanwhile, it surged from 4.8% in to 18.1%. As the buying frenzy heated up, homes and condos were flipped faster than hotcakes. Prices were driven through the roof. And even mortgages themselves were transformed into securities that were riskier than some of the riskiest stocks in the world.</span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;mso-ansi-language:EN-US; mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image006.jpg" alt="http://thenewmortgagecompany.files.wordpress.com/2010/08/five-stages-of-americas-housing-bubble-1-the-run-up1.jpg" border="0" height="247" width="601" /></span><span style="font-family: "Times New Roman","serif";border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in; padding:0in" lang="EN-IN"></span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN">SPECULATIVE FEVER AND DERIVATIVES</span></b></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="mso-ansi-language:EN-US;mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image008.gif" alt="http://upload.wikimedia.org/wikipedia/commons/thumb/2/24/US_derivatives_and_US_wealth_vs_total_world_wealth_1995-2007.gif/600px-US_derivatives_and_US_wealth_vs_total_world_wealth_1995-2007.gif" border="0" height="204" width="599" /></span><span style="font-family: "Times New Roman","serif";color:black;border:none windowtext 1.0pt;mso-border-alt: none windowtext 0in;padding:0in;mso-bidi-font-weight:bold" lang="EN-IN"></span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";color:black;border: none windowtext 1.0pt;mso-border-alt:none windowtext 0in;padding:0in; mso-bidi-font-weight:bold" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";color:black;border: none windowtext 1.0pt;mso-border-alt:none windowtext 0in;padding:0in; mso-bidi-font-weight:bold" lang="EN-IN">The graph above shows the total notional value of derivatives relative to US Wealth measures. It is important to note for the casual observer that, in many cases, notional values of derivatives carry little meaning. Often the parties cannot easily agree on terms to close a derivative contract. The common solution has been to create an equal and opposite contract, often with a different party, in order to net payments, thus eliminating all but the counterparty risk of the contract, but doubling the nominal value of outstanding contracts.<strong></strong></span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><strong><span style="color:black;border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in; padding:0in" lang="EN-IN">Government-Created Monopolies,</span></strong><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> <strong><span style="color:black;border:none windowtext 1.0pt;mso-border-alt:none windowtext 0in; padding:0in">Corruption, Fraud and Cover-Ups</span></strong></span></b></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";color:black;border: none windowtext 1.0pt;mso-border-alt:none windowtext 0in;padding:0in; mso-bidi-font-weight:bold" lang="EN-IN">The U.S. government created two monopolies: Fannie Mae and Freddie Mac. The U.S. Government gave these companies monopolistic control over America's largest debt market — mortgages. And then, beginning in the early 2000s, the government spurred these monopolies to compete aggressively with private subprime lenders. Not surprisingly, the results were similar to those of earlier bubbles: Extreme complacency, excessive risk-taking, and, ultimately, fraud.</span></p> <p class="MsoNoSpacing" style="text-align:justify"><span style="font-family:"Times New Roman","serif";color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;mso-bidi-font-weight:bold" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="text-align:justify"><b><u><span style="font-family:"Times New Roman","serif";color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in" lang="EN-IN">Counterargument to all these bubbles</span></u></b></p> <p class="MsoNoSpacing" style="text-align:justify"><span style="font-family:"Times New Roman","serif";color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;mso-bidi-font-weight:bold" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";color:black;border: none windowtext 1.0pt;mso-border-alt:none windowtext 0in;padding:0in; mso-bidi-font-weight:bold" lang="EN-IN">Provided the speculators do not spread false rumours about the assets they’re hoping to see fall in price, or engage in other fraud, their activity is socially beneficial. It adds to the information in the market and by doing so tends to bring about a more rapid and complete alignment between prices and underlying values.</span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";color:black;border: none windowtext 1.0pt;mso-border-alt:none windowtext 0in;padding:0in; mso-bidi-font-weight:bold" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="text-align:justify;line-height:115%"><span style="font-family:"Times New Roman","serif";color:black;border: none windowtext 1.0pt;mso-border-alt:none windowtext 0in;padding:0in; mso-bidi-font-weight:bold" lang="EN-IN">For instance, in the U.S. housing bubble case, one could speculate that housing prices will fall by selling mortgage-based bonds short. A housing crash will increase the mortgage default rate and thus reduce the value of bonds that are based on mortgages. Had there been rampant short selling of such bonds in the early 2000s, the price of those bonds would have fallen because a high level of short selling would have been a signal of widespread doubt that housing prices would continue to rise. When bond prices fall, yield rises, because the interest rate of a bond is a fixed percentage of the bond’s face value. (So if the value of a bond that pays 2 percent interest falls in half, the interest rate to buyers of the bond rises to 4 percent.) With interest rates on mortgage bonds higher and housing prices therefore lower (because mortgage interest is a major cost of buying a house), we might have been spared the housing bubble whose bursting triggered the economic crisis that the U.S. and the world are still struggling to climb out of.</span></p> <p class="MsoNoSpacing" style="line-height:115%"><span style="font-family:"Times New Roman","serif";color:black;border:none windowtext 1.0pt; mso-border-alt:none windowtext 0in;padding:0in;mso-bidi-font-weight:bold" lang="EN-IN"> </span></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN">SPECULATION IN FOOD PRICES</span></u></b></p> <p class="MsoNormal" style="text-align:justify"><i><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Hunger revolt in Haiti! Bread rebellion in Cameroon!<span style="mso-spacerun:yes"> </span></span></i><span style="font-family:"Times New Roman","serif"" lang="EN-IN">What had happened? The food prices increased drastically worldwide (see figure below). The FAO (Food & Agriculture Organization) food price index which covers the prices of the most important food commodities showed a <b>price increase of 71% </b>during the 15 months between the end of 2006 and March 2008. The increase was particularly dramatic for <b>rice and cereals where the prices sky-rocketed to a peak of 126% </b>in this time period. The head of the UN World Food Program Josette Sheeran called the rising cost of food ‘<b style="mso-bidi-font-weight: normal"><i style="mso-bidi-font-style:normal">a <span style="mso-bidi-font-weight: bold;mso-bidi-font-style:italic">silent tsunami</span></i></b>.’</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">"Speculators create the bubble whereby, they increase prices with their expectations, with their bets on the future, and their activities distort prices, especially in the commodities sector. And that is just like secretly hoarding food during a hunger crisis in order to make profits from increasing prices." -George Soros </span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Food Speculation</span></b></p> <p class="MsoNormal" style="text-align:center" align="center"><span style="font-family:"Times New Roman","serif";mso-ansi-language:EN-US; mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image010.jpg" border="0" height="301" width="529" /></span><span style="font-family: "Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Given that other factors which influence food prices, such as increasing demand of emerging markets countries, stagnation in production or the use of agro fuels, rising oil costs, unpredictable weather and global stocks at 25-year lows are long term factors, they cannot explain that the FAO food price index increased by 71% during only 15 months between the end of 2006 and March 2008 and fell back after July 2008 within few months to the level of 2006. This hike can only be understood by looking at the mechanisms of food speculation. </span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">HOW DOES FOOD SPECULATION WORK?</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">A significant portion of the increases in price and volatility of essential food commodities can only be explained by the emergence of the speculative bubble.</span></p> <p class="MsoListParagraph" style="margin-bottom:10.0pt;mso-add-space:auto; text-align:justify;text-indent:-.25in;line-height:115%;mso-list:l15 level1 lfo5"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt; line-height:115%;mso-bidi-font-weight:bold" lang="EN-IN">The speculative move on commodity markets</span><span style="font-size:11.0pt;line-height:115%" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:1.0in;text-align:justify;text-indent: -.25in;mso-list:l9 level2 lfo11;tab-stops:list 1.0in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">-<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">distorts prices</span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:1.0in;text-align:justify;text-indent: -.25in;mso-list:l9 level2 lfo11;tab-stops:list 1.0in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">-<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">reinforces instability</span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:1.0in;text-align:justify;text-indent: -.25in;mso-list:l9 level2 lfo11;tab-stops:list 1.0in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">-<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">increases market inefficiency</span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:1.0in;text-align:justify;text-indent: -.25in;mso-list:l9 level2 lfo11;tab-stops:list 1.0in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">-<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">periodically leads to the formation of bubble </span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:1.0in;text-align:justify;text-indent: -.25in;mso-list:l9 level2 lfo11;tab-stops:list 1.0in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">-<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">The worst effect: aggravation of hunger in developing countries</span><span style="font-family:Wingdings; mso-ascii-font-family:"Times New Roman";mso-hansi-font-family:"Times New Roman"; mso-bidi-font-family:"Times New Roman";mso-char-type:symbol;mso-symbol-font-family: Wingdings" lang="EN-IN"><span style="mso-char-type:symbol;mso-symbol-font-family:Wingdings">à</span></span><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight: bold" lang="EN-IN"> has pushed millions of additional people into poverty. </span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><b><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Types of speculation with agricultural futures:</span></b></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:0in; margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:-.5in; mso-text-indent-alt:-.25in;mso-list:l8 level2 lfo6;tab-stops:list .5in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span>i.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">The <b><i>Commercial Trade</i></b>, the so-called “good speculation” </span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></b></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-indent:-.5in; mso-text-indent-alt:-.25in;mso-list:l8 level2 lfo6;tab-stops:list .5in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span>ii.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">The more harmful speculation by Institutional Investors such as <b><i>Index and Hedge Funds</i>. </b></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></b></p> <p class="MsoNormal" style="text-align:justify"><b><span style="font-family:"Times New Roman","serif"" lang="EN-IN">GOOD SPECULATION or COMMERCIAL TRADING</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">The logic here is as follows: a farmer negotiates with a speculator in January that the speculator will buy the harvest at a fixed price in August. The arrangement is fixed by a contract. For the farmer, the advantage of futures lies in the security provided by the fixed price. He has transferred the risk to the speculator. The farmer must pay a fee for the derivative. The derivatives trader will also try to sell a corresponding future to the miller who buys the harvest in August to mill flour. The final price of the harvested grain is thus higher than it would have been if the farmer had sold directly to the miller, given the same conditions, because the derivatives trader's risk premium has influenced the price twice. The prices of futures lie slightly above those of direct trade (described as the cash or spot market), generally; however, the markets are stable if nothing unusual happens. The profits or losses achieved by the speculators are kept within limits. For all these reasons, commercial trading is often described as "good" or "useful" speculation. The CFTC (Commodity Futures Trading Commission) describes these traders as "hedgers", as opposed to "speculators“. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">Here the traders are well-established experts in the market. They possess expertise and information systems with which they can provide relatively reliable forecasts on price trends. Commercial trade is quite closely linked to the fundamentals of these markets. In the 17th century, speculators bought the harvests of Japanese rice farmers even before they were harvested. The original motive was safeguarding, virtually an insurance (hedging).</span></p> <p class="MsoNormal" style="text-align:justify"><b><span style="font-family:"Times New Roman","serif"" lang="EN-IN">HARMFUL SPECULATION & THE SPECULATIVE BUBBLE</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">This involves Institutional Investors investing in index funds and hedge funds.</span></p> <p class="MsoNormal" style="text-align:justify"><u><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">Index funds:</span></u><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN"> Such funds speculate on a basket of up to 20 or more commodities, primarily oil and metals (ores), but also agricultural commodities. Agricultural commodities usually account for 10% - 20 % of the index. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">Index fund speculation is not in any way linked to the fundamentals of the food markets. They exclusively follow the trends of the stock exchange indices. And the strategies are based on these trends. Trade is largely automated, so that low transaction costs are incurred.<span style="mso-spacerun:yes"> </span>Therefore, the investment or speculation behaviour of the funds is extremely pro-cyclic. Consequently, the contribution of the index funds to the food markets price bubble is not only restricted to the period from 2003 to 2007, but also contributed to the rapid increase in 2007. However, this can only be explained by another factor, the flight of hedge funds and other institutional investors from the crisis-ridden financial markets into the commodity markets. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">A speculative bubble stared to emerge. Prices increased again uninfluenced by the fundamentals, because institutional investors were entering the market. The price increase in derivatives caused a rise also in the spot prices. On the one hand, buyers on the spot markets bought more ahead to put in stock for fear of further price increases. This increased demand and caused an upward pressure on prices. On the other hand, sellers delayed sales in anticipation of higher prices, and caused supply shortages. Speculation by hedge funds and others set in motion a whole chain of speculative behaviour by other participants. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN"> </span></p> <p class="MsoNormal"><b><u><span style="font-family:"Times New Roman","serif"" lang="EN-IN">OIL PRICE SPECULATION</span></u></b></p> <p class="MsoNormal" style="text-align:center" align="center"><span style="mso-ignore: vglayout;position:relative;z-index:1"><span style="left:0px;position:absolute; left:391px;top:-1px;width:129px;height:45px"> </span></span></p><table cellpadding="0" cellspacing="0"> <tbody><tr> <td style="border:.75pt solid white; vertical-align:top;background:white" bgcolor="white" height="45" width="129"><span style="position:absolute;mso-ignore:vglayout;left:0pt;z-index:1"> <table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div style="padding:4.35pt 7.95pt 4.35pt 7.95pt" class="shape"> <p class="MsoNormal"><span lang="EN-IN"> </span></p> </div> </td> </tr> </tbody></table> </span> </td> </tr> </tbody></table> <span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US;mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image012.jpg" border="0" height="309" width="533" /></span><span style="font-family: "Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN"></span> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">The oil price is a strategic price since it influences the prices of all other products where oil is involved as fuel in production and distribution. This also applies to agricultural commodities. The production of these goods requires tractors and other machines which need petrol, and petrol is also needed to transport them to the consumer. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors. Specifically, these are Corporate and Government Pension Funds, Sovereign Wealth Funds, University Endowments and other Institutional Investors. Collectively, these investors now account on average for a larger share of outstanding commodities futures contracts than any other market participant. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">There are different views about speculation:</span></p> <p class="MsoListParagraph" style="margin-bottom:10.0pt;mso-add-space:auto; text-align:justify;text-indent:-.25in;line-height:115%;mso-list:l15 level1 lfo5"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-size:11.0pt; line-height:115%" lang="EN-IN">Gamblers destabilize the markets</span></b><span style="font-size:11.0pt;line-height:115%;font-family:Wingdings;mso-ascii-font-family: "Times New Roman";mso-hansi-font-family:"Times New Roman";mso-char-type:symbol; mso-symbol-font-family:Wingdings" lang="EN-IN"><span style="mso-char-type:symbol;mso-symbol-font-family: Wingdings">à</span></span><span style="font-size:11.0pt;line-height: 115%;mso-bidi-font-weight:bold" lang="EN-IN"> Many see speculation as the reason for the capricious movement in the oil price. Gamblers speculate (ie, decide whether to buy or sell) seeing simple supply and demand in the market. The problem occurs because, as the volume of trade on the futures markets can be many times greater than actual production, the oil price today is purely speculative, and neither the producing countries nor the end users are able to influence it much. Gamblers at their terminals destabilize the markets and thus the whole world.</span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-indent:-.25in; mso-list:l5 level1 lfo7;tab-stops:list .5in"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family: Arial;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Speculation influence future prices, not spot price</span></b><span style="font-family: Wingdings;mso-ascii-font-family:"Times New Roman";mso-hansi-font-family:"Times New Roman"; mso-bidi-font-family:"Times New Roman";mso-char-type:symbol;mso-symbol-font-family: Wingdings;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-char-type:symbol; mso-symbol-font-family:Wingdings">à</span></span><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN"> If oil traders sell on the futures market, they normally do not purchase the oil until the agreed delivery date. They divert a portion of the production for their transaction and return precisely this amount to the market. In order to influence current market price, speculators must <b><i style="mso-bidi-font-style: normal">withdraw</i></b> the oil prior to delivering it. For this, they need physical storage capacities. Only to the extent that they have these capacities can they influence the price.</span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><b><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Types of speculation with oil futures: </span></b><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></b></p> <p class="MsoListParagraphCxSpFirst" style="margin-bottom:10.0pt;mso-add-space: auto;text-align:justify;text-indent:-.5in;mso-text-indent-alt:-.25in; line-height:115%;mso-list:l13 level1 lfo8"><span style="font-size:11.0pt;line-height:115%;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span>i.<span style="font:7.0pt "Times New Roman""> </span></span></span><i style="mso-bidi-font-style:normal"><span style="font-size:11.0pt;line-height:115%;mso-bidi-font-weight:bold" lang="EN-IN">‘Stabilizing speculation’</span></i><span style="font-size:11.0pt;line-height: 115%;mso-bidi-font-weight:bold" lang="EN-IN"> based on storage fluctuation</span></p> <p class="MsoListParagraphCxSpLast" style="margin-bottom:10.0pt;mso-add-space: auto;text-align:justify;text-indent:-.5in;mso-text-indent-alt:-.25in; line-height:115%;mso-list:l13 level1 lfo8"><span style="font-size:11.0pt;line-height:115%;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span>ii.<span style="font:7.0pt "Times New Roman""> </span></span></span><i style="mso-bidi-font-style:normal"><span style="font-size:11.0pt;line-height:115%;mso-bidi-font-weight:bold" lang="EN-IN">‘Destabilizing speculation’</span></i><span style="font-size:11.0pt;line-height: 115%;mso-bidi-font-weight:bold" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><b><span style="font-family:"Times New Roman","serif"" lang="EN-IN">STABILIZING SPECULATION based on storage fluctuation</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">Large oil companies have extensive storage that they can speculate with. The ships on the oceans are also gigantic storage tanks. Many fully laden oil tankers roam the seas and do not deliver their shipments because the owners of the oil maybe waiting for higher prices. This kind of speculation helps in stabilizing the prices. </span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-indent:-.25in; mso-list:l10 level1 lfo9;tab-stops:list .5in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><u><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">NORMAL CASE: </span></u><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">It helps to smooth spikes in prices, since speculators only make a profit if they buy the oil cheaply and sell it at a higher price. </span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-indent:-.25in; mso-list:l10 level1 lfo9;tab-stops:list .5in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><u><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">LOW PRICE: </span></u><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">They buy the oil and in so doing, increase the price. </span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-indent:-.25in; mso-list:l10 level1 lfo9;tab-stops:list .5in"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><u><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">HIGH PRICE: </span></u><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">They sell the oil, thus lowering the price. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">OPEC is among the stabilizing speculators because it has a gigantic storage capacity in the form of oil reserves. Stabilizing speculation is what happened during the recent recession. Recession reduced the demand for oil. Before producers could adjust output, prices fell. But once the oil producing countries reduced their supply, prices picked up again in spring<span style="mso-spacerun:yes"> </span>2009. It is with regard to this stabilizing effect that it is often said, <i>“OPEC should be regarded as an institution like a central bank that stabilizes the world economy.” </i></span></p> <p class="MsoNormal" style="text-align:justify"><b><span style="font-family:"Times New Roman","serif";mso-bidi-font-style:italic" lang="EN-IN">HOW IS OIL PRICE SPECULATION USEFUL?</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">At the moment it looks like we are starting to suffer real <span style="mso-bidi-font-style:italic">physical</span> supply problems. Easily available oil reserves appear to have reached peak production and may indeed be starting to decline. So in this the <i style="mso-bidi-font-style:normal">speculators may be performing a useful role in raising the price</i>. The events that happen in regard to this speculative activity are:</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">Available oil resources appear to have reached peak production </span><span style="font-family:Wingdings;mso-ascii-font-family:"Times New Roman"; mso-hansi-font-family:"Times New Roman";mso-bidi-font-family:"Times New Roman"; mso-char-type:symbol;mso-symbol-font-family:Wingdings;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-char-type:symbol;mso-symbol-font-family:Wingdings">à</span></span><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight: bold" lang="EN-IN"> So production expected to start declining </span><span style="font-family:Wingdings;mso-ascii-font-family:"Times New Roman"; mso-hansi-font-family:"Times New Roman";mso-bidi-font-family:"Times New Roman"; mso-char-type:symbol;mso-symbol-font-family:Wingdings;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-char-type:symbol;mso-symbol-font-family:Wingdings">à</span></span><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight: bold" lang="EN-IN"> Prices raised now as a result of speculation </span><span style="font-family:Wingdings;mso-ascii-font-family:"Times New Roman"; mso-hansi-font-family:"Times New Roman";mso-bidi-font-family:"Times New Roman"; mso-char-type:symbol;mso-symbol-font-family:Wingdings;mso-bidi-font-weight: bold" lang="EN-IN"><span style="mso-char-type:symbol;mso-symbol-font-family:Wingdings">à</span></span><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight: bold" lang="EN-IN"> Demand drops </span><span style="font-family:Wingdings; mso-ascii-font-family:"Times New Roman";mso-hansi-font-family:"Times New Roman"; mso-bidi-font-family:"Times New Roman";mso-char-type:symbol;mso-symbol-font-family: Wingdings;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-char-type:symbol; mso-symbol-font-family:Wingdings">à</span></span><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN"> Depletion rates slow down </span><span style="font-family:Wingdings; mso-ascii-font-family:"Times New Roman";mso-hansi-font-family:"Times New Roman"; mso-bidi-font-family:"Times New Roman";mso-char-type:symbol;mso-symbol-font-family: Wingdings;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-char-type:symbol; mso-symbol-font-family:Wingdings">à</span></span><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN"> Future prices do not rise as much as it would have otherwise.</span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><b><span style="font-family:"Times New Roman","serif"" lang="EN-IN">DESTABILIZING SPECULATION</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">Here speculators <b><i style="mso-bidi-font-style:normal">borrow</i></b> cash or the object of speculation, to be able to exert a much greater leverage effect on the market. This is problematic for 2 reasons: </span></p> <p class="MsoNormal" style="margin-left:40.5pt;text-align:justify;text-indent: -40.5pt;mso-text-indent-alt:-.25in;mso-list:l11 level2 lfo10;tab-stops:list 40.5pt"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span>i.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">Speculators assume <b>risks</b> that they themselves cannot bear if their speculation goes awry. </span></p> <p class="MsoNormal" style="margin-left:40.5pt;text-align:justify;text-indent: -40.5pt;mso-text-indent-alt:-.25in;mso-list:l11 level2 lfo10;tab-stops:list 40.5pt"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span>ii.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">Individual speculators wield market power by themselves being <b>able to influence the market price level.</b> </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Times New Roman","serif";mso-bidi-font-weight:bold" lang="EN-IN">The system gets completely destabilized if the traded quantities are so large that an individual speculator can change the prices. Others are cheated, and the market fails in producing economic efficiency and stability.</span></p> <p class="Corps" style="line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:11.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-US">CURRENCY SPECULATION</span></u></b></p> <p class="Corps" style="line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">A currency speculator is somebody who buys foreign currency in order to sell it at higher price in the future.</span></p> <p class="Corps" style="line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="margin-left:11.65pt;text-indent:-11.65pt;line-height: 115%;mso-list:l0 level1 lfo12;tab-stops:list 11.65pt left 35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; mso-ansi-language:EN-US"><span style="mso-list:Ignore">I)<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-US">Speculation is necessary to bring liquidity to international trade, foreign direct investments and financial markets.</span></b></p> <p class="Corps" style="line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-US"> </span></b></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Without currency speculation, international trade would be brimmed. In effect, an exporter, which bills their goods in foreign currency, need to pay its workers and suppliers in domestic currency. For instance, a German manufacturer exports cars to the United States. The US importer pays its bill in US dollars. Once the German exporter receives payment, it needs to change US dollars into Euros on the foreign stock exchange. Thus, it has to find someone who wants to buy those US dollars and to sell Euros. Currency speculators are simply middlemen in that process, charging transaction fees and hoping that they will make profit with fluctuations in the future. If a company wants to build a factory in another country, it needs also to exchange its domestic currency into foreign currency.</span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image014.gif" height="196" hspace="16" vspace="16" width="465" align="left" /><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"></span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Consequently, there are two markets on foreign stock exchange: The primary exchange market which is linked to real transactions (exports, investments,) and the secondary market or speculative market which brings liquidity to the primary market. Currency speculation is necessary for importers, exporters, and investors, and that more speculation is generally better than less. The more currency speculators are involved in the secondary market, the easier it is for traders and investors to buy and sell foreign exchange when they need to.</span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Corps" style="margin-left:16.35pt;text-align:justify;text-indent:-16.35pt; line-height:115%;mso-list:l1 level1 lfo13;tab-stops:list 16.35pt left 35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; mso-ansi-language:EN-US"><span style="mso-list:Ignore">II)<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-US">An Excess of speculation brings instability and has to be regulated</span></b></p> <p class="Corps" style="text-align:justify;line-height:115%;tab-stops:35.45pt 70.85pt 106.3pt 141.75pt 177.15pt 212.6pt 248.05pt 283.45pt 318.9pt 354.35pt 389.75pt 425.2pt 460.65pt"><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-US"> </span></b></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">We have to notice that markets are not efficient. <b style="mso-bidi-font-weight:normal">Information asymmetry</b> deals with the study of decisions in transactions where one party has more or better information than the other. That means currency speculation is like a guessing game where people try to know if the currency will appreciate or depreciate. Speculators gather information often on biased source to anticipate fluctuations. They also follow the other speculators, especially hedge funds that launch signal to the markets. Guessing game and herd behavior lead to self-fulfilling prophecies. A self-fulfilling prophecy is a prediction that directly or indirectly causes it to become true, by the very terms of the prophecy itself, due to the positive feedback between belief and behavior.</span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">With those ingredients, currency speculators play a role in sparking or exacerbating economic crisis. First, currency speculation creates instability and disrupts international trade. It is riskier for an exporter to do its business, because he does not know the value of its exports in the future. Besides, hedging its transaction becomes more expensive with instability. Second, National governments and Central Banks are losing power. Currency traders are effectively policing governments by selling off a nation’s currency when they dissatisfied with that government's policies. In the case of euro speculation, financial markets discovered the weakness of European institutions and the laxity of Greek government to tackle its debt.</span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image016.gif" height="408" hspace="16" vspace="16" width="545" align="left" /><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"></span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:16.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">First, Greek debt attracted hedge funds and speculators which bet that the country will default. The price of Credit Default Swap (CDS) aimed at protecting creditors against a possible Greek bankruptcy went from a level of 120 in October 2009 to 420 on February 2010. People who buy CDS at such a high price are betting on the country bankruptcy, which will convert this high price in huge profit. That is the first self-fulfilling ingredient: the higher the bets, the more difficult it is for the country to refinance itself, and the higher the possibility of bankruptcy.</span></p> <p class="Formatlibre" style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Standard & Poor and Moody’s decreased the ratings of Greek bonds that amplified speculation. Speculators don’t want to keep bonds rated BB+ in their portfolio. Thus, they try to sell their Greek bonds but they become junk bonds. They so they have to sell their other risky bonds, i.e. debt bonds from Spain, Ireland and Portugal, the most fragile countries in the Euro zone. Crisis becomes higher.</span></p> <p class="Formatlibre" style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:3.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Hedge funds begin to bet on an implosion of the Euro currency area. Euro currency area is composed with different countries. First, there is a big gap between German economy and Greek economy. The value of a currency always reflects health of an economy. How the German could have the same currency as the Greek? Second, the European Union lacks a federal authority able to demand higher fiscal responsibility, higher transparency and better governance in sovereign debts management. Without federal authority, European governments and their ministers of finance had to implement a rescue refunding plan for Greece, but it took several weeks that let time to speculators to sell euro against dollars.</span></p> <p class="Formatlibre" style="margin-bottom:3.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:3.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">With all of these ingredients, Euro decreased against dollar. In June 2010, euro has lost 20 % of its January 2010 value.</span></p> <p class="Formatlibre" style="margin-top:0in;margin-right:0in;margin-bottom:3.0pt; margin-left:28.35pt;text-align:justify;text-indent:-28.35pt;line-height:115%; mso-list:l2 level1 lfo14;tab-stops:list 28.35pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-US">Speculators think that European Central Bank will tolerate higher inflation and rising inflation will cause the euro to depreciate further against other currencies. They anticipate by selling euros.</span></p> <p class="Formatlibre" style="margin-top:0in;margin-right:0in;margin-bottom:3.0pt; margin-left:28.35pt;text-align:justify;text-indent:-28.35pt;line-height:115%; mso-list:l2 level1 lfo14;tab-stops:list 28.35pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-US">Bad perspectives for economic recovery in Europe.</span></p> <p class="Formatlibre" style="margin-top:0in;margin-right:0in;margin-bottom:2.0pt; margin-left:28.35pt;text-align:justify;text-indent:-28.35pt;line-height:115%; mso-list:l2 level1 lfo14;tab-stops:list 28.35pt"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-US">Flight to quality. Speculators prefer to have dollars than euros.</span></p> <p class="Formatlibre" style="margin-bottom:2.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-bottom:2.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">The example of Europe proves that currency speculation brings instability because it often creates vicious spiral that could bring down an economy.</span></p> <p class="Formatlibre" style="margin-bottom:2.0pt;text-align:justify;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-top:0in;margin-right:0in;margin-bottom:2.0pt; margin-left:21.0pt;text-align:justify;text-indent:-21.0pt;line-height:115%; mso-list:l3 level1 lfo15;tab-stops:list 21.0pt"><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; mso-ansi-language:EN-US"><span style="mso-list:Ignore">III)<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-US">Institutional approach: Money is a public good so speculation has to be regulated.</span></b></p> <p class="Formatlibre" style="margin-bottom:2.0pt;text-align:justify;line-height: 115%"><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-US"> </span></b></p> <p class="Formatlibre" style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Regulation theory (Michel Aglietta): “In the social-link model, money is the collective pivotal point in the relationship between the individual and society. A relationship between two individuals may be termed ‘commercial’ because it is conducted through the institution of money.”</span></p> <p class="Formatlibre" style="margin-left:27.0pt;text-indent:-27.0pt;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Whatever it’s historical shape (fishes, seeds, goods, coins, notes…) money replaces violence between individuals. If a currency has no value, exchange between individuals and countries are impossible. And exchange and trade are a substitution to violence.</span></p> <p class="Formatlibre" style="margin-left:27.0pt;text-indent:-27.0pt;line-height: 115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="margin-left:27.0pt;text-align:justify;text-indent: -27.0pt;line-height:115%"><span style="font-size:11.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-US">That theory has already been proved by facts:</span></p> <p class="Formatlibre" style="margin-left:.5in;text-align:justify;text-indent: -.25in;line-height:115%;mso-list:l14 level1 lfo16"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;mso-ansi-language:EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-US">German Hyper inflation in the twenties which had helped Nazis to take power.</span></p> <p class="Formatlibre" style="margin-left:.5in;text-align:justify;text-indent: -.25in;line-height:115%;mso-list:l14 level1 lfo16"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;mso-ansi-language:EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-US">In the 80’s hyper inflation of peso in Argentina which had led to riots in the streets.</span></p> <p class="Formatlibre" style="margin-left:.5in;text-align:justify;text-indent: -.25in;line-height:115%;mso-list:l14 level1 lfo16"><span style="font-size:11.0pt;line-height:115%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;color:windowtext; mso-ansi-language:EN-IN;mso-fareast-language:EN-IN" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:11.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-US">Violence and riots in Greece towards government measures.</span><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:windowtext;mso-ansi-language: EN-IN;mso-fareast-language:EN-IN" lang="EN-IN"></span></p> <p class="Formatlibre" style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US"> </span></p> <p class="Formatlibre" style="text-align:justify;line-height:115%"><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">If Money is a public good or an institution, currency speculation has to be regulated in order to avoid social crisis.</span><span style="font-size:11.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:windowtext;mso-ansi-language: EN-IN;mso-fareast-language:EN-IN" lang="EN-IN"></span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com5tag:blogger.com,1999:blog-2800879689759110049.post-41452553018820123202012-04-07T18:35:00.000+05:302012-04-07T18:42:41.591+05:30Market Scams<!--[if !mso]> <style> v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} </style> <![endif]--><!--[if gte mso 9]><xml> <o:officedocumentsettings> <o:relyonvml/> <o:allowpng/> </o:OfficeDocumentSettings> </xml><![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves>false</w:TrackMoves> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> 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style="text-align:center;line-height:150%" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:14.0pt; line-height:150%;font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-ansi-language:EN-US"><span style="mso-spacerun:yes"> </span>Bernard Madoff – Ponzi Scheme</span></u></b></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l7 level1 lfo7"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;color:black;mso-themecolor:text1;mso-ansi-language:EN-US"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1; mso-ansi-language:EN-US">Incident:</span></u></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">It was in December 2008 that the biggest financial fraud in the history of the US came to light, this happened when Bernard Madoff, former Chairman of NASDAQ confessed to have been operating a 'Ponzi Scheme'. This affected a large number of investors, banks and had a huge impact on the already reeling US economy.</span></p> <p class="MsoListParagraphCxSpFirst" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l18 level1 lfo8"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;color:black;mso-themecolor:text1;mso-ansi-language:EN-US"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1; mso-ansi-language:EN-US">Analysis:</span></u></b></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US"><span style="text-decoration:none"> </span></span></u></b></p> <p class="MsoListParagraphCxSpLast" style="text-indent:-.25in;line-height:150%; mso-list:l18 level1 lfo8"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">How Did The Fraud Happen?</span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Madoff confessed to having operated the Ponzi scheme through the investment management and advisory division of his firm, Bernard L. Madoff Investment Securities LLC (BLMIS).</span></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%">The division was supposed to invest client’s money in shares of common stock, options, and other securities. It was also promised that whenever clients wanted it, the principal amount of the investment and the profits earned till date would be returned to them. However, instead of investing the money in the securities market, the investment management and advisory division of BLMIS deposited the entire amount in a bank account in Chase Manhattan. Moreover whenever a redemption request was made, it was fulfilled using the pooled money kept in the bank account. However the fund did not receive many redemption requests because of the steady returns that it delivered. </span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 150%;mso-list:l0 level1 lfo9"><span style="font-size:11.0pt; line-height:150%;font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-size:11.0pt;line-height: 150%">Strategy?</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%;mso-outline-level:3"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Rather than offer high returns to all, Madoff offered modest but steady returns (10%). The investment method was marketed as "too complicated for outsiders to understand". He was secretive about the firm’s business, and kept his financial statements closely guarded. Madoff was a "master marketer" and his fund was considered exclusive, giving the appearance of a "velvet rope". He generally refused to meet directly with investors, which gave him an "Oz" aura and increased the allure of the investment. Some of Madoff investors were wary of removing their money from his fund, in case they could not get back in later.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%;mso-outline-level:3"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-weight:bold" lang="EN-IN">Madoff sales pitch, an investment strategy consisted of purchasing blue-chip stocks and taking options contracts on them, sometimes called a split-strike conversion or a collar. Typically, a position will consist of the ownership of 30–35 S&P 100 stocks, most correlated to that index, the sale of out-of-the-money 'calls' on the index and the purchase of out-of-the-money 'puts' on the index. The sale of the 'calls' is designed to increase the rate of return, while allowing upward movement of the stock portfolio to the strike price of the 'calls'. The 'puts', funded in large part by the sales of the 'calls', limit the portfolio's downside.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%;mso-outline-level:3"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-weight:bold" lang="EN-IN">In 1982, he began using futures contracts on the stock index, and then placed put options on futures during the 1987 stock market crash.</span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p> <p style="margin-left:.5in;text-indent:-.25in;line-height:150%;mso-list:l2 level1 lfo10"><span style="font-size:11.0pt;line-height:150%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-size:11.0pt;line-height: 150%">Red Flags:</span></b></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%;mso-bidi-font-weight:bold">A few analysts performing due diligence had been unable to replicate the Madoff fund's past returns using historic price data for U.S. stocks.</span><span style="font-size:11.0pt; line-height:150%"> The only conclusion that they could arrive on was that the scheme was either front running or a ponzi scheme.</span></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%">**Front Running – </span>Illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers. When orders previously submitted by its customers will predictably affect the price of the security, purchasing first for its own account gives the broker an unfair advantage, since it can expect to close out its position at a profit based on the new price level.<span style="font-size:11.0pt;line-height:150%"></span></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%">**Ponzi - Fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.</span></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%">According to the industry experts, both regulators and investors neglected some important facts which enabled Madoff to carry on with this fraud for a long time. His fund had proved to be a consistent performer over decades. The fund had had only five losing months since 1996.</span></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%">One Madoff fund, which described its "strategy" as focusing on shares in the Standard & Poor's 100-stock index, reported a 10.5% annual return during the previous 17 years. Even at the end of November 2008, amid a general market collapse, the same fund reported that it was up 5.6%, while the same year-to-date total return on the S&P stock index had been negative 38%.</span></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%"> </span></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%"> </span></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%"> </span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 150%;mso-list:l4 level1 lfo11"><span style="font-size: 11.0pt;line-height:150%;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height:150%">Complaint:</span></b></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%">Financial analyst and whistleblower Harry Markopolos complained to the SEC's Boston office in May 1999, telling the SEC staff they should investigate Madoff because it was impossible to legally make the profits Madoff claimed using the investment strategies that he claimed to use. In 2005, Markopolos sent a detailed 17-page memo to the SEC, entitled “The World's Largest Hedge Fund is a Fraud”.</span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 150%;mso-list:l15 level1 lfo12"><span style="font-size: 11.0pt;line-height:150%;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;line-height:150%">Aftermath:</span></b></p> <p style="text-align:justify;line-height:150%"><span style="font-size:11.0pt; line-height:150%">The scheme began to unravel in December 2008, as the stock market continued to plunge. Subsequently, as the general market downturn accelerated, investors tried to withdraw $7 billion from the firm, and in the weeks prior to his arrest, Madoff struggled to keep the scheme afloat. To pay off those investors, Madoff needed new money from other investors.</span></p> <p style="line-height:150%"><span style="font-size:11.0pt;line-height:150%">As a last ditched effort Madoff approached several high profile clients saying that he was raising money for a new investment vehicle & needed ($500 million -$1 billion). Finally he decided that the firm pay out 170 million dollars in bonuses from $200 million in assets that the firm still had. He was asked to explain how he could pay bonuses if he was having trouble paying clients & this was when he confessed to have been operating a “Ponzi scheme” which was “one big lie”</span></p> <p style="line-height:150%"><span style="font-size:11.0pt;line-height:150%">There has been no bailout for Madoff’s<span style="mso-spacerun:yes"> </span>investors & he has been sentenced to 150 years in prison. </span></p> <p style="line-height:150%"><span style="font-size:11.0pt;line-height:150%"> </span></p> <p style="line-height:150%"><span style="font-size:11.0pt;line-height:150%"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%;mso-outline-level:3"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-weight:bold" lang="EN-IN"> </span></p> <p style="line-height:150%"><b><span style="font-size:11.0pt;line-height:150%"> </span></b></p> <p class="MsoNormal" style="line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US"> </span></p> <p class="MsoNormal" style="line-height:150%"><b style="mso-bidi-font-weight: normal"><u><span style="font-family:"Times New Roman","serif";color:black; mso-themecolor:text1;mso-ansi-language:EN-US"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal" style="line-height:150%"><b style="mso-bidi-font-weight: normal"><u><span style="font-family:"Times New Roman","serif";color:black; mso-themecolor:text1;mso-ansi-language:EN-US"><span style="text-decoration: none"> </span></span></u></b></p> <p class="MsoNormal" style="text-align:center;line-height:150%" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US"><span style="text-decoration:none"> </span></span></u></b></p> <p class="MsoNormal" style="text-align:center;line-height:150%" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:14.0pt; line-height:150%;font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-ansi-language:EN-US">Sumitomo Corporation – The story of Copper derivatives</span></u></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US">Incident:</span></u></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">This study is a classic example of – ‘Running on the top of the tiger not knowing how to get off without being eaten.’</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1; mso-ansi-language:EN-US">Yasuo Hamanaka, the chief copper trader at Japan's Sumitomo Corporation caused $2.6 billion losses to the company through his unauthorized trading activities in the physical and futures market in copper at the London Metal Exchange. It was the largest unauthorized trading-related loss incurred by any Japanese company during that time. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US">Analysis:</span></u></b></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.5in; line-height:150%;mso-list:l9 level1 lfo1"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Initial Profits – Result of Manipulation </span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Yasuo Hamanaka the head trader of Sumitomo Corporation manipulated the world copper prices through his operations on the LME (London Metal Exchange) copper futures market over the period of 1991-95. This artificial increase in copper price resulted in increased profits for Sumitomo Corporation from selling copper. Moreover Hamanaka was reporting inflated trading profits to the top management by showing invoices of fictitious option trades, which he had created through a nexus with some brokers. Whenever any hedge fund or speculator who was aware of manipulation tried to take short positions, Hamanaka invested more money into his positions thus sustaining the high price. However despite these faulty practices no action was taken against Hamanaka because of the profits he generated for the company.</span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.5in; line-height:150%;mso-list:l9 level1 lfo1"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Lack Of Transparency</span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Successful manipulation of the copper prices was possible due to lack of transparency in the reporting positions of large clients at LME.</span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.5in; line-height:150%;mso-list:l6 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Action Taken Too Late </span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">During late 1995, due to increased copper production facilities particularly in China, copper prices started declining. This was ominous for Sumitomo as they had long positions in the futures market. Hamanaka failed to get rid of his positions. He tried to recover the losses by taking huge positions in copper commodity futures on the London Metal Exchange. However the huge volume of trading attracted the attention of the exchange and it gave a warning to Hamanaka. Hamanaka then struck a deal with Merrill Lynch for US $150 Mn, which enabled him to trade via Merrill at LME. Later however when LME started investigating on the alleged manipulation of copper prices Hamanaka was taken off from his position of head trader. This brought the short traders and hedge funds into the act causing the copper prices to fall further on LME.</span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.5in; line-height:150%;mso-list:l16 level1 lfo3"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Lack of Proper Managerial Supervision</span></b><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> <b style="mso-bidi-font-weight:normal">and Operational Control Systems </b></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Transactions were made solely by Yasuo Hamanaka himself. He abused Sumitomo's name, and continued on with unauthorized trading and even borrowed money from several banks without any authorization from his seniors. Hamanaka a middle-level manager got so much power only because of the fact that he had helped Sumitomo garner a lot of profits in the past. He was given a great deal of responsibility by the company, a star trader status and his only regulators were overseas, far from Tokyo.</span></p> <p class="MsoListParagraph" style="margin-left:39.0pt;mso-add-space:auto; text-align:justify;text-indent:-39.0pt;line-height:150%;mso-list:l14 level1 lfo4"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Lack of Monitoring </span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Trading in commodities and financial instruments was not being properly monitored by the government regulatory agencies and by the companies undertaking these transactions. This conclusion can be derived from the fact that in a short span of 16 months three major derivative disasters were seen:</span></p> <p class="MsoListParagraphCxSpFirst" style="margin-left:39.0pt;mso-add-space: auto;text-align:justify;text-indent:-.25in;line-height:150%;mso-list:l5 level1 lfo5"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"" lang="EN-IN">UK's 233-year-old Barings Bank, which lost $ 1.4 bn in February 1995 due to Nick Leeson's unauthorized trading activities in the Singapore futures market</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:39.0pt;mso-add-space: auto;text-align:justify;text-indent:-.25in;line-height:150%;mso-list:l5 level1 lfo5"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Japanese bank Daiwa which lost $1.1 bn in America's Treasury bond market in September 1995 due to the unauthorized trading activities of Toshihide Iguchi.</span></p> <p class="MsoListParagraphCxSpLast" style="margin-left:39.0pt;mso-add-space:auto; text-align:justify;text-indent:-.25in;line-height:150%;mso-list:l5 level1 lfo5"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Japan's Sumitomo Corporation $2.6 billion losses due to unauthorized trading activities in the physical and futures market in copper at the London Metal Exchange.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">The debacle was the result of Sumitomo's poor managerial, financial and operational control systems. Due to this, Hamanaka was able to carry on unauthorized trading activities undetected by the top management. The vesting of excessive decision power on a single employee and failure to implement the job rotation policy were the other reasons cited.</span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.5in; line-height:150%;mso-list:l8 level1 lfo6"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Damage Control Measures</span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">In order to control mounting losses, Sumitomo began aggressive liquidation of its uncovered positions in the copper physical and futures market under its new president Kenji Miyahara. It cancelled its plans to buy back 20 million of its shares and award Yen 120 million ($1.1 million) of bonuses to its senior managers. Sumitomo was able to overcome the losses since it had a net worth of $6 bn and another $8 bn in hidden reserves. The losses estimated to be $2.6 bn amounted to only 10 per cent of Sumitomo's annual sales.</span></p> <p class="MsoNormal" style="text-align:center;line-height:150%" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:14.0pt; line-height:150%;font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-ansi-language:EN-US">Crazy Eddie-The Series of Frauds </span></u></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US">Incident:</span></u></b></p> <p class="MsoNormal" style="line-height:150%"><span style="font-family: "Times New Roman","serif";color:black;mso-themecolor:text1" lang="EN-IN">By June 1988, Crazy Eddie's suppliers were demanding the liquidation of the company, so they could recover money owed to them. In 1989 they would get their wish. The closing of Crazy Eddie began in March 1989, as the company shuttered 17 of its 43 stores. On June 6, 1989 Crazy Eddie was served with a petition by five of its creditors, who had not been paid a total of $860,000 they were owed, which sought to have the company forced into bankruptcy. The company originally planned to fight the petition and file for dismissal, but fifteen days later Crazy Eddie voluntarily filed for Chapter 11 bankruptcy protection. Company president and CEO Peter Martosella cited problems created by the creditors' position (which he termed "ill-advised"), but said business would be conducted as usual at the remaining 26 stores and that Crazy Eddie was still a strong franchise. The company vowed to stay in business but despite Martosella's assertions Crazy Eddie continued to falter. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US">How did frauds happen?</span></u></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">Almost from the beginning, Crazy Eddie's management was engaged in various forms of fraud. The Antars deliberately falsified their books to reduce (or eliminate) their taxable income. They also paid employees off the books, and regularly skimmed thousands of dollars earned at the stores. For every $5 Crazy Eddie reported as income, $1 was taken by the Antars. In 1979, the Antars began depositing much of this money (hundreds of thousands of dollars) in Israeli bank accounts. The Antar family skimmed an estimated $3 million to $4 million (US) per year at the height of their fraud. In one offshore bank account, the family deposited more than $6 million between 1980 and 1983. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">By 1983, it was becoming more and more difficult to hide the millions of illicit dollars. The Antars discovered the way to cover up their growing fraud was to take the company public. In preparation, Eddie Antar initiated a scheme in 1979 to skim less each year. Since more income was actually being reported, this had the effect of showing drastically increasing profit margins. While company's actual profits (taking into account skimmed profits increased approximately 13%, reported profits rose nearly 171%) from 1980 to 1983.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">A district manager who was paid $5,200 per year "on the books" and $50,000 per year "off the books" was now paid "on the books" over $75,000 per year on the books, instead of receiving any "off the books" compensation. Therefore, according to Crazy Eddie's books and records such a person's annual salary suddenly went from $5,200 per year to $75,000 per year. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">Despite the misgivings of people closely associated with Crazy Eddie, the company held its initial public offering on September 13, 1984 (symbol: CRZY). Shares of the company sold initially for $8. By early 1986, Crazy Eddie stock was trading at more than $75 per share (split adjusted). </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">Eddie recruited his cousin, Sam E. Antar (known as Sammy), to assist the company with its fraud. In 1986, he was named CFO of the company. Sammy was informed that there was a $3 million deficit from the previous year's inventory fraud that needed to be hidden. Additionally, he was instructed to find ways to show a 10% growth in sales. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">One of Sammy's major schemes was a money laundering operation later known as the Panama Pump — money that the Antars had deposited in Israeli banks was transferred to bank accounts in Panama. These accounts, opened under false names, then drafted payments to Crazy Eddie. This money was largely used to inflate same-store sales figures for the company.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">As a public company, Eddie, Sammy, and others engaged in increasing amounts of inventory fraud to increase reported profits and inflate the value of Crazy Eddie stock. For the fiscal year ended March 1, 1985, Crazy Eddie falsified inventories by $3 million. The next fiscal year, that amount increased to between $10 and $12 million.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">Eddie Antar and his father Sam M. Antar wanted to sell over $30 million in stock by the first week of March 1986 at the highest possible price. Therefore, to meet analysts' sales expectations, Sammy conceived of a plan known as the "Panama Pump."</span><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">Eddie Antar and other family members advanced $1,500,000 to Crazy Eddie from their secret bank accounts in Israel which contained funds skimmed while Crazy Eddie was a private company. Those funds were first wired from Bank Leumi Israel to Bank Leumi Panama (both countries were bank secrecy jurisdictions). </span><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">After the funds were transferred to Panama, another family member withdrew those funds from Bank Leumi in the form of drafts or non-negotiable instruments, to avoid violating disclosure laws on the movement of funds into the country.</span><span style="font-family: "Times New Roman","serif";color:black;mso-themecolor:text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">The bank drafts were issued in amounts ranging from $25,000 to $100,000 in order to make it easier to deposit such drafts in each comparable store bank account and conceal the phony sales.</span><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">Since Crazy Eddie’s weekend checks from sales to customers were deposited on Monday anyway, there was no problem including such bank drafts with the weekend sales proceeds. The bank drafts were dated <u>before</u> the fiscal year ended.</span><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">Also, another $500,000 in currency from Antar family mattresses that did not make its way to Israel was deposited in the same store sales.</span><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">Finally, a sale of $200,000 to another retailer called “trans-shipping” was counted as a retail sale and included in same store sales.</span><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">The sum total of $1.5 million in bank drafts, $500k in currency, and $200k from counting a trans-shipping sale as a same store sale, artificially increased same store sales in total by $2,200,000 for fiscal year 1986 and reported profits by $2 million.</span><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1;mso-bidi-font-weight:bold" lang="EN-IN">In Q4 1986, Crazy Eddie reported a 14% same store sales increase, instead of a 9% same store sales increase, due to the "Panama Pump" and other schemes described above. Likewise, Crazy Eddie reported a 10% same store sales increase for January and February 1986, instead of the 4% same store sales increase due to the “Panama Pump.” As a result of the “Panama Pump” fraud, Crazy Eddie’s reported same store sales for January February 1986, met analysts’ expectations for that period.</span><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">To continue the same store sales inflation, a scheme to sell (trans-ship) merchandise to non-retail customers who were not end users, such as other retailers and wholesalers, was advised and <span style="mso-spacerun:yes"> </span>such sales were counted as if they originated from those comparable stores. That scheme is known as "channel switching."</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">Those trans-shipping sales originated from the main office. However, such sales were counted as if they originated from comparable stores as retail end user sales.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor: text1" lang="EN-IN">The trans-shipper issued a series of checks in small denominations for their purchase of merchandise from Crazy Eddie instead of issuing one large check per order. The small checks (usually in denominations of $10,000 - $20,000) were deposited into the bank accounts of the comparable store sales and treated as a regular “off the street” customer retail channel sale.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US">Analysis:</span></u></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US">Methods of doing the frauds:</span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><strong><span style="color:black;mso-bidi-font-style:italic" lang="EN-IN">Fictitious revenues:</span></strong><span class="apple-converted-space"><b><i><span style="font-family:"Times New Roman","serif"; color:black" lang="EN-IN"> </span></i></b></span><span style="font-family: "Times New Roman","serif"" lang="EN-IN">The most common way companies create fictitious revenues is to dummy up sales that did not occur. The accounting transaction created is a credit to sales with an offsetting debit to accounts receivable, which boosts both assets and income. In the Crazy Eddie’s case, the audit trail was easy to fake. Antar’s underlings prepared phony invoices showing merchandise sales. Three major suppliers, beholden to Crazy Eddie’s for large volumes of business, cooperated. When auditors attempted to confirm some of these receivables, the vendors would—at Antar’s behest—lie. Obviously, with such a conspiracy, it would have been difficult—if not impossible—for the auditors to easily uncover such a scheme.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><strong><span style="color:black;mso-bidi-font-style:italic" lang="EN-IN">Fraudulent asset valuations<i>:</i></span></strong><span class="apple-converted-space"><b><i><span style="font-family:"Times New Roman","serif";color:black" lang="EN-IN"> </span></i></b></span><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Although any asset can be fraudulently valued, the most frequent manipulations occur in inventory. In the Crazy Eddie’s fraud, Antar overvalued inventory by $80 million, and employed some pretty outrageous tricks to get there. He and his conspirators “borrowed” merchandise from suppliers to boost the ending inventory count. These were the same suppliers who confirmed Crazy Eddie’s phony receivables. Eddie convinced the suppliers to simply ship merchandise to the Crazy Eddie’s stores, and hold the billing until after the end of the accounting period. They also shipped stock from one store to another so it could be double-counted. And, most outrageous of all, they got into the auditors’ desk and altered inventory count sheets in the work papers to increase the numbers.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><strong><span style="color:black;mso-bidi-font-style:italic" lang="EN-IN">Timing differences:</span></strong><span class="apple-converted-space"><b><i><span style="font-family:"Times New Roman","serif"; color:black" lang="EN-IN"> </span></i></b></span><span style="font-family: "Times New Roman","serif"" lang="EN-IN">Another way companies overstate assets and income is by taking advantage of the accounting cutoff period to either boost sales and/or reduce liabilities and expenses. Antar routinely told his stores to hold the books open past the end of an accounting period to falsely inflate sales revenues. Conversely, as detailed below, the liabilities for any given period were normally not recorded until the next period.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><strong><span style="color:black;mso-bidi-font-style:italic" lang="EN-IN">Concealed liabilities and expenses:</span></strong><span class="apple-converted-space"><b><i><span style="font-family:"Times New Roman","serif";color:black" lang="EN-IN"> </span></i></b></span><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Unfortunately for the CPA (Certified Public Accountant), it is all too easy for a client to conceal liabilities. After all, it is easier to audit something that is there rather than something that<span class="apple-converted-space"><span style="color:black"> isn’t</span></span><em><span style="color:black">. </span></em>In the Crazy Eddie’s case, Sam E. Antar, the CFO (and Eddie’s nephew), regularly stashed unpaid bills in his desk. The liabilities would be either entered after the yearend or held for long periods without being recorded. As a result, Crazy Eddie’s never did know what it really owed, and neither did the auditors.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><strong><span style="color:black;mso-bidi-font-style:italic" lang="EN-IN">Improper disclosures:</span></strong><span class="apple-converted-space"><b><i><span style="font-family:"Times New Roman","serif"; color:black" lang="EN-IN"> </span></i></b></span><span style="font-family: "Times New Roman","serif"" lang="EN-IN">Generally accepted accounting principles (GAAP) require adequate disclosure in the financial statements. Any material fact not covered in the financials should be disclosed in accompanying footnotes. Sam Antar—a former CPA and auditor—managed to change accounting methods simply by altering two words. In one year, the footnotes stated that certain income was recognized when<span class="apple-converted-space"><span style="color:black"> received<i> </i></span></span>(cash basis). The following year, Sam removed “received” and substituted<span class="apple-converted-space"><span style="color:black"> earned<i> </i></span></span>(accrual basis). The deception went unnoticed by the auditors, and it had the intended effect of boosting income. A careful review of the footnotes from year to year would normally detect such a simple—but in this case, effective—scheme.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US">The rationale behind the fraud:</span></b></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo13"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;color:black;mso-themecolor:text1;mso-ansi-language:EN-US"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1; mso-ansi-language:EN-US">Greed</span></b></p> <p class="MsoNormal" style="margin-left:.25in;text-align:justify;line-height: 150%"><span style="font-family:"Times New Roman","serif";color:black; mso-themecolor:text1;mso-ansi-language:EN-US">The whole purpose of the establishment of this electronic consumer products chain was to achieve maximum wealth by all the possible means. The entire Antar family was involved in the frauds and till the company went into bankruptcy, there were lots of frauds which became evident and CEO was sentenced with 8 years of imprisonment and fined to the tunes of $150m.</span></p> <p class="MsoListParagraphCxSpFirst" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US"><span style="text-decoration:none"> </span></span></u></b></p> <p class="MsoListParagraphCxSpLast" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo13"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;color:black;mso-themecolor:text1;mso-ansi-language:EN-US"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1; mso-ansi-language:EN-US">Incentives and opportunities</span></b></p> <p class="MsoNormal" style="margin-left:.25in;text-align:justify;line-height: 150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"; color:black" lang="EN-IN">Crazy Eddie committed crimes simply because they could. Criminologists like to analyze white collar crime in terms of the 'fraud triangle' - incentive, opportunity, and rationalization. They had no rationalization. Simply put, the incentive and opportunity was there, but the morality and excuses were lacking. They never had one conversation about morality during the 18 years that the fraud was going on.</span></span><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-US"></span></u></b></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo13"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;color:black;mso-themecolor:text1;mso-ansi-language:EN-US"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";color:black;mso-themecolor:text1; mso-ansi-language:EN-US">Lack of Policy Control</span></b></p> <p style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt;margin-left: 0in;text-align:justify;text-indent:15.0pt;line-height:150%"><span style="font-size:11.0pt;line-height:150%">Unfortunately, policy makers in Washington and even Crazy Eddie's former auditors <span style="mso-spacerun:yes"> </span>apparently have not learned any lessons from the past and continue to make white-collar crime easy for the criminals. For example, the Dodd-Frank Act watered down Sarbanes-Oxely by exempting</span><span style="font-size:11.0pt;line-height:150%;mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast"> </span><span style="font-size:11.0pt; line-height:150%">small companies from internal control audits. Crazy Eddie would have been exempted under those provisions, too. KPMG (Crazy Eddie's former auditors) was</span><span style="font-size:11.0pt;line-height:150%; mso-fareast-font-family:"Times New Roman";mso-fareast-theme-font:minor-fareast"> </span><span style="font-size:11.0pt;line-height:150%">cited</span><span style="font-size: 11.0pt;line-height:150%;mso-fareast-font-family:"Times New Roman";mso-fareast-theme-font: minor-fareast"> </span><span style="font-size:11.0pt;line-height:150%">by the United Kingdom’s Financial Reporting Council for signing off on audits too early, the same mistake they made at Crazy Eddie<span class="apple-style-span"><span style="color:black">.</span></span><span style="color:black"><br style="mso-special-character:line-break"> <br style="mso-special-character:line-break"> </span></span><strong><i><span style="font-size:11.0pt;line-height: 150%;font-family:"Helvetica","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast;mso-bidi-font-family:"Times New Roman"; color:black"></span></i></strong></p> <p class="MsoNormal"><span class="apple-style-span"><b style="mso-bidi-font-weight: normal"><span style="font-size:14.0pt;line-height:115%;mso-bidi-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-spacerun:yes"> </span></span></b></span><span class="apple-style-span"><b style="mso-bidi-font-weight: normal"><u><span style="font-size:14.0pt;line-height:115%; font-family:"Times New Roman","serif"" lang="EN-IN">Amaranth Advisors</span></u></b></span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; mso-list:l11 level1 lfo15"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Background</span></b></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Amaranth Advisors LLC (Amaranth) was a US based hedge fund incorporated in 2000 by Nick Maounis (Maounis). Initially, Amaranth used conservative investment strategies like arbitrage. When several hedge funds started using similar investment strategies, the resulting profitability came down. Maounis then shifted Amaranth's focus to energy trading. In mid 2004, Maounis hired Brian Hunter (Hunter), an energy trader who was working for Deutsche Bank energy trading desk. Hunter started generating good profits in energy trading. He generated US$ 1 billion profits in 2005. Hunter's trading strategy in 2005 was believed to be based on historical returns as well as on weather predictions. He used excessive leverage and invested in natural gas derivatives on NYMEX and ICE in 2006.</span></span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> <span class="apple-style-span">However, his strategy went wrong and prices of natural gas contracts moved in opposite direction to his estimates. That led to margin calls from Amaranth's lenders which it could not meet and eventually had to windup with US$ 6.6 billion losses.</span></span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; mso-list:l11 level1 lfo15"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Trading Strategy</span></b></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Amaranth’s trading strategy followed by Hunter was</span></span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> long winter and short non-winter natural gas futures contracts. Hunter repeatedly used borrowed money to double up his bets. <span class="apple-style-span">Buying more futures contracts of the kind his fund already owned supported their price by increasing demand, propping up paper gains. But that support only lasted as long as Amaranth and its lenders were willing to spend cash to buy more contracts. </span></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">( Refer Annexure I ,Amaranth’s Positions ) </span></span></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-size:11.0pt;line-height:150%">Historical returns from similar positions held by Amaranth in previous years yielded profits as natural gas supplies were disrupted due to hurricanes like Rita and Katrina and natural gas prices went through the roof. This earned Amaranth USD 1 billion profits and Hunter was labelled as star trader. Hoping for the repeat performance Hunter again took went long on the natural gas contracts leveraging their position 8:1.</span></span><span style="font-size:11.0pt;line-height: 150%;color:#666666"> </span><span class="apple-style-span"><span style="font-size:11.0pt;line-height:150%">Hunter had put 50% of the USD 9 billion hedge fund at stake on natural gas. But that year US did not experience any major storm and on the back of increased supplier the natural gas prices plummeted. This gave a body blow to the hedge fund and the firm shed USD 6 billion in losses.</span></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l1 level1 lfo16"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;mso-ansi-language:EN-US"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US">Risk Management:</span></b></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US">Amaranth’s risk exposure can examined in two dimensions of risk - liquidity risk and market</span></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US">Risk.</span></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US"> </span></span></p> <p class="MsoListParagraph" style="margin-bottom:0in;margin-bottom:.0001pt; mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l12 level1 lfo17;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:Wingdings;mso-fareast-font-family: Wingdings;mso-bidi-font-family:Wingdings;mso-ansi-language:EN-US"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; mso-ansi-language:EN-US">Market Risk </span></b></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"" lang="EN-IN">It is found that Amaranth may have been chasing a potential expected profit of about $1B in September, 2006 for a market risk VaR of about $3.781B with a leverage of about 7.28. That is, although the trade was a reasonable one to make, Amaranth leveraged the position significantly and was taking on a lot of market risk. Even with simple market risk measures, they were implicitly prepared to lose about 56% of their fund ($3.781B) in a “worst” case scenario (less than 1% of the time) for an expected profit of about $1B. They were taking a too risky position.</span></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"" lang="EN-IN"> </span></span></p> <p class="MsoListParagraph" style="margin-bottom:0in;margin-bottom:.0001pt; mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l12 level1 lfo17;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi-font-family:Wingdings" lang="EN-IN"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"" lang="EN-IN">Liquidity Risk </span></b></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"" lang="EN-IN">In the simulated spread trades, the only way to generate such huge losses in September 2006 would have been to hold natural gas futures positions and/or options that represented up to 80% of the total open interest on the NYMEX. While these positions could have been held in a combination of OTC deals, NYMEX positions, and ICE positions, they still represent much too large a position with respect to total open interest on the NYMEX exchange. In some senses, Amaranth would have been near to the sole owner of one side of these futures positions. Thus, the positions of Amaranth were irresponsible and massively excessive from a liquidity perspective, which may have explained the additional $2.07B losses in excess of a simple VaR measure. This also raises important questions for regulators about more transparency in the context of hedge funds’ trading positions.</span></span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"" lang="EN-IN"> </span></span></p> <p class="MsoListParagraphCxSpFirst" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l17 level1 lfo18"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Reasons for the collapse and Lessons:</span></b></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l10 level1 lfo14"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">One of the strong reasons was the lack of stringent trading limits on ICE. ICE, which was an unregulated exchange, had helped Hunter to place bets without any position limits.</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l10 level1 lfo14"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Concentration Risk: Close to 50 % of hedge fund stake was on a single underlying asset natural gas.</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l10 level1 lfo14"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Deviation from core competency: Amaranth had traded energy for several years their roots lay in convertible-bond trading, a different, less-volatile market.</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l10 level1 lfo14"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Portfolio diversification as a risk mitigation strategy was ignored by a hedge fund which is supposed to follow superior risk management practices.</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l10 level1 lfo14"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Relied on the past success of their star energy trader </span></span><span class="apple-converted-space"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Brian</span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> Hunter.</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l10 level1 lfo14"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Excessive use of leverage.</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l10 level1 lfo14"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Firm ignored statistical computations of Value at Risk.( Annexure III )</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l10 level1 lfo14"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Flaws in debt and liquidity management.</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l13 level1 lfo19"><span class="apple-style-span"><span style="font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span></span><span class="apple-style-span"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Aftermath</span></b></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">The Commodity Futures Trading Commission (CFTC) and Federal Energy Regulatory Commission (FERC) had filed the lawsuit against Amaranth and two of its traders - Matthew Donhoe (Donhoe) and Brian Hunter (Hunter), alleging that they had manipulated natural gas market prices through their trading activities in February and April, 2006. CFTC had originally sought US$ 20 million and FERC had sought US$ 291 million in fines from Amaranth and its traders. However, they later agreed to settle the charges against Amaranth and Donhoe for a total of US$ 7.5 million as they felt that the defunct Amaranth would not be able to pay such high penalties with its assets already having been liquidated.</span></span><span style="font-family:"Times New Roman","serif";color:#666666" lang="EN-IN"> </span><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">The charges against Hunter, however, continued with CFTC and FERC complaining that the bets placed by him had been huge and had led to the collapse of Amaranth</span></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></span></p> <p class="MsoListParagraphCxSpLast" style="margin-left:0in;mso-add-space:auto; text-align:justify;line-height:150%"><span class="apple-style-span"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></span></p> <p class="MsoNormal" style="text-align:center;line-height:150%" align="center"><span class="apple-style-span"><b style="mso-bidi-font-weight:normal"><i style="mso-bidi-font-style:normal"><span style="font-size:14.0pt; line-height:150%;font-family:"Times New Roman","serif";color:black" lang="EN-IN">“Major crises are major opportunities for change”</span></i></b></span><span style="font-size:14.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></p><br /><p class="MsoNormal" style="text-align:center" align="center"><span style="font-size:12.0pt;line-height:115%;mso-ansi-language:EN-US;mso-no-proof: yes"> </span><b style="mso-bidi-font-weight:normal"><span style="font-size:14.0pt;line-height:115%" lang="EN-IN"></span></b></p> <span style="font-size:12.0pt;line-height:115%;font-family:"Calibri","sans-serif"; mso-ascii-theme-font:minor-latin;mso-fareast-font-family:Calibri;mso-fareast-theme-font: minor-latin;mso-hansi-theme-font:minor-latin;mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA;mso-no-proof:yes"> </span>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-2280483354056982942012-04-07T18:32:00.001+05:302012-04-07T18:43:59.487+05:30Is Deflation Bad??<!--[if !mso]> <style> v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} </style> <![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> 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<w:lsdexception locked="false" priority="33" semihidden="false" unhidewhenused="false" qformat="true" name="Book Title"> <w:lsdexception locked="false" priority="37" name="Bibliography"> <w:lsdexception locked="false" priority="39" qformat="true" name="TOC Heading"> </w:LatentStyles> </xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:auto; mso-para-margin-right:-2.25pt; mso-para-margin-bottom:auto; mso-para-margin-left:0in; text-align:justify; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman","serif"; color:#333333; mso-ansi-language:EN-IN;} </style> <![endif]--> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><span lang="EN-IN">Introduction</span></b></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">In</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Economics" title="Economics">economics</a>,</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span style="mso-bidi-font-weight:bold" lang="EN-IN">deflation</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">is a decrease in the general</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Price_index" title="Price index">price level</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">of goods and services. Deflation occurs when the annual</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Inflation" title="Inflation">inflation</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">rate falls below 0% (a negative <a href="http://en.wikipedia.org/wiki/Inflation_rate" title="Inflation rate">inflation rate</a>). This should not be confused with</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Disinflation" title="Disinflation">disinflation</a>, a slow-down in the inflation rate (i.e. when inflation declines to lower levels).</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">Inflation reduces the real value of money over time; conversely, deflation increases the real value of</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Money" title="Money">money</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">– the currency of a national or regional economy. This allows one to buy more goods with the same amount of money over time. Economists generally believe that deflation is a problem in a modern economy because of the danger of a</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Deflation#Deflationary_spiral">deflationary spiral</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN">. </span></span><span lang="EN-IN">Deflation is correlated with</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Recession" title="Recession">recessions</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">including the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Great_Depression" title="Great Depression">Great Depression</a>, as</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Fractional-reserve_banking" title="Fractional-reserve banking">banks</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">defaulted on depositors. We have explained in this paper the causes, effects and various historical examples of deflation around the world</span></p> <p class="MsoNormal" style="margin:0in;margin-bottom:.0001pt;line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoNormal" style="margin:0in;margin-bottom:.0001pt;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Causes of Deflation</span></b></p> <p class="MsoNormal" style="margin:0in;margin-bottom:.0001pt;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></b></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l6 level1 lfo3; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Capitalism characterized by sufficient existence of competition, is regarded as one of the factors responsible for the emergence of Deflation. In this case, with the improvement in the capital stocks, competition increases million fold. Escalation in the total number of competitors boosts up the supply of goods, indicating that the prices must decrease in order to stabilize the demand, thereby bringing in Deflation. Capitalism also brings in innovation and efficiency, which also contributes towards the initiation of Deflation. </span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l6 level1 lfo3; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">In an economy based on credit, a decrease in money supply results in remarkably less lending trend, followed by a sharp decline in the money supply. As a result, there occurs a sharp reduction in the demand for goods. A decline in the demand is followed by a decline in the prices, owing to the development of a condition called the supply glut. Gradually, this assumes the form of a deflationary spiral, where the prices go down below the costs of financing production. </span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l6 level1 lfo3; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">With the advent of deflationary spiral in an economy, the commercial sector of the country stops incurring profits, despite lowering the prices of their finished products. Ultimately, a situation arises where this commercial sector is forced to become liquidated. In order to prevent or slacken down the deflationary spiral, it is necessary for the banks to avoid the collection of non-performing loans. </span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:1.8pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l6 level1 lfo3; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">According to the monetarist viewpoint, Deflation occurs when there is a decrease in the velocity of money, and/or in the amount of monetary supply per person. Deflation helps the economy grow and develop at a rapid pace, even faster than the creation of hard money.</span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Following would be a simple illustration explaining the causes of deflation in four forms. Let's assume that we are on an island and there are ten equally desirable goods in our universe and ten $1.00 bills available to purchase them with. We can safely assume that each item will end up costing $1.00 each.</span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">If the quantity of money increases to $20 (without increasing the quantity of goods) the price of the goods will increase to $2.00 - that is inflation. </span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">If, however, the quantity of money decreases to $5.00 the price will fall to 50¢ (deflation). This is what the first part of the above definition is referring to. The money supply can also be reduced if someone on our island hoards half of it and refuses to spend it on anything no matter what. This is the second part of the definition (reduction in spending). So far we have only looked at part of the equation, the supply of money. But what happens if the quantity of goods available increases? What if instead of having ten items we build ten more? We now have twenty items and only $10. 00 so once again each item is worth 50¢. This form of deflation is the good type. Everyone assumes that deflation is bad because the last major deflation that we had was during the "Great Depression" so deflation and Depression are synonymous in many peoples minds. In actuality if prices go down because the goods can be manufactured more cheaply this ends up increasing everyone's wealth. This is exactly what happened in the late 1990s , with cheap productivity available from former Communist countries the quantity of goods is increased while the money supply increased at a slower rate.</span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">What about the demand for goods? If everyone on our island already has one of the items available and no one needs any more, naturally the price will also fall as sellers try to find someone to take them off their hands. So far we have dealt with the supply of money, the supply of goods and the demand for goods, but what about the demand for money? </span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Is it possible that the demand for money could increase or decrease? Generally, the demand for money is measured by how much people are willing to pay to borrow it (i.e. interest rates). If inflation is high, interest rates will have to be higher to compensate for the loss of purchasing power. But also if the demand for money rises banks can charge more to loan it. Conversely, if the demand for money falls interest rates will also fall.</span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">So there are four causes for Deflation. </span></p> <ol start="1" type="1"><li class="MsoNormal" style="margin-right:0in;line-height:150%; mso-list:l10 level1 lfo1;tab-stops:list .5incolor:windowtext;"><b><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";" lang="EN-IN">Decreasing Money Supply</span></b><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";" lang="EN-IN"></span></li><li class="MsoNormal" style="margin-right:0in;line-height:150%; mso-list:l10 level1 lfo1;tab-stops:list .5incolor:windowtext;"><b><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";" lang="EN-IN">Increasing Supply of Goods</span></b><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";" lang="EN-IN"></span></li><li class="MsoNormal" style="margin-right:0in;line-height:150%; mso-list:l10 level1 lfo1;tab-stops:list .5incolor:windowtext;"><b><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";" lang="EN-IN">Decreasing Demand for Goods</span></b><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";" lang="EN-IN"></span></li><li class="MsoNormal" style="margin-right:0in;line-height:150%; mso-list:l10 level1 lfo1;tab-stops:list .5incolor:windowtext;"><b><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";" lang="EN-IN">Increasing Demand for Money</span></b><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";" lang="EN-IN"></span></li></ol> <p class="MsoNormal" style="line-height:150%"><b style="mso-bidi-font-weight: normal"><span lang="EN-IN" style="color:windowtext;">Effects of deflation</span></b></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:0in;line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Deflation is an economic theory, which deals with the general reduction in the price levels or in the prices of a type of good or </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >asset</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">. The effects of Deflation are immense on the economic conditions of a particular nation. With respect to the effects of Deflation, one should not mix up the concept with that of a temporary decrease in the prices. Deflation affects the general price fall in a sustained manner, exerting more or less permanent influence on a country's economy. Following are the diverse ways in which Deflation impacts the economic condition of a country:</span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l4 level1 lfo2; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Deflation results in the improvement of production efficiency, due to lowering of the overall price of commodities. The production efficiency of a country develops at a time when the </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >economic</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> producers of goods and services are propelled sufficiently by a promise of enhancing their profit margins, by improving the overall standard of their products. At this point, the consumers are required to make low </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >payment</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> while buying those goods. This increases the purchasing power, and culminates into an economic condition called Deflation. </span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l4 level1 lfo2; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Deflation is considered to be a natural phenomenon, as far as hard currency economies are concerned. In this case, the rate of increase in money supply is not maintained in proportion to the positive population and the general growth of the </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >economy</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">. Under such circumstance, the per-head availability of hard money reduces. This leads to the escalation in the purchasing power of each unit of currency. This permanent deflationary condition is visible in the later part of the 19th century, with noticeable developments in the economy under the above-mentioned conditions. Hard money economies claim that the economy involves no rigidity. Hence Deflation is a most welcome phenomenon here, for the economy to make diversified ventures in other fields as well, owing to the lowering of prices. This is always a good deflationary effect, as far as economic growth and development is concerned. </span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l4 level1 lfo2; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Deflation generally exerts negative impact on a country's economic conditions. This is because the advent of Deflation acts as a </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >tax</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> on the borrowers and the liquid asset holders simultaneously. This in turn, acts as a benefit, as far as the liquid cash and asset holders and the savers are concerned. Thus, Deflation is just the opposite economic situation to </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >Inflation</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">, levying tax on money lenders and holders, in the interest of short-term consumption and that of the borrowers. As per the contemporary economic thoughts, the concept of Deflation is associated with a certain amount of risk. Here, the risk-adjusted return of assets becomes negative in nature, thereby encouraging the purchasers and investors to gather money, rather than </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >investing</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> it in solid and assured securities. This leads to the formation of a theoretical condition known as Liquidity Trap. Liquidity trap is regarded as a critical condition as it stagnates the economy, where the nominal rate of interest becomes zero or close to zero.</span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l4 level1 lfo2; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Deflation discourages both investment and expenditure. In contemporary economic conditions, the penalties associated with Deflation have increased. This escalation results from lengthy </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >loan terms</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> , essential for the continuation of general commercial activities and building of a country. In fact, Deflation brings with it, a fall in the aggregate demand. Emergence of deflationary spiral is considered to be one of the primary impacts of Deflation. In this case, there is fall in the prices, resulting in the creation of a vicious circle. This makes a problematic situation to worsen, rather than reaching any amicable solution. Perhaps, the greatest instance of deflationary spiral is the Great Depression, occurring in the United States of America during the Civil War. </span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:0in; margin-left:6.0pt;margin-bottom:.0001pt;text-indent:-.25in;line-height:150%; mso-list:l4 level1 lfo2;tab-stops:list .5in"><span style="font-size:10.0pt;mso-bidi-line-height:150%; font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi- mso-fareast-language:EN-INfont-family:Symbol;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">According to the Monetarist Theory of Deflation, Deflation affects an economy by decreasing the velocity of money or the number of commercial </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/effects.html" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >transactions</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> more or less permanently. This leads to the emergence of a remarkable contraction in the supply of money.</span></p> <p class="MsoListParagraphCxSpFirst" style="margin-top:5.0pt;margin-right:0in; margin-bottom:5.0pt;margin-left:0in;mso-add-space:auto;line-height:150%; mso-outline-level:2"><b><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Inflation vs Deflation</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="margin-top:5.0pt;margin-right:0in; margin-bottom:5.0pt;margin-left:0in;mso-add-space:auto;line-height:150%; mso-outline-level:2"><b><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></b></p> <p class="MsoListParagraphCxSpLast" style="margin:0in;margin-bottom:.0001pt; mso-add-space:auto;line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Inflation is the opposite of deflation and refers to a rise in the general level of the prices of goods and services. Deflation is considered as negative inflation because it increases the real value in money, whereas inflation has the reverse effect. Deflation causes a burden on borrowers and holders of various illiquid assets and is favorable for savers and holders of </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/" target="undefined"><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-IN;text-decoration:none;text-underline:nonefont-family:";color:windowtext;" >liquid assets</span></a></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> and currency. On the other hand, inflation favors short-term consumption and borrowers and is a burden on currency holders and savers. Both inflation and deflation can negatively impact the economy. However, most economists consider the effects of moderate long-term </span><span lang="EN-IN"><a href="http://www.economywatch.com/inflation/deflation/" target="undefined"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >inflation</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> to be less damaging than deflation</span></p> <h2 style="text-align:justify;line-height:150%"><span style="line-height:150%;font-variant:small-capsfont-size:12.0pt;" lang="EN-IN" >Types of deflation</span></h2> <p style="text-align:justify;line-height:150%"><span lang="EN-IN" style="color:black;">Actually, deflation itself is neither good nor bad. It depends on the cause of the deflation whether people will suffer or rejoice.</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareast;font-family:";color:black;" lang="EN-IN"> Based on this deflation is classified into Good Deflation and Bad deflation</span></span></p> <h5 style="line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif";font-family:";color:black;" lang="EN-IN">Good Deflation</span></b></h5> <p class="MsoNormal" style="line-height:150%"><span class="apple-style-span"><span lang="EN-IN" style="color:black;">Good Deflation should not be considered as a hypothetical situation. It is very much a real condition of the economy, characterized by substantial growth and development in some sectors of a country, despite the fact that the prices of products in these sectors has been reducing since a long span of time. In fact, Good Deflation results from technological progresses, which initiates excess supply of goods.</span><span lang="EN-IN"></span></span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l1 level1 lfo10; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;font-size:12.0pt;color:black;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-IN" style="color:black;">From the consumer's point of view, Good Deflation is immensely beneficial as it helps those commercial sectors like the bank to deal with sinking prices. The banking sector of a country faces such as a situation, when the value of the collateral (securities) for loans decreases remarkably, having low sale value than what was earlier expected. This condition is far more aggravated by public debts and unemployment problem, which display rising trends.<span class="apple-converted-space"> </span>This situation is controlled to considerable extents by the advent of Good Deflation. In the theoretical sense, Good Deflation does not allow the distribution of corporate gains among the employees, in the form of increase in their wages. Instead, decrease in the prices owing to Deflation is transferred to the consumers. This leads to uniform allocation of the profits, involving those also, who are not directly associated with production.<span class="apple-converted-space"> </span></span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l1 level1 lfo10; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;font-size:12.0pt;color:black;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-IN" style="color:black;">The debtors should evade price fall, which appears to them in the form of low rates of interest.<span class="apple-converted-space"> </span></span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l1 level1 lfo10; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;font-size:12.0pt;color:black;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-IN" style="color:black;">Good Deflation can only work when people have full faith in the future of the concept, which is closely related with the consumption and investments on their part. In fact, the customers consume and invest to meet their requirements and not the price expectations.<span class="apple-converted-space"> </span></span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:1.8pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l1 level1 lfo10; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;font-size:12.0pt;color:black;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-IN" style="color:black;">For Good Deflation to exist in an economy, it is required that there is no interference of any strong union, who may insist on productivity gain on behalf of the employees.</span></p> <h5 style="line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif";font-family:";color:black;" lang="EN-IN">Bad Deflation</span></b></h5> <p class="MsoNormal" style="line-height:150%"><span class="apple-style-span"><span lang="EN-IN" style="color:black;">Bad Deflation is born out of trifling demands. It is an economic situation characterized by reduction in the prices not due to developments in the productivities, but because of a lack of demand induced by crashing down of the stock market. In fact, Deflation becomes bad when the consumers save their money for future uncertainties, or in the expectation that prices may lower further.</span><span lang="EN-IN"></span></span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:12.0pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l9 level1 lfo11; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;font-size:12.0pt;color:black;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-IN" style="color:black;">It is the cumulative process of very little generation of demand which affects the population of a country at the time of Bad Deflation. Detection of Bad Deflation thus requires an in-depth study of the overall economic conditions of a nation and not just the price of goods.<span class="apple-converted-space"> </span></span></p> <p class="MsoNormal" style="margin-top:1.8pt;margin-right:0in;margin-bottom:1.8pt; margin-left:6.0pt;text-indent:-.25in;line-height:150%;mso-list:l9 level1 lfo11; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;font-size:12.0pt;color:black;" lang="EN-IN" ><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-IN" style="color:black;">Owing to Bad Deflation, the consumers who are the potential purchasers become unwilling to invest and buy, considering the future of their money and the country's economy. This leads to a fast fall in the prices, worsening the overall economic conditions further. Under the impact of Bad Deflation, the recessions are virtually all transformed into depressions. In reality, it is not the price fall of Bad Inflation which matters, but the serious consequences it gives birth to.</span></p> <p><b style="mso-bidi-font-weight:normal"><span lang="EN-IN" style="color:black;">Measures to correct deflation</span></b></p> <p><span style="mso-ansi-language:EN-US;mso-fareast-language:EN-US; mso-no-proof:yescolor:black;" ><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.gif" border="0" height="215" width="605" /></span><b style="mso-bidi-font-weight: normal"><span lang="EN-IN" style="color:black;"></span></b></p> <p><span lang="EN-IN" style="color:black;"> </span></p> <p class="MsoListParagraphCxSpFirst" style="margin:0in;margin-bottom:.0001pt; mso-add-space:auto;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Quantitative Instruments</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="margin:0in;margin-bottom:.0001pt; mso-add-space:auto;line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">1) Changes in Bank Rate Policy or Rediscount Rate:</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"><span style="mso-tab-count:1"> </span>To remove deflation central bank will decrease the bank rate, the commercial banks will also decrease the rate loans. In this way, people will get more loans. Investment production, employment and Prices will start rising up. Accordingly, deflation will be controlled.</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">2) Open Market Operation</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"><span style="mso-tab-count:1"> </span>This is the second instrument of the monetary policy.<span style="mso-spacerun:yes"> </span>If there is deflation in the economy, to control deflation, the central bank purchases the government securities. Then the monetary base of the commercial banks will increase their loaning power will increase. As a result, investment will increase, income and prices will go up.</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">3) Changes in Reserve Requirements</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"><span style="mso-tab-count:1"> </span>In case of deflation, the central bank reduces the reserve requirements, the commercial banks will be able to advance' more loans. Hence, deflation could be removed.</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">4) Changes in Reserve Capital</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"><span style="mso-tab-count:1"> </span>Each commercial bank has to keep a certain ratio of its deposit with central bank. In case of Pakistan, each commercial bank has to keep 5% of its deposit in the central bank. By changing the reserve capital, a central bank can control the supply of money by commercial banks. <span style="mso-tab-count:1"> </span>On the other hand, if central bank decreases the 'reserve ratio, the commercial banks will be having more funds to advance. Accordingly, the deflation could be controlled.</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">5) Changes in Marginal Requirements</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:0in;mso-add-space:auto; line-height:150%"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"><span style="mso-tab-count:1"> </span>Commercial banks do not give loans against leaves, rather they ask for pledges to make. How much a person will have to pledge is settled by the central bank. This is given the name of marginal requirement. The central bank can bring changes in the marginal requirements.<span style="mso-spacerun:yes"> </span>During deflation the marginal requirements are decreased. Hence people will get more loans from the commercial banks. As a result supply of money will go up and deflation will be controlled.</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin:0in;margin-bottom:.0001pt; mso-add-space:auto;line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpLast" style="margin-left:0in;mso-add-space:auto; line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";color:windowtext;" lang="EN-IN">Qualitative Methods</span></b></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">1) Moral Suasion: It is concerned with just as a moral request by central bank to commercial banks to provide more loans at cheaper rate to control deflation.</span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">2) Publicity: The central bank of the country is the overall in charge of economic stability of the country. Its aim is to protect the economy from inflation and deflation. For this purpose, it analyses the whole economy. It keeps an eye over the activities of the commercial banks. If the commercial banks are found advancing loans which create inflation or deflation, their activities will be unhealthy for whole economy. The central bank can black list such banks. Thus to avoid such bad reputation in' future, they will be careful in advancing loans.</span></p> <p class="MsoNormal" style="line-height:150%"><b style="mso-bidi-font-weight: normal"><span lang="EN-IN" style="color:windowtext;">Historic examples of deflation around the world</span></b></p> <h3 style="margin-top:0in;margin-right:0in;margin-bottom:.05in;margin-left: 0in;text-align:justify;line-height:150%"><span class="mw-headline"><span style="line-height:150%;Times New Roman","serif"font-family:";font-size:12.0pt;" lang="EN-IN" >In Hong Kong</span></span><span style="line-height: 150%;Times New Roman","serif"font-family:";font-size:12.0pt;" lang="EN-IN" ></span></h3> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">Following the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/1997_Asian_Financial_Crisis" title="1997 Asian Financial Crisis">Asian financial crisis</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">in late 1997,</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Hong_Kong" title="Hong Kong">Hong Kong</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">experienced a long period of deflation which did not end until the 4th quarter of 2004. Many</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/East_Asia" title="East Asia">East Asian</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">currencies devalued following the crisis. The</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Hong_Kong_dollar" title="Hong Kong dollar">Hong Kong dollar</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">however, was pegged to the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/US_Dollar" title="US Dollar">US Dollar</a>, leading to an adjustment instead by a deflation of</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Consumer_price_index" title="Consumer price index">consumer prices</a>. The situation was worsened by the increasingly cheap exports from</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Mainland_China" title="Mainland China">Mainland China</a>, and weak consumer confidence in Hong Kong. This deflation was accompanied by an economic slump that was more severe and prolonged than those of the surrounding countries that devalued their currencies in the wake of the Asian financial crisis.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN"> </span></p> <h3 style="margin-top:0in;margin-right:0in;margin-bottom:.05in;margin-left: 0in;text-align:justify;line-height:150%"><span class="mw-headline"><span style="line-height:150%;Times New Roman","serif"font-family:";font-size:12.0pt;" lang="EN-IN" >In Ireland</span></span></h3> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">In February 2009,</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Republic_of_Ireland" title="Republic of Ireland">Ireland</a>'s</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Central_Statistics_Office" title="Central Statistics Office">Central Statistics Office</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">announced that during January 2009, the country experienced deflation, with prices falling by 0.1% from the same time in 2008. This is the first time deflation has hit the Irish economy since 1960. Overall consumer prices decreased by 1.7% in the month. </span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">Brian Lenihan, Ireland's Minister for Finance, mentioned deflation in an interview with RTÉ Radio. According to RTÉ's account, "Minister for Finance Brian Lenihan has said that deflation must be taken into account when Budget cuts in child benefit, public sector pay and professional fees are being considered. Mr Lenihan said month-on-month there has been a 6.6% decline in the cost of living this year."</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">This interview is notable in that the deflation referred to is not discernibly regarded negatively by the Minister in the interview. The Minister mentions the deflation as an item of data helpful to the arguments for a cut in certain benefits. The alleged economic harm caused by deflation is not alluded to or mentioned by this member of government. This is a notable example of deflation in the modern era being discussed by a senior financial Minister without any mention of how it might be avoided, or whether it should be. </span></p> <p class="MsoNormal" style="line-height:150%"><b style="mso-bidi-font-weight: normal"><span lang="EN-IN" style="color:windowtext;">In Japan</span></b></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Deflation started in the early 1990s. The </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Bank_of_Japan" title="Bank of Japan"><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-IN;text-decoration:none;text-underline:nonefont-family:";color:windowtext;" >Bank of Japan</span></a></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> and the government tried to eliminate it by reducing interest rates (part of their '</span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Quantitative_easing" title="Quantitative easing"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >quantitative easing</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">' policy), but this was unsuccessful for over a decade. In July 2006, the zero-rate policy was ended.</span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Systemic reasons for deflation in Japan can be said to include:</span></p> <p class="MsoNormal" style="margin-top:5.0pt;margin-right:0in;margin-bottom:1.2pt; margin-left:.25in;text-indent:-.25in;line-height:150%;mso-list:l7 level1 lfo4; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi- mso-fareast-language:EN-INfont-family:Wingdings;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Demographics_of_Japan" title="Demographics of Japan"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >Unfavorable demographics</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";color:windowtext;" lang="EN-IN">. Japan has an aging population (22.6% over age 65) that is not growing and will soon start a long decline. The Japanese death rate recently exceeded the birth rate.</span></p> <p class="MsoNormal" style="margin-top:5.0pt;margin-right:0in;margin-bottom:1.2pt; margin-left:.25in;text-indent:-.25in;line-height:150%;mso-list:l0 level1 lfo5; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi- mso-fareast-language:EN-INfont-family:Wingdings;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Fallen </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Asset" title="Asset"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-IN;text-decoration: none;text-underline:nonefont-family:";color:windowtext;" >asset</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-INfont-family:";color:windowtext;" lang="EN-IN"> prices. In the case of Japan asset price deflation was a mean reversion or correction back to the price level that prevailed before the asset bubble. There was a rather large </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Price_bubble" title="Price bubble"><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-IN;text-decoration:none;text-underline:nonefont-family:";color:windowtext;" >price bubble</span></a></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> in </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Equities" title="Equities"><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-IN;text-decoration:none;text-underline:nonefont-family:";color:windowtext;" >equities</span></a></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> and especially </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Real_estate" title="Real estate"><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-IN;text-decoration:none;text-underline:nonefont-family:";color:windowtext;" >real estate</span></a></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> in Japan in the 1980s (peaking in late 1989).</span></p> <p class="MsoNormal" style="margin-top:5.0pt;margin-right:0in;margin-bottom:1.2pt; margin-left:.25in;text-indent:-.25in;line-height:150%;mso-list:l2 level1 lfo6; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi- mso-fareast-language:EN-INfont-family:Wingdings;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Insolvent companies: Banks lent to companies and individuals that invested in real estate. When real estate values dropped, these loans could not be paid. The banks could try to collect on the collateral (land), but this wouldn't pay off the loan. Banks delayed that decision, hoping asset prices would improve. These delays were allowed by national banking regulators. Some banks made even more loans to these companies that are used to service the debt they already had. This continuing process is known as maintaining an "unrealized loss", and until the assets are completely revalued and/or sold off (and the loss realized), it will continue to be a deflationary force in the economy. Improving bankruptcy law, land transfer law, and tax law have been suggested (by </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/The_Economist" title="The Economist"><span style="mso-fareast-Times New Roman";mso-fareast-language: EN-IN;text-decoration:none;text-underline:nonefont-family:";color:windowtext;" >The Economist</span></a></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">) as methods to speed this process and thus end the deflation.</span></p> <p class="MsoNormal" style="margin-top:5.0pt;margin-right:0in;margin-bottom:1.2pt; margin-left:.25in;text-indent:-.25in;line-height:150%;mso-list:l8 level1 lfo7; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi- mso-fareast-language:EN-INfont-family:Wingdings;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Insolvent banks: Banks with a larger percentage of their loans which are "non-performing", that is to say, they are not receiving payments on them, but have not yet written them off, cannot lend more money; they must increase their cash reserves to cover the bad loans.</span></p> <p class="MsoNormal" style="margin-top:5.0pt;margin-right:0in;margin-bottom:1.2pt; margin-left:.25in;text-indent:-.25in;line-height:150%;mso-list:l5 level1 lfo8; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi- mso-fareast-language:EN-INfont-family:Wingdings;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Fear of insolvent banks: Japanese people are afraid that banks will collapse so they prefer to buy (United States or Japanese) Treasury bonds instead of saving their money in a bank account. This likewise means the money is not available for lending and therefore economic growth. This means that the savings rate depresses consumption, but does not appear in the economy in an efficient form to spur new investment. People also save by owning real estate, further slowing growth, since it inflates land prices.</span></p> <p class="MsoNormal" style="margin-top:5.0pt;margin-right:0in;margin-bottom:1.2pt; margin-left:.25in;text-indent:-.25in;line-height:150%;mso-list:l3 level1 lfo9; tab-stops:list .5in"><span style="font-size: 10.0pt;mso-bidi-line-height:150%;font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi- mso-fareast-language:EN-INfont-family:Wingdings;font-size:12.0pt;color:windowtext;" lang="EN-IN" ><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">Imported deflation: Japan imports Chinese and other countries' inexpensive consumable goods (due to lower wages and fast growth in those countries) and inexpensive raw materials, many of which reached all time real price minimums in the early 2000s. Thus, prices of imported products are decreasing. Domestic producers must match these prices in order to remain competitive. This decreases prices for many things in the economy, and thus is deflationary.</span></p> <p class="MsoNormal" style="line-height:150%"><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">In November 2009 Japan has returned to deflation, according to the </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Wall_Street_Journal" title="Wall Street Journal"><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >Wall Street Journal</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN">. </span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Bloomberg_L.P." title="Bloomberg L.P."><span style="mso-fareast-Times New Roman"; mso-fareast-language:EN-IN;text-decoration:none;text-underline: nonefont-family:";color:windowtext;" >Bloomberg L.P.</span></a></span><span style="mso-fareast-Times New Roman";mso-fareast-language:EN-INfont-family:";color:windowtext;" lang="EN-IN"> reports that consumer prices fell in October 2009 by a near record 2.2%</span></p> <h3 style="margin-top:0in;margin-right:0in;margin-bottom:.05in;margin-left: 0in;text-align:justify;line-height:150%"><span class="mw-headline"><span style="line-height:150%;Times New Roman","serif"font-family:";font-size:12.0pt;" lang="EN-IN" >In the United States</span></span><span style=" line-height:150%;Times New Roman","serif"font-family:";font-size:12.0pt;" lang="EN-IN" ></span></h3> <p class="MsoNormal" style="text-align:center;line-height:150%; background:#F9F9F9" align="center"></p><p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">There have been three significant periods of deflation in the United States.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">The first was the recession of the late 1830s, following the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Panic_of_1837" title="Panic of 1837">Panic of 1837</a>, when the currency in the United States contracted by about 30%, a contraction which is only matched by the Great Depression. This "deflation" satisfies both definitions, that of a decrease in prices and a decrease in the available quantity of money.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">The second was after the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/United_States_Civil_War" title="United States Civil War">Civil War</a>, sometimes called</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/The_Great_Deflation" title="The Great Deflation">The Great Deflation</a>. It was possibly spurred by return to a gold standard, retiring paper money printed during the Civil War.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">"The Great Sag of 1873-96 could be near the top of the list. Its scope was global. It featured cost-cutting and productivity-enhancing technologies. It flummoxed the experts with its persistence, and it resisted attempts by politicians to understand it, let alone reverse it. It delivered a generation’s worth of rising bond prices, as well as the usual losses to unwary creditors via defaults and early calls. Between 1875 and 1896, according to</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Milton_Friedman" title="Milton Friedman">Milton Friedman</a>,prices fell in the United States by 1.7% a year, and in Britain by 0.8% a year. </span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">The third was between 1930–1933 when the rate of deflation was approximately 10 percent/year, part of the United States' slide into the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Great_Depression" title="Great Depression">Great Depression</a>, where banks failed and</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Unemployment" title="Unemployment">unemployment</a> peaked at 25%.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN">The deflation of the Great Depression, as in 1836, did not begin because of any sudden rise or surplus in output. It occurred because there was an enormous contraction of</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Credit_%28finance%29" title="Credit (finance)">credit</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">(money),</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Bankruptcies" title="Bankruptcies">bankruptcies</a> creating an environment where</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Monetary_base" title="Monetary base">cash</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font: major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">was in frantic demand, and the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Federal_Reserve" title="Federal Reserve">Federal Reserve</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">did not adequately accommodate that demand, so banks toppled one-by-one (because they were unable to meet the sudden demand for cash— see</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Fractional-reserve_banking" title="Fractional-reserve banking">Fractional-reserve banking</a>). From the standpoint of the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Fisher_equation" title="Fisher equation">Fisher equation</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">(see above), there was a concomitant drop both in money supply (credit) and the</span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://en.wikipedia.org/wiki/Velocity_of_money" title="Velocity of money">velocity of money</a></span><span class="apple-converted-space"><span style="mso-fareast-Times New Roman";mso-fareast-theme-font:major-fareastfont-family:";" lang="EN-IN"> </span></span><span lang="EN-IN">which was so profound that price deflation took hold despite the increases in money supply spurred by the Federal Reserve.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span lang="EN-IN"> </span></p> <p class="MsoNormal" style="line-height:150%"><span lang="EN-IN" style="color:windowtext;"> </span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-64256557173427950122012-04-07T18:30:00.000+05:302012-04-07T18:32:17.897+05:30Foreign Reserve Management<!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> 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name="Bibliography"> <w:lsdexception locked="false" priority="39" qformat="true" name="TOC Heading"> </w:LatentStyles> </xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-ansi-language:EN-IN;} </style> <![endif]--> <p class="MsoListParagraphCxSpFirst" style="margin-left:.75in; mso-add-space:auto;text-align:center;text-indent:-.5in;mso-list:l1 level1 lfo1" align="center"><b style="mso-bidi-font-weight:normal"><span style="font-size:16.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><u><span style="font-size:16.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN">Foreign Reserve Management – Overview</span></u></b></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:7.1pt;mso-add-space: auto;text-align:justify;tab-stops:7.1pt"><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l0 level1 lfo2;tab-stops:7.1pt list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-font-family:"Wingdings 2"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Foreign Exchange Reserves </span></b><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">are those foreign currency deposits and bonds which are held by central banks and monetary authorities</span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l0 level1 lfo2;tab-stops:7.1pt list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-font-family:"Wingdings 2"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Commonly includes foreign exchange and gold, special drawing rights (SDR’s) and IMF reserve positions</span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l0 level1 lfo2;tab-stops:7.1pt list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-font-family:"Wingdings 2"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">These are assets of central bank held in different reserve currencies mostly in US dollar and to lesser extent the Euro, UK pound and Japanese Yen used to back its liabilities</span><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif""> <span lang="EN-IN"></span></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:7.1pt;mso-add-space: auto;text-align:justify;tab-stops:7.1pt"><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpLast" style="margin-left:7.1pt;mso-add-space:auto; text-align:justify;tab-stops:7.1pt"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN">Purpose: </span></u></b></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span style="color:black" lang="EN-IN">In a flexible exchange rate system, official international reserve assets allow a<span class="apple-converted-space"> </span>central bank<span class="apple-converted-space"> </span>to purchase the domestic<span class="apple-converted-space"> </span>currency, which is considered a<span class="apple-converted-space"> </span>liability<span class="apple-converted-space"> </span>for the central bank (since it prints the money or<span class="apple-converted-space"> </span>fiat currency<span class="apple-converted-space"> </span>as IOUs). This action can stabilize the value of the domestic currency.</span></p> <p style="margin-top:4.8pt;margin-right:0in;margin-bottom:6.0pt;margin-left: 0in;text-align:justify;line-height:150%"><span style="color:black" lang="EN-IN">Central banks throughout the world have sometimes cooperated in buying and selling official international reserves to attempt to influence exchange rates</span></p> <p class="MsoListParagraphCxSpFirst" style="margin-left:7.1pt;mso-add-space:auto; text-align:justify;tab-stops:7.1pt"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></b></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:7.1pt;mso-add-space: auto;text-align:justify;tab-stops:7.1pt"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN">Objectives of Foreign Exchange Reserves</span></u></b><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN">: </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:7.1pt;mso-add-space: auto;text-align:justify;line-height:150%;tab-stops:7.1pt"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:7.1pt;mso-add-space: auto;text-align:justify;line-height:150%;tab-stops:7.1pt"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Reserve management should seek to ensure that: </span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l2 level1 lfo3;tab-stops:7.1pt list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-font-family:"Wingdings 2"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Adequate foreign exchange reserves are available for meeting a defined range of objectives</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l2 level1 lfo3;tab-stops:7.1pt list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-font-family:"Wingdings 2"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Liquidity, market and credit risks are controlled in a prudent manner</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l2 level1 lfo3;tab-stops:7.1pt list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-font-family:"Wingdings 2"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Subject to liquidity and other risk constraints, reasonable earnings are generated over the medium to long term on the funds invested</span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US" lang="EN-IN"> </span><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:7.1pt;mso-add-space: auto;text-align:justify;tab-stops:7.1pt"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration:none"> </span></span></u></b></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:7.1pt;mso-add-space: auto;text-align:justify;tab-stops:7.1pt"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN">Foreign Exchange Reserves – Benefits</span></u></b><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN">:</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:7.1pt;mso-add-space: auto;text-align:justify;tab-stops:7.1pt"><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:.75in;mso-add-space: auto;text-align:justify;text-indent:-.5in;line-height:150%;mso-list:l3 level1 lfo4; tab-stops:7.1pt"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">i)<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Large reserves of foreign currency allow a government to <b><i style="mso-bidi-font-style:normal">manipulate exchange rates</i></b><span style="mso-bidi-font-weight:bold"> </span>- usually to stabilize the foreign exchange rates to provide a more favourable economic environment</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:.75in;mso-add-space: auto;text-align:justify;text-indent:-.5in;line-height:150%;mso-list:l3 level1 lfo4; tab-stops:7.1pt"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">ii)<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">The greater a country's foreign reserves, the better position it is in to <b><i style="mso-bidi-font-style: normal">defend itself </i></b><b style="mso-bidi-font-weight:normal"><i style="mso-bidi-font-style:normal">from <span style="mso-bidi-font-weight:bold">speculative attacks on the domestic currency</span></i></b></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:.75in;mso-add-space: auto;text-align:justify;text-indent:-.5in;line-height:150%;mso-list:l3 level1 lfo4; tab-stops:7.1pt"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">iii)<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Foreign exchange reserves are important indicators of ability to <b><i style="mso-bidi-font-style: normal">repay foreign debt</i></b><span style="mso-bidi-font-weight:bold"> </span>and for currency defence, and are used to <span style="mso-bidi-font-weight:bold">determine <b><i style="mso-bidi-font-style:normal">credit ratings</i></b> </span>of nations</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:.75in;mso-add-space: auto;text-align:justify;text-indent:-.5in;line-height:150%;mso-list:l3 level1 lfo4; tab-stops:7.1pt"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">iv)<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">One objective of maintaining reserves is to guard against total ruin - <b><i style="mso-bidi-font-style: normal">Gold</i></b> is an asset which, even in the most unsettled of times, is likely to find a willing buyer</span></p> <p class="MsoListParagraphCxSpLast" style="margin-left:.75in;mso-add-space:auto; text-align:justify;text-indent:-.5in;line-height:150%;mso-list:l3 level1 lfo4; tab-stops:7.1pt"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">v)<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%; font-family:"Times New Roman","serif";mso-ansi-language:EN-US">As a political approach and a friendly nation, foreign exchange reserves are used to buy a country’s treasury bills or debentures when that country is suffering from natural calamities </span><span style="font-size:12.0pt;line-height: 150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%;tab-stops:7.1pt"><i style="mso-bidi-font-style:normal"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">In addition to fluctuations in exchange rates, <b style="mso-bidi-font-weight:normal">the purchasing power of money decreases constantly due to devaluation through inflation</b>. Therefore, a central bank must continually increase the amount of its reserves to maintain the same power to manipulate exchange rates</span></i></p> <p class="MsoNormal" style="tab-stops:7.1pt"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN">Foreign Exchange Reserves – Criticism</span></u></b><b style="mso-bidi-font-weight: normal"><span style="font-size:12.0pt;line-height:115%;font-family: "Times New Roman","serif"" lang="EN-IN">: </span></b></p> <p class="MsoNormal" style="margin-left:.5in;text-indent:-.25in;line-height:150%; mso-list:l6 level1 lfo5;tab-stops:7.1pt list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-font-family:"Wingdings 2"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Gold is that it is not an earning asset</span></b><span style="font-size:12.0pt;line-height: 150%;font-family:"Times New Roman","serif"" lang="EN-IN">, and so the security of holding significant quantities of gold involves an Opportunity cost of the return of alternative investments which, in times of high interest rates, could be considerable</span></p> <p class="MsoNormal" style="margin-left:.5in;text-indent:-.25in;line-height:150%; mso-list:l6 level1 lfo5;tab-stops:7.1pt list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2"; mso-fareast-font-family:"Wingdings 2";mso-bidi-font-family:"Wingdings 2"" lang="EN-IN"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold" lang="EN-IN">Fluctuations in exchange markets result in gains and losses in the purchasing power of reserves</span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoNormal" style="line-height:150%;tab-stops:7.1pt"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"><span style="mso-spacerun:yes"> </span>Eg: China holds huge U.S. dollar-denominated assets, but if the U.S. dollar weakens on the exchange markets, the decline results in a relative loss of wealth for China</span></p> <p class="MsoNormal" style="text-align:center;tab-stops:7.1pt" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:16.0pt; line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN"><span style="text-decoration:none"> </span></span></u></b></p> <p class="MsoListParagraph" style="margin-left:.75in;mso-add-space: auto;text-align:center;text-indent:-.5in;mso-list:l1 level1 lfo1;tab-stops: 7.1pt" align="center"><b style="mso-bidi-font-weight:normal"><span style="font-size:16.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">II.<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><u><span style="font-size:16.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Sovereign Wealth Funds</span></u></b><b style="mso-bidi-font-weight:normal"><u><span style="font-size:16.0pt; line-height:115%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></u></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Sovereign Wealth Funds</span></u></b></p> <p class="MsoNormal" style="margin-left:0in;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l4 level1 lfo6;tab-stops:list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2";mso-fareast-font-family: "Wingdings 2";mso-bidi-font-family:"Wingdings 2";mso-ansi-language:EN-US"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">A Sovereign Wealth Fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets.</span></p> <p class="MsoNormal" style="margin-left:0in;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l4 level1 lfo6;tab-stops:list .5in"><span style="font-size:12.0pt;line-height:150%;font-family:"Wingdings 2";mso-fareast-font-family: "Wingdings 2";mso-bidi-font-family:"Wingdings 2";mso-ansi-language:EN-US"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">These assets can include: balance of payments surpluses, official foreign currency operations, the proceeds of privatizations, fiscal surpluses, and/or receipts resulting from commodity exports. Sovereign Wealth Funds can be structured as a fund, pool, or corporation</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Sovereign wealth funds (SWFs) are special-purpose investment funds or arrangements that are owned by the general government. Created by the general government for macro-economic purposes, SWFs hold, manage, or administer assets to achieve financial objectives, and employ a set of investment strategies that include investing in foreign financial assets. SWFs have diverse legal, institutional, and governance structures. They are a heterogeneous group, comprising fiscal stabilization funds, savings funds, reserve investment corporations, development funds, and pension reserve funds without explicit pension liabilities.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">The generally accepted principles and practices (GAPP), therefore, is underpinned by the following guiding objectives for SWFs:<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">i. To help maintain a stable global financial system and free flow of capital and investment; </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">ii. To comply with all applicable regulatory and disclosure requirements in the countries in which they invest; </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">iii. To invest on the basis of economic and financial risk and return-related considerations; </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">iv. To have in place a transparent and sound governance structure that provides for adequate operational controls, risk management, and accountability.<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">The purpose of the GAPP is to identify a framework of generally accepted principles and practices that properly reflect appropriate governance and accountability arrangements as well as the conduct of investment practices by SWFs on a prudent and sound basis. Elements of the GAPP have been drawn from a review of existing SWF practices used in a number of countries and a distillation of principles and practices applicable to SWF activities that are already in use in other international fora.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">The GAPP is a voluntary set of principles and practices that the members of the IWG support and either have implemented or aspire to implement. The GAPP denotes general practices and principles, which are potentially achievable by countries at all levels of economic development. The GAPP is subject to provisions of intergovernmental agreements, and legal and regulatory requirements. Thus, the implementation of each principle of the GAPP is subject to applicable home country laws.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">The GAPP covers practices and principles in three key areas. These include</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"><span style="mso-spacerun:yes"> </span>(i) Legal framework, objectives, and coordination with macroeconomic policies; </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">(ii) Institutional framework and governance structure; and<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">(iii) Investment and risk management framework. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Sound practices and principles in the first area underpin a robust institutional framework and governance structure of the SWF, and facilitate formulation of appropriate investment strategies consistent with the SWF’s stated policy objectives. A sound governance structure that separates the functions of the owner, governing body(ies), and management facilitates operational independence in the management of the SWF to pursue investment decisions and investment operations free of political influence. A clear investment policy shows an SWF’s commitment to a disciplined investment plan and practices. Also, a reliable risk management framework promotes the soundness of its investment operations and accountability.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Some examples of GAPP principles:</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">GAPP 1. Principle </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s). </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">GAPP 1.1. Subprinciple. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">GAPP 1.2. Subprinciple. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">GAPP 2. Principle The policy purpose of the SWF should be clearly defined and publicly disclosed. </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">GAPP 3. Principle </span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Where the SWF’s activities have significant direct domestic macroeconomic implications, those activities should be closely coordinated with the domestic fiscal and monetary authorities, so as to ensure consistency with the overall macroeconomic policies.</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></b></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">SWF Examples :</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%;mso-outline-level:3"><b style="mso-bidi-font-weight: normal"><span style="font-size:12.0pt;line-height:150%;font-family: "Times New Roman","serif"" lang="EN-IN">Australia:</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span lang="EN-IN"><a href="http://www.futurefund.gov.au/"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; color:windowtext;text-decoration:none;text-underline:none">The Future Fund</span></b></a></span><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><strong><u><span style="font-size:12.0pt;line-height:150%;color:#333333" lang="EN-IN">Goals and objectives:</span></u></strong><b style="mso-bidi-font-weight:normal"><u><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></u></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span lang="EN-IN"><a href="http://www.futurefund.gov.au/"><span style="font-size:12.0pt;line-height: 150%;font-family:"Times New Roman","serif";color:windowtext;text-decoration: none;text-underline:none">The Future Fund</span></a></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"> Act 2006 (the Act) commenced on April 3, 2006, and established the Future Fund Special Account (the Fund Account), the Future Fund Board of Guardians (the Board) and the Future Fund Management Agency (the Agency), collectively referred to as the Future Fund. The object of the Act is to strengthen the Commonwealth’s long-term financial position.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span lang="EN-IN"><a href="http://www.futurefund.gov.au/"><span style="font-size:12.0pt;line-height: 150%;font-family:"Times New Roman","serif";color:windowtext;text-decoration: none;text-underline:none">The Future Fund</span></a></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"> will make provision for unfunded superannuation liabilities that will become payable during a period when an aging population is likely to place significant pressure on the Commonwealth’s finances. The legislation quarantines the Fund, the balance of the Fund Account and other investments, for the ultimate purpose of paying unfunded superannuation liabilities and expenses associated with the investment and administration of both the Board of Guardians, and by direct transfer from the administered funds, the expenses of the Future Fund Management Agency.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><strong><u><span style="font-size:12.0pt;line-height:150%;color:#333333" lang="EN-IN"><span style="text-decoration:none"> </span></span></u></strong></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><strong><u><span style="font-size:12.0pt;line-height:150%;color:#333333" lang="EN-IN">How the fund is managed</span></u></strong></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span lang="EN-IN"><a href="http://www.futurefund.gov.au/"><span style="font-size:12.0pt;line-height: 150%;font-family:"Times New Roman","serif";color:windowtext;text-decoration: none;text-underline:none">The Future Fund</span></a></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"> is controlled by an independent Board of Guardians that is collectively responsible for the investment decisions of the fund and is accountable to the Australian Government for the safekeeping and performance of fund assets. The Future Fund Management Agency is responsible for the development of recommendations to the Board on appropriate investment strategies and for the implementation of these strategies. The functions of both the Board of Guardians and the Future Fund Management Agency are set out in the Future Fund Act. The Board of Guardians reports annually to the Australian Parliament on all aspects of the Fund’s performance, and the Fund is subject to independent external audit by the Australian National Audit Office. </span></p> <h3 style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin;color:black;mso-ansi-language:EN-IN; mso-bidi-font-weight:normal" lang="EN-IN">China:</span></h3> <p style="text-align:justify;line-height:150%"><span lang="EN-IN"><a href="http://www.china-inv.cn/cicen"><b style="mso-bidi-font-weight:normal"><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black">China Investment Corporation</span></b></a></span><b style="mso-bidi-font-weight:normal"><u><span style="mso-fareast-font-family: Calibri;mso-fareast-theme-font:minor-latin;color:black" lang="EN-IN"></span></u></b></p> <p style="text-align:justify;line-height:150%"><u><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black;mso-bidi-font-weight:bold" lang="EN-IN">Incorporation and purpose</span></u></p> <p style="text-align:justify;line-height:150%"><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN">China Investment Corporation (CIC) was established on September 29, 2007, by the Chinese government in compliance with the Company Law of the People’s Republic of China. It is wholly owned by the Chinese government and has its own corporate entity status. The purpose of the CIC is to maximize return at acceptable risk tolerance and improve the corporate governance of key state-owned financial institutions.</span></p> <p style="text-align:justify;line-height:150%"><u><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN">Source of funds</span></u></p> <p style="text-align:justify;line-height:150%"><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN"><span style="mso-spacerun:yes"> </span>CIC’s capital is funded through issuing special treasury bonds. With the approval of the Standing Committee of the 10th National People’s Congress, the Ministry of Finance issued Y1.55 trillion special treasury bonds and used raised funds to purchase foreign reserves (US$200 billion) to be injected into CIC as its registered equity capital. CIC has to pay dividends to the State Council as its owner, to cover the cost of these special treasury bonds.</span></p> <p style="text-align:justify;line-height:150%"><u><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black;mso-bidi-font-weight:bold" lang="EN-IN">Governance arrangements</span></u><u><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN"></span></u></p> <p style="text-align:justify;line-height:150%"><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN"><span style="mso-spacerun:yes"> </span>As required by the Company Law, CIC has been working on its internal institutional setting and governance structure. It has established a Board of Directors, Supervisory Board, and management team. The appointment and dismissal of Board directors should be approved by the State Council. The chairman and vice chairman of the Board are appointed by the State Council. CIC’s development strategies and operational and investment guidelines are determined by the Board of Directors. Responsibilities and accountabilities within the CIC, across departments and desks, are clearly defined.</span></p> <p style="text-align:justify;line-height:150%"><span style="color:#333333" lang="EN-IN"><span style="mso-spacerun:yes"> </span></span><u><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN">Reporting and auditing<span style="mso-bidi-font-weight:bold"></span></span></u></p> <p style="text-align:justify;line-height:150%"><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN">CIC’s implementing performance and accounting are reported to the Board, and are subject to the scrutiny by the Supervisory Board. The Internal Audit Department carries out independent audits. The audit reports shall be approved by the Chairman of the Supervisory Board. CIC is subject to financial supervision by the Ministry of Finance and periodic external auditing by the National Audit Office.</span></p> <p style="text-align:justify;line-height:150%"><u><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black;mso-bidi-font-weight:bold" lang="EN-IN">Investment objectives and risk management</span></u><strong><span style="color:#333333" lang="EN-IN"></span></strong></p> <p style="text-align:justify;line-height:150%"><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN"><span style="mso-spacerun:yes"> </span>CIC’s investment objectives are first, to invest in a diversified portfolio of overseas financial instruments, to maximize long-term returns on CIC’s capital; and second, to recapitalize domestic financial institutions as a shareholder abiding by relevant laws in order to maintain and increase the value of stateowned financial assets in its wholly owned subsidiary—Central Huijin.</span></p> <p style="text-align:justify;line-height:150%"><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN">CIC focuses its overseas investment mainly on equity, fixed-income, and alternative assets. CIC will allocate assets prudently and effectively at acceptable risk tolerance.</span></p> <p style="text-align:justify;line-height:150%"><span style="mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin; color:black" lang="EN-IN">CIC has established its preliminary system of investment decision-making, internal control, and risk monitoring and management. CIC has established a risk management structure in order to ensure legitimate, compliant, sound, and prudent operation.</span></p> <p class="MsoListParagraph" style="margin-top:0in;margin-right:0in; margin-bottom:3.75pt;margin-left:.75in;mso-add-space:auto;text-align:center; text-indent:-.5in;mso-list:l1 level1 lfo1" align="center"><b style="mso-bidi-font-weight:normal"><span style="font-size:16.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"><span style="mso-list:Ignore">III.<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><span style="font-size:16.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"" lang="EN-IN">India’s Forex Management:</span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"><span style="mso-spacerun:yes"> </span></span></b><span style="font-size: 12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">After the East Asian crises of 1997, India has followed a policy to build higher levels of FER that take into account not only anticipated current account deficits but also liquidity at risk arising from unanticipated capital movements. Accordingly, the primary objectives of maintaining FER in India are safety and liquidity; maximizing returns is considered secondary. In India, reserves are held for precautionary and transaction motives to provide confidence to the markets, both domestic and external, that foreign obligation can always be met.</span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">The conservative strategy adopted in the management of FER has implications for the rate of return on investment. Forex Investments are being made in foreign government securities (with maturity not exceeding 10 years), and the deposits are placed with other central banks, international commercial banks, and the Bank for International Settlement following a multicurrency and multi-market approach. The direct financial return on holdings of foreign currency assets is low, given the low interest rates prevailing in the international markets. </span></p> <p class="MsoListParagraph" style="margin-bottom:0in;margin-bottom:.0001pt; mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l5 level1 lfo7;mso-layout-grid-align:none;text-autospace:none"><span style="font-size:12.0pt;line-height:150%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">Opportunity Cost:</span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:150%;mso-layout-grid-align:none;text-autospace:none"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"><span style="mso-spacerun:yes"> </span>However, the low returns on foreign investment have to be compared with the costs involved in reviving international confidence once eroded, and with the benefits of retaining confidence of the domestic and international markets, including that of the credit rating agencies.</span><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-bottom:3.75pt;text-align:justify;line-height: 150%"><b style="mso-bidi-font-weight:normal"><span style="font-size: 12.0pt;line-height:150%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"" lang="EN-IN">Should India start a SWF?</span></b></p> <p class="MsoNormal" style="margin-bottom:3.75pt;text-align:justify;line-height: 150%"><span style="font-size:12.0pt;line-height:150%;font-family: "Times New Roman","serif";mso-fareast-font-family:"Times New Roman"" lang="EN-IN">The main policy rationale behind setting up a SWF is not to acquire strategic assets and secure supply of natural resources, as proposed by New Delhi. Such funds are established to manage excessive foreign exchange reserves, commodity exports, the proceeds of privatizations and fiscal surpluses. For instance, China established its SWF, China Investment Corporation, with a $200 billion corpus to manage its excessive forex reserves, which reached 2.4 trillion by end-June 2010.</span></p> <p class="MsoNormal" style="margin-bottom:3.75pt;text-align:justify;line-height: 150%"><span style="font-size:12.0pt;line-height:150%;font-family: "Times New Roman","serif";mso-fareast-font-family:"Times New Roman"" lang="EN-IN">SWFs help in diversifying and improving the return on a country's foreign exchange reserves or commodity revenues. Like central banks, SWFs deploy surplus forex reserves; but since SWFs are set up to diversify investment, they undertake long-term investments in illiquid and risky assets, whereas central banks typically undertake short-term investments in low-yielding liquid assets, such as government securities and money market instruments.</span></p> <p class="MsoNormal" style="margin-bottom:3.75pt;text-align:justify;line-height: 150%"><span style="font-size:12.0pt;line-height:150%;font-family: "Times New Roman","serif";mso-fareast-font-family:"Times New Roman"" lang="EN-IN">Unlike China and other East Asian countries, which have established such funds on sustained current account surpluses, India has been running persistent current account deficits. Its current account deficit touched $29.8 billion in fiscal 2009 as against $15.7 billion in fiscal 2007. Unlike West Asia, India does not have any dominant exportable commodity (such as oil or gas) so as to generate significant surpluses. It continues to be a huge net importer of oil and gas. The country's current account deficit is widening despite steady growth in software services exports and a rise in workers' remittances from overseas Indians.</span></p> <p class="MsoNormal" style="margin-bottom:3.75pt;text-align:justify;line-height: 150%"><span style="font-size:12.0pt;line-height:150%;font-family: "Times New Roman","serif";mso-fareast-font-family:"Times New Roman"" lang="EN-IN">Its persistent current account deficits have been financed by large capital inflows in the form of portfolio investments and other volatile capital flows that are subject to capital flight. Given the overriding presence of volatile capital flows in India's forex reserves, coupled with vulnerability to external shocks, it would be erroneous to consider its foreign exchange reserves ($280 billion) as a position of strength</span></p> <p class="MsoNormal" style="text-align:justify;line-height:150%"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN">India's external debt has been rising steadily for the past few years on account of higher borrowings by the Indian companies and short-term credit. Besides, India also runs a perennial fiscal deficit which means that raising substantial money for sovereign fund from budgetary allocation would be extremely difficult.</span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-36624446481303134872012-04-07T18:26:00.000+05:302012-04-07T18:30:03.071+05:30Currency Fluctuation<!--[if !mso]> <style> v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} </style> <![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves>false</w:TrackMoves> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> <w:donotpromoteqf/> 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style="mso-element:para-border-div;border:none;border-bottom:solid #4F81BD 1.0pt; mso-border-bottom-themecolor:accent1;padding:0in 0in 4.0pt 0in"> <p class="MsoTitle">Currency Fluctuation<b style="mso-bidi-font-weight:normal"><span style="font-size:15.0pt;mso-bidi-font-size:26.0pt"></span></b></p> </div> <h1 style="margin-top:0in">Fundamentals</h1> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt"> </p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:0in; margin-left:.5in;margin-bottom:.0001pt;text-indent:-.25in;mso-list:l3 level1 lfo1; tab-stops:list .5in"><span style="font-size:12.0pt; line-height:115%;font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">In economics, the terms currency appreciation and currency depreciation describe the movements of the exchange rate induced by market fluctuations. </span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:0in; margin-left:.5in;margin-bottom:.0001pt;text-indent:-.25in;mso-list:l3 level1 lfo1; tab-stops:list .5in"><span style="font-size:12.0pt; line-height:115%;font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">If a country is fixing the exchange rate, official adjustments to the fixed exchange rate are called currency revaluation and devaluation. </span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:0in; margin-left:.5in;margin-bottom:.0001pt;text-indent:-.25in;mso-list:l3 level1 lfo1; tab-stops:list .5in"><span style="font-size:12.0pt; line-height:115%;font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">Currency appreciates when its value increases with respect to the value of another currency or a “basket” of other currencies. Currency depreciates when its value falls with respect to the value of another currency or a basket of other currencies. </span></p> <h1><span style="mso-fareast-font-family:"Times New Roman"">Types of Exchange</span></h1> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">There are two main systems used to determine a currency's exchange rate: <b>floating currency</b> and <b>pegged currency</b>. </span></p> <h2>The Floating Exchange Rate<span style="mso-fareast-font-family:"Times New Roman"; color:#000099"></span></h2> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">The market determines a floating exchange rate. In other words, a currency is worth whatever buyers are willing to pay for it. This is determined by <b>supply and demand</b>, which is, in turn, driven by foreign investment, import/export ratios, inflation, and a host of other economic factors. </span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">Generally, countries with mature, stable economic markets will use a floating system. Virtually every major nation uses this system, including the U.S., Canada and Great Britain. Floating exchange rates are considered more efficient, because the market will automatically correct the rate to reflect inflation and other economic forces. </span></p> <p class="MsoNormal" style="mso-margin-bottom-alt:auto;text-align:justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">The floating system isn't perfect, though. If a country's economy suffers from instability, a floating system will discourage investment. Investors could fall victim to wild swings in the exchange rates, as well as disastrous <b>inflation</b>. </span></p> <h2> <span style="mso-bidi-font-size:13.5pt;line-height:115%">The Pegged Exchange Rate</span></h2> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">A pegged, or <b>fixed system</b>, is one in which the exchange rate is set and artificially maintained by the government. The rate will be pegged to some other country's dollar, usually the U.S. dollar. The rate will not fluctuate from day to day. </span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">A government has to work to keep their pegged rate stable. Their national bank must hold large reserves of foreign currency to mitigate changes in supply and demand. If a sudden demand for a currency were to drive up the exchange rate, the national bank would have to release enough of that currency into the market to meet the demand. They can also buy up currency if low demand is lowering exchange rates. </span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">Countries that have immature, potentially unstable economies usually use a pegged system. Developing nations can use this system to prevent out-of control-inflation. The system can backfire, however, if the real world market value of the currency is not reflected by the pegged rate. In that case, a <b>black market</b> may spring up, where the currency will be traded at its market value, disregarding the government's peg. </span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">When people realize that their currency isn't worth as much as the pegged rate indicates, they may rush to exchange their money for other, more stable currencies. This can lead to economic disaster, since the sudden flood of currency in world markets drives the exchange rate very low. So if a country doesn't take good care of their pegged rate, they may find themselves with worthless currency. </span></p> <h2><span style="mso-fareast-font-family:"Times New Roman"">The Hybrid Exchange Rate</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:#000099"></span></h2> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">In reality, few exchange rate systems are 100 percent floating, or 100 percent pegged. Countries using a pegged rate can avoid market panics and inflationary disasters by using a <b>floating peg</b>. They peg their rate to the U.S. dollar, and that rate doesn't fluctuate from day to day. However, the government periodically reviews their peg, and makes minor adjustments to keep it in line with the true market value. </span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">Floating systems aren't really left to the mercy of market forces, either. Governments using floating exchange rates make changes to their national economic policy that can affect exchange rates, directly or indirectly. Tax cuts, changes to the national interest rate, and import tariffs can all change the value of a nation's currency, even though the value technically floats. </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><span style="font-size:12.0pt;line-height:115%;font-family: "Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">Although this system works pretty well most of the time, it's not always the best solution. </span></p> <h1><span style="mso-fareast-font-family:"Times New Roman"">What causes currency fluctuation?</span></h1> <p style="text-align:justify;line-height:115%">Actually, there are a lot of factors affecting the currency fluctuation. Generally speaking, changes in economic position and the macroeconomics policies are the underlying factors for the long term currency trend. The analysts are always very concerned about certain economic indices like GNP (gross national product), consumer index and changes in interest rate, etc. By knowing these economic indices, it helps them to find out the currency fluctuation trend. </p> <p style="text-align:justify;line-height:115%">International profits significantly affect the currency trend. International profits are the net amount of income and expenses on foreign economic activities. Under normal circumstances, trade deficit indicates that the demand exceeds the supply for the foreign currency/trade/imports. Under the floating rate system, market demand and supply determine the currency fluctuation. A trade deficit can cause the depreciation of local currency while appreciation of foreign currency, vice versa.</p> <p style="text-align:justify;line-height:115%">National Income or Gross National Income (GNI) also affects the currency trend. In general, when the national income increases, the people spend more locally. This is in fact an indication of local currency demand. If the demand of local currency remains unchanged, the additional demand on local currency cause it to appreciate.</p> <p style="text-align:justify;line-height:115%">Of course, whether the change in national income induces a currency depreciation or currency appreciation depends on factors causing the change in national income. If the change is caused by increased product supply, the purchasing power of such currency increases in the long run. Foreign currency is likely to depreciate. If the national income increases due to governmental expenses or demand, which may increase the foreign import, then foreign currency may appreciate. </p> <p style="text-align:justify;line-height:115%">Inflation rate is another fundamental factor that affects currency fluctuation. If a nation has over issued its currency which exceeds the demand in product purchasing, there will be inflation. Inflation decreases the purchasing power of the people and therefore leads to currency depreciation. In general sense, the local currency depreciates means the foreign currencies appreciate.</p> <p style="text-align:justify;line-height:115%">The change in inflation rate changes the demand and supply in currencies, bonds, and currency value expectation. Inflation leads to higher product price internally. Under the same currency rate, the nation loses on exports and gain in imports. In the currency market, the demand of foreign currencies increases, therefore causing the appreciation of foreign currencies. </p> <p style="text-align:justify;line-height:115%">There are other factors like foreign investments, productivity, unemployment etc. that can also result into fluctuation of the currency.</p> <h1 style="margin-bottom:12.0pt">Introduction to Indian Rupee Fluctuation</h1> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;mso-layout-grid-align:none;text-autospace:none"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">The Indian Economy is the eleventh largest economy in the world with a nominal GDP of US$1,235,975 million (IMF list). The Indian market has been booming in leaps & bounds.</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; color:black" lang="EN-IN"> </span><span class="apple-style-span"><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif";color:black">By 2008, India had established itself as the world's</span></span><span class="apple-converted-space"><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";color:black"> </span></span><span class="apple-style-span"><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";color:black">second-fastest growing major economy after China, with a growth rate of 9.4%.<span style="mso-spacerun:yes"> </span>However, the year 2009 saw a significant slowdown in India's GDP growth rate to 6.8%. The Rupee hit a record low during early 2009 on account of the global recession. </span></span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">However, due to a strong domestic market, India managed to bounce back sooner than the western countries. Since September 2009 there has been a constant appreciation in Rupee versus most Tier 1 currencies. The exchange rate as on 30<sup>th</sup> October, 2010 is </span><a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="font-size:10.0pt;line-height:115%;font-family:"-webkit-sans-serif","serif"; color:#0645AD;mso-no-proof:yes;text-decoration:none;text-underline:none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">44.345 to the USD. A rising rupee prompted Government of India to buy 200 tonnes of Gold for $6.7 billion from IMF in 2009 as a total role reversal from 1991. Indian forex reserves stands at </span><span class="apple-style-span"><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";color:black">$294.01 billion (Oct, 2010)</span></span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">.</span><span style="font-size:10.0pt; line-height:115%;font-family:"-webkit-sans-serif","serif";color:black" lang="EN-IN"> </span><span style="font-size:10.0pt;line-height:115%;font-family:"-webkit-sans-serif","serif"; color:black"></span></p> <h1>Advantages of Rupee Appreciation</h1> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.5in;text-align:justify;text-indent:-.25in;mso-list:l1 level1 lfo2; tab-stops:list .5in"><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-ansi-language:EN-IN" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="Heading2Char"><span style="font-size: 13.0pt;line-height:115%">Dampening of inflation</span></span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">: Normally, currencies appreciate when the economies are doing well and the rise in their value is a cause for celebration especially for consumers. A higher value of rupee will result in cheaper imports which, in turn has a dampening <span style="mso-bidi-font-weight:bold">effect on inflation</span> Thus, rupee appreciation helps control inflation.</span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.5in;text-align:justify;text-indent:-.25in;mso-list:l1 level1 lfo2; tab-stops:list .5in"><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-ansi-language:EN-IN" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="Heading2Char"><span style="font-size: 13.0pt;line-height:115%">Foreign debt servicing</span></span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-bidi-font-weight:bold">: Appreciation of the rupee helps in easing the pressure, related to foreign debt servicing (interest payments on debt raised in foreign currency), on India and Indian companies. With Indian companies taking advantage of the United States soft interest rate regime and raising foreign currency loans, known as external commercial borrowings (ECBs), this is a welcome phenomenon from the point of view of their interest commitments on the loans raised. This will help them avoid taking a bigger hit on their bottom-line, which is beneficial for its shareholders. Indian companies which have Foreign Currency Convertible Bonds (FCCBs) like Reliance Communications, Bharat Forge, Sun Pharma and Ranbaxy</span><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-IN; mso-bidi-font-weight:bold"> <span lang="EN-IN">benefit from the appreciation of rupee.</span></span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.5in;text-align:justify;text-indent:-.25in;mso-list:l1 level1 lfo2; tab-stops:list .5in"><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-ansi-language:EN-IN" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="Heading2Char"><span style="font-size:13.0pt;line-height:115%;mso-ansi-language:EN-IN" lang="EN-IN">Outbound tourists/student bonanza</span></span><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-IN; mso-bidi-font-weight:bold" lang="EN-IN">:</span><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN"> </span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">The appreciating rupee is a big positive for tourists traveling or wanting to travel abroad. Considering that the rupee has appreciated by over 10% against the US dollar since mid-2002, traveling to the US is now cheaper by a similar quantum in rupee terms. The same applies to students who are still in the process of finalizing their study plans abroad. For example, a student's enrollment for a $1,000 course abroad would now cost only </span><a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; color:windowtext;mso-no-proof:yes;text-decoration:none;text-underline:none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">44,000 instead of the earlier </span><a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; color:windowtext;mso-no-proof:yes;text-decoration:none;text-underline:none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">49,000!</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.5in;text-align:justify;text-indent:-.25in;mso-list:l1 level1 lfo2; tab-stops:list .5in"><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-ansi-language:EN-IN" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="Heading2Char"><span style="font-size:13.0pt;line-height:115%;mso-ansi-language:EN-IN" lang="EN-IN">Government reserves</span></span><span style="font-size:12.0pt;line-height: 115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-IN;mso-bidi-font-weight: bold" lang="EN-IN">:</span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN"> </span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">Considering that the government has been selling its stake aggressively in major public sector units in the recent past, and with a substantial chunk of this being subscribed by FIIs, the latter will have to invest more dollars to pick up a stake in the company being divested, thus aiding the governments build up of reserves.</span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN"></span></p> <h1 style="margin-bottom:12.0pt"><span style="mso-ansi-language: EN-IN" lang="EN-IN">Disadvantages of Rupee Appreciation</span></h1> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.5in;text-align:justify;text-indent:-.25in;mso-list:l2 level1 lfo3; tab-stops:list .5in"><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";mso-ansi-language:EN-IN" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span><span class="Heading2Char"><span style="font-size:13.0pt;line-height:115%;mso-ansi-language:EN-IN" lang="EN-IN">Exporters' disadvantage</span></span><b><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN">: </span></b><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">The exporters are at a disadvantage owing to the currency appreciation as this renders their produce expensive in the international markets as compared to other competing nations whose currencies haven't appreciated on a similar scale. </span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN">Small exporters are hit badly by rupee appreciation as they have limited access to hedging products.</span><span style="font-size:12.0pt;line-height:115%;font-family: "Times New Roman","serif""> This tends to take away a part of the advantage from Indian companies, which they enjoy due to their cost competitiveness. However, it must be noted that despite the sharp currency appreciation in recent times, Indian exports have continued to grow. </span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN"></span></p> <h2 style="margin-top:10.0pt;margin-right:0in;margin-bottom:12.0pt;margin-left: .5in;text-align:justify;text-indent:-.25in;mso-list:l2 level1 lfo3;tab-stops: list .5in"><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black;mso-themecolor:text1;mso-ansi-language:EN-IN; font-weight:normal;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">•<span style="font:7.0pt "Times New Roman""> </span></span></span>Dollar denominated earnings hurt<span style="mso-ansi-language:EN-IN" lang="EN-IN">: </span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; color:black;mso-themecolor:text1;mso-ansi-language:EN-IN;font-weight:normal; mso-bidi-font-weight:bold" lang="EN-IN">The strengthening rupee has an adverse impact on various companies/sectors, which derive a substantial portion of their revenues from the US markets (or in dollar denominations). Software and BPO are typical examples of the sectors adversely impacted by the appreciation of rupee.</span></h2> <h1 style="margin-bottom:12.0pt"><span style="mso-ansi-language: EN-IN" lang="EN-IN">RUPEE APPRECIATION FROM THE EXPORTER’S POINT OF VEIW</span></h1> <p class="MsoNormal" style="margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;tab-stops:list .5in"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">Most developing countries have economies based largely on exports that are competitive in global markets because of low prices. When those countries' currency gains value, they are no longer able to offer exports to the global market at the same low prices that they planned to. This may cause importers to look elsewhere to country's with lower valued currency and thus prices or to order less than they would have otherwise. Thus, the s</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">hare of exports in economy will be affected, if the currency appreciates. The main effect on the exporters is that an appreciated currency </span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">makes the exporter’s products more expensive in overseas markets and it thus erodes their international competitiveness.</span></p> <p class="MsoNormal" style="margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;tab-stops:list .5in"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN"><span style="mso-spacerun:yes"> </span>In the Indian scenario today, the</span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif""> IT industry is growing by 31% YOY and major operations (around 80-85%) are outsourced from the US-based companies. Hotels like ITC, Taj etc. have about 50% of their revenues in terms of dollars. Thus, these industries will stand to lose when rupee appreciates. Similiarly, s</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">ilk industry had to bear the brunt as it was <span style="mso-bidi-font-weight:bold">71% sensitive to the<b> </b></span>hardening of the currency. Cotton and jute were less sensitive to the rising rupee at <span style="mso-bidi-font-weight:bold">23% and 18% respectively. The </span>IT sector companies were <span style="mso-bidi-font-weight:bold">upto</span> <span style="mso-bidi-font-weight:bold">90% sensitive to </span>rupee appreciation. </span></p> <h1><span style="mso-ansi-language:EN-IN" lang="EN-IN">RUPEE APPRECIATION FROM THE IMPORTER’S POINT OF VEIW </span></h1> <p class="MsoNormal" style="tab-stops:list .5in"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">The reverse phenomenon happens when you look at rupee appreciation from the importer’s point of view. Oil companies are highly benefitted, more than <span style="mso-bidi-font-weight:bold">80% crude oil is imported from the gulf and<b> </b></span>other counties. Acc to an Indian Oil Corporation manager, for every Rs1 appreciation, crude oil price dips by <span style="mso-bidi-font-weight:bold">2%. Another major beneficiary of rupee appreciation are the<b> </b></span>Indian companies who have gone for recent acquisitions using foreign debt-leverage. Indian companies who have International borrowings in their account are also benefitted. An appreciating rupee is beneficial for the country’s external debts as well<b>. </b>Consumer electronic goods, imported apparels etc become available at cheaper prices as a result of a higher valued rupee. Industries which import raw materials get these at a </span><span style="font-size:12.0pt;line-height:115%;font-family: "Times New Roman","serif"">cheaper price.</span></p> <p class="MsoNormal" style="tab-stops:list .5in"><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif""> </span></p> <p class="MsoNormal" style="tab-stops:list .5in"><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image006.gif" border="0" height="335" width="680" /></span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN"></span></p> <p style="text-align:justify;line-height:115%">In 1990, the value of rupee was <a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="color:windowtext;mso-no-proof:yes;text-decoration:none;text-underline: none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a>17.5. Then liberalization happened in 1991 and by 1995, the value of rupee depreciated to <a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="color:windowtext;mso-no-proof: yes;text-decoration:none;text-underline:none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a>32.43. In 2006, the value of rupee was as low as <a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="color:windowtext;mso-no-proof:yes;text-decoration:none;text-underline: none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a>48.34. In 2007, when the Indian economy was booming it appreciated to <a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="color:windowtext;mso-no-proof:yes;text-decoration:none;text-underline: none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a>38.48. The 2009 recession saw the rupee depreciate to <a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="color:windowtext;mso-no-proof:yes;text-decoration:none;text-underline: none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a>45.62. As on October 2010, the exchange rate stands at <a href="http://en.wikipedia.org/wiki/Indian_rupee" title=""Indian rupee" "><span style="color:windowtext;mso-no-proof:yes;text-decoration:none;text-underline: none"><span style="mso-ignore:vglayout"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image004.gif" alt="Indian rupee" border="0" height="10" width="7" /></span></span></a><span style="mso-ansi-language:EN-IN" lang="EN-IN">44.345.</span></p> <h1><span style="mso-ansi-language:EN-IN" lang="EN-IN">Government Initiatives to the exporters</span></h1> <p class="MsoListParagraphCxSpFirst" style="text-align:justify;text-indent:-.25in; mso-list:l0 level1 lfo4"><span style="font-size:12.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;mso-ansi-language:EN-IN" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image008.jpg" height="205" hspace="12" width="258" align="left" /><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">It could reduce import duty, excise and service taxes (domestic taxes) to compensate for the reduced export realisation of exporters in rupee terms. In simple words, it could facilitate the reduction of transaction costs of businesses and exporters. </span><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpLast" style="text-align:justify;text-indent:-.25in; mso-list:l0 level1 lfo4;tab-stops:right 300.0pt"><span style="font-size:12.0pt;line-height:115%;font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-IN" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif"">It could speed up the implementation of the policy measures announced by the Ministry of Commerce and Industry in June 2007 such as the reduction of pre-shipment credit, mandated export credit disbursement by commercial banks and so forth. Thus, government helps exporters through t</span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN">ax incentives, interest reductions, reduction in service taxes. </span></p> <p style="margin-left:.5in;text-align:justify;text-indent:-.25in;line-height: 115%;mso-list:l0 level1 lfo4;tab-stops:right 300.0pt"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-ansi-language:EN-IN" lang="EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image002.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="mso-ansi-language:EN-IN" lang="EN-IN">Encouraging forward contracts with customers will help to protect exporter’s interest. Forward contracts helps the exporters to hedge the exchange rate risk and be protected from the currency fluctuations. <span style="mso-spacerun:yes"> </span></span></p> <h1><span style="mso-fareast-font-family:"Times New Roman"">RBI’s Weakening of Rupee</span></h1> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">The purchase of dollars from the markets by RBI is a way to stem the rise of rupee appreciation by curbing the liquidity; however this is a short term remedy.</span><span lang="EN-IN"> </span><span style="font-size: 12.0pt;line-height:115%;font-family:"Times New Roman","serif"">However, it is seen that in </span><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-IN" lang="EN-IN">the recent period of roughly a year, RBI intervention has subsided.</span></p> <h1><span style="mso-ansi-language:EN-IN" lang="EN-IN">IS WEAKENING OF RUPEE A PLAUSIBLE SOLUTION?</span></h1> <p class="MsoNormal" style="text-align:justify"><span class="Heading2Char"><span style="font-size:13.0pt;line-height:115%;mso-ansi-language:EN-IN" lang="EN-IN">One School of Thoughts</span></span><b><span style="mso-ansi-language: EN-IN" lang="EN-IN">: </span></b><span style="font-size:12.0pt;line-height:115%; font-family:"Times New Roman","serif";mso-ansi-language:EN-IN;mso-bidi-font-weight: bold" lang="EN-IN">Policy makers want a weaker rupee so that India’s </span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">competitiveness will rise. They do not think that it is normal for the rupee to appreciate as a result of greater foreign exchange inflows into the economy. <i><span style="mso-bidi-font-weight:bold">This absurdity will continue until policy-makers turn their attention to raising productivity of governance and the competitiveness of the aggregate supply chain. It is a pity that many of India’s exporters have chosen to rely on a weak rupee to sustain their competitiveness. </span></i><span style="mso-bidi-font-weight: bold;mso-bidi-font-style:italic">They </span>are now deeply disturbed. Their future ‘rupee profitability’ is in jeopardy. They are horrified that the Reserve Bank of India (RBI) has allowed the rupee to strengthen. They are nervous that the RBI may have given up its policy of ‘weakening through intervention’ in the foreign exchange markets. What they want is a weaker rupee so that India’s export competitiveness will rise. They want more exports to lead to greater foreign exchange inflows. They want these inflows to rise so that India can fund its imports. But the rupee will inevitably strengthen if inflows of foreign exchange exceed outflows. They will then argue that the strong rupee is a threat to India’s competitiveness. </span></p> <p class="MsoNormal" style="text-align:justify"><span class="Heading2Char"><span style="font-size:13.0pt;line-height:115%;mso-ansi-language:EN-IN" lang="EN-IN">Other School of thoughts (Modern Approach) or Productivity & Competitiveness</span></span><b><span style="mso-ansi-language:EN-IN" lang="EN-IN">: </span></b><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">The reason for the above schools of thoughts is simple and straight forward- the sops turns unprofitable exports profitable. T</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">hese schools of thought argue that the real exchange rate appreciation is productivity driven and reflects a natural evolution of the economy towards long run equilibrium. This emphasizes supply-side factors such as technological change and labour mobility. At the same time, other demand-side factors such as transitory demand shocks like fiscal expansion and structural factor like rising real income growth, leading to higher services (non-tradable) demand, could cause appreciation. In the Indian case, the driving factor is capital inflows. This appreciation is more likely to negatively impact small and medium firms who are more likely to be credit constrained. They will have less back up, in terms of reserves and access to working capital, to sail through the difficult times as in the current case. Some of them may go out of business if they are not able to manage the declining rupee profit margins and competitiveness.</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN"></span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-ansi-language:EN-IN" lang="EN-IN">It is not so long ago (until early 2007) that RBI was actively trading in the currency market, championing the cause of India's exporters, and it has got them in enough trouble. In some ways, our inflation crisis today is the legacy of the unprecedented credit boom of the Y V Reddy years. Today's India is only more open than the India where Y V Reddy's regime tripped up on currency trading. In other words, RBI intervention has subsided substantially.</span></p> <h1>Rising Yen</h1> <p class="MsoNormal"> </p> <p class="MsoNormal"><span style="mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image010.jpg" alt=" 60 Day Chart" border="0" height="307" width="417" /></span></p> <p class="MsoNormal"><span style="font-size:12.0pt;line-height:115%;font-family: "Times New Roman","serif"">US$ vs. YEN in the past one year.</span></p> <p class="MsoNormal"><span style="font-size:12.0pt;line-height:115%;font-family: "Times New Roman","serif"">Yen is gaining strength despite stimulation measures taken through quantitative easing by BOJ to help its struggling economy.<span style="mso-spacerun:yes"> </span>Japan has a massive Total Public & Private Debt of 375 pct of its GDP. Its Central Bank Rate is 0.1 pct since Dec 2008. Yen is now close to 15-year High of 82.02. Investors will be looking for the Japanese Central Bank intervention.<span style="mso-spacerun:yes"> </span>It was probably reported in 2004 that 115 Yen to a USD was the desired level to support Japan’s export. Currently Yen is hovering around 85.50, but today its economy is in better shape and its export is still growing.</span></p> <p class="MsoNormal"><span style="font-size:12.0pt;line-height:115%;font-family: "Times New Roman","serif"">since 1970, the Yen has risen by a whopping 350% against the Dollar. It has doubled in value since 1990 and risen 14% since the start of the year, en route to a 15-year high. Over the same period (actually since 1980; I couldn’t find data from the 1970), Japan’s economy has expanded by an average annualized growth rate of 2.2%. Over the last 10 years, the average is a paltry .9%. The contradiction between fundamentals and reality could not be more stark!</span></p> <p class="MsoNormal"><span style="font-size:12.0pt;line-height:115%;font-family: "Times New Roman","serif";mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image012.jpg" border="0" height="454" width="604" /></span><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif""></span></p> <p class="MsoNormal" style="tab-stops:54.75pt"><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif""> </span></p> <p class="MsoNormal" style="tab-stops:54.75pt"><span style="font-size:12.0pt; line-height:115%;font-family:"Times New Roman","serif"">Investor risk appetite has been reinvigorated with the <b style="mso-bidi-font-weight:normal">decline of the Yen carry trade</b>. During most of the last decade, carry trading caused the Yen to decline to 120 USD/JPY as investors borrowed Yen in bulk in order to purchase high-yielding assets. The <b style="mso-bidi-font-weight: normal">credit crisis</b> spurred a <b style="mso-bidi-font-weight:normal">short squeeze</b> (i.e. rapid unwinding of carry trade positions) in early 2007, and caused the Yen to rocket upward.</span></p> <h1><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; color:windowtext;font-weight:normal;mso-bidi-font-weight:bold">The recent run-up in emerging market currencies, global equities, commodities, and other risky assets would certainly seem to support a carry trade strategy. For its part, the Bank of Japan is also doing its best to create a healthy environment for carry trading by printing currency, easing monetary policy, and fighting to keep the Yen from rising. And yet, if indeed there are still carry traders (and there certainly are!), the current trend in forex markets suggests that they are very much outnumbered by those betting on the Yen’s rise. In addition to this, those that hold Yen earn a nominal return of near 0%. Long-term interest rates (proxied by 10-year government bonds) are only slightly higher – at 1% – and certainly too low to attract any foreign institutional interest. Besides, it’s well-known that 90% of Japanese government debt is held by domestic savers. Meanwhile, the Japanese stock market has stagnated for more than 2 decades, and the Nikkei average is lower than at any point since 1985 (except for a brief period following the dot-com bust. Japanese real estate is equally unattractive.</span></h1> <p>As a result, there are only two conceivable reasons for the Yen’s continued upward push. The first is fundamental/structural and is connected to <b style="mso-bidi-font-weight:normal">Japan’s trade surplus</b>. In spite of an appreciating currency, the Japanese export sector continues to be the lone bright spot in an economy with otherwise limited sources of growth. Compared to 2009, <a href="http://www.google.com/hostednews/afp/article/ALeqM5jRdkB-OHC2RScz_m3IX2NrTp853Q?docId=CNG.88fc783a698a4e567a66bd5ad9118bc9.251"><b style="mso-bidi-font-weight:normal">the trade surplus is up 83%</b></a>, helped by a rise of 50% in September. It is on pace to top $100 Billion for the year. In this regard, foreigners that buy Japanese Yen do so because they must- for purposes of trade.</p> <p style="text-align:center" align="center"><span style="mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image014.jpg" alt="Japan inflation rate chart 1970 - 2010" border="0" height="238" width="559" /></span></p> <p>The second source of demand for Japanese <b style="mso-bidi-font-weight: normal">Yen is so-called safe haven flows</b>. While the Japanese Yen is not a high-yielding currency, it is actually an excellent <em>store of value</em>. [This is one of the three primary functions that a currency should fulfill. The other two are <em>medium of exchange</em> and <em>unit of account</em>]. That’s because inflation in Japan is the lowest in the world, often to the point of being nil. Since 1970, the inflation rate has averaged only 3%, compared to 4.5% in the US. Over the last 15 years, inflation has been 0%. In other words, even if they are invested in low-yielding savings accounts, Japanese savers can ensure that 1 Yen today will probably still be worth 1 Yen 5 years from now. Foreign investors can take advantage of the same phenomenon, when they bet that the exchange value of the Yen will be equally stable.</p> <h1>Bullish on Euro</h1> <h2>The Trend of Euro in the recent past</h2> <p style="text-align:justify;line-height:115%">It dove during the financial crisis, only to surge during the apparent recovery phase, fell during the sovereign debt crisis, and rose during the paradigm shift, then fell as risk appetite waned, only to rise again in September, en route to a 5-month high.</p> <p style="text-align:center" align="center"><span style="mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image016.jpg" border="0" height="288" width="512" /></span></p> <p style="text-align:justify;line-height:115%">There are a handful of factors which currently underlie the Euro’s strength, which can all generally be explained by the fact that risk is “on” at the moment, and the markets are moving away from so-called safe haven currencies and back towards growth investments. Of course that could change tomorrow (or even 5 minutes from now!), but at the moment, risk appetite is high and the Euro symbolizes risk. Never mind how ironic it is, that growth in the EU is projected at 1.8% for the year while Rest of World (ROW) GDP will probably top 5%. All that matters is compared to the Dollar (and Yen, Pound, Franc to a lesser extent) the Euro is perceived as the currency of risk.</p> <p style="text-align:justify;line-height:115%">The Euro’s cause is also helped by the ongoing “currency wars,” which heated up last week with Japan’s entry into the game. Basically, Central Banks around the world are now competing with each other to devalue their currencies. In contrast, the European Central Bank (ECB) has decided to remain on the sidelines (in favor of fiscal austerity), which is forcing the Euro up (or rather all other currencies down). To make matters even worse, “The U.S. Federal Reserve indicated this summer that it may ease monetary policy further… often seen as printing money to pump up the economy.” As a result, “The euro looks set to keep on climbing in a trend that looks increasingly entrenched.”</p> <p style="text-align:justify;line-height:115%">There are certainly those that argue that the Euro’s recent surge reflects renewed confidence in the Eurozone economy and prospects for resolving the EU debt crisis. After all, most Euro members will reduce their budget deficits in 2010 and auctions of new bonds are once again oversubscribed. On the other hand, interest rates for the PIGS (Portugal, Italy, Greece, and Spain) have risen to multi-year highs, as investors are finally trying to make a serious effort at pricing the possibility of default.</p> <p style="text-align:center;line-height:115%" align="center"><span style="mso-no-proof:yes"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image017.gif" alt="Eurozone sovereign debt interest rates graph 2007-2010" border="0" height="281" width="290" /></span></p> <p style="text-align:justify;line-height:115%"><br />In addition, the credit markets in the EU are barely functioning, and large institutions remain dependent on the ECB’s credit facilities for financing. Finally, it shouldn’t be forgotten that the only reason crisis was due to the massive support (€140 Billion) extended to Greece. When this program expires in less than three years, the fiscal problems of Greece (and the other PIGS) will be exposed once again, and a new (stop-gap) solution will need to be proposed.</p> <p style="text-align:justify;line-height:115%">As every analyst has pointed out, none of the EU’s fiscal problems have been solved. EU members have certainly proven adept at resolving acute crises and the ECB certainly deserves credit for keeping credit markets functioning, but none has proposed a viable solution for repairing of member countries’ fiscal and economic health. Currency devaluation is impossible. Sovereign default is being prevented. That leaves wage cuts and increased productivity as the only two paths to equilibrium. The former could be accomplished through inflation, but the ECB seems reluctant to allow this to happen.</p> <p style="text-align:justify;line-height:115%">More importantly, China is responsible for this as well. China has long spoken about its intentions to change the allocation of its forex reserve holdings, and in hindsight, its timing was perfect. In the beginning of June, the Euro stood at a multi-year low, and the price of US Treasury Bonds stood at a multi-year high. Thus, China’s sovereign wealth fund was able to simultaneously lock in some profits from lending to the US and dissipate risk by swapping US assets for those denominated in Euros and Yen. “China has already bought $20 billion worth of yen financial assets this year, almost five times as much as it did in the previous five years combined.” [Analysts have noted that buying Yen also achieves the peripheral end of making Japanese exports less competitive relative to those from China].</p> <p style="text-align:justify;line-height:115%">Moreover, China can achieve this diversification without influencing the value of the Yuan, since Dollars can be exchanged directly for Yen and Euros. That is important, since the RMB is still effectively pegged to the Dollar. Speaking of which, the Yuan has hardly budged since its 1% revaluation in June. On a trade-weighted basis, it has actually fallen.</p> <h1>CONCLUSION</h1> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"">By boosting productivity and improving business conditions, the export growth can remain buoyant despite stronger rupee. Rapid productivity growth plays an important role in explaining why a country’s export performance can remain robust even when its currency strengthens. All currencies would ultimately have to move towards a flexible exchange rate regime, and by moving upwards first rather than downwards, economies would be in a better position to deal with crises. Normally foreign currency exposures are covered for a maximum of a year, but now exporters are contracting forward contracts for 3-5 years to curb the impact of an appreciating rupee on their profits. Hedging of commodity exposures has also risen sharply with volatility in global markets. In any case, weaker rupee would provide no guarantee that the exports would grow faster.</span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-81900215799986917012012-04-07T18:24:00.001+05:302012-04-07T18:24:46.304+05:30Business Law - Cases<!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> <w:donotpromoteqf/> <w:lidthemeother>EN-US</w:LidThemeOther> <w:lidthemeasian>X-NONE</w:LidThemeAsian> <w:lidthemecomplexscript>X-NONE</w:LidThemeComplexScript> <w:compatibility> <w:breakwrappedtables/> <w:snaptogridincell/> <w:wraptextwithpunct/> <w:useasianbreakrules/> <w:dontgrowautofit/> <w:splitpgbreakandparamark/> 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mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman","serif";} </style> <![endif]--> <p class="MsoNormal" style="margin-bottom:12.0pt;mso-layout-grid-align:none; text-autospace:none"><b style="mso-bidi-font-weight:normal"><span style="font-size:10.5pt;font-family:"Arial","sans-serif";mso-ansi-language: EN-IN;mso-fareast-language:EN-IN" lang="EN-IN">A was waiting for a train at the Railway Platform. B , who passed by, came back and sat in front of A, took out a brush and shoe polish from a small box he carried and started polishing A’s Shoes, without being asked for. A</span></b><b style="mso-bidi-font-weight:normal"><span style="font-size:11.0pt;font-family:"Arial","sans-serif";mso-ansi-language: EN-IN;mso-fareast-language:EN-IN" lang="EN-IN"> </span></b><b style="mso-bidi-font-weight: normal"><span style="font-size:10.5pt;font-family:"Arial","sans-serif"; mso-ansi-language:EN-IN;mso-fareast-language:EN-IN" lang="EN-IN">did not make any attempt to stop B</span></b><b style="mso-bidi-font-weight:normal"><span style="font-family:"Arial","sans-serif";mso-ansi-language:EN-IN;mso-fareast-language: EN-IN" lang="EN-IN"> </span></b><b style="mso-bidi-font-weight:normal"><span style="font-size:10.5pt;font-family:"Arial","sans-serif";mso-ansi-language: EN-IN;mso-fareast-language:EN-IN" lang="EN-IN">from polishing the shoes. Later, A refused to pay stating that he did not ask for it. He did not made any attempt to stop B from doing the work, since he thought that the service was free.</span></b></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><b style="mso-bidi-font-weight: normal"><span style="font-size:10.5pt;font-family:"Arial","sans-serif"; mso-ansi-language:EN-IN;mso-fareast-language:EN-IN" lang="EN-IN">Advise B.</span></b></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">A’s contentions are given in the question. Further, A may argue that B has not made an offer and there was no acceptance from A and hence there is no valid contract.<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">B is in the business of Shoe Polishing and he earns his livelihood by doing this service in the Railway Plat form. Such type of service providers are common sight at the Railway platforms, and it is common knowledge that they are not providing free service. A could have just withdrawn his feet/ shoes in case he did not want to pay. By sitting without disturbing the work throughout, he has either accepted the implied offer or accepted a non gratuitous act. </span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"">Section 70 of the Indian contract Act 1881 provides the obligation of person enjoying benefit of non-gratuitous act: </span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.5in"><span style="font-family:"Arial","sans-serif"">“Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such another person enjoys the benefit thereof, the letter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.”</span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"">As per the above section, four conditions are to be satisfied to make one liable:</span></p> <p class="MsoNormal" style="margin-left:.75in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l0 level1 lfo1;tab-stops:21.25pt 42.55pt list .75in left 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family: Arial;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">1.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">A person should lawfully do something for another.</span><span style="font-family:"Arial","sans-serif";mso-ansi-language:EN-IN; mso-bidi-font-weight:bold" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:.75in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l0 level1 lfo1;tab-stops:21.25pt 42.55pt list .75in left 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family: Arial;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">2.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">He must not intend to act gratuitously </span><span style="font-family:"Arial","sans-serif";mso-ansi-language:EN-IN; mso-bidi-font-weight:bold" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:.75in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l0 level1 lfo1;tab-stops:21.25pt 42.55pt list .75in left 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family: Arial;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">3.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">The other party must enjoy the benefit.</span><span style="font-family:"Arial","sans-serif";mso-ansi-language:EN-IN; mso-bidi-font-weight:bold" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:.75in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l0 level1 lfo1;tab-stops:21.25pt 42.55pt list .75in left 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family: Arial;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">4.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">The beneficiary has the choice to reject the services.</span><span style="font-family:"Arial","sans-serif"; mso-ansi-language:EN-IN;mso-bidi-font-weight:bold" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left:.75in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l0 level1 lfo1;tab-stops:21.25pt 42.55pt list .75in left 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family: Arial;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold" lang="EN-IN"><span style="mso-list:Ignore">5.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold"><span style="mso-spacerun:yes"> </span>The services should have been rendered without request.</span><span style="font-family:"Arial","sans-serif";mso-ansi-language:EN-IN;mso-bidi-font-weight: bold" lang="EN-IN"></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight: bold">In the given case:</span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l2 level1 lfo2;tab-stops:21.25pt 42.55pt 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family:Arial; mso-bidi-font-weight:bold"><span style="mso-list:Ignore">1.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">B does the work of polishing the shoes, which is lawful.</span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l2 level1 lfo2;tab-stops:21.25pt 42.55pt 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family:Arial; mso-bidi-font-weight:bold"><span style="mso-list:Ignore">2.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">His intention was to get some money out of the job, and he did not act gratuitously.<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l2 level1 lfo2;tab-stops:21.25pt 42.55pt 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family:Arial; mso-bidi-font-weight:bold"><span style="mso-list:Ignore">3.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">A got his shoe polished, and thereby enjoyed the benefit of B’s act.</span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l2 level1 lfo2;tab-stops:21.25pt 42.55pt 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family:Arial; mso-bidi-font-weight:bold"><span style="mso-list:Ignore">4.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">A had the opportunity to reject the service.</span></p> <p class="MsoNormal" style="margin-left:.5in;text-align:justify;text-justify: inter-ideograph;text-indent:-.25in;mso-list:l2 level1 lfo2;tab-stops:21.25pt 42.55pt 63.8pt 85.05pt 106.3pt 127.6pt 148.85pt 170.1pt"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family:Arial; mso-bidi-font-weight:bold"><span style="mso-list:Ignore">5.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">B has rendered the service without request.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight: bold">From the above, it is clear that all the conditions of section 70 are met. </span></p> <p class="MsoNormal" style="margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt; margin-left:0in"><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight: bold">A case where the facts are similar to the given case is decided by the High court of Delhi during 2006. The case is as follows:</span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.25in"><u><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight: bold">Neha Bhasin v Anand Raj anand - (2006) 132 DLT 196:</span></u><span style="font-family:"Arial","sans-serif";mso-ansi-language:EN-IN; mso-bidi-font-weight:bold" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.25in"><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight: bold">Songs of N were recorded by the defendants. There was no contract between them. The defendants commercially marketed CDs of her song recordings.Though the facts did not directly point to the fact of a non gratuitous act on the part of N, the court came to the conclusion that it was a non gratuitous act and that the defendants enjoyed the benefit. The court held that the a quasi contract arose and the under section 70 and the defendants are liable to pay.</span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Arial","sans-serif";color:red;mso-ansi-language: EN-IN;mso-fareast-language:EN-IN"><span style="mso-spacerun:yes"> </span></span></b><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">Hence A is bound to make compensation to B in respect of the work of polishing his shoes. </span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:12.0pt; margin-left:.25in"><b style="mso-bidi-font-weight:normal"><span style="font-size:10.5pt;font-family:"Arial","sans-serif";color:red;mso-ansi-language: EN-IN;mso-fareast-language:EN-IN" lang="EN-IN"> </span></b></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><b style="mso-bidi-font-weight: normal"><span style="font-size:10.5pt;font-family:"Arial","sans-serif"">ALTERNATE APPROACH:</span></b></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">As per the Indian contract Act 1881:</span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">“When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a Promise”<span style="mso-tab-count:1"> </span>- S. 2(b) </span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">“Every promise and every set of promises, forming the consideration for each other, is an Agreement.”<span style="mso-tab-count: 1"> </span> - S.2(e)<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">“An agreement enforceable by law is a<span style="mso-spacerun:yes"> </span>Contract” <span style="mso-tab-count:1"> </span>- S.2(h) </span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">“The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.” <span style="mso-spacerun:yes"> </span>-<span style="mso-spacerun:yes"> </span>S.3 <span style="mso-tab-count:4"> </span><span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">From section 3 of Indian contract act 1881 as quoted above, it follows that the communication is deemed to be made</span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.75in;text-indent:-.25in;mso-list:l1 level1 lfo4"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">¾<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">By<span style="mso-spacerun:yes"> </span>act or omission of the parties</span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:1.5in;text-indent:-1.5in;mso-text-indent-alt:-9.0pt;mso-list:l3 level3 lfo3"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family:Arial; mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span>i.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">By which he intends to communicate <span style="mso-tab-count:3"> </span>or </span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:1.5in;text-indent:-1.5in;mso-text-indent-alt:-9.0pt;mso-list:l3 level3 lfo3"><span style="font-family:"Arial","sans-serif";mso-fareast-font-family:Arial; mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span>ii.<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Arial","sans-serif";mso-bidi-font-weight:bold">Which has the effect of communicating it.</span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">In the given case, by his action of taking the shoe and starting the act of polishing B has communicated the proposal. </span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">Omission of A to prevent B is the communication of acceptance of the proposal. </span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">Even if A had no intention of communicating the acceptance, his omission had the effect of communicating the acceptance. </span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">Though no consideration is fixed beforehand, since A allowed B to continue polishing the shoes, and has not stopped him from doing so, it is to be presumed that the B expected a reasonable consideration and A has agreed to the same.</span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">Acceptance of proposal by conduct is well established in a famous English case Carlill v Carbolic Smoke Ball Co<span style="mso-spacerun:yes"> </span>[1893] 1 QB 256, where the plaintiff, by buying the product from a shop was deemed to have accepted an offer for reward , published as an advertisement in a News Paper. Even though the parties had not even met or communicated, the conduct of bothe the parties were deemed to have completed a valid contract..<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif"; mso-bidi-font-weight:bold">Hence it is proved that a valid contract is established between A and B and that A is bound to pay B for the work undertaken by him. </span></p> <p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-family:"Arial","sans-serif""> </span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-82873401386328244442012-04-07T18:20:00.000+05:302012-04-07T18:23:31.350+05:30Insurance<!--[if !mso]> <style> v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} </style> <![endif]--><!--[if gte mso 9]><xml> 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<w:lsdexception locked="false" priority="68" semihidden="false" unhidewhenused="false" name="Medium Grid 2 Accent 3"> <w:lsdexception locked="false" priority="69" semihidden="false" unhidewhenused="false" name="Medium Grid 3 Accent 3"> <w:lsdexception locked="false" priority="70" semihidden="false" unhidewhenused="false" name="Dark List Accent 3"> <w:lsdexception locked="false" priority="71" semihidden="false" unhidewhenused="false" name="Colorful Shading Accent 3"> <w:lsdexception locked="false" priority="72" semihidden="false" unhidewhenused="false" name="Colorful List Accent 3"> <w:lsdexception locked="false" priority="73" semihidden="false" unhidewhenused="false" name="Colorful Grid Accent 3"> <w:lsdexception locked="false" priority="60" semihidden="false" unhidewhenused="false" name="Light Shading Accent 4"> <w:lsdexception locked="false" priority="61" semihidden="false" unhidewhenused="false" name="Light List Accent 4"> <w:lsdexception locked="false" priority="62" semihidden="false" unhidewhenused="false" name="Light Grid Accent 4"> <w:lsdexception locked="false" priority="63" semihidden="false" unhidewhenused="false" name="Medium Shading 1 Accent 4"> <w:lsdexception locked="false" priority="64" semihidden="false" unhidewhenused="false" name="Medium Shading 2 Accent 4"> <w:lsdexception locked="false" priority="65" semihidden="false" unhidewhenused="false" name="Medium List 1 Accent 4"> <w:lsdexception locked="false" priority="66" semihidden="false" unhidewhenused="false" name="Medium List 2 Accent 4"> <w:lsdexception locked="false" priority="67" semihidden="false" unhidewhenused="false" name="Medium Grid 1 Accent 4"> <w:lsdexception locked="false" priority="68" semihidden="false" unhidewhenused="false" name="Medium Grid 2 Accent 4"> <w:lsdexception locked="false" priority="69" semihidden="false" unhidewhenused="false" name="Medium Grid 3 Accent 4"> <w:lsdexception locked="false" priority="70" semihidden="false" unhidewhenused="false" name="Dark 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locked="false" priority="68" semihidden="false" unhidewhenused="false" name="Medium Grid 2 Accent 6"> <w:lsdexception locked="false" priority="69" semihidden="false" unhidewhenused="false" name="Medium Grid 3 Accent 6"> <w:lsdexception locked="false" priority="70" semihidden="false" unhidewhenused="false" name="Dark List Accent 6"> <w:lsdexception locked="false" priority="71" semihidden="false" unhidewhenused="false" name="Colorful Shading Accent 6"> <w:lsdexception locked="false" priority="72" semihidden="false" unhidewhenused="false" name="Colorful List Accent 6"> <w:lsdexception locked="false" priority="73" semihidden="false" unhidewhenused="false" name="Colorful Grid Accent 6"> <w:lsdexception locked="false" priority="19" semihidden="false" unhidewhenused="false" qformat="true" name="Subtle Emphasis"> <w:lsdexception locked="false" priority="21" semihidden="false" unhidewhenused="false" qformat="true" name="Intense Emphasis"> <w:lsdexception locked="false" priority="31" semihidden="false" unhidewhenused="false" qformat="true" name="Subtle Reference"> <w:lsdexception locked="false" priority="32" semihidden="false" unhidewhenused="false" qformat="true" name="Intense Reference"> <w:lsdexception locked="false" priority="33" semihidden="false" unhidewhenused="false" qformat="true" name="Book Title"> <w:lsdexception locked="false" priority="37" name="Bibliography"> <w:lsdexception locked="false" priority="39" qformat="true" name="TOC Heading"> </w:LatentStyles> </xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--><!--[if gte mso 9]><xml> <o:shapedefaults ext="edit" spidmax="2050"> </xml><![endif]--><!--[if gte mso 9]><xml> <o:shapelayout ext="edit"> <o:idmap ext="edit" data="1"> <o:rules ext="edit"> <o:r id="V:Rule1" type="connector" idref="#_x0000_s1036"> <o:r id="V:Rule2" type="connector" idref="#_x0000_s1031"> <o:r id="V:Rule3" type="connector" idref="#_x0000_s1037"> <o:r id="V:Rule4" type="connector" idref="#_x0000_s1039"> <o:r id="V:Rule5" type="connector" idref="#_x0000_s1030"> </o:rules> </o:shapelayout></xml><![endif]--> <p class="MsoListParagraphCxSpFirst" style="mso-margin-top-alt:auto; mso-margin-bottom-alt:auto;margin-left:22.5pt;mso-add-space:auto;text-align: center;tab-stops:9.0pt" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">GENERAL INSURANCE</span></u></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt: auto;mso-margin-bottom-alt:auto;margin-left:22.5pt;mso-add-space:auto; text-align:center" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""><span style="text-decoration:none"> </span></span></u></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:22.5pt;mso-add-space:auto;text-align:justify"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Insurance policy that protects you against losses and damages other than those covered by life insurance. It</span><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman""> is provided based on the nature of the business.</span><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""></span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""> </span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:22.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; mso-list:l5 level1 lfo9"><span style="font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi-font-family:Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><u><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-fareast-font-family:"Times New Roman"; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">Types </span></u></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:40.5pt;mso-add-space:auto;text-align:justify"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-fareast-font-family:"Times New Roman"; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman""> </span></b></p> <p class="MsoListParagraphCxSpLast" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; mso-list:l7 level1 lfo10"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:Cambria;mso-fareast-theme-font:major-latin;mso-hansi-theme-font: major-latin;mso-bidi-font-family:Cambria;mso-bidi-theme-font:major-latin"><span style="mso-list:Ignore">1)<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">Property Insurance - </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font: major-latin;mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">Property insurance indemnifies property owners against the loss or damage of real/personal property caused by various perils such as lightning, fire etc. By law, insurance coverage cannot be more or less than actual value. Property insurance will cover the following damages caused to the insured:</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><i style="mso-bidi-font-style:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-fareast-font-family:"Times New Roman"; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">Fire</span></i></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">: Indemnifies insured for loss due to destruction of or damage to property or goods, caused by fire.</span> <span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">The insurer is liable to make good the actual amount of loss not exceeding the maximum amount fixed under the policy. </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><b style="mso-bidi-font-weight:normal"><i style="mso-bidi-font-style: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Marine</span></i></b><i style="mso-bidi-font-style:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-fareast-font-family:"Times New Roman"; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">:</span></i><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""> Covers ocean-going vessels and their cargo from loss or damage because of perils of the sea.</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span><span style="font-family: "Cambria","serif";mso-ascii-theme-font:major-latin;mso-fareast-font-family: "Times New Roman";mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">'Perils of the sea' refers only to accidents or causalities of the sea, and does not include ordinary action of winds and waves. Besides, maritime perils include, fire, war perils, pirates, seizures and jettison.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><b style="mso-bidi-font-weight:normal"><i style="mso-bidi-font-style: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Automobile</span></i></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">: Its primary use is to provide protection against physical damage resulting from traffic collisions and against liability that could also arise from it. In case of commercial auto insurance, the legal liability of business firms arising out of the ownership or operation of business vehicles is covered.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><b style="mso-bidi-font-weight:normal"><i style="mso-bidi-font-style: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Machinery</span></i></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">: Covers losses due to accidental breakdown of covered equipment. Examples can be steam boilers, air conditioning and refrigeration equipment.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><b style="mso-bidi-font-weight:normal"><i style="mso-bidi-font-style: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Theft</span></i></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">: Generally covers all acts of stealing. There are three major types of insurance contracts for burglary, robbery, and other theft.</span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; mso-list:l7 level1 lfo10"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:Cambria;mso-fareast-theme-font:major-latin;mso-hansi-theme-font: major-latin;mso-bidi-font-family:Cambria;mso-bidi-theme-font:major-latin"><span style="mso-list:Ignore">2)<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Liability Insurance</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-fareast-font-family:"Times New Roman"; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">Protects an individual or business from the risk that they may <span style="mso-spacerun:yes"> </span>be sued and held legally liable for something such as malpractice, injury or negligence. It covers both legal costs and any legal payouts for which the insured would be responsible if found legally liable. Intentional damage and contractual liabilities are typically not covered in these types of policies. </span></p> <p class="MsoListParagraphCxSpFirst" style="margin-left:28.35pt;mso-add-space: auto;text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"">Ex: Medical malpractice insurance covers physicians and other health-care providers for liability claims arising out of harm or injury to patients. </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:28.35pt;mso-add-space: auto;text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif""> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:.25in;mso-add-space: auto;text-align:justify;text-indent:-.25in;line-height:150%;mso-list:l7 level1 lfo10"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""><span style="mso-list:Ignore">3)<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"">Other forms</span></b><span style="font-family:"Times New Roman","serif""> – Export credit, employees state insurance, guarantee insurance</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:.25in;mso-add-space: auto;text-align:justify;text-indent:-.25in;line-height:150%;mso-list:l7 level1 lfo10"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""><span style="mso-list:Ignore">4)<span style="font:7.0pt "Times New Roman""> </span></span></span></b><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"">Reinsurance </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font: major-latin;mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font: major-latin;mso-bidi-font-family:"Times New Roman"">- The practice of insurers transferring portions of risk portfolios to other parties by some form of agreement in order to reduce the likelihood of having to pay a large obligation resulting from an insurance claim.</span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif""></span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; mso-list:l18 level1 lfo8"><span style="font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi-font-family:Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-fareast-font-family:"Times New Roman"; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">AIM: </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Risk reduction.</span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; mso-list:l18 level1 lfo8"><span style="font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi-font-family:Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-fareast-font-family:"Times New Roman"; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">BENEFITS: </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font: major-latin;mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font: major-latin;mso-bidi-font-family:"Times New Roman"">Apart from increased underwriting capacity, it helps stabilize profits as well as provides for protection against a catastrophic loss.</span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""> </span></b></p> <p class="MsoListParagraphCxSpLast" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; mso-list:l18 level1 lfo8"><span style="font-family:Wingdings; mso-fareast-font-family:Wingdings;mso-bidi-font-family:Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-fareast-font-family:"Times New Roman"; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman"">ILLUSTRATION – </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font: major-latin;mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font: major-latin;mso-bidi-font-family:"Times New Roman"">Insurance firm A has written a $10 million life insurance policy on the life of Mr. X.</span><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman""> </span><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Firm A is concerned that Mr. X death would have a material impact on their profits from the $10 million claim. So, A buys coverage on the life of Mr. X from firm B ($3 million of coverage) – <i style="mso-bidi-font-style:normal">Refer Appendix I</i></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Case 1</span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""> (No Reinsurance) - If X dies in a plane crash, firm A will have to pay his beneficiary $10 million.</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Case 2</span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""> (Reinsurance )- If X dies in a plane crash, company A will have to pay his beneficiary $10 million, but it can in turn collect on the coverage it obtained from B. The two insurance companies will share the loss, with B bearing $3 million and A $7 million.</span><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin;mso-bidi-font-family:"Times New Roman""> Here both companies share in the premiums and profits of the coverage as well as the losses.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><i style="mso-bidi-font-style:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Firm B</span></i><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""> – Not the insurer that wrote the original coverage. They are instead standing behind the original insurer. (reinsurer)</span></p> <p class="MsoNormal" style="text-align:justify"><i style="mso-bidi-font-style: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">Firm A</span></i><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman";mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman""> - S</span><span style="font-family: "Cambria","serif";mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"">eding company or cedant . It has ceded some of its life insurance business to B through the reinsurance arrangement.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin;mso-bidi-font-family: "Times New Roman"">There are a wide variety of reinsurance coverages that A can purchase. For example, if it believes Mr X health is fine, but is worried that he might die from an accident, they can purchase reinsurance coverage only for death via an accident. In that arrangement, if instead of a plane crash X dies of a heart attack, A would still have to pay his beneficiary $10 million, but B would not owe anything to A. Naturally, A would pay less premium to B for accidental death reinsurance coverage than for comprehensive life reinsurance coverage.</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-size:12.0pt;line-height:115%;font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin"><span style="mso-spacerun:yes"> </span>“Insurance Industry is poised for a great leap in India in the years to come”</span></b></p> <p class="MsoNormal" style="text-align:justify"><span class="normaltext"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">India is fast emerging on the world map as a strong economic and a global powerhouse. The country is going through a phase of rapid development and growth. All the vital industries and sectors of the country are registering growth and thus, luring foreign investors with the insurance sector being no exception.</span></span><span style="font-size:10.0pt; line-height:115%;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:"Times New Roman";color:black"> </span><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Together with banking services, the sector adds about 7 per cent to the country's GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Yet, nearly 80 per cent of Indian population is without life insurance cover while health and non-life insurance continue to be below international standards. Moreover this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is a sure indicator that growth potential for the insurance sector is immense.</span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; mso-list:l1 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><strong><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin;mso-bidi-font-family: "Times New Roman";mso-bidi-theme-font:minor-bidi">Market Analysis</span></strong><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin"></span></b></p> <p class="MsoNormal" style="text-align:justify"><span class="normaltext"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">With a huge population and large untapped market, insurance happens to be a big opportunity in India.</span></span><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> <span class="normaltext">Insurance penetration for the year 2008 stood at 4.0 % for life insurance and 0.6% for non-life insurance. The level of penetration tends to rise as income increases and India, with its huge middle class households, does have immense potential. This in turn has made international players to look for investment opportunities in the Indian market. Moreover, saturation of markets in many developed economies has made the Indian market all the more attractive for global insurance majors.</span></span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; mso-list:l9 level1 lfo2"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Changing Mindset</span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">In India, insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits.</span><span style="font-size:10.0pt;line-height:115%;font-family:"Verdana","sans-serif"; color:black"> </span><span style="font-family:"Cambria","serif";mso-ascii-theme-font: major-latin;mso-hansi-theme-font:major-latin">Indian people are prone to investing in properties and gold followed by bank deposits. They selectively invest in shares also but the percentage is very small. However with the focus of insurance companies now on educating customers on the benefits of insurance this mindset is fast changing.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin;mso-no-proof: yes"> </span><span style="font-family:"Cambria","serif";mso-ascii-theme-font: major-latin;mso-hansi-theme-font:major-latin"></span></p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; mso-list:l12 level1 lfo3"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Insurance – Current Scenario </span></b></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">The Insurance industry in India has been progressing at a rapid pace since opening up of the industry in 2000. The US$ 41-billion Indian insurance industry is the fifth largest life insurance market in the emerging insurance economies globally, growing at 32-34% annually.<span style="mso-spacerun:yes"> </span>The momentum in equity investments by insurers picked up from 2004 when private insurance companies began marketing ULIPs (market-linked products) to investors. With collections increasing under such plans, insurance companies have raised their investments in the Indian stock market. Moreover with the increasing popularity of insurance plans that are linked to the stock market, insurance companies are emerging as a major force on the bourses.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">The Indian insurance industry boasts of a huge and diverse customer base. Nonetheless, its market penetration remains modest. The industry has long been fettered by low market awareness of insurance products; lack of product differentiation and focus; and insufficient infrastructure to deliver products to market. Competition for market share, among a growing number of vendors, is intense. Insurance companies also have to contend with rising costs and the possibility of further deregulation. Furthermore, the recent global recession and fall in international stock markets has damped demand for insurance products in India. New entrants to the market are being hit by both high start-up costs as well as high operating expenses. This has pushed out typical break-even estimates by a further two to three years to around eight to eleven years. <i style="mso-bidi-font-style:normal">Refer Appendix IV</i> </span></p> <p class="MsoListParagraphCxSpFirst" style="margin-left:.25in;mso-add-space:auto; text-align:justify;text-indent:-.25in;mso-list:l22 level1 lfo6"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Potential<span style="mso-spacerun:yes"> </span>& Challenges - </span></b><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">There is no doubt whatsoever that the Indian insurance industry is poised for a great leap in the years to come, however in order to benefit from the favorable environmental factors the insurance companies will have to overcome both the exogenous as well as endogenous challenges that have long plagued the industry.</span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:27.0pt;mso-add-space: auto;text-align:justify"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></b></p> <p class="MsoListParagraphCxSpLast" style="margin-left:.25in;mso-add-space:auto; text-align:justify;text-indent:-.25in;mso-list:l15 level1 lfo4"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Exogenous challenges -</span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> These challenges, which affect both product demand and the delivery of products and services, will have a medium- to long-term impact on company revenues and market growth.</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">1) Slowing demand due to economic recession: </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">India’s financial sector has been protected from the most severe consequences of the global recession. However, it has not been unscathed. Demand for insurance products has been adversely affected by slowing industrial and GDP growth. Customers are less willing or less able to buy insurance products. This has reduced sales in the non-life sector and caused growth in the life sector to slacken. Especially hard-hit by slowing product demand have been private insurance vendors who have enjoyed double digit growth over the past five to six years. The decline in international capital markets has also knocked sales of unit linked insurance products. With such products constituting up to 85 percent of the total product portfolios of some Indian insurance companies, the slump in capital markets has negatively impacted the growth rates of such vendors.</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">2) Increasing competition as a result of the growing number of vendors: </span></b><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">There are about 40 private vendors in the insurance market. The non-life sector in particular has seen a flurry of recent newcomers. While increased competition creates potential for accelerated market growth, it will also put pressure on commissions and premium rates during the short to medium term. The ability of the market to sustain such a large number of vendors is unproven. Product delivery mechanisms need to be expanded quickly to ensure that a critical mass of consumers is promptly brought into the insurance market in order to protect operating margins.</span></p> <p class="MsoListParagraph" style="margin-left:22.5pt;mso-add-space:auto; text-align:justify;text-indent:-.25in;mso-list:l17 level1 lfo5"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Endogenous challenges - </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Created by the specific conditions that exist within the insurance industry, these challenges need to be addressed by a combination of government, industry representatives and vendors of products and services.</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">1) High distribution costs: </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Over-dependence on agents within the life insurance market and direct sales agents within the non-life sector has resulted in high commissioning rates. Bancassurance is slowly gaining credence as a cost effective distribution medium. However, this advance is being countered by the increasing bargaining power of bancassurance partners. The rapid expansion of companies distribution networks, comprising agents and branch outlets, together with the high incidence of churn among agents, continues to push up expense ratios. Furthermore, investment in distribution networks continues to focus on “bricks and mortar” infrastructure rather than less expensive alternatives. Given the large and heterogeneous nature of the Indian market, a scalable and effective national distribution infrastructure could provide insurance vendors with a critical competitive advantage. A multi-channel delivery mechanism, which uses India’s telecommunications and IT backbone infrastructure, could extend the sales reach of the industry as a whole.</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">2) Increasing staff salary costs: </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Branch and back-office operations within the insurance industry remain staffed at levels formerly required for the high growth in policy volumes. The subsequent tapering of industry growth has resulted in inefficient workforce utilization, low productivity and rising costs. Workforce planning across all levels of the industry is essential in order to tap market growth to its full potential.</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">3) High customer churn: </span></b><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Inadequately trained salespeople within the life and non-life sectors, who tend to focus on sales volumes rather than customer needs, are responsible for a high degree of mis-selling within the insurance industry. This has caused consumer dissatisfaction and resulted in customer churn, brand disloyalty and frequent lapsing of policies. In addition, inadequate understanding of customer behavior, needs and expectations has limited vendors ability to identify such dissatisfaction and implement appropriate proactive interventions.</span></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">4) Need for better product definition and dynamic pricing: </span></b><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">The deregulated tariff regime within the non-life insurance industry has created the opportunity for vendors to design and market differentiated products that address specific consumer sectors and pricing requirements. Vendors need a varied and dynamic spread of products, appropriately priced, not only to meet the requirements of their customers but also to ensure that their risk-to-return exposure is adequately spread across different product categories.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">In order to overcome these challenges and explore the Indian market to its full potential a four pronged strategy that the insurance sector can follow has been identified- </span></p> <p class="MsoListParagraphCxSpFirst" style="text-align:justify;text-indent:-.25in; mso-list:l0 level1 lfo7"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Managing costs strategically to better manage profitability.<i style="mso-bidi-font-style: normal"> Refer Appendix II,III</i></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l0 level1 lfo7"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Seizing competitive advantage through differentiated customer experience.</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l0 level1 lfo7"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Ensuring seamless customer focus and delivery through multichannel integration.</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l0 level1 lfo7"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Deriving actionable insights through strong analytics backbone</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></p> <p class="MsoListParagraphCxSpLast" style="margin-left:22.5pt;mso-add-space:auto; text-align:justify;text-indent:-.25in;mso-list:l17 level1 lfo5"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span> </p><table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal" style="text-align:center" align="center"><b style="mso-bidi-font-weight:normal">Firm B (Reinsurer)</b></p> </div> </td> </tr> </tbody></table> <table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal" style="text-align:center" align="center"><b style="mso-bidi-font-weight:normal">Firm A (Insurer)</b></p> </div> </td> </tr> </tbody></table> <table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal" style="text-align:center" align="center"><b style="mso-bidi-font-weight:normal">MR <span style="mso-spacerun:yes"> </span>X</b></p> </div> </td> </tr> </tbody></table> <b style="mso-bidi-font-weight:normal"><span style="font-family: "Cambria","serif";mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Appendix I – Reinsurance</span></b> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></b></p> <p class="MsoNormal" style="text-align:justify"> </p><table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal">Reinsurance</b></p> </div> </td> </tr> </tbody></table> <table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Insurance</span></b></p> </div> </td> </tr> </tbody></table> <b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin"> </span></b> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></b></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></b></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></b></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></b></p> <br style="mso-ignore:vglayout" clear="ALL"> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; mso-list:l20 level1 lfo11"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Appendix II <span style="mso-spacerun:yes"> </span>- <span style="mso-spacerun:yes"> </span>Life Insurance cost drivers</span></b></p> <p class="MsoNormal" style="text-align:justify"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin;mso-no-proof:yes"> </span></b><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"></span></b></p> <p class="MsoNormal" style="text-align:justify"> </p> <p class="MsoListParagraph" style="text-align:justify;text-indent:-.25in; mso-list:l14 level1 lfo12"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Appendix III - <span style="mso-spacerun:yes"> </span>Non Life Insurance Cost drivers</span></b></p> <p class="MsoNormal" style="text-align:justify"> </p><table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><span style="font-size:10.0pt;line-height:115%">Loss Adjustment Expenses</span></b></p> </div> </td> </tr> </tbody></table> <table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><span style="font-size:10.0pt;line-height:115%">General Administration Costs</span></b></p> </div> </td> </tr> </tbody></table> <table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal" style="text-align:center" align="center"><span style="font-size:10.0pt;line-height:115%"> </span></p> <p class="MsoNormal" style="text-align:center" align="center"><b style="mso-bidi-font-weight:normal"><span style="font-size:10.0pt; line-height:115%">Commission Costs</span></b></p> </div> </td> </tr> </tbody></table> <b style="mso-bidi-font-weight:normal"> </b> <p class="MsoNormal" style="text-align:justify"> </p> <p class="MsoNormal" style="text-align:justify"> </p> <p class="MsoNormal" style="text-align:justify"> </p> <br style="mso-ignore:vglayout" clear="ALL"> <p class="MsoNormal" style="text-align:justify"> </p><table cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td> <div> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal">Annual Gross Premium</b></p> </div> </td> </tr> </tbody></table> <b style="mso-bidi-font-weight:normal">Costs</b> <p class="MsoNormal" style="text-align:justify"> </p> <p class="MsoNormal" style="text-align:justify"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin"> </span></p> <p class="MsoListParagraphCxSpFirst" style="text-align:justify;text-indent:-.25in; mso-list:l13 level1 lfo13"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Appendix IV - <span style="mso-spacerun:yes"> </span>Michael Porter’s Five Forces Analysis</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin"> </span></b></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:.25in;mso-add-space: auto;text-align:justify;text-indent:-.25in;mso-list:l6 level1 lfo15"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Buyer/Customer Power</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l11 level1 lfo14"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Widening Product Range</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l11 level1 lfo14"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Large Corporate Clients</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l11 level1 lfo14"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Sale of Bancassurance</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l11 level1 lfo14"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Price Sensitive Buyers</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l11 level1 lfo14"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Multiple Distribution Channels</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:22.5pt;mso-add-space: auto;text-align:justify;text-indent:-.25in;mso-list:l4 level1 lfo16"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Suppliers Power</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l21 level1 lfo17"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Limited Actuaries in the Market</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l21 level1 lfo17"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Reinsurance Concentration</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l21 level1 lfo17"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Cession to the National Insurer</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l21 level1 lfo17"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Dependence on IT Providers</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:22.5pt;mso-add-space: auto;text-align:justify;text-indent:-.25in;mso-list:l2 level1 lfo18"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Rivalry among Competitors</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l16 level1 lfo19"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Industry Concentration in Life and Non-life</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l16 level1 lfo19"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Low Penetration of Insurance</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l16 level1 lfo19"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Regulation Restricts Competition</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:22.5pt;mso-add-space: auto;text-align:justify;text-indent:-.25in;mso-list:l8 level1 lfo20"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Barriers to entry</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l19 level1 lfo21"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">FDI Ceiling</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l19 level1 lfo21"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Capital Requirements</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l19 level1 lfo21"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Elaborate Distribution Requirements</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l19 level1 lfo21"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin"><span style="mso-spacerun:yes"> </span>‘Lock-in’ of Buyers</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left:27.0pt;mso-add-space: auto;text-align:justify;text-indent:-.25in;mso-list:l3 level1 lfo22"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings"><span style="mso-list:Ignore">v<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Cambria","serif";mso-ascii-theme-font:major-latin; mso-hansi-theme-font:major-latin">Threat of Substitutes products</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l10 level1 lfo23"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Government Pension Scheme</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l10 level1 lfo23"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Tax Saving Instruments</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align:justify;text-indent:-.25in; mso-list:l10 level1 lfo23"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Emerging Substitutes</span></p> <p class="MsoListParagraphCxSpLast" style="text-align:justify;text-indent:-.25in; mso-list:l10 level1 lfo23"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Cambria","serif"; mso-ascii-theme-font:major-latin;mso-hansi-theme-font:major-latin">Dependence on Children in Rural India</span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-89483041341762937072012-04-06T14:13:00.000+05:302012-04-06T14:14:22.714+05:30Business Ethics<!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> 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9]><xml> <o:shapelayout ext="edit"> <o:idmap ext="edit" data="1"> </o:shapelayout></xml><![endif]--> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-fareast-language:EN-IN" lang="EN-IN"><a href="http://www.wisegeek.com/what-are-business-ethics.htm"><span style="color:windowtext;text-decoration:none;text-underline:none"><br /></span><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; mso-bidi-font-size:11.0pt;color:windowtext;text-decoration:none;text-underline: none">Business ethics</span></b></a> is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer. </span><span style="font-family:"Times New Roman","serif"" lang="EN-IN">Many businesses have gained a bad reputation just by being in business. To some people, businesses are interested in making money, and that is the bottom line. It is the manner in which some businesses conduct themselves that brings up the question of ethical behavior.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;mso-bidi-font-size:11.0pt;font-family:"Times New Roman","serif"" lang="EN-IN"> </span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:normal"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;mso-bidi-font-size:11.0pt;font-family:"Times New Roman","serif"" lang="EN-IN">Elements of business ethics:</span></b><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;mso-bidi-font-size:11.0pt;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-fareast-language:EN-IN" lang="EN-IN"></span></b></p> <p class="MsoListParagraphCxSpFirst" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Integrity<span style="mso-tab-count:3"> </span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Honesty- its said that “honesty is the best policy”</span><span style="font-family:"Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Sincerity<span style="mso-tab-count:3"> </span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Truthfulness</span><span style="font-family: "Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Transparency</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol" lang="EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Generosity</span><span style="font-family: "Times New Roman","serif"" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Co-operation<span style="mso-tab-count:1"> </span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Empathy</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Leadership</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Selflessness</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Openness</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-US">Fairness</span></p> <p class="MsoListParagraphCxSpLast" style="text-indent:-.25in;line-height:normal; mso-list:l0 level1 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-ansi-language: EN-US"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";mso-ansi-language:EN-US">Accountability</span></b></p> <p class="MsoNormal" style="line-height:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN">A well-designed and implemented business ethics program provides enterprise employees and agents with the guidance and information they need for effective, efficient, and responsible choices and actions. We often hear the term "shared responsibility", but there is no such thing as "shared accountability". One could define accountability as the "ultimate responsibility"..</span></p> <p><b><span style="mso-bidi-font-size:11.0pt" lang="EN-IN"> </span></b></p> <p><b><span style="mso-bidi-font-size:11.0pt" lang="EN-IN">ACCOUNTABILITY</span></b></p> <p><b><span style="font-size:11.0pt" lang="EN-IN">Accountability</span></b><span style="font-size:11.0pt" lang="EN-IN"><span style="mso-spacerun:yes"> </span>is defined as “framework for justifying management organizational actions, whether they are financial or employment-related. Ajunior manager is accountable to a senior manager for the completion of an organizational program by a particular date and within budget guidelines”. The word “accountability” most often comes up in this context—someone has crossed the line and done something very wrong.<span style="mso-spacerun:yes"> </span>What happens to this person?<span style="mso-spacerun:yes"> </span>This captures one very common usage of the word “accountability”: the process of <span style="mso-spacerun:yes"> </span>assigning blame and punishing wrong-doing.<span style="mso-spacerun:yes"> </span>There is, however, a different—and more positive--way to conceive of accountability.<span style="mso-spacerun:yes"> </span></span></p> <p><span style="font-size:11.0pt" lang="EN-IN">Let’s begin with a brief discussion of accountability. When Canada reoriented its public <span style="mso-spacerun:yes"> </span>service five years ago to focus on ethics and values, it listed this definition and characteristics of effective accountability systems:<span style="mso-spacerun:yes"> </span></span></p> <p><span style="font-size:11.0pt" lang="EN-IN">Accountability is the process whereby the City and its leadership are responsible for their decisions and actions, and submit themselves to appropriate external scrutiny.<span style="mso-spacerun:yes"> </span>In effect, accountability is the obligation to answer for a responsibility conferred and accepted.<span style="mso-spacerun:yes"> </span></span></p> <p><b style="mso-bidi-font-weight:normal"><span style="font-size: 11.0pt" lang="EN-IN"> </span></b></p> <p><b style="mso-bidi-font-weight:normal"><span style="font-size: 11.0pt" lang="EN-IN">Principles of Effective Accountability Systems </span></b></p> <p><span style="font-size:11.0pt" lang="EN-IN">a. Clear roles and responsibilities </span></p> <p><span style="font-size:11.0pt" lang="EN-IN">b. Clear performance expectations </span></p> <p><span style="font-size:11.0pt" lang="EN-IN">c. Balanced expectations and capacities </span></p> <p><span style="font-size:11.0pt" lang="EN-IN">d. Credible reporting </span></p> <p><span style="font-size:11.0pt" lang="EN-IN">e. Reasonable review and adjustment </span></p> <p><b><span style="mso-bidi-font-size:11.0pt" lang="EN-IN">Self-Accountability</span></b><span style="mso-bidi-font-size:11.0pt" lang="EN-IN"></span></p> <p><span style="font-size:11.0pt" lang="EN-IN">As individuals, it is our capacity for self-accountability that keeps us functioning ethically and responsibly. While people may be accountable to others, they may not be as accountable to themselves when there is no one else to observe, monitor or hold them responsible.</span></p> <p><span style="font-size:11.0pt" lang="EN-IN">Self-accountability is the cornerstone of ethics: It is who you are and what you do when no one is watching. When you have a well-developed sense of self-accountability, you are honest with yourself, and are answerable and responsible for what you say and do. You have the ability to look beyond the immediate moment to consider the consequences and know if you are willing to pay them. You have personal ethics.</span></p> <p><b style="mso-bidi-font-weight:normal"><span style="mso-bidi-font-size: 11.0pt" lang="EN-IN">Group accountability:</span></b></p> <p><span style="font-size:11.0pt" lang="EN-IN">Boundary Management refocuses accountability from individuals to groups. This is a major shift. Holding individuals accountable has been one of the central tenets of effective management practice, and includes its extension: that individuals should only be accountable for those things that they can control. It is essentially a strategy of matching accountability and degree of control. Everyone within the organization has a set of tasks and results over which they have control and for which they are accountable. </span></p> <p><span style="font-size:11.0pt" lang="EN-IN"> Any time you maximize a individual element of a process, the performance of the overall process diminishes. Focusing exclusively on individuals does exactly this. In fact, it is worse. It is trying to maximize all of the elements, and is a sure way to reduce overall performance. </span></p> <p><span style="font-size:11.0pt;mso-bidi-font-style:italic" lang="EN-IN">The traditional accountability-control strategy gives a wonderful management structure over individuals and lousy control over the group. Anything that is left unconnected to someone goes to the manager. The manager is left with the all the white space in the organizational chart, everything between the boxes. This might sound appropriate but the group and not the manager control most of these items, and what falls to the manager is not a small list. These white space items are almost always in some state of flux and therefore require attention. They require balance and definition. It is difficult for one person to do this, and nearly impossible when no one else within the group feels accountable to help, and may actually be working against the whole. </span></p> <p><span style="font-size:11.0pt;mso-bidi-font-style:italic" lang="EN-IN">Another interesting aspect of the accountability-control strategy is its opposition to entrepreneurism. We are never in control of entrepreneurial efforts. Their very nature means that we are not in complete control. They wouldn’t be entrepreneurial otherwise. In the real world, there are really few things over which we have complete control as individuals. Business itself is founded on an uncontrollable entity: the customer. To establish an enterprise that must continuously shift to meet customer demands, and then design an internal structure that is static so people can be in control seems foolish at best. </span></p> <p><span style="font-size:11.0pt" lang="EN-IN">Boundary Management<sup>sm</sup> is based on the concept that we almost always have some control and almost never have complete control. Instead of trying to match accountability to control, we need to increase control. We have been working with the wrong side of the equation. Group accountability/control does this. As individuals, we control little. As individuals functioning as a group, we control far more than the sum of the individuals. Individuals within a group can coordinate, negotiate, and collaborate. This not only increases the current level of control but also gives the group influence where none existed before. <span style="mso-bidi-font-style:italic"></span></span></p> <p><span style="font-size:11.0pt;mso-bidi-font-style:italic" lang="EN-IN">Groups perform as groups when they are treated as groups. If we treat individuals only as individuals, they will not perform as a group. Organizations that can make this change from individual to group accountability will be able to move faster, change faster, and perform at a higher level.</span><span style="font-size:11.0pt" lang="EN-IN"> Boundary Management<sup>sm</sup> establishes group performance measures and a group focus through the use of Boundary Theory. It sets up the structure for group performance.</span></p> <p><b style="mso-bidi-font-weight:normal"><span style="mso-bidi-font-size: 11.0pt" lang="EN-IN">Organisational accountability:</span></b></p> <p><span style="font-size:11.0pt" lang="EN-IN">The organisation is also accountable to its employees, shareholder and in a broader sense to the society (stakeholders). During recession, many companies went for lay off, but TATA group set an example infront of the nation by following the strategy of <b style="mso-bidi-font-weight:normal">no lay off. </b>As per Indian Companies Act, all the public companies need to disclose their financial report to the public. Organisations are also focused on trasferablity and disclosure.</span></p> <p><span style="font-size:11.0pt" lang="EN-IN">Accountability acts as an agent and drive the organisation towards the path of ethic.</span></p> <p><span style="font-size:11.0pt" lang="EN-IN"> </span></p> <p class="MsoNormal" style="line-height:normal"><span style="font-family:"Times New Roman","serif"" lang="EN-IN"> </span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-22564278417957768132012-04-06T14:10:00.000+05:302012-04-06T14:11:47.088+05:30Green Marketing - Indian Initiatives<!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> 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</w:LatentStyles> </xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal" style="line-height:150%"><span style="font-size: 14.0pt;mso-bidi-font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; color:black" lang="EN-IN">INTRODUCTION:<br style="mso-special-character:line-break"> <br style="mso-special-character:line-break"> </span><span class="apple-style-span"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; color:black" lang="EN-IN"></span></span></p> <p class="MsoNormal" style="line-height:150%"><span class="apple-style-span"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; color:black" lang="EN-IN">According to the American Marketing Association, green marketing is the marketing of products that are presumed to be environmentally safe. Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this termOther similar terms used are Environmental Marketing and Ecological Marketing.</span></span><span class="apple-converted-space"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; color:black" lang="EN-IN"> </span></span><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif";color:black" lang="EN-IN"><br /><br /><span class="apple-style-span">* The first wave of Green Marketing occurred in the 1980s. Corporate Social Responsibility (CSR) Reports started with the ice cream seller Ben & Jerry's where the financial report was supplemented by a greater view on the company's environmental impact.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* In 1987 a document prepared by the World Commission on Environment and Development defined sustainable development as meeting "the needs of the present without compromising the ability of future generations to meet their own need", this became known as the Brundtland Report and was another step towards widespread thinking on sustainability in everyday activity.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Two tangible milestones for wave of green marketing came in the form of published books, both of which were called Green Marketing. They were by Ken Peattie (1992) in the United Kingdom and by Jacquelyn Ottman (1993) in the United States of America.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">In the years after 2000 a second wave of Green marketing emerged. By now CSR and the Triple Bottom Line (TBL) were widespread. Such publications as a 2005 United Nations Report, then in 2006 a book by Al Gore and the UK Stern Report brought scientific-environmental arguments to a wide public in an easy to understand way.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">OBJECTIVE: The objective of this paper is to examine the need and significance of green marketing and also to evaluate the initiatives taken by the Indian companies and concern for green marketing in their core business values.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Benefits of Green Marketing</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Companies that develop new and improved products and services with environment inputs in mind give themselves access to new markets, increase their profit sustainability, and enjoy a competitive advantage over the companies which are not concerned for the environment.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Adoption of Green Marketing</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">here are basically five reasons for which a marketer should go for the adoption of green marketing. They are -</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Opportunities or competitive advantage</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Corporate social responsibilities (CSR)</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Government pressure</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Competitive pressure</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Cost or profit issues</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Green Marketing Mix</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Every company has its own favourite marketing mix. Some have 4 P's and some have 7 P's of marketing mix. The 4 P's of green marketing are that of a conventional marketing but the challenge before marketers is to use 4 P's in an innovative manner.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Product</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The ecological objectives in planning products are to reduce resource consumption and pollution and to increase conservation of scarce resources (Keller man, 1978).</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Price</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Price is a critical and important factor of green marketing mix. Most consumers will only be prepared to pay additional value if there is a perception of extra product value. This value may be improved performance, function, design, visual appeal, or taste. Green marketing should take all these facts into consideration while charging a premium price.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Promotion</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">There are three types of green advertising: -</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Ads that address a relationship between a product/service and the biophysical environment</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Those that promote a green lifestyle by highlighting a product or service</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Ads that present a corporate image of environmental responsibility</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Place</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The choice of where and when to make a product available will have significant impact on the customers. Very few customers will go out of their way to buy green products.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Challenges Ahead</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Green products require renewable and recyclable material, which is costly</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Requires a technology, which requires huge investment in R & D</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Water treatment technology, which is too costly</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Majority of the people are not aware of green products and their uses</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">* Majority of the consumers are not willing to pay a premium for green products</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Green marketing of MNCs</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Philips Light's CFL</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Philips Lighting's first shot at marketing a standalone compact fluorescent light (CFL) bulb was Earth Light, at $15 each versus 75 cents for incandescent bulbs.[17] The product had difficulty climbing out of its deep green niche.[17]The company re-launched the product as "Marathon," underscoring its new "super long life" positioning and promise of saving $26 in energy costs over its five-year lifetime.[18] Finally, with the U.S. EPA's Energy Star label to add credibility as well as new sensitivity to rising utility costs and electricity shortages, sales climbed 12 percent in an otherwise flat market.[18]</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Electronics sector</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The consumer electronics sector provides room for using green marketing to attract new customers. One example of this is HP's promise to cut its global energy use 20 percent by the year 2010.[21] To accomplish this reduction below 2005 levels, The Hewlett-Packard Company announced plans to deliver energy-efficient products and services and institute energy-efficient operating practices in its facilities worldwide.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Introduction of CNG in Delhi</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">New Delhi, capital of India, was being polluted at a very fast pace until Supreme Court of India forced a change to alternative fuels. In 2002, a directive was issued to completely adopt CNG in all public transport systems to curb pollution</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* ITC</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* ITC has been 'Carbon Positive' three years in a row (sequestering/storing twice the amount of CO2 than the Company emits).</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* 'Water Positive' six years in a row (creating three times more Rainwater Harvesting potential than ITC's net consumption).</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Close to 100% solid waste recycling.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* All Environment, Health and Safety Management Systems in ITC conform to the best international standards.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* ITC's businesses generate livelihoods for over 5 million people.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* ITC's globally recognised e-Choupal initiative is the world's largest rural digital infrastructure benefiting over 4 million farming families.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an estimated 35 million person days of employment among the disadvantaged.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* ITC's Watershed Development Initiative brings precious water to nearly 35,000 hectares of drylands and moisture-stressed areas.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* ITC's Sustainable Community Development initiatives include women empowerment, supplementary education, integrated animal husbandry programmes.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Maruthi:Greening of Supply Chain</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The company has remained ahead of regulatory requirements in pursuit of environment protection and energy conservation at its manufacturing facilities, and in development of products that use fewer natural resources and are environment friendly.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The company credited the 'Just-in-Time' philosophy adopted and internalized by the employees as the prime reason that helped to excel in this direction.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The company has been promoting 3R since its inception. As a result the company has not only been able to recycle 100% of treated waste water but also reduced fresh water consumption. The company has implemented rain water harvesting to recharge the aquifers. Also, recyclable packing for bought out components is being actively promoted.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The company has been facilitating implementation of Environment Management System (EMS) at its suppliers' end. Regular training programs are conducted for all the suppliers on EMS. Surveys are conducted to assess the vendors who need more guidance. The systems and the environmental performance of suppliers are audited.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The green co-efficient of this system is much better than the conventional system</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* HCL's Environment Management Policy under HCL ecoSafe</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">In building a system to identify, develop and sustain the maintenance of an environment management system at corporate level we have formulated a program that we proudly refer as HCL's ecosafe.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">The aim is to encapsulate knowledge, awareness, and key developments on all environmental issues faced by today's world and to incorporate these in HCL's operations assuring our commitment in delivering quality products, solutions and services</span><span class="apple-converted-space"> </span><br /><br /><br /><br /><br /><br /><br /><span class="apple-style-span">The key objective under HCL ecoSafe is targeted at integrating environmental management procedures into its business processes thereby protecting the environment, health, and safety of all its stakeholders. HCL commits to manufacture products that are environment friendly in all respects and are free from hazardous chemicals.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">HCL ecoSafe focuses on product lifecycle management to ensure that our products right from when they are manufactured, bought by customers, recovered at their end-of-life and recycled after useful life are done in an environmentally responsible manner Key initiatives undertaken through HCL ecoSafe program are:</span><span class="apple-converted-space"> </span><br /><span class="apple-style-span">Some more Examples:</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* McDonald's restaurant's napkins, bags are made of recycled paper.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Coca-Cola pumped syrup directly from tank instead of plastic which saved 68 million pound/year.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Badarpur Thermal Power station of NTPC in Delhi is devising ways to utilize coal-ash that has been a major source of air and water pollution.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Barauni refinery of IOC is taken steps for restricting air and water pollutants.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Public Opinion on Green Marketing:</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Shoppers are thinking green, but not always buying that way, according to a new study released by the Grocery Manufacturers Association (GMA) and Deloitte. The study found that while 54 percent of shoppers indicate that environmental sustainability in a factor in their purchasing decisions, they actually bought green products on just 22 percent of their shopping trips. The survey is the basis of the GMA-Deloitte report titled Finding the Green in Today's Shoppers: Sustainability Trends and New Shopper Insights and was based on interviews with over 6,400 shoppers.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Now eco packaging is poised to become the next low-hanging fruit of the clean tech world. Investors and entrepreneurs this week at Europe's most important annual clean tech conference reported unprecedented interest in reducing the use of raw materials while finding superior protection for food and other products.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Consumers are increasingly putting plastic shopping bags and non-green wrapping items on their naughty list, according to Deloitte's 2008 Annual Holiday Survey. Nearly half of the 13,000 consumers polled said they'd be willing to pay more for green gifts. This was up from 17 percent last year.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Consumers perceive themselves as being environmentally responsible. Successful green marketing requires matching a company's brand attributes with its customers' identity as "green." An article suggested examining green marketing from the perspective of the 4 P's of marketing -- product, price, placement and promotion -- plus a 5th P, "prove it."</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Americans are quick to identify polluting companies as "socially irresponsible" and make their purchasing decisions accordingly, says a new survey. The poll also found that American consumers between the ages of 18-29 are more likely to spend more on organic, environmentally preferable or fair trade products than other age groups.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* The survey, by the research firm Global Market Insite, quizzed more than 15,000 online consumers in the U.S. and 16 other countries about their socially conscious business practices.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Americans placed the highest value on corporate community involvement; when asked what factor was the most important in determining if a business is socially responsible, "contributing to the community" (e.g. sponsorship, grants, employee volunteer programs) came in highest with 47%. On the other hand, all of the other countries surveyed (India, Canada, Australia, Germany, China, and Japan) selected environmentally preferable practices (recycling, using biodegradable products) as the top factor.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* "In the high-tech era where employees are expected to work 24/7, it's significant that Americans rate giving back to the community as their top priority in recognizing socially responsible companies," said Marjorie Thompson, co-author of Brand Spirit: How Cause Related Marketing Builds Brands. "It shows that people want to feel connected to each other and that they are willing to reward businesses who tap into this sense of mutual support and belonging. Companies will need to start thinking of their community programs as core to their businesses and brands, and central to how they market themselves."</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Not surprising, the U.S., along with other countries such as India and China, which have experienced environmental disasters caused by corporations (e.g. Love Canal, Bhobal, Exxon Valdez) or have had to deal with major polluting issues (e.g. coal plants, manufacturing), believe that damaging the environment is associated with acting socially irresponsible. Other countries, including France (60%), Denmark (52%) and Italy (45%) selected the use of child labor as the main factor in making them think a corporation is socially irresponsible.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Juxtaposing Americans' negative opinions on damaging the environment, the GMIPoll found that only 42% of all Americans are willing to spend more for products branded as organic, environmentally friendly, or fair trade, except for the Y Generation. While only 14% of 18-29 year olds label themselves as socially responsible consumers, half of this age group (50%) responded that they will spend more on these types of products (organic, environmentally friendly or fair trade) compared to their older and wealthier counterparts, with only 37% of 45-64 years olds saying they would spend more on green products.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Thompson adds: "Based on the findings, Generation Y is obviously more environmentally conscious and socially savvy, which is expected given that many are aware of the issues surrounding globalization and trade and how this can negatively affect the environment, labor pool and the local communities."</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">* Surprisingly, a large majority of online consumers in the less developed countries of China and India, 91% and 71% respectively, will pay more for socially responsible products, while almost half (47%) of the U.K. respondents indicated they would spend more for these types of goods.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Conclusion</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Green marketing should not neglect the economic aspect of marketing. Marketers need to understand the implications of green marketing. If we think customers are not concerned about environmental issues or will not pay a premium for products that are more eco-responsible, think again. We must find an opportunity to enhance our product's performance and strengthen yur customer's loyalty and command a higher price.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">Green marketing is still in its infancy and a lot of research is to be done on green marketing to fully explore its potential.Think of a refrigerator for example. While we may have had to be convinced in the 1950s to buy a refrigerator, we would have wanted the great white box to look cool in the 1970s, but in today's uncertain world, we might ask ourselves about the impact of the chlorofluorocarbons (CFCs) that our refrigerator is emitting and demand a more environmentally friendly refrigerator.</span><span class="apple-converted-space"> </span><br /><br /><span class="apple-style-span">So, if today's successful marketing is about appealing to personal values and delivering consumer empowerment, then surely the time is right to inject sustainable development into the marketing mix to help address some of the gritty issues currently facing our planet.Green marketing methods produce highly effective results. They apply all of the steps you need to cut costs, raise response rates and increase growth in the most important marketing metric we are all held accountable for—the bottom line</span></span><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"" lang="EN-IN"></span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-59588336318192807992012-04-06T13:10:00.001+05:302012-04-06T14:09:58.969+05:30An Inconvenient Truth<!--[if gte mso 9]><xml> <o:officedocumentsettings> <o:relyonvml/> <o:allowpng/> </o:OfficeDocumentSettings> </xml><![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> 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</w:LatentStyles> </xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal" style="text-align:justify"><i><span style="font-size:12.0pt; line-height:115%">An Inconvenient Truth</span></i><span style="font-size:12.0pt; line-height:115%"> focuses on Al Gore’s efforts to educate the public about the severity of the climate crisis. He is no scientist, but he manages to convincingly portray himself as an expert on the topic. </span></p> <p class="MsoNormal" style="text-align:justify"><i><span style="font-size:12.0pt; line-height:115%">Infact the documentary</span></i><span style="font-size:12.0pt; line-height:115%"> lays out Gore's case convincingly : <span style="mso-spacerun:yes"> </span>The case that we are now seeing the beginning of a climate crisis that threatens life on Earth as we know it. The film loses no time showing us the destruction of Hurricane Katrina, data on the record numbers of storms, floods, and other kinds of extreme weather. <span style="mso-spacerun:yes"> </span>along with a series of comparative photographs from disappearing glaciers around the world, footage of collapsing ice shelves, , new diseases.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt; line-height:115%">The on-screen evidence is difficult to dismiss--charts and graphs reveal frightening trends.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt; line-height:115%">For example, Gore discusses the possibility of the collapse of a major </span><a href="http://en.wikipedia.org/wiki/Ice_sheet" title="Ice sheet"><span style="font-size:12.0pt;line-height:115%">ice sheet</span></a><span style="font-size:12.0pt;line-height:115%"> in </span><a href="http://en.wikipedia.org/wiki/Greenland" title="Greenland"><span style="font-size:12.0pt;line-height:115%">Greenland</span></a><span style="font-size:12.0pt;line-height:115%">, which could raise global sea levels by approximately 20 feet, flooding coastal areas and producing 100 million refugees. Melt water from Greenland, because of its lower </span><a href="http://en.wikipedia.org/wiki/Salinity" title="Salinity"><span style="font-size:12.0pt;line-height:115%">salinity</span></a><span style="font-size:12.0pt;line-height:115%">, could then halt the currents that keep northern Europe warm and quickly trigger dramatic local cooling there. </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt; line-height:115%">The documentary ends with Gore arguing that if appropriate actions are taken soon, the effects of global warming can be successfully reversed by releasing less </span><a href="http://en.wikipedia.org/wiki/Carbon_dioxide" title="Carbon dioxide"><span style="font-size:12.0pt;line-height:115%">CO<sub>2</sub></span></a><span style="font-size:12.0pt;line-height:115%"> and planting more vegetation to consume existing CO<sub>2</sub>.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt; line-height:115%">"It is now clear that we face a deepening global climate crisis that requires us to act boldly, quickly, and wisely the solutions to the problem are within reach; we are only lacking the political will to do anything about it.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt; line-height:115%">Which makes climate change really not a political issue, so much as a moral one",</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt; line-height:115%"> </span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt; line-height:115%">Gore says, "I've been trying to tell this story for a long time and I feel as if I've failed to get the message across.</span></p> <p class="MsoNormal" style="text-align:justify"><span style="font-size:12.0pt; line-height:115%"> </span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-78082447704993420702012-04-06T13:08:00.000+05:302012-04-06T13:09:24.461+05:30Debt markets<!--[if gte mso 9]><xml> <o:officedocumentsettings> <o:relyonvml/> <o:allowpng/> </o:OfficeDocumentSettings> </xml><![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> <w:donotpromoteqf/> <w:lidthemeother>EN-US</w:LidThemeOther> <w:lidthemeasian>X-NONE</w:LidThemeAsian> <w:lidthemecomplexscript>X-NONE</w:LidThemeComplexScript> <w:compatibility> <w:breakwrappedtables/> <w:snaptogridincell/> <w:wraptextwithpunct/> <w:useasianbreakrules/> <w:dontgrowautofit/> 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mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal" style="text-align:center" align="center"><b style="mso-bidi-font-weight: normal"><u><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-bidi-font-family:"Times New Roman";mso-bidi-theme-font:minor-bidi">INTRODUCTION TO DEBT MARKETS</span></u></b></p> <p class="MsoNormal" style="text-align:center" align="center"><u><span style="font-size:14.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-bidi-font-family:"Times New Roman";mso-bidi-theme-font:minor-bidi"><span style="text-decoration:none"> </span></span></u></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The capital market comprises of equities market and debt market. The debt market is the market where fixed income securities of various types and features are issued and traded. Debt markets are therefore, markets for fixed income securities issued by central and state governments, municipal corporations, government bodies and commercial entities like financial institutions, banks, public sector units and also structured finance instruments. </span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Debt instruments are contracts in which one party lends money to another on pre-determined terms with regard to rate of interest to be paid by the borrower to the lender, the periodicity of such interest payment, and the repayment of the principal amount borrowed. </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The debt market plays a very critical role for any growing economy which needs to employ a large amount of capital and resources for achieving the desired industrial and financial growth.</span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l0 level1 lfo1"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">DEBT MARKET IN INDIA</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Indian debt markets, in the early nineties, were characterized by controls on pricing of assets, segmentation of markets and barriers to entry, low levels of liquidity, limited number of players, near lack of transparency, and high transactions cost.<span style="mso-spacerun:yes"> </span>Financial reforms have significantly changed the Indian debt markets for the better.<span style="mso-spacerun:yes"> </span><span style="mso-bidi-font-weight: bold">The Indian debt markets are today poised on the threshold of momentous change and transition to an efficient, transparent and vibrant market with significant retail participation.</span></span><b><span style="font-size:10.0pt; line-height:150%;font-family:"Arial","sans-serif";color:#1C355D"> </span></b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold">The first half of the twentieth century had witnessed a significant amount of retail interest and participation in the G-Sec market with more than half the holdings of G-Secs issued being held by retail investors.</span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The Indian debt market in fact is today one of the largest in Asia and includes securities issued by the Government (Central & State Governments), public sector undertakings, other government bodies, financial institutions, banks and corporates. </span><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">For classification of instruments traded in debt market refer Appendix I.<span style="mso-bidi-font-weight:bold"></span></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;text-align:center;line-height:150%" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:14.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">POLICY DEVELOPMENTS</span></u></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">The development of the debt market in India was led by the need for the government to raise increased amounts from the market, the encouragement given to financial institutions and corporations to raise funds from a competitive market without any specific borrowing allocations, the need for long-term infrastructure financing and the importance of a liquid debt market in promoting these objectives.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">In order to develop debt markets in India, as an initial condition for efficient price discovery, it was necessary to move away from administered interest rates. This, along with the reduced reliance by government on high statutory pre-emption of banks resources and automatic monetization of the deficit by the RBI, were two major areas of focus of reforms in the early 1990s. The move to an auction system for issuing government securities, paved the way for market-related interest rates in the government securities market - enabling the emergence of a risk-free yield curve providing a basis for pricing of other debt securities. The Statutory Liquidity Ratio was reduced to its statutorily prescribed minimum level of 24%. The cash reserve ratio, which had reached an effective high of about 16.5%, has been reduced to the current level of 5.5%. Another significant development has been the elimination of the practice of automatic monetization of the central government’s budget deficit through ad hoc T-bills with effect from April 1997 and the introduction of a new scheme of Ways and Means Advances (a limited financing facility available to central and state governments from the RBI to bridge the temporary mismatches in cash flows).</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">From the 1990s, several other measures were taken by the RBI to create an enabling environment for market development. Prudential norms have been introduced in line with international best practices, banking supervision has been strengthened, transparency and disclosure standards enhanced to meet international standards and risk management practices have been prescribed. </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">However for further development of the debt market policy measures should be aimed at increasing market liquidity and improving depth and breadth of investor base. </span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-78220073410018466452012-04-06T13:00:00.001+05:302012-04-06T13:06:16.646+05:30Tata Capital Limited - NCD<!--[if !mso]> <style> v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} 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mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.MsoTableLightGridAccent5 {mso-style-name:"Light Grid - Accent 5"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:62; mso-style-unhide:no; border:solid #4BACC6 1.0pt; mso-border-themecolor:accent5; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-border-insideh:1.0pt solid #4BACC6; mso-border-insideh-themecolor:accent5; mso-border-insidev:1.0pt solid #4BACC6; mso-border-insidev-themecolor:accent5; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.MsoTableLightGridAccent5FirstRow {mso-style-name:"Light Grid - Accent 5"; mso-table-condition:first-row; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid #4BACC6; mso-tstyle-border-top-themecolor:accent5; mso-tstyle-border-left:1.0pt solid #4BACC6; mso-tstyle-border-left-themecolor:accent5; mso-tstyle-border-bottom:2.25pt solid #4BACC6; mso-tstyle-border-bottom-themecolor:accent5; mso-tstyle-border-right:1.0pt solid #4BACC6; mso-tstyle-border-right-themecolor:accent5; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:1.0pt solid #4BACC6; mso-tstyle-border-insidev-themecolor:accent5; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; font-family:"Bookman Old Style","serif"; mso-ascii-font-family:Cambria; mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast; mso-hansi-font-family:Cambria; mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:major-bidi; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MsoTableLightGridAccent5LastRow {mso-style-name:"Light Grid - Accent 5"; mso-table-condition:last-row; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-border-top:2.25pt double #4BACC6; mso-tstyle-border-top-themecolor:accent5; mso-tstyle-border-left:1.0pt solid #4BACC6; mso-tstyle-border-left-themecolor:accent5; mso-tstyle-border-bottom:1.0pt solid #4BACC6; mso-tstyle-border-bottom-themecolor:accent5; mso-tstyle-border-right:1.0pt solid #4BACC6; mso-tstyle-border-right-themecolor:accent5; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:1.0pt solid #4BACC6; mso-tstyle-border-insidev-themecolor:accent5; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; font-family:"Bookman Old Style","serif"; mso-ascii-font-family:Cambria; mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast; mso-hansi-font-family:Cambria; mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:major-bidi; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MsoTableLightGridAccent5FirstCol {mso-style-name:"Light Grid - Accent 5"; mso-table-condition:first-column; mso-style-priority:62; mso-style-unhide:no; font-family:"Bookman Old Style","serif"; mso-ascii-font-family:Cambria; mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast; mso-hansi-font-family:Cambria; mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:major-bidi; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MsoTableLightGridAccent5LastCol {mso-style-name:"Light Grid - Accent 5"; mso-table-condition:last-column; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid #4BACC6; mso-tstyle-border-top-themecolor:accent5; mso-tstyle-border-left:1.0pt solid #4BACC6; mso-tstyle-border-left-themecolor:accent5; mso-tstyle-border-bottom:1.0pt solid #4BACC6; mso-tstyle-border-bottom-themecolor:accent5; mso-tstyle-border-right:1.0pt solid #4BACC6; mso-tstyle-border-right-themecolor:accent5; font-family:"Bookman Old Style","serif"; mso-ascii-font-family:Cambria; mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast; mso-hansi-font-family:Cambria; mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:major-bidi; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MsoTableLightGridAccent5OddColumn {mso-style-name:"Light Grid - Accent 5"; mso-table-condition:odd-column; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-shading:#D2EAF1; mso-tstyle-shading-themecolor:accent5; mso-tstyle-shading-themetint:63; mso-tstyle-border-top:1.0pt solid #4BACC6; mso-tstyle-border-top-themecolor:accent5; mso-tstyle-border-left:1.0pt solid #4BACC6; mso-tstyle-border-left-themecolor:accent5; mso-tstyle-border-bottom:1.0pt solid #4BACC6; mso-tstyle-border-bottom-themecolor:accent5; mso-tstyle-border-right:1.0pt solid #4BACC6; mso-tstyle-border-right-themecolor:accent5;} table.MsoTableLightGridAccent5OddRow {mso-style-name:"Light Grid - Accent 5"; mso-table-condition:odd-row; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-shading:#D2EAF1; mso-tstyle-shading-themecolor:accent5; mso-tstyle-shading-themetint:63; mso-tstyle-border-top:1.0pt solid #4BACC6; mso-tstyle-border-top-themecolor:accent5; mso-tstyle-border-left:1.0pt solid #4BACC6; mso-tstyle-border-left-themecolor:accent5; mso-tstyle-border-bottom:1.0pt solid #4BACC6; mso-tstyle-border-bottom-themecolor:accent5; mso-tstyle-border-right:1.0pt solid #4BACC6; mso-tstyle-border-right-themecolor:accent5; mso-tstyle-border-insidev:1.0pt solid #4BACC6; mso-tstyle-border-insidev-themecolor:accent5;} table.MsoTableLightGridAccent5EvenRow {mso-style-name:"Light Grid - Accent 5"; mso-table-condition:even-row; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid #4BACC6; mso-tstyle-border-top-themecolor:accent5; mso-tstyle-border-left:1.0pt solid #4BACC6; mso-tstyle-border-left-themecolor:accent5; mso-tstyle-border-bottom:1.0pt solid #4BACC6; mso-tstyle-border-bottom-themecolor:accent5; mso-tstyle-border-right:1.0pt solid #4BACC6; mso-tstyle-border-right-themecolor:accent5; mso-tstyle-border-insidev:1.0pt solid #4BACC6; mso-tstyle-border-insidev-themecolor:accent5;} table.LightShading-Accent11 {mso-style-name:"Light Shading - Accent 11"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:60; mso-style-unhide:no; border-top:solid #4F81BD 1.0pt; mso-border-top-themecolor:accent1; border-left:none; border-bottom:solid #4F81BD 1.0pt; mso-border-bottom-themecolor:accent1; border-right:none; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; color:#365F91; mso-themecolor:accent1; mso-themeshade:191; mso-bidi-language:EN-US;} table.LightShading-Accent11FirstRow {mso-style-name:"Light Shading - Accent 11"; mso-table-condition:first-row; mso-style-priority:60; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid #4F81BD; mso-tstyle-border-top-themecolor:accent1; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:1.0pt solid #4F81BD; mso-tstyle-border-bottom-themecolor:accent1; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightShading-Accent11LastRow {mso-style-name:"Light Shading - Accent 11"; mso-table-condition:last-row; mso-style-priority:60; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid #4F81BD; mso-tstyle-border-top-themecolor:accent1; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:1.0pt solid #4F81BD; mso-tstyle-border-bottom-themecolor:accent1; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightShading-Accent11FirstCol {mso-style-name:"Light Shading - Accent 11"; mso-table-condition:first-column; mso-style-priority:60; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightShading-Accent11LastCol {mso-style-name:"Light Shading - Accent 11"; mso-table-condition:last-column; mso-style-priority:60; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightShading-Accent11OddColumn {mso-style-name:"Light Shading - Accent 11"; mso-table-condition:odd-column; mso-style-priority:60; mso-style-unhide:no; mso-tstyle-shading:#D3DFEE; mso-tstyle-shading-themecolor:accent1; mso-tstyle-shading-themetint:63; mso-tstyle-border-left:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.LightShading-Accent11OddRow {mso-style-name:"Light Shading - Accent 11"; mso-table-condition:odd-row; mso-style-priority:60; mso-style-unhide:no; mso-tstyle-shading:#D3DFEE; mso-tstyle-shading-themecolor:accent1; mso-tstyle-shading-themetint:63; mso-tstyle-border-left:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.MediumShading11 {mso-style-name:"Medium Shading 11"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:63; mso-style-unhide:no; border:solid #404040 1.0pt; mso-border-themecolor:text1; mso-border-themetint:191; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-border-insideh:1.0pt solid #404040; mso-border-insideh-themecolor:text1; mso-border-insideh-themetint:191; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.MediumShading11FirstRow {mso-style-name:"Medium Shading 11"; mso-table-condition:first-row; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-top:1.0pt solid #404040; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-top-themetint:191; mso-tstyle-border-left:1.0pt solid #404040; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-left-themetint:191; mso-tstyle-border-bottom:1.0pt solid #404040; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-bottom-themetint:191; mso-tstyle-border-right:1.0pt solid #404040; mso-tstyle-border-right-themecolor:text1; mso-tstyle-border-right-themetint:191; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading11LastRow {mso-style-name:"Medium Shading 11"; mso-table-condition:last-row; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-border-top:2.25pt double #404040; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-top-themetint:191; mso-tstyle-border-left:1.0pt solid #404040; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-left-themetint:191; mso-tstyle-border-bottom:1.0pt solid #404040; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-bottom-themetint:191; mso-tstyle-border-right:1.0pt solid #404040; mso-tstyle-border-right-themecolor:text1; mso-tstyle-border-right-themetint:191; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading11FirstCol {mso-style-name:"Medium Shading 11"; mso-table-condition:first-column; mso-style-priority:63; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading11LastCol {mso-style-name:"Medium Shading 11"; mso-table-condition:last-column; mso-style-priority:63; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading11OddColumn {mso-style-name:"Medium Shading 11"; mso-table-condition:odd-column; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-shading:silver; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:63;} table.MediumShading11OddRow {mso-style-name:"Medium Shading 11"; mso-table-condition:odd-row; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-shading:silver; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:63; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.MediumShading11EvenRow {mso-style-name:"Medium Shading 11"; mso-table-condition:even-row; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.LightList1 {mso-style-name:"Light List1"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:61; mso-style-unhide:no; border:solid black 1.0pt; mso-border-themecolor:text1; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.LightList1FirstRow {mso-style-name:"Light List1"; mso-table-condition:first-row; mso-style-priority:61; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightList1LastRow {mso-style-name:"Light List1"; mso-table-condition:last-row; mso-style-priority:61; mso-style-unhide:no; mso-tstyle-border-top:2.25pt double black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightList1FirstCol {mso-style-name:"Light List1"; mso-table-condition:first-column; mso-style-priority:61; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightList1LastCol {mso-style-name:"Light List1"; mso-table-condition:last-column; mso-style-priority:61; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightList1OddColumn {mso-style-name:"Light List1"; mso-table-condition:odd-column; mso-style-priority:61; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1;} table.LightList1OddRow {mso-style-name:"Light List1"; mso-table-condition:odd-row; mso-style-priority:61; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1;} table.LightGrid1 {mso-style-name:"Light Grid1"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:62; mso-style-unhide:no; border:solid black 1.0pt; mso-border-themecolor:text1; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-border-insideh:1.0pt solid black; mso-border-insideh-themecolor:text1; mso-border-insidev:1.0pt solid black; mso-border-insidev-themecolor:text1; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.LightGrid1FirstRow {mso-style-name:"Light Grid1"; mso-table-condition:first-row; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:2.25pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:1.0pt solid black; mso-tstyle-border-insidev-themecolor:text1; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; font-family:"Bookman Old Style","serif"; mso-ascii-font-family:Cambria; mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast; mso-hansi-font-family:Cambria; mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:major-bidi; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightGrid1LastRow {mso-style-name:"Light Grid1"; mso-table-condition:last-row; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-border-top:2.25pt double black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:1.0pt solid black; mso-tstyle-border-insidev-themecolor:text1; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; font-family:"Bookman Old Style","serif"; mso-ascii-font-family:Cambria; mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast; mso-hansi-font-family:Cambria; mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:major-bidi; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightGrid1FirstCol {mso-style-name:"Light Grid1"; mso-table-condition:first-column; mso-style-priority:62; mso-style-unhide:no; font-family:"Bookman Old Style","serif"; mso-ascii-font-family:Cambria; mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast; mso-hansi-font-family:Cambria; mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:major-bidi; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightGrid1LastCol {mso-style-name:"Light Grid1"; mso-table-condition:last-column; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1; font-family:"Bookman Old Style","serif"; mso-ascii-font-family:Cambria; mso-ascii-theme-font:major-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:major-fareast; mso-hansi-font-family:Cambria; mso-hansi-theme-font:major-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:major-bidi; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightGrid1OddColumn {mso-style-name:"Light Grid1"; mso-table-condition:odd-column; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-shading:silver; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:63; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1;} table.LightGrid1OddRow {mso-style-name:"Light Grid1"; mso-table-condition:odd-row; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-shading:silver; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:63; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1; mso-tstyle-border-insidev:1.0pt solid black; mso-tstyle-border-insidev-themecolor:text1;} table.LightGrid1EvenRow {mso-style-name:"Light Grid1"; mso-table-condition:even-row; mso-style-priority:62; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1; mso-tstyle-border-insidev:1.0pt solid black; mso-tstyle-border-insidev-themecolor:text1;} table.DarkList1 {mso-style-name:"Dark List1"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:70; mso-style-unhide:no; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; color:white; mso-themecolor:background1;} table.DarkList1FirstRow {mso-style-name:"Dark List1"; mso-table-condition:first-row; mso-style-priority:70; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-top:cell-none; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:2.25pt solid white; mso-tstyle-border-bottom-themecolor:background1; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.DarkList1LastRow {mso-style-name:"Dark List1"; mso-table-condition:last-row; mso-style-priority:70; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themeshade:127; mso-tstyle-border-top:2.25pt solid white; mso-tstyle-border-top-themecolor:background1; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.DarkList1FirstCol {mso-style-name:"Dark List1"; mso-table-condition:first-column; mso-style-priority:70; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themeshade:191; mso-tstyle-border-top:cell-none; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:cell-none; mso-tstyle-border-right:2.25pt solid white; mso-tstyle-border-right-themecolor:background1; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.DarkList1LastCol {mso-style-name:"Dark List1"; mso-table-condition:last-column; mso-style-priority:70; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themeshade:191; mso-tstyle-border-top:cell-none; mso-tstyle-border-left:2.25pt solid white; mso-tstyle-border-left-themecolor:background1; mso-tstyle-border-bottom:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.DarkList1OddColumn {mso-style-name:"Dark List1"; mso-table-condition:odd-column; mso-style-priority:70; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themeshade:191; mso-tstyle-border-top:cell-none; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.DarkList1OddRow {mso-style-name:"Dark List1"; mso-table-condition:odd-row; mso-style-priority:70; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themeshade:191; mso-tstyle-border-top:cell-none; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.MediumGrid31 {mso-style-name:"Medium Grid 31"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:69; mso-style-unhide:no; border:solid white 1.0pt; mso-border-themecolor:background1; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-border-insideh:.75pt solid white; mso-border-insideh-themecolor:background1; mso-border-insidev:.75pt solid white; mso-border-insidev-themecolor:background1; mso-tstyle-shading:silver; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:63; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.MediumGrid31FirstRow {mso-style-name:"Medium Grid 31"; mso-table-condition:first-row; mso-style-priority:69; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-top:1.0pt solid white; mso-tstyle-border-top-themecolor:background1; mso-tstyle-border-left:1.0pt solid white; mso-tstyle-border-left-themecolor:background1; mso-tstyle-border-bottom:3.0pt solid white; mso-tstyle-border-bottom-themecolor:background1; mso-tstyle-border-right:1.0pt solid white; mso-tstyle-border-right-themecolor:background1; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:1.0pt solid white; mso-tstyle-border-insidev-themecolor:background1; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold; mso-ansi-font-style:normal; mso-bidi-font-style:normal;} table.MediumGrid31LastRow {mso-style-name:"Medium Grid 31"; mso-table-condition:last-row; mso-style-priority:69; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-top:3.0pt solid white; mso-tstyle-border-top-themecolor:background1; mso-tstyle-border-left:1.0pt solid white; mso-tstyle-border-left-themecolor:background1; mso-tstyle-border-bottom:1.0pt solid white; mso-tstyle-border-bottom-themecolor:background1; mso-tstyle-border-right:1.0pt solid white; mso-tstyle-border-right-themecolor:background1; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:1.0pt solid white; mso-tstyle-border-insidev-themecolor:background1; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold; mso-ansi-font-style:normal; mso-bidi-font-style:normal;} table.MediumGrid31FirstCol {mso-style-name:"Medium Grid 31"; mso-table-condition:first-column; mso-style-priority:69; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-left:1.0pt solid white; mso-tstyle-border-left-themecolor:background1; mso-tstyle-border-right:3.0pt solid white; mso-tstyle-border-right-themecolor:background1; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold; mso-ansi-font-style:normal; mso-bidi-font-style:normal;} table.MediumGrid31LastCol {mso-style-name:"Medium Grid 31"; mso-table-condition:last-column; mso-style-priority:69; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-top:cell-none; mso-tstyle-border-left:3.0pt solid white; mso-tstyle-border-left-themecolor:background1; mso-tstyle-border-bottom:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold; mso-ansi-font-style:normal; mso-bidi-font-style:normal;} table.MediumGrid31OddColumn {mso-style-name:"Medium Grid 31"; mso-table-condition:odd-column; mso-style-priority:69; mso-style-unhide:no; mso-tstyle-shading:gray; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:127; mso-tstyle-border-top:1.0pt solid white; mso-tstyle-border-top-themecolor:background1; mso-tstyle-border-left:1.0pt solid white; mso-tstyle-border-left-themecolor:background1; mso-tstyle-border-bottom:1.0pt solid white; mso-tstyle-border-bottom-themecolor:background1; mso-tstyle-border-right:1.0pt solid white; mso-tstyle-border-right-themecolor:background1; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.MediumGrid31OddRow {mso-style-name:"Medium Grid 31"; mso-table-condition:odd-row; mso-style-priority:69; mso-style-unhide:no; mso-tstyle-shading:gray; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:127; mso-tstyle-border-top:1.0pt solid white; mso-tstyle-border-top-themecolor:background1; mso-tstyle-border-left:1.0pt solid white; mso-tstyle-border-left-themecolor:background1; mso-tstyle-border-bottom:1.0pt solid white; mso-tstyle-border-bottom-themecolor:background1; mso-tstyle-border-right:1.0pt solid white; mso-tstyle-border-right-themecolor:background1; mso-tstyle-border-insideh:1.0pt solid white; mso-tstyle-border-insideh-themecolor:background1; mso-tstyle-border-insidev:1.0pt solid white; mso-tstyle-border-insidev-themecolor:background1;} table.MediumShading21 {mso-style-name:"Medium Shading 21"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:64; mso-style-unhide:no; border-top:solid windowtext 2.25pt; border-left:none; border-bottom:solid windowtext 2.25pt; border-right:none; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.MediumShading21FirstRow {mso-style-name:"Medium Shading 21"; mso-table-condition:first-row; mso-style-priority:64; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-top:2.25pt solid windowtext; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:2.25pt solid windowtext; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading21LastRow {mso-style-name:"Medium Shading 21"; mso-table-condition:last-row; mso-style-priority:64; mso-style-unhide:no; mso-tstyle-shading:white; mso-tstyle-shading-themecolor:background1; mso-tstyle-border-top:2.25pt double windowtext; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:2.25pt solid windowtext; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; color:windowtext;} table.MediumShading21FirstCol {mso-style-name:"Medium Shading 21"; mso-table-condition:first-column; mso-style-priority:64; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-top:cell-none; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:2.25pt solid windowtext; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading21LastCol {mso-style-name:"Medium Shading 21"; mso-table-condition:last-column; mso-style-priority:64; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-tstyle-border-left:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading21OddColumn {mso-style-name:"Medium Shading 21"; mso-table-condition:odd-column; mso-style-priority:64; mso-style-unhide:no; mso-tstyle-shading:#D8D8D8; mso-tstyle-shading-themecolor:background1; mso-tstyle-shading-themeshade:216; mso-tstyle-border-left:cell-none; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.MediumShading21OddRow {mso-style-name:"Medium Shading 21"; mso-table-condition:odd-row; mso-style-priority:64; mso-style-unhide:no; mso-tstyle-shading:#D8D8D8; mso-tstyle-shading-themecolor:background1; mso-tstyle-shading-themeshade:216;} table.MediumShading21NECell {mso-style-name:"Medium Shading 21"; mso-table-condition:ne-cell; mso-style-priority:64; mso-style-unhide:no; mso-tstyle-border-top:2.25pt solid windowtext; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:2.25pt solid windowtext; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.MediumShading21NWCell {mso-style-name:"Medium Shading 21"; mso-table-condition:nw-cell; mso-style-priority:64; mso-style-unhide:no; mso-tstyle-border-top:2.25pt solid windowtext; mso-tstyle-border-left:cell-none; mso-tstyle-border-bottom:2.25pt solid windowtext; mso-tstyle-border-right:cell-none; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; color:white; mso-themecolor:background1;} table.MediumShading12 {mso-style-name:"Medium 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mso-tstyle-border-top-themetint:191; mso-tstyle-border-left:1.0pt solid #404040; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-left-themetint:191; mso-tstyle-border-bottom:1.0pt solid #404040; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-bottom-themetint:191; mso-tstyle-border-right:1.0pt solid #404040; mso-tstyle-border-right-themecolor:text1; mso-tstyle-border-right-themetint:191; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading12LastRow {mso-style-name:"Medium Shading 12"; mso-table-condition:last-row; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-border-top:2.25pt double #404040; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-top-themetint:191; mso-tstyle-border-left:1.0pt solid #404040; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-left-themetint:191; mso-tstyle-border-bottom:1.0pt solid #404040; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-bottom-themetint:191; mso-tstyle-border-right:1.0pt solid #404040; mso-tstyle-border-right-themecolor:text1; mso-tstyle-border-right-themetint:191; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading12FirstCol {mso-style-name:"Medium Shading 12"; mso-table-condition:first-column; mso-style-priority:63; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading12LastCol {mso-style-name:"Medium Shading 12"; mso-table-condition:last-column; mso-style-priority:63; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.MediumShading12OddColumn {mso-style-name:"Medium Shading 12"; mso-table-condition:odd-column; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-shading:silver; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:63;} table.MediumShading12OddRow {mso-style-name:"Medium Shading 12"; mso-table-condition:odd-row; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-shading:silver; mso-tstyle-shading-themecolor:text1; mso-tstyle-shading-themetint:63; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.MediumShading12EvenRow {mso-style-name:"Medium Shading 12"; mso-table-condition:even-row; mso-style-priority:63; mso-style-unhide:no; mso-tstyle-border-insideh:cell-none; mso-tstyle-border-insidev:cell-none;} table.LightList2 {mso-style-name:"Light List2"; mso-tstyle-rowband-size:1; mso-tstyle-colband-size:1; mso-style-priority:61; mso-style-unhide:no; border:solid black 1.0pt; mso-border-themecolor:text1; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.LightList2FirstRow {mso-style-name:"Light List2"; mso-table-condition:first-row; mso-style-priority:61; mso-style-unhide:no; mso-tstyle-shading:black; mso-tstyle-shading-themecolor:text1; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; color:white; mso-themecolor:background1; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightList2LastRow {mso-style-name:"Light List2"; mso-table-condition:last-row; mso-style-priority:61; mso-style-unhide:no; mso-tstyle-border-top:2.25pt double black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1; mso-para-margin-top:0in; mso-para-margin-bottom:0in; mso-para-margin-bottom:.0001pt; line-height:normal; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightList2FirstCol {mso-style-name:"Light List2"; mso-table-condition:first-column; mso-style-priority:61; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightList2LastCol {mso-style-name:"Light List2"; mso-table-condition:last-column; mso-style-priority:61; mso-style-unhide:no; mso-ansi-font-weight:bold; mso-bidi-font-weight:bold;} table.LightList2OddColumn {mso-style-name:"Light List2"; mso-table-condition:odd-column; mso-style-priority:61; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1;} table.LightList2OddRow {mso-style-name:"Light List2"; mso-table-condition:odd-row; mso-style-priority:61; mso-style-unhide:no; mso-tstyle-border-top:1.0pt solid black; mso-tstyle-border-top-themecolor:text1; mso-tstyle-border-left:1.0pt solid black; mso-tstyle-border-left-themecolor:text1; mso-tstyle-border-bottom:1.0pt solid black; mso-tstyle-border-bottom-themecolor:text1; mso-tstyle-border-right:1.0pt solid black; mso-tstyle-border-right-themecolor:text1;} </style> <![endif]--> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;text-align:center;line-height:150%" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:14.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">TATA CAPITAL LIMITED</span></u></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Tata Capital Limited is a subsidiary of Tata Sons Limited. The company is registered with the Reserve Bank of India as a systemically important Non Deposit Accepting Non Banking Financial Company (NBFC) and offers fund and fee-based financial services to its customers.</span> <span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The company was incorporated<span style="mso-spacerun:yes"> </span>on March<span style="mso-spacerun:yes"> </span>8,<span style="mso-spacerun:yes"> </span>1991<span style="mso-spacerun:yes"> </span>and<span style="mso-spacerun:yes"> </span>actively<span style="mso-spacerun:yes"> </span>commenced<span style="mso-spacerun:yes"> </span>business operations since September, 2007.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> A trusted and customer-centric, one-stop financial services provider, Tata Capital Limited caters to the diverse needs of retail, corporate and institutional customers, directly or indirectly, through its subsidiaries across various areas of business namely the Commercial Finance, Investment Banking, Private Equity, Infrastructure Finance, Securities, Wealth Management, Consumer Loans, Cards and Travel Related Services. Tata Capital is headquartered in Mumbai and has a wide network of over 100 branches spanning all critical markets in India. For </span><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">corporate structure of Tata Capital Limited refer Appendix II.</span><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"></span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-indent:-.25in;line-height:150%;mso-list:l2 level1 lfo2"><span style="font-size:12.0pt;line-height:150%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;mso-fareast-language:EN-IN;mso-bidi-font-weight: bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">“</span></b><b><span style="font-size:12.0pt; line-height:150%;font-family:"Times New Roman","serif";mso-fareast-language: EN-IN">WE ONLY DO WHAT’S RIGHT FOR YOU”</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The essence of brand Tata Capital is encapsulated in their brand proposition – it reflects their strong resolve to deliver financial solutions that are ‘right’ for their customers and the society at large.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; margin-left:.5in;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l10 level1 lfo3"><span style="font-size:12.0pt; line-height:150%;font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"">SUITE OF PRODUCTS OFFERED –</span></b><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"></span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; margin-left:.25in;text-align:justify;line-height:150%"><span style="font-family: "Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">Tata Capital offers suite of products across multiple financial domains. For business lines, as carried out by the company and its subsidiaries<b style="mso-bidi-font-weight: normal"> </b>refer<b style="mso-bidi-font-weight:normal"> </b>Appendix III.</span><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;line-height: 150%;font-family:"Times New Roman","serif";mso-fareast-language:EN-IN"></span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; margin-left:1.0in;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l4 level4 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Commercial Finance<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; margin-left:1.0in;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l4 level4 lfo1"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Wealth Management</span></p> <p class="MsoListParagraphCxSpFirst" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:1.0in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l4 level4 lfo1"><span style="font-size:12.0pt;line-height:150%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Consumer Loans <span style="mso-spacerun:yes"> </span></span><b style="mso-bidi-font-weight: normal"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"></span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:1.0in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l4 level4 lfo1"><span style="font-size:12.0pt;line-height:150%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Forex Services<span style="mso-spacerun:yes"> </span></span><b style="mso-bidi-font-weight:normal"><span style="font-size: 12.0pt;line-height:150%;font-family:"Times New Roman","serif";mso-fareast-language: EN-IN"></span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:1.0in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l11 level4 lfo11"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Tata cards<span style="mso-spacerun:yes"> </span></span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:1.0in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l11 level4 lfo11"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Travel Related Services</span></p> <p class="MsoListParagraphCxSpLast" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:1.0in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l11 level4 lfo11"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Investment Banking</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; margin-left:1.0in;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l11 level4 lfo11"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Private Equity</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; margin-left:1.0in;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l11 level4 lfo11"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Infrastructure Finance </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"><span style="mso-spacerun:yes"> </span></span><b style="mso-bidi-font-weight:normal"><u><span style="font-size: 14.0pt;line-height:150%;font-family:"Times New Roman","serif";mso-fareast-language: EN-IN">PURPOSE OF ISSUE</span></u></b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"></span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Public issue of secured Non-Convertible Debentures (NCDs) aggregating Rs 5,000 Mn. with an option<span style="mso-spacerun:yes"> </span>to<span style="mso-spacerun:yes"> </span>retain over-subscription of Rs 10,000 Mn.<span style="mso-spacerun:yes"> </span>for<span style="mso-spacerun:yes"> </span>issuance of additional NCDs. For </span><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">Issue details</span><span style="font-family:"Times New Roman","serif";mso-fareast-language: EN-IN"> and Issue structure refer Appendix IV and Appendix V.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">A NCD (Non Convertible debenture) is essentially a debt instrument with a fixed tenure that pays a certain rate of interest monthly, quarterly, annually or at the end of the tenure. The money invested is returned either over the tenure of the investment or at the end of the tenure</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-ansi-language:EN-GB;mso-fareast-language:EN-IN" lang="EN-GB">For the above issue the coupon rate from 11-12% was available in four options. The issue had a lock-in period of 36 and 42 months depending on the option chosen. The company had a right to redeem post 36 and 42 months depending on the option chosen. No long-term capital gains were to be levied if held over one year and sold through the exchange medium. </span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"></span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l5 level1 lfo5"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">OBJECTS</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">The funds raised through this Issue, after meeting the expenditures of and related to the Issue, were to be used for various financing activities including lending and investments, to repay existing loans and business operations including that for capital expenditure and working capital requirements.</span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l5 level1 lfo5"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">INTERIN USE OF PROCEEDS</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">The management of the company, in accordance with the policies formulated by it from time to time, would have flexibility in deploying the proceeds received from the Issue. Pending utilization of the proceeds out of the Issue for the purposes described above, the company also intended to temporarily invest funds in high quality interest bearing liquid instruments including money market mutual funds, deposits with banks or temporarily deploy the funds in investment grade interest bearing securities as approved by the Board. Such investment would be in accordance with the investment policies.</span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:22.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l9 level1 lfo9"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">RATING</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; margin-left:4.5pt;text-align:justify;line-height:150%"><span style="font-family: "Times New Roman","serif";mso-fareast-language:EN-IN">Rating agencies like ICRA and CARE had assigned LAA+ and AA+ rating to the NCD.<span style="mso-spacerun:yes"> </span>ICRA<span style="mso-spacerun:yes"> </span>rating of LAA+<span style="mso-spacerun:yes"> </span>indicated high-credit quality and low credit<span style="mso-spacerun:yes"> </span>risk and rating by CARE of AA+ indicated high safety for timely servicing of debt obligations.</span></p> <span style="font-size:11.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin;mso-ansi-language: EN-US;mso-fareast-language:EN-IN;mso-bidi-language:AR-SA"><br style="page-break-before:always" clear="all"> </span> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;text-align:center;line-height:150%" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:14.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">PERFORMANCE ANALYSIS OF COMPANY</span></u></b></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:22.5pt;mso-add-space:auto;text-indent:-.25in;line-height:150%; mso-list:l6 level1 lfo10"><span style="font-size:12.0pt; line-height:150%;font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="13" width="13" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">ISSUE ANALYSIS</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">In order to analyze whether investing in the issue would have be a prudent investment strategy, comparison has been made between Tata Capital Limited and its peers thus identifying various advantages and drawbacks.</span></p> <p class="MsoListParagraphCxSpFirst" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:.25in;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l5 level1 lfo5"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">ADVANTAGES</span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify;line-height:150%"><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN"> </span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo7"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">WELL CPITALIZED - </span></b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Despite risk of higher NPA’s that the company faced in light of the slowing economy, it was adequately capitalized. The company was subject to the capital adequacy requirements prescribed by the RBI where it was required to maintain a minimum ratio of 10% as prescribed under the Non-Banking Financial norms in 2007 however the company had a Capital adequacy ratio (CAR) of 26.1% as on September 2008.</span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo7"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">LOWER LEVERRAGE - <span style="mso-spacerun:yes"> </span></span></b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold">The<span style="mso-spacerun:yes"> </span>company<span style="mso-spacerun:yes"> </span>had<span style="mso-spacerun:yes"> </span>a<span style="mso-spacerun:yes"> </span>debt<span style="mso-spacerun:yes"> </span>to<span style="mso-spacerun:yes"> </span>equity<span style="mso-spacerun:yes"> </span>ratio<span style="mso-spacerun:yes"> </span>of<span style="mso-spacerun:yes"> </span>2.7<span style="mso-spacerun:yes"> </span>times<span style="mso-spacerun:yes"> </span>as<span style="mso-spacerun:yes"> </span>on September<span style="mso-spacerun:yes"> </span>2008. This<span style="mso-spacerun:yes"> </span>was<span style="mso-spacerun:yes"> </span>quite<span style="mso-spacerun:yes"> </span>low<span style="mso-spacerun:yes"> </span>as<span style="mso-spacerun:yes"> </span>compared<span style="mso-spacerun:yes"> </span>to<span style="mso-spacerun:yes"> </span>other finance companies which<span style="mso-spacerun:yes"> </span>have<span style="mso-spacerun:yes"> </span>debt<span style="mso-spacerun:yes"> </span>equity<span style="mso-spacerun:yes"> </span>ratio<span style="mso-spacerun:yes"> </span>in<span style="mso-spacerun:yes"> </span>the<span style="mso-spacerun:yes"> </span>range<span style="mso-spacerun:yes"> </span>of<span style="mso-spacerun:yes"> </span>5-8<span style="mso-spacerun:yes"> </span>times. Also the company intended to repay a portion of the debt with the issue proceeds thereby lowering cost for the company.</span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo7"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">TATA BRAND - </span></b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">TCL in owned 100% by Tata Sons Limited. The company could grow by leveraging the strength of the “Tata” brand and by exploiting the synergies with other Tata Group companies.</span></p> <p class="MsoListParagraphCxSpLast" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo7"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">LIABILITY MANAGEMENT - </span></b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Sources of funds for the company mainly were in the form of loan funds from bank and commercial papers. Through this issue, the company would be able to diversify its sources of funds which in turn would result in better asset- liability management.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"> </span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; line-height:150%"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:14.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"><span style="text-decoration:none"> </span></span></u></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN"> </span></p> <p class="MsoListParagraphCxSpFirst" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l7 level1 lfo8"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">AREAS OF CONCERN</span></b><span style="font-family: "Times New Roman","serif";mso-fareast-language:EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo7"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">LOSSES IN THE PAST - </span></b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The company had incurred a net loss of Rs. 2273 lakhs (before tax) for the nine months period ended December 31, 2008. The loss upto September 2008 was only Rs 299 lakh which imply that the company has incurred a loss of Rs.1974 lakh in the last quarter ending December 2008. According to the company these losses were due to the prevailing market conditions and high cost of borrowing. It the company continued to incur further losses, the company’s results of operations and financial condition would be adversely affected.</span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo7"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">ASSET QUALITY - </span></b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">As on September 2008, the company had a loan book of Rs.68280 mn, out of which loans to construction equipment and SME formed approximately 70% of the loans. Any slowdown in industrial activity was likely to expose the loan book of TCL to a higher credit risk. This would in turn lead to an increase in the number and value of company’s NPA.</span></p> <p class="MsoListParagraphCxSpLast" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo7"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">LIMITED OPERATING HISTORY - </span></b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Although the company was incorporated in<span style="mso-spacerun:yes"> </span><span style="mso-spacerun:yes"> </span>1991, active commencement<span style="mso-spacerun:yes"> </span>of<span style="mso-spacerun:yes"> </span>business operations began only in September, 2007. As a result, there was limited historical financial and operating information available to evaluate its<span style="mso-spacerun:yes"> </span>past performance. The return that the company had generated in the past from advances and investments stood at 8.5% and 8.6% respectively in FY08.Also the cost of funds stood at 8.3%. Moreover because of limited operating history, the historical financial results could <span style="mso-spacerun:yes"> </span>not have accurately predicted<span style="mso-spacerun:yes"> </span>its<span style="mso-spacerun:yes"> </span>future<span style="mso-spacerun:yes"> </span>performance, therefore making it difficult for prospective investors to evaluate its business.</span></p> <table class="MsoNormalTable" style="width:249.0pt;margin-left:109.85pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="332"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.75pt"> <td style="width:107.0pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="143"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white"><span style="mso-spacerun:yes"> </span>Ratios</span></b></p> </td> <td style="width:74.0pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="99"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white"><span style="mso-spacerun:yes"> </span><span style="mso-spacerun:yes"> </span>2007-08</span></b></p> </td> <td style="width:68.0pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white"><span style="mso-spacerun:yes"> </span>2008-09</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:15.0pt"> <td style="width:107.0pt;border:solid windowtext 1.0pt; border-right:none;mso-border-top-alt:solid windowtext 1.0pt;mso-border-left-alt: solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="143"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Cost of funds</span></p> </td> <td style="width:74.0pt;border-top:solid windowtext 1.0pt; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none; mso-border-top-alt:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="99"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">8.30%</span></p> </td> <td style="width:68.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext 1.0pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext 1.0pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">9.40%</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.0pt"> <td style="width:107.0pt;border-top:none; border-left:solid windowtext 1.0pt;border-bottom:solid windowtext 1.0pt; border-right:none;mso-border-left-alt:solid windowtext 1.0pt;mso-border-bottom-alt: solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="143"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Yields on loans</span></p> </td> <td style="width:74.0pt;border:none;border-bottom: solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="99"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">8.50%</span></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">12.10%</span></p> </td> </tr> <tr style="mso-yfti-irow:3;mso-yfti-lastrow:yes;height:15.75pt"> <td style="width:107.0pt;border-top:none; border-left:solid windowtext 1.0pt;border-bottom:solid windowtext 1.0pt; border-right:none;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="143"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Yield on investments</span></p> </td> <td style="width:74.0pt;border:none;border-bottom: solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="99"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">8.60%</span></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">3.20%</span></p> </td> </tr> </tbody></table> <p class="MsoListParagraphCxSpFirst" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;text-indent:-.25in; line-height:150%;mso-list:l3 level1 lfo7"><span style="font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-font-family: Wingdings;mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore">§<span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN">DETAILS ON DEPLOYMENT OF ISSUE PROCEEDS - </span></b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The company had indicated that the funds raised through the issue would be used for its various financing activities including<span style="mso-spacerun:yes"> </span>lending<span style="mso-spacerun:yes"> </span>and<span style="mso-spacerun:yes"> </span>investments,<span style="mso-spacerun:yes"> </span>to<span style="mso-spacerun:yes"> </span>repay<span style="mso-spacerun:yes"> </span>its<span style="mso-spacerun:yes"> </span>existing<span style="mso-spacerun:yes"> </span>loans<span style="mso-spacerun:yes"> </span>and<span style="mso-spacerun:yes"> </span>for<span style="mso-spacerun:yes"> </span>future capital expenditures, however the company had not given any details with respect to the same. </span></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;line-height:150%"><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN"> </span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;line-height:150%"><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN"> </span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;line-height:150%"><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN"> </span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;line-height:150%"><b><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN"> </span></b></p> <p class="MsoListParagraphCxSpMiddle" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;margin-left:31.5pt;mso-add-space:auto;text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"> </span></p> <p class="MsoListParagraphCxSpLast" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l7 level1 lfo8"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">NPA (NON PERFORMING ASSETS)</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Net non-performing assets were Rs.5,364 lakhs representing 0.6% of gross value of customer assets as at March 31, 2009 as compared to Rs.1,445 lakhs representing 0.4% of gross value of customer assets as at March 31, 2008.</span> <span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The Company commenced its operations actively only in September 2007. Therefore with the growth of the business, the number and value of NPAs has increased as large part of the portfolio was not seasoned and has resulted in increased provisioning towards the NPAs.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Going forward it may be difficult for the company to control or reduce the number of NPAs due to adverse global and domestic economic conditions and a prolonged recession period. The company may not be able to improve its collections and recoveries in relation to its existing NPAs. The company’s inability to control or reduce the number and value of its NPAs may lead to deterioration of the quality of its loan portfolio and may severely impact its business.</span><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"></span></p> <table class="MsoNormalTable" style="width:365.25pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="487"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.75pt"> <td style="width:110.0pt;border-top:solid windowtext 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">(NPA) Ratios:</span></b></p> </td> <td colspan="2" style="width:142.75pt;border-top:windowtext; border-left:white;border-bottom:windowtext;border-right:white;border-style: solid;border-width:1.0pt;mso-border-top-alt:windowtext;mso-border-left-alt: white;mso-border-bottom-alt:windowtext;mso-border-right-alt:white;mso-border-style-alt: solid;mso-border-width-alt:.5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" valign="bottom" width="190"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Six months ended March 31</span></b></p> </td> <td colspan="2" style="width:112.5pt;border: solid windowtext 1.0pt;border-left:none;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="150"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Year ended March 31</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:13.5pt"> <td style="width:110.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:13.5pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Year</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2009</span></p> </td> <td style="width:74.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="100"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2008</span></p> </td> <td style="width:47.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="64"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2009</span></p> </td> <td style="width:64.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="86"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2008</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:13.5pt"> <td style="width:110.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:13.5pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Gross NPA</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:74.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="100"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:47.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="64"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">7,730</span></p> </td> <td style="width:64.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="86"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2,191</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:14.25pt"> <td style="width:110.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:14.25pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Net NPA</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:74.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="100"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:47.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="64"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">5,364</span></p> </td> <td style="width:64.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="86"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,445</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:24.25pt"> <td style="width:110.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:24.25pt" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">% of Gross NPA to gross advances</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:24.25pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:74.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:24.25pt" nowrap="nowrap" valign="bottom" width="100"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:47.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:24.25pt" nowrap="nowrap" valign="bottom" width="64"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.95%</span></p> </td> <td style="width:64.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:24.25pt" nowrap="nowrap" valign="bottom" width="86"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.64%</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:27.75pt"> <td style="width:110.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:27.75pt" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">% of Net NPA to net advances</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.75pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:74.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.75pt" nowrap="nowrap" valign="bottom" width="100"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:47.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.75pt" nowrap="nowrap" valign="bottom" width="64"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.66%</span></p> </td> <td style="width:64.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.75pt" nowrap="nowrap" valign="bottom" width="86"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.42%</span></p> </td> </tr> <tr style="mso-yfti-irow:6;mso-yfti-lastrow:yes;height:12.75pt"> <td style="width:110.0pt;border:solid windowtext 1.0pt; border-top:solid white 1.0pt;mso-border-alt:solid windowtext .5pt;mso-border-top-alt: solid white .5pt;background:black;padding:0in 5.4pt 0in 5.4pt;height:12.75pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Return on Assets</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:12.75pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.02%</span></p> </td> <td style="width:74.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:12.75pt" nowrap="nowrap" valign="bottom" width="100"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.16%</span></p> </td> <td style="width:47.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:12.75pt" nowrap="nowrap" valign="bottom" width="64"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.06%</span></p> </td> <td style="width:64.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:12.75pt" nowrap="nowrap" valign="bottom" width="86"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.65%</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"></span></p> <table class="MsoNormalTable" style="width:482.25pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="643"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.75pt"> <td style="width:86.25pt;border:solid windowtext 1.0pt; border-right:none;mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt: solid windowtext .5pt;mso-border-bottom-alt:solid windowtext .5pt;background: black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="115"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">(NPA) Ratios:</span></b></p> </td> <td colspan="3" style="width:139.5pt;border-top:windowtext; border-left:white;border-bottom:windowtext;border-right:white;border-style: solid;border-width:1.0pt;mso-border-top-alt:windowtext;mso-border-left-alt: white;mso-border-bottom-alt:windowtext;mso-border-right-alt:white;mso-border-style-alt: solid;mso-border-width-alt:.5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" valign="bottom" width="186"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">6 months ended March 31</span></b></p> </td> <td colspan="3" style="width:112.5pt;border-top: solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt; border-right:solid white 1.0pt;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="150"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Year ended March 31</span></b></p> </td> <td colspan="2" style="width:2.0in;border:none; border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="192"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">6 months ended Sept 30</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:13.5pt"> <td style="width:86.25pt;border-top:none; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="115"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Year</span></b></p> </td> <td style="width:78.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="105"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:56.25pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> <td colspan="2" style="width:63.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:44.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="59"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> <td colspan="2" style="width:82.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="111"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:70.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="93"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.0pt"> <td style="width:86.25pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="115"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Gross NPA</span></b></p> </td> <td style="width:78.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="105"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">15,216</span></p> </td> <td style="width:56.25pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">23,876</span></p> </td> <td colspan="2" style="width:63.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">15,216</span></p> </td> <td style="width:44.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="59"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">23,876</span></p> </td> <td colspan="2" style="width:82.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="111"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">18,351</span></p> </td> <td style="width:70.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="93"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">22,187</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:15.0pt"> <td style="width:86.25pt;border-top:white; border-left:windowtext;border-bottom:white;border-right:windowtext; border-style:solid;border-width:1.0pt;mso-border-top-alt:white;mso-border-left-alt: windowtext;mso-border-bottom-alt:white;mso-border-right-alt:windowtext; mso-border-style-alt:solid;mso-border-width-alt:.5pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="115"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Net NPA</span></b></p> </td> <td style="width:78.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="105"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">11,293</span></p> </td> <td style="width:56.25pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">17,961</span></p> </td> <td colspan="2" style="width:63.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">11,293</span></p> </td> <td style="width:44.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="59"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">17,961</span></p> </td> <td colspan="2" style="width:82.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="111"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">13,340</span></p> </td> <td style="width:70.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="93"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">16,063</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:30.0pt"> <td style="width:86.25pt;border-top:none;border-left: solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:30.0pt" valign="bottom" width="115"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">% of Gross NPA to gross advances</span></b></p> </td> <td style="width:78.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:30.0pt" nowrap="nowrap" valign="bottom" width="105"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1.02%</span></p> </td> <td style="width:56.25pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:30.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2.23%</span></p> </td> <td colspan="2" style="width:63.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:30.0pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1.02%</span></p> </td> <td style="width:44.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:30.0pt" nowrap="nowrap" valign="bottom" width="59"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2.23%</span></p> </td> <td colspan="2" style="width:82.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:30.0pt" nowrap="nowrap" valign="bottom" width="111"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1.12%</span></p> </td> <td style="width:70.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:30.0pt" nowrap="nowrap" valign="bottom" width="93"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1.78%</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:27.0pt"> <td style="width:86.25pt;border-top:white;border-left: windowtext;border-bottom:white;border-right:windowtext;border-style:solid; border-width:1.0pt;mso-border-top-alt:white;mso-border-left-alt:windowtext; mso-border-bottom-alt:white;mso-border-right-alt:windowtext;mso-border-style-alt: solid;mso-border-width-alt:.5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:27.0pt" valign="bottom" width="115"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">% of Net NPA to net advances</span></b></p> </td> <td style="width:78.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="105"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.76%</span></p> </td> <td style="width:56.25pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1.69%</span></p> </td> <td colspan="2" style="width:63.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.76%</span></p> </td> <td style="width:44.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="59"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1.69%</span></p> </td> <td colspan="2" style="width:82.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="111"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.82%</span></p> </td> <td style="width:70.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="93"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1.29%</span></p> </td> </tr> <tr style="mso-yfti-irow:6;mso-yfti-lastrow:yes;height:14.25pt"> <td style="width:86.25pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;background: black;padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="115"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Return on Assets</span></b></p> </td> <td style="width:78.75pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="105"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.16%</span></p> </td> <td style="width:56.25pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.10%</span></p> </td> <td colspan="2" style="width:63.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.43%</span></p> </td> <td style="width:44.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="59"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.43%</span></p> </td> <td colspan="2" style="width:82.95pt;border-top: none;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="111"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.40%</span></p> </td> <td style="width:70.05pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="93"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.32%</span></p> </td> </tr> <tr height="0"> <td style="border:none" width="115"><br /></td> <td style="border:none" width="105"><br /></td> <td style="border:none" width="75"><br /></td> <td style="border:none" width="6"><br /></td> <td style="border:none" width="79"><br /></td> <td style="border:none" width="59"><br /></td> <td style="border:none" width="12"><br /></td> <td style="border:none" width="99"><br /></td> <td style="border:none" width="93"><br /></td> </tr> </tbody></table> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l7 level1 lfo8"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">DEBT EQUITY RATIO</span></b></p> <table class="MsoNormalTable" style="width:437.35pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="583"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:27.75pt"> <td style="width:126.75pt;border:solid white 1.0pt; mso-border-alt:solid white .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:27.75pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Particulars</span></b></p> </td> <td style="width:54.25pt;border-top:solid white 1.0pt; border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:27.75pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">2007-08</span></b></p> </td> <td style="width:97.0pt;border-top:solid white 1.0pt; border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:27.75pt" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Prior to the Issue (Sept 30,2008)</span></b></p> </td> <td style="width:53.0pt;border-top:solid white 1.0pt; border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:27.75pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">2008-09</span></b></p> </td> <td style="width:51.0pt;border-top:solid white 1.0pt; border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:27.75pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">2009-10</span></b></p> </td> <td style="width:55.35pt;border-top:solid white 1.0pt; border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:27.75pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">2010-11</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:15.0pt"> <td style="width:126.75pt;border-top:none; border-left:solid white 1.0pt;border-bottom:solid white 1.0pt;border-right: none;mso-border-left-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Secured loans</span></b></p> </td> <td style="width:54.25pt;border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt;background:white;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1356</span></p> </td> <td style="width:97.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">209,439</span></p> </td> <td style="width:53.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">701,475</span></p> </td> <td style="width:51.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">656,692</span></p> </td> <td style="width:55.35pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">877,967</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.0pt"> <td style="width:126.75pt;border-top:none; border-left:solid white 1.0pt;border-bottom:solid white 1.0pt;border-right: none;mso-border-left-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Unsecured loans</span></b></p> </td> <td style="width:54.25pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;background: white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">921</span></p> </td> <td style="width:97.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">351,948</span></p> </td> <td style="width:53.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">240,389</span></p> </td> <td style="width:51.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">327,902</span></p> </td> <td style="width:55.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">501,501</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:15.0pt"> <td style="width:126.75pt;border-top:none; border-left:solid white 1.0pt;border-bottom:solid white 1.0pt;border-right: none;mso-border-left-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Total Debt</span></b></p> </td> <td style="width:54.25pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2277</span></p> </td> <td style="width:97.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">561,387</span></p> </td> <td style="width:53.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">941,864</span></p> </td> <td style="width:51.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">984,594</span></p> </td> <td style="width:55.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,379,468</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:15.0pt"> <td style="width:126.75pt;border-top:none; border-left:solid white 1.0pt;border-bottom:solid white 1.0pt;border-right: none;mso-border-left-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Share capital</span></b></p> </td> <td style="width:54.25pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Arial;color:black">1987.6</span><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black"></span></p> </td> <td style="width:97.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">208,762</span></p> </td> <td style="width:53.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">208,762</span></p> </td> <td style="width:51.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">209,349</span></p> </td> <td style="width:55.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">249,515</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:15.0pt"> <td style="width:126.75pt;border-top:none; border-left:solid white 1.0pt;border-bottom:solid white 1.0pt;border-right: none;mso-border-left-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Reserves</span></b></p> </td> <td style="width:54.25pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Arial;color:black">19.3</span><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black"></span></p> </td> <td style="width:97.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2,231</span></p> </td> <td style="width:53.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2,288</span></p> </td> <td style="width:51.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">7,502</span></p> </td> <td style="width:55.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">14,672</span></p> </td> </tr> <tr style="mso-yfti-irow:6;height:15.0pt"> <td style="width:126.75pt;border-top:none; border-left:solid white 1.0pt;border-bottom:solid white 1.0pt;border-right: none;mso-border-left-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Less:Misc. expenditure </span></b></p> </td> <td style="width:54.25pt;border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt;background:white;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0</span></p> </td> <td style="width:97.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">275</span></p> </td> <td style="width:53.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0</span></p> </td> <td style="width:51.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0</span></p> </td> <td style="width:55.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0</span></p> </td> </tr> <tr style="mso-yfti-irow:7;height:15.0pt"> <td style="width:126.75pt;border-top:none; border-left:solid white 1.0pt;border-bottom:solid white 1.0pt;border-right: none;mso-border-left-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Total Shareholders Fund</span></b></p> </td> <td style="width:54.25pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2,007</span></p> </td> <td style="width:97.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">210,718</span></p> </td> <td style="width:53.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">211,050</span></p> </td> <td style="width:51.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">216,851</span></p> </td> <td style="width:55.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">264,187</span></p> </td> </tr> <tr style="mso-yfti-irow:8;mso-yfti-lastrow:yes;height:15.0pt"> <td style="width:126.75pt;border-top:none; border-left:solid white 1.0pt;border-bottom:solid white 1.0pt;border-right: none;mso-border-left-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="169"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Debt Equity Ratio </span></b></p> </td> <td style="width:54.25pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1.13</span></p> </td> <td style="width:97.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="129"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2.66</span></p> </td> <td style="width:53.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="71"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">4.46</span></p> </td> <td style="width:51.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="68"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">4.54</span></p> </td> <td style="width:55.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">5.22</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">Prior to the issue, debt equity ratio is 2.66 as on Sep 30, 2008. The debt equity ratio prior to this Issue is based on a total outstanding debt of Rs. 5614cr and shareholder funds amounting to Rs. 2107cr. The debt equity ratio post the Issue (2008-09) has gone up to 4.46 times, based on a total outstanding debt of Rs. 9419cr and shareholders fund of Rs. 2110cr. Over the years the debt equity ratio of the company has risen however this is still low as compared to its peer groups (except for SIDBI) as shown in the table below. Therefore, it has room to raise more debt and grow its business aggressively in the future. </span><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN"></span></p> <table class="MsoNormalTable" style="width:253.0pt;border-collapse:collapse;mso-yfti-tbllook:1184; mso-table-lspace:9.0pt;margin-left:6.75pt;mso-table-rspace:9.0pt;margin-right: 6.75pt;mso-table-anchor-vertical:paragraph;mso-table-anchor-horizontal:margin; mso-table-left:center;mso-table-top:1.55pt;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="337" align="left"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.0pt"> <td colspan="2" style="width:253.0pt;border: solid white 1.0pt;mso-border-alt:solid white .5pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="337"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Debt Equity Ratio of Peer Group </span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:10.6pt"> <td style="width:154.35pt;border-top:none; border-left:solid white 1.0pt;border-bottom:none;border-right:solid white 1.0pt; mso-border-left-alt:solid white .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:10.6pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Company</span></b></p> </td> <td style="width:98.65pt;border:none; border-right:solid white 1.0pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:10.6pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Debt Equity Ratio</span></b></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.0pt"> <td style="width:154.35pt;border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; color:black">TATA CAPITAL LTD</span></p> </td> <td style="width:98.65pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">5.22</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:16.5pt"> <td style="width:154.35pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:16.5pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; color:black">DEEWAN HOUSING FIN LTD</span></p> </td> <td style="width:98.65pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:16.5pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="right"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">8.89</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:15.0pt"> <td style="width:154.35pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; color:black">HDFC LIMITED</span></p> </td> <td style="width:98.65pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="right"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">7.22</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:15.0pt"> <td style="width:154.35pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; color:black">HUDCO</span></p> </td> <td style="width:98.65pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="right"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">5.45</span></p> </td> </tr> <tr style="mso-yfti-irow:6;height:15.0pt"> <td style="width:154.35pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; color:black">LIC HOUSING FIN LTD </span></p> </td> <td style="width:98.65pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="right"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">10.87</span></p> </td> </tr> <tr style="mso-yfti-irow:7;height:15.0pt"> <td style="width:154.35pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; color:black">NATIONAL HOUSING BANK</span></p> </td> <td style="width:98.65pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="right"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">9.67</span></p> </td> </tr> <tr style="mso-yfti-irow:8;height:15.0pt"> <td style="width:154.35pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; color:black">PNB HOUSING FINANCE </span></p> </td> <td style="width:98.65pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="right"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">11.07</span></p> </td> </tr> <tr style="mso-yfti-irow:9;mso-yfti-lastrow:yes;height:15.0pt"> <td style="width:154.35pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="206"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;mso-element:frame;mso-element-frame-hspace:9.0pt;mso-element-wrap: around;mso-element-anchor-vertical:paragraph;mso-element-anchor-horizontal: margin;mso-element-left:center;mso-element-top:1.55pt;mso-height-rule:exactly"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"; color:black">SIDBI</span></p> </td> <td style="width:98.65pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="132"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-left:center;mso-element-top: 1.55pt;mso-height-rule:exactly" align="right"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">2.48</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l7 level1 lfo8"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">EARNINGS</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">The company is actively operating since Sep, 2007 hence TCL’s profitability has remained under pressure in the short to medium term, this would be the case until the operating income is large enough to absorb initial high fixed overhead expenses incurred on setting up the infrastructure. Profitability of the company could also improve as the non-fund based businesses of the company, such as insurance distribution, merchant banking and financial advisory scale up. Business per employee shall also increase in coming months with the diversification of the business that will further reduce cost.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-spacerun:yes"> </span>However, the ability of TCL to maintain reasonable risk adjusted returns would be linked to the level of control it maintains over delinquencies on its loan portfolio. </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"><span style="mso-spacerun:yes"> </span>Despite the expected pressure on profitability, TCL’s strategic importance to the Tata Group, in its position as a key financier within the Tata Group apart from Tata Motors Finance Limited (TMFL), which finances only Tata Motor Limited (TML) assets would ensure strong support from the Group.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">For financial results of Tata Capital Limited refer Appendix VI.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l7 level1 lfo8"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">CAPITAL ADEQUACY RATIO</span></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Tata Capital Limited is subject to the capital adequacy requirements prescribed by the RBI. Prior to the issue they were required to maintain a minimum ratio of 10% as prescribed under the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 (as amended from time to time) based on total capital to risk weighted assets. As per the RBI circular for NBFC-ND-SI, this limit was increased to 12% by March 31, 2009 and to 15% by March 31, 2010. As a part of Tata Capital’s governance policy, they ordinarily maintain capital adequacy higher than the statutorily prescribed CAR. CAR as on March 31, 2008 and as on September 30, 2008 was 45.5% and 26.1% respectively. The company has maintained capital adequacy higher than the statutorily prescribed CAR which reflects low credit risk. Tata Capital’s credit rating, risk containment measures and brand value will help them to access capital on relatively favourable terms.</span></p> <table class="MsoNormalTable" style="width:374.0pt;border-collapse:collapse;mso-yfti-tbllook:1184; mso-table-lspace:9.0pt;margin-left:6.75pt;mso-table-rspace:9.0pt;margin-right: 6.75pt;mso-table-anchor-vertical:paragraph;mso-table-anchor-horizontal:margin; mso-table-left:left;mso-table-top:33.6pt;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="499" align="left"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.75pt"> <td style="width:118.0pt;border-top:solid windowtext 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="157"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Analytical Ratios</span></b></p> </td> <td colspan="2" style="width:143.9pt;border-top:windowtext; border-left:white;border-bottom:windowtext;border-right:white;border-style: solid;border-width:1.0pt;mso-border-top-alt:windowtext;mso-border-left-alt: white;mso-border-bottom-alt:windowtext;mso-border-right-alt:white;mso-border-style-alt: solid;mso-border-width-alt:.5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" valign="bottom" width="192"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Six months ended March 31</span></b></p> </td> <td colspan="2" style="width:112.1pt;border: solid windowtext 1.0pt;border-left:none;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="149"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Year ended March 31</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:13.5pt"> <td style="width:118.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:13.5pt" nowrap="nowrap" valign="bottom" width="157"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Year</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">2009</span></p> </td> <td style="width:75.9pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="101"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">2008</span></p> </td> <td style="width:52.1pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="69"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">2009</span></p> </td> <td style="width:60.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="80"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">2008</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:13.5pt"> <td style="width:118.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:13.5pt" nowrap="nowrap" valign="bottom" width="157"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Capital Adequacy Ratio</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">-</span></p> </td> <td style="width:75.9pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="101"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">-</span></p> </td> <td style="width:52.1pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="69"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">17.06%</span></p> </td> <td style="width:60.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="80"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">45.52%</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:14.25pt"> <td style="width:118.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:14.25pt" nowrap="nowrap" valign="bottom" width="157"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Basic EPS</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">0.01</span></p> </td> <td style="width:75.9pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="101"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black"><span style="mso-spacerun:yes"> </span>0.06</span></p> </td> <td style="width:52.1pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="69"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black"><span style="mso-spacerun:yes"> </span>0.06</span></p> </td> <td style="width:60.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="80"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black"><span style="mso-spacerun:yes"> </span>0.22</span></p> </td> </tr> <tr style="mso-yfti-irow:4;mso-yfti-lastrow:yes;height:27.0pt"> <td style="width:118.0pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:27.0pt" valign="bottom" width="157"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Diluted EPS</span></b></p> </td> <td style="width:68.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="91"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black"><span style="mso-spacerun:yes"> </span>0.01</span></p> </td> <td style="width:75.9pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="101"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black"><span style="mso-spacerun:yes"> </span>0.05</span></p> </td> <td style="width:52.1pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="69"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black"><span style="mso-spacerun:yes"> </span>0.02</span></p> </td> <td style="width:60.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="80"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;mso-element:frame;mso-element-frame-hspace: 9.0pt;mso-element-wrap:around;mso-element-anchor-vertical:paragraph; mso-element-anchor-horizontal:margin;mso-element-top:33.6pt;mso-height-rule: exactly" align="center"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black"><span style="mso-spacerun:yes"> </span>0.19</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <table class="MsoNormalTable" style="width:474.15pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="632"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.75pt"> <td style="width:108.75pt;border-top:solid windowtext 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="145"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Analytical Ratios</span></b></p> </td> <td colspan="2" style="width:127.65pt;border-top:windowtext; border-left:white;border-bottom:windowtext;border-right:white;border-style: solid;border-width:1.0pt;mso-border-top-alt:windowtext;mso-border-left-alt: white;mso-border-bottom-alt:windowtext;mso-border-right-alt:white;mso-border-style-alt: solid;mso-border-width-alt:.5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" valign="bottom" width="170"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">6 months ended Mar 31</span></b></p> </td> <td colspan="2" style="width:115.65pt; border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt; border-right:solid white 1.0pt;mso-border-top-alt:solid windowtext .5pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="154"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Year ended Mar 31</span></b></p> </td> <td colspan="2" style="width:122.1pt;border: none;border-bottom:solid windowtext 1.0pt;mso-border-bottom-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="163"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">6 months ended Sept 30</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:13.5pt"> <td style="width:108.75pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:13.5pt" nowrap="nowrap" valign="bottom" width="145"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Year</span></b></p> </td> <td style="width:72.5pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="97"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:55.15pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> <td style="width:61.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="82"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:54.3pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> <td style="width:58.2pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="78"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:63.9pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:40.5pt"> <td style="width:108.75pt;border-top:white;border-left:windowtext; border-bottom:white;border-right:windowtext;border-style:solid;border-width: 1.0pt;mso-border-top-alt:white;mso-border-left-alt:windowtext;mso-border-bottom-alt: white;mso-border-right-alt:windowtext;mso-border-style-alt:solid;mso-border-width-alt: .5pt;background:black;padding:0in 5.4pt 0in 5.4pt;height:40.5pt" width="145"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Capital Adequacy Ratio</span></b></p> </td> <td style="width:72.5pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:40.5pt" nowrap="nowrap" valign="bottom" width="97"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">17.80%</span></p> </td> <td style="width:55.15pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:40.5pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">21.44%</span></p> </td> <td style="width:61.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:40.5pt" nowrap="nowrap" valign="bottom" width="82"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">17.80%</span></p> </td> <td style="width:54.3pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:40.5pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">21.44%</span></p> </td> <td style="width:58.2pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:40.5pt" nowrap="nowrap" valign="bottom" width="78"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">16.82%</span></p> </td> <td style="width:63.9pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:40.5pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">17.80%</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:15.0pt"> <td style="width:108.75pt;border-top:none; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="145"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Basic EPS</span></b></p> </td> <td style="width:72.5pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="97"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.13</span></p> </td> <td style="width:55.15pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.09</span></p> </td> <td style="width:61.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="82"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.36</span></p> </td> <td style="width:54.3pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.43</span></p> </td> <td style="width:58.2pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="78"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.29</span></p> </td> <td style="width:63.9pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.25</span></p> </td> </tr> <tr style="mso-yfti-irow:4;mso-yfti-lastrow:yes;height:21.75pt"> <td style="width:108.75pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-right-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:21.75pt" valign="bottom" width="145"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Diluted EPS</span></b></p> </td> <td style="width:72.5pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="97"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.12</span></p> </td> <td style="width:55.15pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="74"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.06</span></p> </td> <td style="width:61.35pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="82"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.33</span></p> </td> <td style="width:54.3pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="72"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.24</span></p> </td> <td style="width:58.2pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="78"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.28</span></p> </td> <td style="width:63.9pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="85"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">0.21</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif";mso-fareast-language:EN-IN; mso-bidi-font-weight:bold"> </span></p> <span style="font-size:11.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin;mso-ansi-language: EN-US;mso-fareast-language:EN-IN;mso-bidi-language:AR-SA"><br style="page-break-before:always" clear="all"> </span> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;text-align:center;line-height:150%" align="center"><b style="mso-bidi-font-weight:normal"><u><span style="font-size:14.0pt;line-height:150%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">CONCLUSION</span></u></b></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Tata Capital's Public Issue of NCD received an overwhelming response - Based on subscriptions of over Rs 3,000 crore received, the Issue was over subscribed by more than six times. The Rs. 500 crore Issue had an option for the Company to retain an additional Rs 1,000 crore. Tata Capital had decided to retain total subscriptions of Rs.1,500 crore, which was upto the rated amount. The issue gained significant acceptance and this re-instated the investors’ confidence in Tata Capital. </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">As stated in the issue purpose proceeds of the NCD’s were utilized towards Issue expenses, repayment of existing loans and for financing activities including lending and investments. </span></p> <p class="MsoListParagraph" style="mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-add-space:auto;text-align:justify;text-indent:-.25in;line-height:150%; mso-list:l7 level1 lfo8"><span style="font-family:Symbol; mso-fareast-font-family:Symbol;mso-bidi-font-family:Symbol;mso-fareast-language: EN-IN;mso-bidi-font-weight:bold"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Particulars of the proceeds of the NCDs and its utilization are as under:</span></p> <table class="MsoNormalTable" style="width:403.0pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="537"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.0pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-right:solid white 1.0pt;mso-border-alt:solid windowtext .5pt; mso-border-right-alt:solid white .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:white">Particulars</span></b></p> </td> <td style="width:69.0pt;border-top:solid windowtext 1.0pt; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:white">2009-10</span></b></p> </td> <td style="width:71.0pt;border-top:windowtext; border-left:white;border-bottom:windowtext;border-right:white;border-style: solid;border-width:1.0pt;mso-border-top-alt:windowtext;mso-border-left-alt: white;mso-border-bottom-alt:windowtext;mso-border-right-alt:white;mso-border-style-alt: solid;mso-border-width-alt:.5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:white">2008-09</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:15.0pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Opening Balance of unutilized proceeds</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">26,178</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">-</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.0pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Amount received out of issue of debentures</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">-</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">150,000</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:15.0pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Less: Issue expenses</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">-</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">5,661</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:15.0pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Net Proceeds</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">26,178</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">144,339</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:15.0pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Utilization of funds</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black"> </span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black"> </span></p> </td> </tr> <tr style="mso-yfti-irow:6;height:15.0pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Financing activities including lending and investments</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">11,178</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">50,661</span></p> </td> </tr> <tr style="mso-yfti-irow:7;height:14.25pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Repayment of existing loans</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">15,000</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">67,500</span></p> </td> </tr> <tr style="mso-yfti-irow:8;height:13.5pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Total</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">26,178</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:13.5pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">118,161</span></p> </td> </tr> <tr style="mso-yfti-irow:9;height:26.25pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:26.25pt" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Balance unutilized proceeds have been temporarily invested in Fixed deposits with the banks</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:26.25pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">NIL</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:26.25pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">26,178</span></p> </td> </tr> <tr style="mso-yfti-irow:10;mso-yfti-lastrow:yes;height:15.0pt"> <td style="width:263.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="351"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman";color:black">Total</span></p> </td> <td style="width:69.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="92"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">Nil</span></p> </td> <td style="width:71.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="95"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:black">26,178</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold">Going forward, the company’s strategy is to consolidate its existing lines of business, explore new business opportunities, pursue strategic acquisitions and alliances, leverage its technology advantage, attract and retain talented professionals and expand client base and geographical presence. Based on the good response that the NCD issue had generated, such bonds have become an instrument of choice for investors and other corporates leading to the development of a strong corporate bond market.</span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify;line-height:150%"><span style="font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN;mso-bidi-font-weight:bold"> </span></p> <p class="MsoListParagraph" style="margin-left:27.0pt;mso-add-space:auto; text-indent:-.25in;mso-list:l8 level1 lfo4"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"">APPENDIX I - </span></b><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-language:EN-IN">CLASSIFICATION OF INSTRUMENTS TRADED IN DEBT MARKET</span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif""></span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <table class="MsoNormalTable" style="width:465.75pt; mso-cellspacing:1.5pt;mso-yfti-tbllook:1184;mso-padding-alt:1.5pt 1.5pt 1.5pt 1.5pt" border="0" cellpadding="0" width="621"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes"> <td style="width:19.48%;background:black;mso-background-themecolor: text1;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="19%"> <h3 style="text-align:center" align="center"><span style="mso-fareast-font-family: "Times New Roman";color:white;mso-themecolor:background1">Market Segment</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:white;mso-themecolor:background1"></span></h3> </td> <td style="width:25.92%;background:black;mso-background-themecolor: text1;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="25%"> <h3 style="text-align:center" align="center"><span style="mso-fareast-font-family: "Times New Roman";color:white;mso-themecolor:background1">Issuer</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:white;mso-themecolor:background1"></span></h3> </td> <td style="width:53.3%;background:black;mso-background-themecolor: text1;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="53%"> <h3 style="text-align:center" align="center"><span style="mso-fareast-font-family: "Times New Roman";color:white;mso-themecolor:background1">Instruments</span><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";color:white;mso-themecolor:background1"></span></h3> </td> </tr> <tr style="mso-yfti-irow:1;height:30.75pt"> <td style="width:19.48%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:30.75pt" valign="top" width="19%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Government Securities</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:25.92%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:30.75pt" valign="top" width="25%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Central Government </span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:53.3%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:30.75pt" valign="top" width="53%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Zero Coupon Bonds, Coupon Bearing Bonds, Treasury Bills, STRIPS</span><span style="font-size:12.0pt;font-family: "Times New Roman","serif";mso-fareast-font-family:"Times New Roman""></span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:21.75pt"> <td style="width:19.48%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:21.75pt" valign="top" width="19%"><br /></td> <td style="width:25.92%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:21.75pt" valign="top" width="25%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">State Governments</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:53.3%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:21.75pt" valign="top" width="53%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Coupon Bearing Bonds.</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> </tr> <tr style="mso-yfti-irow:3"> <td style="width:19.48%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="19%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Public Sector Bonds</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:25.92%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="25%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Government Agencies / Statutory Bodies </span><span style="font-size:12.0pt;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""></span></p> </td> <td style="width:53.3%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="53%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Govt. Guaranteed Bonds, Debentures</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:21.0pt"> <td style="width:19.48%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:21.0pt" valign="top" width="19%"><br /></td> <td style="width:25.92%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:21.0pt" valign="top" width="25%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Public Sector Units</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:53.3%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt; height:21.0pt" valign="top" width="53%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">PSU Bonds, Debentures, Commercial Paper</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""></span></p> </td> </tr> <tr style="mso-yfti-irow:5"> <td style="width:19.48%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="19%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Private Sector Bonds</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:25.92%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="25%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Corporates</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:53.3%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="53%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Debentures, Bonds, Commercial Paper, Floating Rate Bonds, Zero Coupon Bonds, Inter-Corporate Deposits</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> </tr> <tr style="mso-yfti-irow:6"> <td style="width:19.48%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="19%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:12.0pt;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></p> </td> <td style="width:25.92%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="25%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Banks</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:53.3%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="53%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Certificates of Deposits, Debentures, Bonds</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""></span></p> </td> </tr> <tr style="mso-yfti-irow:7;mso-yfti-lastrow:yes"> <td style="width:19.48%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="19%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-size:12.0pt; font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman""> </span></b></p> </td> <td style="width:25.92%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="25%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Financial Institutions</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> <td style="width:53.3%;background:#BFBFBF;mso-background-themecolor: background1;mso-background-themeshade:191;padding:1.5pt 1.5pt 1.5pt 1.5pt" valign="top" width="53%"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:"Times New Roman"">Certificates of Deposits, Bonds</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman""></span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoListParagraph" style="margin-top:0in;margin-right:0in;margin-bottom: 0in;margin-left:.25in;margin-bottom:.0001pt;mso-add-space:auto;text-indent: -.25in;line-height:normal;mso-list:l0 level1 lfo13"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family: Symbol"><span style="mso-list:Ignore"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font:7.0pt "Times New Roman""> </span></span></span><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">APPENDIX II – </span></b><span style="font-family:"Times New Roman","serif";mso-fareast-font-family: "Times New Roman"">CORPORATE STRUCTURE OF TATA CAPITAL LIMITED</span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman";mso-no-proof:yes"> </span></b><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman""></span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">APPENDIX <span style="mso-spacerun:yes"> </span>III -<span style="mso-spacerun:yes"> </span></span></b><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">BUSINESS LINES CARRIED OUT BY COMPANY AND ITS SUBSIDIARIES</span></p> <table class="MsoNormalTable" style="width:467.0pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="623"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.0pt"> <td style="width:152.0pt;border:solid white 1.0pt; border-bottom:none;mso-border-top-alt:solid white .5pt;mso-border-left-alt: solid white .5pt;mso-border-right-alt:solid white .5pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Name of Entity</span></b></p> </td> <td style="width:159.0pt;border-top:solid white 1.0pt; border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Fund based business</span></b></p> </td> <td style="width:156.0pt;border-top:solid white 1.0pt; border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid white .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:white">Fee based business</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:48.75pt"> <td style="width:152.0pt;border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:48.75pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Tata Capital Ltd</span></p> </td> <td style="width:159.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:48.75pt" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">SME<span style="mso-spacerun:yes"> </span>finance, Infrastructure finance, Retail finance</span></p> </td> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:48.75pt" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Private<span style="mso-spacerun:yes"> </span>Equity, Wealth Management<span style="mso-spacerun:yes"> </span>and Portfolio Management Services </span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.0pt"> <td style="width:152.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Tata Capital Markets Ltd</span></p> </td> <td style="width:159.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:156.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Merchant Banking</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:33.75pt"> <td style="width:152.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:33.75pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Tata Securities Ltd</span></p> </td> <td style="width:159.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:33.75pt" nowrap="nowrap" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:156.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:33.75pt" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Retail broking and Distribution Depository Services</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:15.0pt"> <td style="width:152.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Tata Capital Housing Finance Ltd</span></p> </td> <td style="width:159.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Housing finance</span></p> </td> <td style="width:156.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:15.0pt"> <td style="width:152.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">TC Travel and Services Ltd</span></p> </td> <td style="width:159.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:156.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Travel and Forex</span></p> </td> </tr> <tr style="mso-yfti-irow:6;height:30.75pt"> <td style="width:152.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:30.75pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Tata capital Pte. Ltd</span></p> </td> <td style="width:159.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:30.75pt" nowrap="nowrap" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Corporate finance</span></p> </td> <td style="width:156.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:30.75pt" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Investment Banking, Treasury Centre</span></p> </td> </tr> <tr style="mso-yfti-irow:7;height:15.0pt"> <td style="width:152.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Tata Capital Advisors Pte. Ltd</span></p> </td> <td style="width:159.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:156.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Advisory services to funds</span></p> </td> </tr> <tr style="mso-yfti-irow:8;mso-yfti-lastrow:yes;height:15.0pt"> <td style="width:152.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;padding: 0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="203"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:black">Tata Capital Markets Pte. Ltd</span></p> </td> <td style="width:159.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="212"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">-</span></p> </td> <td style="width:156.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Investment Advisory Services </span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">APPENDIX 1V – </span></b><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">ISSUE DETAILS</span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <table class="MsoNormalTable" style="width:303.0pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="404"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.0pt"> <td colspan="2" style="width:303.0pt;background: black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="404"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Issue Details</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:33.75pt"> <td style="width:91.0pt;border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt;background:white;padding:0in 5.4pt 0in 5.4pt; height:33.75pt" nowrap="nowrap" valign="bottom" width="121"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:black">Issue Size</span></b></p> </td> <td style="width:212.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-top-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;background: white;padding:0in 5.4pt 0in 5.4pt;height:33.75pt" valign="bottom" width="283"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Rs 5,000 mn., with a green shoe option of Rs 10,000 mn</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:39.0pt"> <td style="width:91.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;background: white;padding:0in 5.4pt 0in 5.4pt;height:39.0pt" nowrap="nowrap" valign="bottom" width="121"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:black">Face Value</span></b></p> </td> <td style="width:212.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:white;padding:0in 5.4pt 0in 5.4pt;height:39.0pt" valign="bottom" width="283"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Option I – Rs. 1,00,000 : Option II, III IV - -Rs.1000.</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:28.5pt"> <td style="width:91.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;background: white;padding:0in 5.4pt 0in 5.4pt;height:28.5pt" valign="bottom" width="121"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:black">Minimum Application</span></b></p> </td> <td style="width:212.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:white;padding:0in 5.4pt 0in 5.4pt;height:28.5pt" valign="bottom" width="283"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">Option I – Rs. 1,00,000 : Option II, III IV - -Rs.1000</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:27.0pt"> <td style="width:91.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;background: white;padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="121"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:black">Ratings</span></b></p> </td> <td style="width:212.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:white;padding:0in 5.4pt 0in 5.4pt;height:27.0pt" valign="bottom" width="283"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1) ICRA – LAA+<span style="mso-spacerun:yes"> </span>2) CARE- AA+</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:15.0pt"> <td style="width:91.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;background: white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="121"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:black">Issue Opens</span></b></p> </td> <td style="width:212.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" valign="bottom" width="283"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2-Feb-09</span></p> </td> </tr> <tr style="mso-yfti-irow:6;mso-yfti-lastrow:yes;height:15.0pt"> <td style="width:91.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt;background: white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="121"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b style="mso-bidi-font-weight:normal"><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family:"Times New Roman"; mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri;color:black">Issue Closes</span></b></p> </td> <td style="width:212.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-bottom-alt:solid windowtext .5pt;mso-border-right-alt:solid windowtext .5pt; background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" valign="bottom" width="283"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">24-Feb-09</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">APPENDIX V – </span></b><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">ISSUE STRUCTURE</span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <table class="MsoNormalTable" style="width:379.0pt;margin-left:4.65pt;border-collapse:collapse;border:none; mso-border-alt:solid windowtext .5pt;mso-yfti-tbllook:1184;mso-padding-alt: 0in 5.4pt 0in 5.4pt;mso-border-insideh:.5pt solid windowtext;mso-border-insidev: .5pt solid windowtext" border="1" cellpadding="0" cellspacing="0" width="505"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.0pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white">Options </span></b><b><span style="font-size:8.0pt;font-family: "Verdana","sans-serif";mso-fareast-font-family:"Times New Roman";mso-bidi-font-family: Calibri;color:white"></span></b></p> </td> <td style="width:113.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-left-alt:solid windowtext .5pt;mso-border-alt: solid windowtext .5pt;background:white;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial">I </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri"></span></p> </td> <td style="width:110.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-left-alt:solid windowtext .5pt;mso-border-alt: solid windowtext .5pt;background:white;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial">II </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri"></span></p> </td> </tr> <tr style="mso-yfti-irow:1;height:15.0pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white">Interest Payment </span></b><b><span style="font-size:8.0pt; font-family:"Verdana","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:Calibri;color:white"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;background:white;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial">Monthly </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;background:white;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial">Quarterly</span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri"></span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.0pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white">Face Value of NCDs (Rs/NCD) </span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">100000 (Rs)</span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">1000 (Rs) </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:24.75pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:24.75pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white">Mode of Interest Payment </span></b><b><span style="font-size: 8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:Calibri;color:white"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:24.75pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">ECS only </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:24.75pt" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">Through various options availabe </span><span style="font-size: 8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:Calibri;color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:15.0pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white">Coupon (%) </span></b><b><span style="font-size:8.0pt; font-family:"Verdana","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:Calibri;color:white"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">11% per annum </span><span style="font-size:8.0pt;font-family: "Verdana","sans-serif";mso-fareast-font-family:"Times New Roman";mso-bidi-font-family: Calibri;color:black"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">11.25% per annum</span><span style="font-size:8.0pt;font-family: "Verdana","sans-serif";mso-fareast-font-family:"Times New Roman";mso-bidi-font-family: Calibri;color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:15.0pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white">Put and call option</span></b><b><span style="font-size:8.0pt; font-family:"Verdana","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:Calibri;color:white"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">36 months </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">42 months </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:6;height:17.25pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:17.25pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white">Tenor </span></b><b><span style="font-size:8.0pt;font-family: "Verdana","sans-serif";mso-fareast-font-family:"Times New Roman";mso-bidi-font-family: Calibri;color:white"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:17.25pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">60 months </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:17.25pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">60 months </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:7;mso-yfti-lastrow:yes;height:41.25pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:41.25pt" nowrap="nowrap" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white">Redemption Date</span></b><b><span style="font-size:8.0pt; font-family:"Verdana","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:Calibri;color:white"></span></b></p> </td> <td style="width:113.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:41.25pt" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">5 years from the deemed date of allotment</span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:black"></span></p> </td> <td style="width:110.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt;height:41.25pt" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">5 years from the deemed date of allotment </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:black"></span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <table class="MsoNormalTable" style="width:379.0pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="505"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.75pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white;mso-themecolor:background1">Options </span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white;mso-themecolor: background1"></span></b></p> </td> <td style="width:113.0pt;border:solid windowtext 1.0pt; border-left:none;mso-border-left-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">III </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border:solid windowtext 1.0pt; border-left:none;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">IV </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:1;height:15.75pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white;mso-themecolor:background1">Interest Payment </span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white;mso-themecolor: background1"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">Annual </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">Cumulative </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:15.75pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white;mso-themecolor:background1">Face Value of NCDs (Rs/NCD) </span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white;mso-themecolor: background1"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">1000 (Rs) </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">1000 (Rs) </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:24.75pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:24.75pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white;mso-themecolor:background1">Mode of Interest Payment </span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white;mso-themecolor: background1"></span></b></p> </td> <td style="width:113.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:24.75pt" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">Through various options availabe</span><span style="font-size: 8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:Calibri;color:black"></span></p> </td> <td style="width:110.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:24.75pt" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">Through various options availabe </span><span style="font-size: 8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:Calibri;color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:24.0pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:24.0pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white;mso-themecolor:background1">Coupon (%) </span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white;mso-themecolor: background1"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:24.0pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">12% per annum</span><span style="font-size:8.0pt;font-family: "Verdana","sans-serif";mso-fareast-font-family:"Times New Roman";mso-bidi-font-family: Calibri;color:black"></span></p> </td> <td style="width:110.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:24.0pt" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">12% per annum to be compounded annually </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:15.75pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white;mso-themecolor:background1">Put and call option</span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white;mso-themecolor: background1"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">36 months </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">36 months </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:6;height:17.25pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:17.25pt" nowrap="nowrap" valign="bottom" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white;mso-themecolor:background1">Tenor </span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white;mso-themecolor: background1"></span></b></p> </td> <td style="width:113.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:17.25pt" nowrap="nowrap" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">60 months </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> <td style="width:110.0pt;border-top:none; border-left:none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:17.25pt" nowrap="nowrap" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">60 months </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Calibri; color:black"></span></p> </td> </tr> <tr style="mso-yfti-irow:7;mso-yfti-lastrow:yes;height:41.25pt"> <td style="width:156.0pt;border:solid windowtext 1.0pt; border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:41.25pt" nowrap="nowrap" width="208"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:white;mso-themecolor:background1">Redemption Date</span></b><b><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:white;mso-themecolor: background1"></span></b></p> </td> <td style="width:113.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; mso-border-left-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt; height:41.25pt" valign="bottom" width="151"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">5 years from the deemed date of allotment</span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:black"></span></p> </td> <td style="width:110.0pt;border-top:none;border-left: none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt; padding:0in 5.4pt 0in 5.4pt;height:41.25pt" valign="bottom" width="147"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-size:8.0pt;font-family:"Verdana","sans-serif"; mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial; color:black">5 years from the deemed date of allotment </span><span style="font-size:8.0pt;font-family:"Verdana","sans-serif";mso-fareast-font-family: "Times New Roman";mso-bidi-font-family:Calibri;color:black"></span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman"">APPENDIX VI – </span></b><span style="font-family:"Times New Roman","serif";mso-fareast-font-family:"Times New Roman"">FINANCIAL RESULTS - TATA CAPITAL LIMITED</span></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <table class="MsoNormalTable" style="width:448.45pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="598"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.75pt"> <td style="width:158.25pt;border-top:solid windowtext 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Particulars</span></b></p> </td> <td colspan="2" style="width:89.2pt;border-top:solid windowtext 1.0pt; border-left:solid white 1.0pt;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid white .5pt; mso-border-right-alt:solid white .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" valign="bottom" width="119"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">6 months ended Mar' 31</span></b></p> </td> <td colspan="2" style="width:97.3pt;border-top: solid windowtext 1.0pt;border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="130"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Year ended </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Mar' 31</span></b></p> </td> <td colspan="2" style="width:103.7pt;background: black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="138"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">6 months ended Sept' 30</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:16.6pt"> <td style="width:158.25pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:16.6pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Year</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; mso-border-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt;height:16.6pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:46.15pt;border:solid black 1.0pt; border-left:none;mso-border-top-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.6pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> <td style="width:50.3pt;border:solid black 1.0pt; border-left:none;mso-border-top-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.6pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:47.0pt;border:solid black 1.0pt; border-left:none;mso-border-top-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.6pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> <td style="width:56.5pt;border:solid black 1.0pt; border-left:none;mso-border-top-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.6pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2011</span></p> </td> <td style="width:47.2pt;border:solid black 1.0pt; border-left:none;mso-border-top-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.6pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2010</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:25.6pt"> <td style="width:158.25pt;border-top:solid white 1.0pt;border-left: solid windowtext 1.0pt;border-bottom:solid white 1.0pt;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-bottom-alt:solid white .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:25.6pt" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">1. Interest earned</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:25.6pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">81948</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:25.6pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">66,076</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:25.6pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">154,336</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:25.6pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">132,323</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:25.6pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">98917</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:25.6pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">72388</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:15.0pt"> <td style="width:158.25pt;border:none; border-left:solid windowtext 1.0pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">2. Other Income</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">5,082</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,945</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">8,132</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">5,603</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">5931</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">3050</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:21.75pt"> <td style="width:158.25pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:21.75pt" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">3. Total Income (1+2)</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:21.75pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">87,030</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">68,021</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">162,468</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">137,926</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">104848</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">75438</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:27.0pt"> <td style="width:158.25pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:solid white 1.0pt; border-right:none;mso-border-top-alt:solid white .5pt;mso-border-left-alt: solid windowtext .5pt;mso-border-bottom-alt:solid white .5pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">4.<span style="mso-spacerun:yes"> </span>Interest expended</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:27.0pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">53082</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">40702</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">98377</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">84245</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">65713</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">45295</span></p> </td> </tr> <tr style="mso-yfti-irow:6;height:14.25pt"> <td style="width:158.25pt;border-top:none; border-left:solid windowtext 1.0pt;border-bottom:solid windowtext 1.0pt; border-right:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:14.25pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">5.<span style="mso-spacerun:yes"> </span>Operating Expenses</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:14.25pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">20906</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">17837</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">40264</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">34508</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">24195</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">19358</span></p> </td> </tr> <tr style="mso-yfti-irow:7;height:15.0pt"> <td style="width:158.25pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">6. Total Expenditure (4+5)</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">73,988</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">58,539</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">138,641</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">118,753</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">89908</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">64653</span></p> </td> </tr> <tr style="mso-yfti-irow:8;height:15.0pt"> <td style="width:158.25pt;border-top:solid white 1.0pt; border-left:none;border-bottom:solid white 1.0pt;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">7. Operating Profit (3-6)</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">13,042</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">9,482</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">23,827</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">19,173</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">14940</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">10785</span></p> </td> </tr> <tr style="mso-yfti-irow:9;height:15.0pt"> <td style="width:158.25pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">8. Provisions & Contingencies</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">9,063</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">7,217</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">13,498</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">11,645</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">4335</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">4435</span></p> </td> </tr> <tr style="mso-yfti-irow:10;height:15.0pt"> <td style="width:158.25pt;border-top:solid white 1.0pt; border-left:none;border-bottom:solid white 1.0pt;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">9. PBT</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">3,979</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2,265</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">10,329</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">7,528</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">10605</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">6350</span></p> </td> </tr> <tr style="mso-yfti-irow:11;height:15.0pt"> <td style="width:158.25pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">10. Tax Expense</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,315</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,067</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,067</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2,397</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">3466</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1877</span></p> </td> </tr> <tr style="mso-yfti-irow:12;mso-yfti-lastrow:yes;height:18.85pt"> <td style="width:158.25pt;border:none; border-top:solid white 1.0pt;mso-border-top-alt:solid white .5pt;background: black;padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="211"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">11. Net Profit (+)/ Loss (-)<span style="mso-spacerun:yes"> </span>(9-10)</span></b></p> </td> <td style="width:43.05pt;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:18.85pt" nowrap="nowrap" valign="bottom" width="57"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2,664</span></p> </td> <td style="width:46.15pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="62"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,198</span></p> </td> <td style="width:50.3pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">7,137</span></p> </td> <td style="width:47.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">5,131</span></p> </td> <td style="width:56.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="75"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">7139</span></p> </td> <td style="width:47.2pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="63"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">4473</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <table class="MsoNormalTable" style="width:441.75pt;margin-left:4.65pt;border-collapse:collapse;mso-yfti-tbllook: 1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="0" cellpadding="0" cellspacing="0" width="589"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes;height:15.75pt"> <td style="width:162.75pt;border-top:solid windowtext 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Particulars</span></b></p> </td> <td colspan="2" style="width:135.0pt;border-top:solid windowtext 1.0pt; border-left:solid white 1.0pt;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid white .5pt; mso-border-right-alt:solid white .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:15.75pt" valign="bottom" width="180"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">6 months ended Mar' 31</span></b></p> </td> <td colspan="2" style="width:2.0in;border-top: solid windowtext 1.0pt;border-left:none;border-bottom:none;border-right:solid white 1.0pt; mso-border-top-alt:solid windowtext .5pt;mso-border-right-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.75pt" nowrap="nowrap" valign="bottom" width="192"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Year ended Mar' 31</span></b></p> </td> </tr> <tr style="mso-yfti-irow:1;height:16.6pt"> <td style="width:162.75pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:16.6pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal" align="center"><b><span style="mso-ascii-font-family: Calibri;mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:white">Year</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; mso-border-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt;height:16.6pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2009</span></p> </td> <td style="width:63.0pt;border:solid black 1.0pt; border-left:none;mso-border-top-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.6pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2008</span></p> </td> <td style="width:76.5pt;border:solid black 1.0pt; border-left:none;mso-border-top-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.6pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2009</span></p> </td> <td style="width:67.5pt;border:solid black 1.0pt; border-left:none;mso-border-top-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:16.6pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2008</span></p> </td> </tr> <tr style="mso-yfti-irow:2;height:25.6pt"> <td style="width:162.75pt;border-top:solid white 1.0pt;border-left: solid windowtext 1.0pt;border-bottom:solid white 1.0pt;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; mso-border-bottom-alt:solid white .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:25.6pt" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">1. Interest earned</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:25.6pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">53,325</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:25.6pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">15,062</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:25.6pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">85,697</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:25.6pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">17,798</span></p> </td> </tr> <tr style="mso-yfti-irow:3;height:15.0pt"> <td style="width:162.75pt;border:none; border-left:solid windowtext 1.0pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">2. Other Income</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">3,402</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">598</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">3,700</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">598</span></p> </td> </tr> <tr style="mso-yfti-irow:4;height:21.75pt"> <td style="width:162.75pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:none;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-left-alt:solid windowtext .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:21.75pt" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">3. Total Income (1+2)</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:21.75pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">56,727</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">15,660</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">89,397</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:21.75pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">18,396</span></p> </td> </tr> <tr style="mso-yfti-irow:5;height:27.0pt"> <td style="width:162.75pt;border-top:solid white 1.0pt; border-left:solid windowtext 1.0pt;border-bottom:solid white 1.0pt; border-right:none;mso-border-top-alt:solid white .5pt;mso-border-left-alt: solid windowtext .5pt;mso-border-bottom-alt:solid white .5pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">4.<span style="mso-spacerun:yes"> </span>Interest expended</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:27.0pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">42,200</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">8,655</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">60,675</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:27.0pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">9,400</span></p> </td> </tr> <tr style="mso-yfti-irow:6;height:14.25pt"> <td style="width:162.75pt;border-top:none; border-left:solid windowtext 1.0pt;border-bottom:solid windowtext 1.0pt; border-right:none;mso-border-left-alt:solid windowtext .5pt;mso-border-bottom-alt: solid windowtext .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:14.25pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">5.<span style="mso-spacerun:yes"> </span>Operating Expenses</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:14.25pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">12,715</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">6,433</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">25,510</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:14.25pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">7,956</span></p> </td> </tr> <tr style="mso-yfti-irow:7;height:15.0pt"> <td style="width:162.75pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">6. Total Expenditure (4+5)</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">54,915</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">15,088</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">86,185</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">17,356</span></p> </td> </tr> <tr style="mso-yfti-irow:8;height:15.0pt"> <td style="width:162.75pt;border-top:solid white 1.0pt; border-left:none;border-bottom:solid white 1.0pt;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">7. Operating Profit (3-6)</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,812</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">572</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">3,212</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,040</span></p> </td> </tr> <tr style="mso-yfti-irow:9;height:15.0pt"> <td style="width:162.75pt;background:black; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">8. Provisions & Contingencies</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">1,650</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">357</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">2,601</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">307</span></p> </td> </tr> <tr style="mso-yfti-irow:10;height:15.0pt"> <td style="width:162.75pt;border-top:solid white 1.0pt; border-left:none;border-bottom:solid white 1.0pt;border-right:none; mso-border-top-alt:solid white .5pt;mso-border-bottom-alt:solid white .5pt; background:black;padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">9. PBT</span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:15.0pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">162</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">215</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">611</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:15.0pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">733</span></p> </td> </tr> <tr style="mso-yfti-irow:11;mso-yfti-lastrow:yes;height:18.85pt"> <td style="width:162.75pt;border:none; mso-border-top-alt:solid white .5pt;background:black;padding:0in 5.4pt 0in 5.4pt; height:18.85pt" nowrap="nowrap" valign="bottom" width="217"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b><span style="mso-ascii-font-family:Calibri;mso-fareast-font-family: "Times New Roman";mso-hansi-font-family:Calibri;mso-bidi-font-family:Calibri; color:white">11. Net Profit (+)/ Loss (-)<span style="mso-spacerun:yes"> </span></span></b></p> </td> <td style="width:1.0in;border:solid black 1.0pt; border-top:none;mso-border-left-alt:solid black .5pt;mso-border-bottom-alt: solid black .5pt;mso-border-right-alt:solid black .5pt;padding:0in 5.4pt 0in 5.4pt; height:18.85pt" nowrap="nowrap" valign="bottom" width="96"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">175</span></p> </td> <td style="width:63.0pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="84"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">406</span></p> </td> <td style="width:76.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="102"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">474</span></p> </td> <td style="width:67.5pt;border-top:none; border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt; mso-border-bottom-alt:solid black .5pt;mso-border-right-alt:solid black .5pt; padding:0in 5.4pt 0in 5.4pt;height:18.85pt" nowrap="nowrap" valign="bottom" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt; text-align:right;line-height:normal" align="right"><span style="mso-ascii-font-family:Calibri; mso-fareast-font-family:"Times New Roman";mso-hansi-font-family:Calibri; mso-bidi-font-family:Calibri;color:black">921</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="font-family:"Times New Roman","serif"; mso-fareast-font-family:"Times New Roman""> </span></b></p> <p class="MsoNormal" 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</xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.MsoTableGrid {mso-style-name:"Table Grid"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-priority:59; mso-style-unhide:no; border:solid black 1.0pt; mso-border-themecolor:text1; mso-border-alt:solid black .5pt; mso-border-themecolor:text1; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-border-insideh:.5pt solid black; mso-border-insideh-themecolor:text1; mso-border-insidev:.5pt solid black; mso-border-insidev-themecolor:text1; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Risk – Can be quantitatively measured whereas uncertainty – can’t be measured</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Standard deviation – Total Volatility-Both Systematic and unsystematic risk,<span style="mso-spacerun:yes"> </span>Beta – Measures only <span style="mso-spacerun:yes"> </span>systematic risk</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Tracking error – </span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Professional Index construction –</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Price spread between BSE and NSE</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Volume of transaction between BSE and NSE</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Pricing asset – Construct portfolio (Market Portfolio) with systematic risk – Volatility does not matter only systematic risk.</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Need some kind of proxy –SENSEX or NIFTY</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Market beta =1</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Risk free – 91 days T-Bill (because it is always available reflecting inflation and purchasing power)</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">TAA – Tactical Asset Allocation</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">SAPM –Requires some sort of quantitative literacy.</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">CAPM is a theoretical model which does not carry any epsilon</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Applied form CAPM is single index model because error term is there incorporated.</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Like CAPM APT is theoretical model, therefore multifactor model is the applied form of APT(So error term should be in applied model)</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">We need to thoroughly understand the summary out put data and be able to interpret the data</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Three factor Model - Eugene Fama and Kenneth French (Using Micro Economic variable) </span></p> <div align="center"> <table class="MsoTableGrid" style="border-collapse:collapse;border:none;mso-border-alt:solid black .5pt; mso-border-themecolor:text1;mso-yfti-tbllook:1184;mso-padding-alt:0in 5.4pt 0in 5.4pt" border="1" cellpadding="0" cellspacing="0"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes"> <td style="width:.7in;border:solid black 1.0pt; mso-border-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">RATIOS</span></p> </td> <td style="width:49.5pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-left:none;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="66"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">VALUE STOCKS</span></p> </td> <td style="width:67.5pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-left:none;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">GROWTH STOCKS</span></p> </td> </tr> <tr style="mso-yfti-irow:1"> <td style="width:.7in;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">B/M</span></p> </td> <td style="width:49.5pt;border-top:none;border-left:none; border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="66"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">High</span></p> </td> <td style="width:67.5pt;border-top:none;border-left:none; border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">Low</span></p> </td> </tr> <tr style="mso-yfti-irow:2"> <td style="width:.7in;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">P/E</span></p> </td> <td style="width:49.5pt;border-top:none;border-left:none; border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="66"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">Low</span></p> </td> <td style="width:67.5pt;border-top:none;border-left:none; border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">High</span></p> </td> </tr> <tr style="mso-yfti-irow:3;mso-yfti-lastrow:yes"> <td style="width:.7in;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="67"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">D/P</span></p> </td> <td style="width:49.5pt;border-top:none;border-left:none; border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="66"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">High</span></p> </td> <td style="width:67.5pt;border-top:none;border-left:none; border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themecolor: text1;padding:0in 5.4pt 0in 5.4pt" valign="top" width="90"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="font-family:"Times New Roman","serif"">Low</span></p> </td> </tr> </tbody></table> </div> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif""> </span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Debt free company is good and enjoy premium in stock market</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Efficient Market Hypothesis is nothing but Random walk theory: Efficient market is information reflecting market where technical analysis will not work and speculators can not make alpha return.</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Correlation – The relationship between two variables</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Auto correlation – Relationship<span style="mso-spacerun:yes"> </span>within the variable and it can be used only in Time series data.</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Always weak form efficiency is against to Technical analysis moreover the global equity market is weak form efficient</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Expiration effect – Day and Weak</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Free float Market Capitalization<span style="mso-spacerun:yes"> </span>=<span style="mso-spacerun:yes"> </span>(Total market capitalization – Promotors Holding +QIB holding)</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">S&P CNX Nifty<span style="mso-spacerun:yes"> </span>-<span style="mso-spacerun:yes"> </span>CRISIL and NSE joint venture<span style="mso-spacerun:yes"> </span>has got license from S&P</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Coupling and decoupling effect</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">IPO and FPO </span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Investment banking</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Structured obligation – Mortgage (Reason for Sub prime mortgage)</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Securitization:</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Credit rating agencies :There are five credit rating agencies in India as follows:</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">CRISIL</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">CARE –Credit Analysis and Research Limited</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Fitch India</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">ICRA – Investment Information and Credit Rating Agency of India</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">The above mentioned agencies are rating the instruments only not the companies</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Actively Managed funds – Normal Mutual Funds</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Passively Managed Funds – Index Funds</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Exchange Traded Funds – ETFs</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Rupee cost average</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Dollar cost Average</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">ADR-GDR and IDR(Indian Depositories Reserves)</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">GDR is mainly issued in Luxemburg – London Stock Exchange</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">GARCH model is a tool to calculate daily standard deviation rather total standard deviation</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">ECB – External commercial Borrowings from ADB ,IMF and world bank</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">GDR INDEX – SK INDIA</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">INDIA VIX Published by NSE</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">CDO – Collateral Debt Obligation</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">CLO –Collateral Loan Obligation</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Testing CAPM – Fama Macbeth<span style="mso-spacerun:yes"> </span>- Time Series Regression or First Pass Regression and Second Pass regression or Cross sectional regression.</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Applicability of CAPM in any market is = E(r) – Rf = B(Rm-Rf) so the alpha return will be zero</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Bond duration </span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Convexity<span style="mso-spacerun:yes"> </span>is always positive</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Few Good Books for Fixed Income Securities:</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Fabozzi – Fixed Income Securities</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Reily </span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Suresh Sundaresan</span></p> <p class="MsoNormal" style="text-align:center" align="center"><b style="mso-bidi-font-weight: normal"><span style="font-family:"Times New Roman","serif"">STOCK SELECTION</span></b></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Key things to be considered in Stock Selection:</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Company Analysis :Selecting Value Stocks</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">P/E Ratio should be low a stock to be value stock(If nom of shares reduced then the earning will be high then the P/E will be low.</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">So P/CF can be used <span style="mso-spacerun:yes"> </span>:Here instead of Price/PAT an alternative method is Price/CF moreover stock market always consider cash flow .</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Cash flow from operating activities is good for stock analysis.</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Fund based activities & Fee based activities</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Therefore:</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">P/E<span style="mso-spacerun:yes"> </span>- P/CF(Three year average cash flow should be taken) ,Debt Free Position </span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Consistent dividend payment</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Participating share by AMC(Assety Management Company)</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">Having share in other company </span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">EV= Enterprise value (Actual Value of the Company)</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">EV=MC(Market Capitalisation)+Debt – Cash reserve</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">EV/VI</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">EV= Enterprise Value VI = Value Investment(Investment Made in other company)</span></p> <p class="MsoNormal"><span style="font-family:"Times New Roman","serif"">EV ratio should be lesser to buy the company</span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-21176030796088644572012-04-06T12:50:00.002+05:302012-04-06T12:56:13.331+05:30Security Analysis and Portfolio Management Questions<!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> 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unhidewhenused="false" qformat="true" name="Book Title"> <w:lsdexception locked="false" priority="37" name="Bibliography"> <w:lsdexception locked="false" priority="39" qformat="true" name="TOC Heading"> </w:LatentStyles> </xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} table.MsoTableGrid {mso-style-name:"Table Grid"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-priority:59; mso-style-unhide:no; border:solid black 1.0pt; mso-border-themecolor:text1; mso-border-alt:solid black .5pt; mso-border-themecolor:text1; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-border-insideh:.5pt solid black; mso-border-insideh-themecolor:text1; mso-border-insidev:.5pt solid black; mso-border-insidev-themecolor:text1; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <table class="MsoTableGrid" style="border-collapse:collapse;border:none;mso-border-alt:solid black .5pt; mso-border-thememso-yfti-tbllook:1184;mso-padding-alt:0in 5.4pt 0in 5.4ptcolor:text1;" border="1" cellpadding="0" cellspacing="0"> <tbody><tr style="mso-yfti-irow:0;mso-yfti-firstrow:yes"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.1</span></b></p> </td> <td style="width:441.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-left:none;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" >What is the difference between risk and uncertainly?</span></p> </td> </tr> <tr style="mso-yfti-irow:1"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:2"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.2</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" >Which tool can be used to calculate volatility of a stock?</span></p> </td> </tr> <tr style="mso-yfti-irow:3"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:4"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.3</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" >What is measure used by William Sharpe to estimate the sensitivity and how to estimate the sensitivity?</span></p> </td> </tr> <tr style="mso-yfti-irow:5"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:6"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.4</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" >Briefly explain the term tracking error and estimating technique?</span></p> </td> </tr> <tr style="mso-yfti-irow:7"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:8"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.5</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" >Why the NSE data is more valid rather BSE?</span></p> </td> </tr> <tr style="mso-yfti-irow:9"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:10"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.6</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" >Define the price spread between NSE and BSE?</span></p> </td> </tr> <tr style="mso-yfti-irow:11"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:12"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.7</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" >What is the proxy required to estimate the asset price?</span></p> </td> </tr> <tr style="mso-yfti-irow:13"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:14"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.8</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is the value of market beta?</span></p> </td> </tr> <tr style="mso-yfti-irow:15"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:16"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.9</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is risk free return?</span></p> </td> </tr> <tr style="mso-yfti-irow:17"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:18"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.10</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Why 91 days T-bill is used as bench mark risk free return?</span></p> </td> </tr> <tr style="mso-yfti-irow:19"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:20"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q11</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Write the expansion of TAA</span></p> </td> </tr> <tr style="mso-yfti-irow:21"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:22"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q12</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is applied form CAPM model and explain why?</span></p> </td> </tr> <tr style="mso-yfti-irow:23"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:24"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.13</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Write a short note on residual risk.</span></p> </td> </tr> <tr style="mso-yfti-irow:25"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:26"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q14</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is the limitation of Markowitz Portfolio risk estimation?</span></p> </td> </tr> <tr style="mso-yfti-irow:27"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:28"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.15</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is the contribution of Stephen Ross ?</span></p> </td> </tr> <tr style="mso-yfti-irow:29"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:30"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.16</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Give the applied form of APT model?</span></p> </td> </tr> <tr style="mso-yfti-irow:31"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:32"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.17</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Explain the difference between theoretical odel and applied model.</span></p> </td> </tr> <tr style="mso-yfti-irow:33"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:34"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.18</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Explain the difference between single index model and CAPM model?</span></p> </td> </tr> <tr style="mso-yfti-irow:35"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:36"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.19</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Who were the scholars published paper on three factor model using micro economic variable?</span></p> </td> </tr> <tr style="mso-yfti-irow:37"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:38"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.20</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is actually predicted by measure R2</span></p> </td> </tr> <tr style="mso-yfti-irow:39"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:40"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.21</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Using Graham and Piotroski models what analysis could be done?</span></p> </td> </tr> <tr style="mso-yfti-irow:41"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:42"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.22</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Efficient Market Hypothesis is nothing but Random Walk – Why</span></p> </td> </tr> <tr style="mso-yfti-irow:43"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:44"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.23</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is the role of correlation in SAPM?</span></p> </td> </tr> <tr style="mso-yfti-irow:45"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:46"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.24</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is the superiority of auto correlation? </span></p> </td> </tr> <tr style="mso-yfti-irow:47"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:48"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.25</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What kind of data it should be to use autocorrelation?</span></p> </td> </tr> <tr style="mso-yfti-irow:49"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:50"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.26</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Expand CRISIL</span></p> </td> </tr> <tr style="mso-yfti-irow:51"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:52"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.27</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Expand CARE</span></p> </td> </tr> <tr style="mso-yfti-irow:53"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:54"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.28</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Expand ICRA</span></p> </td> </tr> <tr style="mso-yfti-irow:55"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:56"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.29</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >How many credit rating agencies as of now operating in India?</span></p> </td> </tr> <tr style="mso-yfti-irow:57"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:58"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.30 </span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is actually rated by those agencies in terms of companies?</span></p> </td> </tr> <tr style="mso-yfti-irow:59"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:60"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.31</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Explain the term free float capitalization.</span></p> </td> </tr> <tr style="mso-yfti-irow:61"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:62"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.32</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Briefly explain the term securitization.</span></p> </td> </tr> <tr style="mso-yfti-irow:63"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:64"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.33</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Why the NSE index is called S&P<span style="mso-spacerun:yes"> </span>CNX Nifty?</span></p> </td> </tr> <tr style="mso-yfti-irow:65"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:66"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.34</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >State any four reasons for NSE being superior than BSE</span></p> </td> </tr> <tr style="mso-yfti-irow:67"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:68"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.35</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Can you say price difference which is charged by the investment bank between IPO and FPO?</span></p> </td> </tr> <tr style="mso-yfti-irow:69"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:70"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.36</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Explain the difference between actively and passively managed funds?</span></p> </td> </tr> <tr style="mso-yfti-irow:71"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:72"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.37</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What do you mean by the term rupee cost average?</span></p> </td> </tr> <tr style="mso-yfti-irow:73"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:74"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.38</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Why the tool covariance is used in beta estmation?What does actually the covariance perform?</span></p> </td> </tr> <tr style="mso-yfti-irow:75"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:76"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.39</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is the utility of GARCH model in portfolio research?</span></p> </td> </tr> <tr style="mso-yfti-irow:77"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:78"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.40</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Which is the popular market for GDR issue?</span></p> </td> </tr> <tr style="mso-yfti-irow:79"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:80"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.41</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >State any three financial institutions from which companies are getting ECBs.</span></p> </td> </tr> <tr style="mso-yfti-irow:81"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:82"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.42</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >The applicability of CAPM in any market is proved that the Alpha return is zero. Explain the same with equation.</span></p> </td> </tr> <tr style="mso-yfti-irow:83"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:84"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.43</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Why duration is most significant in bond price volatility?</span></p> </td> </tr> <tr style="mso-yfti-irow:85"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:86"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.44</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >How can you overcome the limitations of modified duration?</span></p> </td> </tr> <tr style="mso-yfti-irow:87"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:88"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.45</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >P/E ratio a popular ratio in company analysis has got its own limitation. Comment</span></p> </td> </tr> <tr style="mso-yfti-irow:89"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:90"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.46</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Which measure is popularly used in stock market instead the P/E ratio?</span></p> </td> </tr> <tr style="mso-yfti-irow:91"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:92"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.47</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Explain the difference between fund based activities and fee based activities in banking companies.</span></p> </td> </tr> <tr style="mso-yfti-irow:93"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:94"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.48</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What are the key indicators that Warren Buffet uses to select value stocks?</span></p> </td> </tr> <tr style="mso-yfti-irow:95"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >`</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:96"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.49</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is enterprise value, how to estimate it?</span></p> </td> </tr> <tr style="mso-yfti-irow:97"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:98"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.50</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Why Sharpe’s performance measure is better than Treyner’s?</span></p> </td> </tr> <tr style="mso-yfti-irow:99"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:100"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.51</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >Explain the Jensen’s Alpha measure with equation and how it is used in semi strong form efficiency testing</span></p> </td> </tr> <tr style="mso-yfti-irow:101"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:102"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" >Q.52</span></b></p> </td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" >What is special application of M</span><sup>2</sup><span style="Times New Roman","serif"font-family:";" > model in performance appraisal?</span></p> </td> </tr> <tr style="mso-yfti-irow:103"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> <tr style="mso-yfti-irow:104;mso-yfti-lastrow:yes"> <td style="width:36.9pt;border:solid black 1.0pt; mso-border-themecolor:text1;border-top:none;mso-border-top-alt:solid black .5pt; mso-border-top-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="49"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;line-height: normal"><b style="mso-bidi-font-weight:normal"><span style="Times New Roman","serif"font-family:";" > </span></b></p> <br /></td> <td style="width:441.9pt;border-top:none;border-left: none;border-bottom:solid black 1.0pt;mso-border-bottom-themecolor:text1; border-right:solid black 1.0pt;mso-border-right-themecolor:text1;mso-border-top-alt: solid black .5pt;mso-border-top-themecolor:text1;mso-border-left-alt:solid black .5pt; mso-border-left-themecolor:text1;mso-border-alt:solid black .5pt;mso-border-themepadding:0in 5.4pt 0in 5.4ptcolor:text1;" valign="top" width="589"> <p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;text-justify:inter-ideograph;line-height:normal"><span style="Times New Roman","serif"font-family:";" > </span></p> <br /></td> </tr> </tbody></table>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-32917751401390241672011-01-23T15:25:00.001+05:302011-01-23T15:25:46.664+05:30Mutual Funds<!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> <w:donotpromoteqf/> <w:lidthemeother>EN-US</w:LidThemeOther> <w:lidthemeasian>X-NONE</w:LidThemeAsian> <w:lidthemecomplexscript>X-NONE</w:LidThemeComplexScript> <w:compatibility> <w:breakwrappedtables/> <w:snaptogridincell/> <w:wraptextwithpunct/> <w:useasianbreakrules/> <w:dontgrowautofit/> <w:splitpgbreakandparamark/> <w:dontvertaligncellwithsp/> <w:dontbreakconstrainedforcedtables/> 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!mso]><object classid="clsid:38481807-CA0E-42D2-BF39-B33AF135CC4D" id="ieooui"></object> <style> st1\:*{behavior:url(#ieooui) } </style> <![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal"><b style=""><u><span style="font-size: 14pt;">MUTUAL FUNDS</span></u></b></p> <p style="text-align: justify; line-height: 150%;"><strong><span style="font-weight: normal;">Mutual Fund</span></strong> is an <strong><span style="font-weight: normal;">investment company</span></strong> that pools money from shareholders / unitholders and invests in a variety of <strong><span style="font-weight: normal;">securities, such as stocks, bonds and money market instruments</span></strong>. Most open-end <strong><span style="font-weight: normal;">mutual funds</span></strong> stand ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund's investment portfolio at the time of redemption. Most open-end <strong><span style="font-weight: normal;">mutual funds</span></strong> continuously offer new shares also to investors. </p> <p style="text-align: justify; line-height: 150%;">In Simple Words, <strong><span style="font-weight: normal;">Mutual fund</span></strong> is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. </p> <p style="text-align: justify; line-height: 150%;">Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. <strong><span style="font-weight: normal;">Mutual fund issues units</span></strong> to the investors in accordance with quantum of money invested by them. <strong><span style="font-weight: normal;">Investors of mutual funds are known as unitholders</span></strong>. </p> <p style="text-align: justify; line-height: 150%;">The profits or losses are shared by the investors in <strong><span style="font-weight: normal;">proportion to their investments</span></strong>. The <strong><span style="font-weight: normal;">mutual funds</span></strong> normally come out with a number of schemes with different investment objectives which are launched from time to time. In India, a <strong><span style="font-weight: normal;">mutual fund </span></strong>is required to be registered with Securities and Exchange Board of India (SEBI), which regulates securities markets, <strong><span style="font-weight: normal;">before it can collect funds from the public</span></strong>. </p> <p style="text-align: justify; line-height: 150%;"><em>In Short, a </em><strong><i><span style="font-weight: normal;">mutual fund</span></i></strong><em> is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an </em><strong><i><span style="font-weight: normal;">equity fund</span></i></strong><em> would invest equity and equity related instruments and a </em><strong><i><span style="font-weight: normal;">debt fund </span></i></strong><em>would invest in bonds, debentures, gilts etc</em>. </p> <h3 style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-size: 12pt; line-height: 150%;">Sponsor:</span></h3> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><em>A sponsor is an entity responsible for laying the foundation stone of a fund</em>. In real sense, it puts in the seed money in fund’s set up. Any registered company, a scheduled bank or financial institution can act as sponsor. As per <a href="http://www.sebi.gov.in/" target="_blank" title="SEBI">SEBI</a> norms it <em>must possess a prerequisite and good financial record in past</em>. AMC and custodian are appointed by sponsor but once<strong> </strong><strong><span style="font-weight: normal;">AMC</span></strong> is constituted, sponsor is just the stakeholder of fund and is not liable for making up any operational losses of the fund. For example, SBI is the sponsor of SBI Mutual Fund.</p> <h3 style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-size: 12pt; line-height: 150%;"> </span></h3> <h3 style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-size: 12pt; line-height: 150%;">Board of trustees:</span></h3> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><a href="http://www.sharemarketbasics.com/Mutual-Funds/Mutual-Funds-Beginners-Choice.htm" target="_blank" title="Mutual Funds India ">Mutual funds in India</a> are constituted as trusts and have a board of trustees to run the fund. <strong><span style="font-weight: normal;">AMC</span></strong> is a third party appointed by trustees for managing the money but the real power lies with the trust that is accountable for investor’s money held in the fund. They can even sack the AMC if it is found doing unethical practices or underperforming.</p> <h3 style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-size: 12pt; line-height: 150%;"> </span></h3> <h3 style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-size: 12pt; line-height: 150%;">Custodian:</span></h3> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">It is an <em>independent entity appointed for holding and safekeeping of the fund’s assets</em>. As the portfolio of securities for a mutual fund is so big, they need a third party for receipt, delivery of securities and keeping an account of the same. Most of the funds use banks as their custodians but one bank can act as <strong><span style="font-weight: normal;">custodian of multiple funds</span></strong>. On a broader side, when instead of common public, bigger players like FIIs are the investors, the concept of domestic and global custodian comes into picture.</p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong>AMC: </strong><br /><strong><span style="font-weight: normal;">Asset Management Company</span></strong> (AMC) can be considered as the heart of any fund. It manages the investments you have made. At the core are <strong><span style="font-weight: normal;">fund managers or portfolio managers</span></strong><b style=""> </b>taking investment decisions on your behalf. They have access to critical market data that helps them analyze the market conditions and explore investing opportunity to meet their financial objectives. In addition, it is responsible for maintaining a record of pricing and accounting data. It also <b style=""><a href="http://www.sharemarketbasics.com/NET-ASSET-VALUE.htm" target="_blank" title="Net Asset Value NAV"><strong><span style="color: windowtext; font-weight: normal; text-decoration: none;">calculates NAV</span></strong></a></b> of the fund that is mandated by SEBI to be disclosed publicly on daily basis. The fund charges investors a fee, called management fees for the services offered by AMC.</p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong><span style="font-weight: normal;"> </span></strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong><span style="font-weight: normal;">The ultimate aim of any fund is the benefit to investors and SEBI is keeping an eye on above entities to ensure compliance of rules and regulations set for the investor’s benefit</span></strong><b style="">. </b>The fund regulations in India are considered the best in the world and one major<b style=""> </b>strength lies in well coordinated structure with defined roles of sponsor, trustee, AMC that tend to protect investor’s from risk of default.</p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"> </p> <p class="MsoNormal"> </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong>8.1 History of Mutual Funds in India</strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong><span style="font-weight: normal;"> </span></strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong><span style="font-weight: normal;">Unit Trust of India (UTI)</span></strong><b style=""> w</b>as the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up <strong><span style="font-weight: normal;">mutual funds</span></strong><b style="">.</b> </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"> </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">In the year 1992, <strong><span style="font-weight: normal;">Securities and exchange Board of India (SEBI) Act</span></strong><b style=""> </b>was passed. The objectives of SEBI are – to protect the interest of investors in securities and to promote the development of and to regulate the securities market.</p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"> </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Funds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial bills accepted/co-accepted by banks, certificates of deposit and dated government securities having unexpired maturity of upto one year.</p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"> </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI issues guidelines to the mutual funds from time to time to protect the interests of investors. </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">All <strong><span style="font-weight: normal;">mutual funds,</span></strong> whether promoted by public sector or private sector entities including those promoted by foreign entities, are <strong><span style="font-weight: normal;">governed by the same set of Regulations</span></strong>. There is no distinction in regulatory requirements for these <strong><span style="font-weight: normal;">mutual funds</span></strong> and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"> </p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><b style=""><u>8.2 Types of Mutual Funds</u></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><strong> </strong></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><strong>a) Schemes according to Maturity Period: </strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">A mutual fund scheme can be classified into <strong>open-ended</strong> scheme or <strong>close-ended </strong>scheme depending on its maturity period. </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong>(i) Open-ended Fund </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;">An <strong><span style="font-weight: normal;">open-ended Mutual fund</span></strong> is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a <strong><span style="font-weight: normal;">fixed maturity period</span></strong><b style="">. </b>Investors can conveniently buy and sell units at <strong><span style="font-weight: normal;">Net Asset Value (NAV)</span></strong><b style=""> </b>related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity. </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong>(ii) Close-ended Fund</strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;">A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor, i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong>b) Schemes according to Investment Objective: </strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows: </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong>(i) Growth / Equity Oriented Scheme </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;">The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong>(ii) Income / Debt Oriented Scheme </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;">The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong>(iii) Balanced Fund </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;">The aim of balanced funds is to provide both growth and regular income, as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong>(iv) Money Market or Liquid Fund </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;">These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong>(v) Gilt Fund </strong></p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;">These funds invest exclusively in government securities. Government securities have negligible or nil default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong> </strong></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"> </p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><b style="">c) Other schemes</b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"> </p> <p style="margin: 0in 0in 0.0001pt 0.25in; text-align: justify; line-height: 150%;"><strong>(i) Index Funds </strong></p> <p class="MsoNormal" style="margin-left: 0.25in; text-align: justify; line-height: 150%;">Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weightage composition of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. </p> <p class="MsoNormal" style="margin-left: 0.25in; text-align: justify; line-height: 150%;"><b style="">(ii) Tax Saving Schemes</b></p> <p class="MsoNormal" style="margin-left: 0.25in; text-align: justify; line-height: 150%;">In India, Tax Saving Schemes schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues, for e.g. <strong><span style="font-weight: normal;">Equity Linked Savings Schemes (ELSS).</span></strong></p> <p class="MsoNormal" style="margin-left: 0.25in; text-align: justify; line-height: 150%;"><strong><span style="font-weight: normal;"> </span></strong></p> <p class="MsoNormal" style="margin-left: 0.25in; text-align: justify; line-height: 150%;"><strong>(iii) Sector Specific Schemes</strong><strong><span style="font-weight: normal;"></span></strong></p> <p class="MsoNormal" style="margin-left: 0.25in; text-align: justify; line-height: 150%;"><strong><span style="font-weight: normal;">These have caught the fancy of investors in the recent times. These schemes invest only in stocks of a particular sector alone, for example, Banking, Pharmaceuticals, Infrastructure etc. </span></strong></p> <p class="MsoNormal" style="margin-left: 0.25in; text-align: justify; line-height: 150%;"> </p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"> </p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"> </p> <h1 style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><u><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif";">8.3 What is NET ASSET VALUE ?</span></u></h1> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">The Term <strong><span style="font-weight: normal;">Net Asset Value (NAV)</span></strong> is used by investment companies to measure <strong><span style="font-weight: normal;">net assets</span></strong>. It is calculated by subtracting liabilities from the value of a fund's securities and other items of value and dividing this by the number of outstanding shares. <strong><span style="font-weight: normal;">Net asset value</span></strong> is popularly used in newspaper mutual fund tables to designate the price per share for the fund.</p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"> </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">The value of a collective investment fund based on the market price of securities held in its portfolio is first calculated. Units in open ended funds are valued using this measure. Closed ended investment trusts have a net asset value but have a separate market value (if listed on stock exchange). Such closed ended Schemes can trade at <strong><span style="font-weight: normal;">net asset value</span></strong> or their price can be at a premium or discount to <strong><span style="font-weight: normal;">NAV</span>.</strong> <strong><span style="font-weight: normal;">NAV </span></strong>is calculated each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding.</p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong> </strong></p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"><strong>Calculating NAVs</strong> - Calculating mutual fund <strong><span style="font-weight: normal;">net asset values</span></strong> is easy. The current market value of the fund's net assets (securities held by the fund minus any liabilities) is found and then divided by the number of units outstanding. So if a fund had net assets of Rs.50 lakh and there are one lakh units of the fund, then the price per unit (or <strong>NAV</strong>) is Rs.50.00.</p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;"> </p> <p style="margin: 0in 0in 0.0001pt; text-align: justify; line-height: 150%;">The NAV has significance, apart from knowing one’s value of investment at a particular time. The AMC fixes the sale and repurchase price of open-ended schemes at NAV (or around it, in case of entry / exit load is applicable).</p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"> </p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"> </p> <p class="MsoNormal"> </p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com1tag:blogger.com,1999:blog-2800879689759110049.post-18197376266190909412011-01-23T15:21:00.000+05:302011-01-23T15:22:13.750+05:30Factoring<!--[if !mso]> <style> v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} </style> <![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves>false</w:TrackMoves> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> 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priority="37" name="Bibliography"> <w:lsdexception locked="false" priority="39" qformat="true" name="TOC Heading"> </w:LatentStyles> </xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">What is factoring?</span></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoNormal"><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Factoring is a service that covers the financing and collection of account receivables in domestic and international trade</span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">.<span class="apple-style-span"><span style="color: black;"> It is a cash management tool for companies where long receivables are a part of business cycle.</span></span> It is the conversion of credit sales into cash.</span></p> <p class="MsoNormal"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"><span style=""> </span>In factoring, a financial institution (factor) buys the accounts receivable of a company (Client) and pays up to 80% of the amount immediately on agreement. Factoring company pays the remaining amount (Balance 20%-finance cost-operating cost) to the client when the customer pays the debt. Collection of debt from the customer is done either by the factor or the client depending upon the type of factoring. The account receivable in factoring can either be for a product or service. </span></p> <p class="MsoNormal"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Examples are factoring against goods purchased, factoring for construction services (usually for government contracts), factoring against medical insurance etc. Let us see how factoring is done against an invoice of goods purchased.</span></p> <p class="MsoNormal"><span style="font-family: "Times New Roman","serif";"><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="http://www.languages.ind.in/factoring_files/image001.gif" height="388" width="606" /></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoNormal"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Characteristics of factoring</span></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <ol style="margin-top: 0in;" start="1" type="1"><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Usually period for factoring is 90 to 150 days. Sometimes more than 150 days.</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Costly source of finance compared to other sources of short term borrowings.</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Credit worthiness is evaluated based on financial strength of customer (debtor). Therefore ideal for new and emerging firms without strong financials.</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Bad debts are considered for factoring.</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Credit rating is not mandatory. But factoring companies usually carries out credit risk analysis before entering into agreement.</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Method of off balance sheet financing.</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Cost of factoring=finance cost + operating cost. Factoring cost depends on transaction size, financial strength of the customer etc. varies from 1.5% to 3% per month depending upon the financial strength of client's customer.</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Indian firms offer factoring for invoices as low as 1000Rs</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">For delayed payments beyond the approved credit period, penal charge of around 1-2% per month over and above normal cost is charged.</span></li></ol> <p class="MsoNormal" style="margin-left: 0.5in;"><b style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN"><span style=""> </span>How is factoring different from a bank loan?</span></b></p> <p class="MsoListParagraphCxSpFirst" style="text-indent: -0.25in;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"><span style="">1.<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Credit decision in factoring is based on receivables rather than other factors like how long the company has been in business, working capital and personal credit score. </span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent: -0.25in;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"><span style="">2.<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Factoring is not a loan; it is the purchase of financial asset. </span></p> <p class="MsoListParagraphCxSpLast" style="text-indent: -0.25in;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"><span style="">3.<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Bank loan involves two parties whereas factoring involves three-buyer, exporter and factor.</span></p> <p class="MsoNormal"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">**There is some misconception regarding factoring like people believe factors are a lender of last resort but that is not true because exporters seeking out factoring are often in the beginning stages of growth. At first glance, factoring appears to be expensive but does a lot more; in essence, factoring replaces the accounts receivables and credit department.</span></p> <p class="MsoNormal"><b><i><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Advantages</span></i></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <ul style="margin-top: 0in;" type="disc"><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">turns receivables instantly into cash</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">provides credit protection for receivables</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">helps meet increasing sales demand and expand</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Saves time as invoice financing company collects money itself</span></li></ul> <p class="MsoNormal"><b><i><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Disadvantages</span></i></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <ul style="margin-top: 0in;" type="disc"><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">may lead to ruined relations with customers if factor engages in aggressive or unprofessional practices when collecting accounts.</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">cost involved in factoring agreement may be more than cost of other methods of financing </span></li></ul> <p class="MsoNormal"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Different types of Factoring</span></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <ol style="margin-top: 0in;" start="1" type="1"><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Disclosed and Undisclosed</span></li><li class="MsoNormal" style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Recourse and Non recourse</span></li></ol> <p class="MsoNormal"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">A single factoring company may not offer all these services.</span></p> <p class="MsoNormal"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Disclosed</span></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoNormal" style="margin-left: 0.25in; text-indent: -0.25in; line-height: normal;"><span style="font-size: 10pt; font-family: "Courier New";"><span style="">o<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Client's customers are notified of factoring agreement. Can either be recourse or non recourse.</span><span lang="EN-IN"> </span><span style="font-size: 12pt; font-family: "Times New Roman","serif";"></span></p> <p class="MsoNormal" style="margin-left: 0.25in; text-indent: -0.25in; line-height: normal;"><span style="font-size: 10pt; font-family: "Courier New";"><span style="">o<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">factor may or may not be responsible for the collection of debts depending on whether it is recourse or non recourse.</span><span style="font-size: 12pt; font-family: "Times New Roman","serif";"></span></p> <p class="MsoNormal"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Undisclosed</span></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoNormal"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">client's customers are not notified of the factoring arrangement. Sales ledger administration and collection of debts are undertaken by client himself. Client has to pay the amount to the factor irrespective of whether customer has paid or not. </span></p> <p class="MsoNormal"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Recourse </span></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoNormal"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">client undertakes to collect debts from customer. If customer dosent pay amount on maturity, factor will recover it from client. Offered at lower interest rate since risk by factor is low. Balance amount is paid to client when customer pays factor.</span></p> <p class="MsoNormal"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Non recourse</span></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoNormal"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">factor undertakes to collect debts from customer. Balance amount is paid to client at the end of credit period or when the customer pays factor whichever comes first. advantage is that continuous factoring will eliminate need for credit and collection departments.</span></p> <p class="MsoNormal"><u><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Factoring companies in India</span></u><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpFirst" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Canbank Factors Limited</span><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">SBI Factors and Commercial Services Pvt. Ltd</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">The Hongkong and Shanghai Banking Corporation Ltd</span><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Foremost Factors Limited</span><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Global Trade Finance Limited</span><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Export Credit Guarantee Corporation of India Ltd</span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Citibank NA, India</span><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Small Industries Development Bank of India (SIDBI)</span><span style="font-family: "Times New Roman","serif";" lang="EN-IN"></span></p> <p class="MsoListParagraphCxSpLast" style="text-indent: -0.25in;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Standard Chartered Bank</span><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoNormal"><b style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">What is forfeiting?</span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">The forfeiting owes its origin to a French term ‘a forfait’ which means to forfeit (or surrender) ones’ rights on something to someone else. It <span style=""> </span>is a mechanism of financing exports:</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">a. by discounting export receivables</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">b. evidenced by bills of exchanges or promissory notes</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">c. without recourse to seller (viz; exporter)</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">d. carrying medium to long-term maturities</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">e. on a fixed rate basis upto 100% of contract value.</span></p> <p class="MsoNoSpacing"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">In other words, it is trade finance extended by a forfaiter to an exporter seller for an export/sale transaction involving deferred payment terms over a long period at a firm rate of discount. Forfaiting is generally extended for export of capital goods, commodities and services where importer insists on supplies on credit terms. Recourse to forfaiting usually takes place where the credit is for long date maturities and there is no prohibition for extending the facility where the credits are maturing in periods less than one year.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Parties to Forfaiting</span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">There are five parties in a transaction of forfaiting. </span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">i. Exporter</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">ii. Importer</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">iii. Exporter’s bank</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">iv. Importer’s bank</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">v. The forfaiter.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Mechanism</span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">1. exporter and importer negotiate proposed export sale contract. Then exporter approaches forfaiter to ascertain terms of forfaiting.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">forfaiter collects details about importer, supply and credit terms, documentation etc.</span></p> <p class="MsoNoSpacing" style="margin-left: 0.5in; text-indent: -0.25in; line-height: 115%;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">ascertains country and credit risk involved.</span></p> <p class="MsoNoSpacing" style="margin-left: 0.5in; text-indent: -0.25in; line-height: 115%;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">quotes discount rate.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">5. exporter then quotes a contract price to overseas buyer by loading discount rate, commitment fee etc. On the sale price of goods to be exported.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">6. exporter and forfaiter sign a contract.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">7. Export takes place against documents guaranteed by importer’s bank.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">8. exporter discounts bill with forfaiter and latter presents the same to importer for payment on due date or even sell it in secondary market.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Documentation</span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">1. Forfaiting transaction is usually covered either by a promissory note or bills of exchange & are guaranteed by a bank.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">3. Bills of exchange may be ‘availed by’ importer’s bank. ‘Aval’ is an endorsement made on bills of exchange or promissory note by the guaranteeing bank by writing ‘per aval’ on these documents under proper authentication.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Costs of forfaiting</span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">1. Commitment fee, payable by exporter to forfeiter ‘for latter’s’ commitment to execute a specific forfeiting transaction at a firm discount rate with in a specified time.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">2. Discount fee, interest payable by exporter for entire period of credit involved and deducted by forfaiter from amount paid to exporter against availised promissory notes or bills of exchange.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">3. Documentation fee.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Benefits of forfaiting</span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">1. frees exporter from political or commercial risks from abroad.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">2. offers ‘without recourse’ finance to an exporter. does not effect exporter’s borrowing limits/capacity.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">3. relieves exporter from botheration of credit administration and collection problems.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">4. Forfaiting is specific to a transaction. It does not require long term banking relationship with forfaiter.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">5. Exporter saves money on insurance costs because forfeiting eliminates need for export credit insurance.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Advantages</span></b></p> <p class="MsoNoSpacing" style="margin-left: 0.5in; text-indent: -0.25in; line-height: 115%;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Firms resorting to factoring have added attraction of ready source of short-term funds. This improves cash flow and is invaluable as it leads to a higher level of activity resulting in increased profitability.</span></p> <p class="MsoNoSpacing" style="margin-left: 0.5in; text-indent: -0.25in; line-height: 115%;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">By offloading the sales accounting and administration, management has more time for planning, running and improving the business, and exploiting opportunities, The reduction in overheads brought about by factor’s administration of sales ledger result in interest savings and contribute towards cost savings.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Disadvantages</span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="margin-left: 0.5in; text-indent: -0.25in; line-height: 115%;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">costlier to in-house management of receivables, specially for large firms which have access to similar sources of funds as the factors themselves and which on account of their size have well organised credit and receivable management.</span></p> <p class="MsoNoSpacing" style="margin-left: 0.5in; text-indent: -0.25in; line-height: 115%;"><span style="font-family: Symbol;" lang="EN-IN"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">perceived as an expensive form of financing and also as finance of the last resort. This tends to have a deleterious effect on the creditworthiness of the company in the market.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b style=""><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Major players in India</span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><b><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></b></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">The first factoring company was started by the SBI in 1991 namely Factors and Commercial Ltd. (SBI FACS) followed by Canara Bank and PNB, setting the subsidiaries for the purpose. While the SBI would provide such services in the Western region, the RBI has permitted the Canara Bank and PNB to concentrate on the Southern and Northern regions of the country, for providing such services for the customers. The major players since 1991 are Canbank Factors, SBI Factors and later Foremost Factors. The new entrants in the market include ICICI, HSBC and Global Trade Finance. Canback Factors leads in the domestic market with about 65%-70% of the share.</span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN"> </span></p> <p class="MsoNoSpacing" style="line-height: 115%;"><span style="font-family: "Times New Roman","serif";" lang="EN-IN">The factoring service has not developed to any significant extent in India.</span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com10tag:blogger.com,1999:blog-2800879689759110049.post-7795643007539343452011-01-23T15:20:00.000+05:302011-01-23T15:21:09.691+05:30Bill Discounting<!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> 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</w:LatentStyles> </xml><![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal">Bill discounting as a fund-based activity emerged as a profitable business in the early nineties – However post scam its importance has declined (restrictions by RBI)</p> <p class="MsoNormal"><b style="">DEF</b></p> <p class="MsoNormal">Bank takes the bill drawn by borrower on his(borrower's) customer and pay him immediately deducting some amount as discount/commission. The Bank then presents the Bill to the borrower's customer on the due date of the Bill and collect the total amount. If the bill is delayed, the borrower or his customer pay the Bank a pre-determined interest depending upon the terms of transaction.</p> <p class="MsoNormal"><b style="">TYPES OF BILLS</b></p> <p class="MsoNormal"><b style="">Demand Bill: </b>Payable immediately “at sight” or “on presentment” to the drawee. Bill on which no “due date” is specified is also termed as a demand bill.<span style=""> </span></p> <p class="MsoNormal"><b style="">Usance Bill: </b>(time Bill) - Bill of exchange drawn on a term governed by the usage in that trade. Usance refers to the time period recognized by custom or usage for payment of bills.</p> <p class="MsoNormal"><b style="">Documentary Bills:</b> B/Es that are accompanied by documents that confirm that a trade has taken place. documents include the invoices and other documents of title such as railway receipts, lorry receipts and bills of lading.</p> <p class="MsoNormal">Further classified as: </p> <p class="MsoListParagraphCxSpFirst" style="margin-left: 0.75in; text-indent: -0.5in;"><span style=""><span style="">(i)<span style="font: 7pt "Times New Roman";"> </span></span></span>Documents against acceptance (D/A) bills - documentary<span style=""> </span>evidence<span style=""> </span>accompanying<span style=""> </span>B/E is deliverable<span style=""> </span>against<span style=""> </span>acceptance<span style=""> </span>by<span style=""> </span>drawee.</p> <p class="MsoListParagraphCxSpLast" style="margin-left: 0.75in; text-indent: -0.5in;"><span style=""><span style="">(ii)<span style="font: 7pt "Times New Roman";"> </span></span></span>Documents against payment (D/P) bills - In case a bill<span style=""> </span>is a “documents against payment” bill and has been accepted by the drawee,<span style=""> </span>documents<span style=""> </span>of<span style=""> </span>title<span style=""> </span>will<span style=""> </span>be<span style=""> </span>held<span style=""> </span>by<span style=""> </span>bank<span style=""> </span>till maturity of B/E.</p> <p class="MsoNormal"><b style="">Clean Bills:</b> not accompanied by any documents that show that a trade has taken place. Thus interest rate charged on such bills is higher than rate charged on documentary bills.</p> <p class="MsoListParagraph" style="text-indent: -0.25in;"><span style="font-family: Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><b style="">CREATION OF A B/E:</b></p> <p class="MsoNormal">Suppose a seller sells goods to a buyer. In most cases, the seller would like to purchase on credit. To solve<span style=""> </span>this problem,<span style=""> </span>the seller draws a B/E of a given maturity on<span style=""> </span>the<span style=""> </span>buyer.</p> <p class="MsoNormal">Seller (creditor) ---Drawer of bill</p> <p class="MsoNormal">Buyer(debtor)----Drawee.</p> <p class="MsoNormal">seller<span style=""> </span>then sends the bill<span style=""> </span>to the buyer who acknowledges his responsibility<span style=""> </span>for<span style=""> </span>the payment of<span style=""> </span>the amount by writing his acceptance on<span style=""> </span>the bill.</p> <p class="MsoNormal"> </p> <p class="MsoListParagraph" style="text-indent: -0.25in;"><span style="font-family: Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><b style="">DISCOUNTING OF A B/E:</b></p> <p class="MsoNormal">The seller, who is the holder of an accepted B/E has two options:</p> <p class="MsoNormal">1. Hold on to the B/E till maturity and then take the payment from the buyer. </p> <p class="MsoNormal">2. Discount the B/E with a discounting agency. (more attractive)</p> <p class="MsoNormal">The seller can take over<span style=""> </span>the accepted B/E<span style=""> </span>to a discounting agency<span style=""> </span>and obtain ready cash. </p> <p class="MsoNormal">(known as discounting the B/E) </p> <p class="MsoNormal">The margin between<span style=""> </span>the<span style=""> </span>ready money paid and the<span style=""> </span>face<span style=""> </span>value<span style=""> </span>of<span style=""> </span>the<span style=""> </span>bill<span style=""> </span>is<span style=""> </span>called<span style=""> </span>the<span style=""> </span>discount<span style=""> </span>and<span style=""> </span>is<span style=""> </span>calculated<span style=""> </span>at<span style=""> </span>a<span style=""> </span>rate<span style=""> </span>percentage<span style=""> </span>per annum on the maturity value.<span style=""> </span></p> <p class="MsoNormal">The maturity a B/E is defined as the date on which payment will fall due.</p> <p class="MsoListParagraph" style="text-indent: -0.25in;"><span style="font-family: Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><b style="">TYPES OF BILL DISCOUNTING:</b></p> <p class="MsoNormal">Bills discounting is of two types </p> <p class="MsoNormal">1. Purchase bills discounting - investor<span style=""> </span>discounts<span style=""> </span>the<span style=""> </span>purchase<span style=""> </span>bill<span style=""> </span>of<span style=""> </span>the company and pays the company, who<span style=""> </span>in turn pay their supplier. investor gets his money back from the company at the end of the discounting period.</p> <p class="MsoNormal">2. Sales bill discounting - investor discounts the sales bill of the company and pays directly to the<span style=""> </span>company. The<span style=""> </span>investor<span style=""> </span>gets<span style=""> </span>his<span style=""> </span>return<span style=""> </span>from<span style=""> </span>the<span style=""> </span>company<span style=""> </span>at<span style=""> </span>the<span style=""> </span>end<span style=""> </span>of<span style=""> </span>the discounting period.</p> <p class="MsoListParagraph" style="text-indent: -0.25in;"><span style="font-family: Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><b style="">Procedure</b></p> <p class="MsoNormal">Broker will contact you with proposals to discount bills of different companies at<span style=""> </span>different<span style=""> </span>rates. better<span style=""> </span>companies<span style=""> </span>command discounting rates of 13%<span style=""> </span>to 15%,while lesser known have<span style=""> </span>to pay discounting<span style=""> </span>rates of 17% - 28%.</p> <p class="MsoNormal">On agreement of particular <span style=""> </span>bill<span style=""> </span>discounting<span style=""> </span>transaction company<span style=""> </span>gives<span style=""> </span>to<span style=""> </span>the investor the following:</p> <p class="MsoListParagraphCxSpFirst" style="text-indent: -0.25in;"><span style="font-family: Wingdings;"><span style="">ü<span style="font: 7pt "Times New Roman";"> </span></span></span>The original copies of bills to be discounted; </p> <p class="MsoListParagraphCxSpLast" style="text-indent: -0.25in;"><span style="font-family: Wingdings;"><span style="">ü<span style="font: 7pt "Times New Roman";"> </span></span></span><span style="">hundi / promissory note; Post dated cheque. </span><span style=""> </span></p> <p class="MsoNormal">The investor simply has to issue a cheque - amount arrived at after deducting the discount<span style=""> </span>rate.</p> <p class="MsoNormal">EX. Company A wants to discount its purchase bill of Rs200,000 for three months. Investor P agrees to do so at a discount rate of 21%. </p> <p class="MsoNormal">Investor will issue a cheque of Rs189, 500. (200,000 x 21% x 3/12)</p> <p class="MsoNormal">company on its part will issue a post-dated cheque of Rs200,000 for three months period. </p> <p class="MsoNormal">He gets the interest element at the first day of issuing the cheque.<span style=""> </span>i.e. he does not<span style=""> </span>include that part<span style=""> </span>in his cheque amount. Thus he can earn<span style=""> </span>interest on this<span style=""> </span>interest for a three-month period. Even a simple bank fixed deposit on<span style=""> </span>it will earn @5% p.a. By<span style=""> </span>investing Rs189,500 for three months, the<span style=""> </span>investor earns Rs10,500 on<span style=""> </span>it. A return of 22.16%. </p> <p class="MsoListParagraph" style="text-indent: -0.25in;"><span style="font-family: Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><b style="">Discount Rates The rates depend on the following factors:<span style=""> </span><span style=""> </span><span style=""> </span></b></p> <p class="MsoNormal"><b style="">Broker -</b> His relations with the company and the investor do make a difference of a couple of percentage point in discounting rates.</p> <p class="MsoNormal"><b style="">Liquidity - </b>Liquidity crunch in the market tends to hike up the rates even in the best of the companies.</p> <p class="MsoNormal"><b style="">Volume/Value of Discounting - </b>When the volume/value of discounting done by the investor is high,<span style=""> </span>he<span style=""> </span>is<span style=""> </span>looking<span style=""> </span>at<span style=""> </span>security<span style=""> </span>more<span style=""> </span>than<span style=""> </span>returns.<span style=""> </span>The<span style=""> </span>company<span style=""> </span>on<span style=""> </span>its<span style=""> </span>part<span style=""> </span>is<span style=""> </span>looking<span style=""> </span>at savings<span style=""> </span>by way of<span style=""> </span>reduced<span style=""> </span>legal paper work and a higher amount of dedicated<span style=""> </span>funds .</p> <p class="MsoNormal"><b style="">Frequency - </b>regular<span style=""> </span>bills<span style=""> </span>discounter may<span style=""> </span>get<span style=""> </span>upto<span style=""> </span>1% to1.5% points higher<span style=""> </span>interest rates than a new investor. investor trying out with a new company and will agree to a lesser rate to ensure safety.</p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com1tag:blogger.com,1999:blog-2800879689759110049.post-43001834967243055232011-01-23T15:17:00.000+05:302011-01-23T15:18:17.256+05:30ADR/GDR<!--[if gte mso 9]><xml> <o:officedocumentsettings> <o:allowpng/> </o:OfficeDocumentSettings> </xml><![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:trackmoves/> <w:trackformatting/> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> <w:donotpromoteqf/> <w:lidthemeother>EN-US</w:LidThemeOther> <w:lidthemeasian>X-NONE</w:LidThemeAsian> <w:lidthemecomplexscript>X-NONE</w:LidThemeComplexScript> <w:compatibility> <w:breakwrappedtables/> <w:snaptogridincell/> <w:wraptextwithpunct/> <w:useasianbreakrules/> <w:dontgrowautofit/> <w:splitpgbreakandparamark/> 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mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} </style> <![endif]--> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><b><span style="font-size: 12pt; font-family: "Times New Roman","serif";">AMERICAN DEPOSITORY RECEIPTS (ADR) & GLOBAL DEPOSITORY RECEIPTS (GDR)</span></b><span style="font-size: 12pt; font-family: "Times New Roman","serif";"></span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><b><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Depository Receipts :</span></b><span style="font-size: 12pt; font-family: "Times New Roman","serif";"></span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Depository Receipts are a type of negotiable (transferable) financial security, representing a security, usually in the form of equity, issued by a foreign publicly-listed company. However, DRs are traded on a local stock exchange though the foreign public listed company is not traded on the local exchange. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> Thus, the DRs are physical certificates, which allow investors to hold shares in equity of other countries. . This type of instruments first started in USA in late 1920s and are commonly known as American depository receipt (ADR). Later on these have become popular in other parts of the world also in the form of Global Depository Receipts (GDRs). Some other common type of DRs are European DRs and International DRs.</span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">In nut shell we can say ADRs are typically traded on a US national stock exchange, such as the New York Stock Exchange (NYSE) or the American Stock Exchange, while GDRs are commonly listed on European stock exchanges such as the London Stock Exchange. Both ADRs and GDRs are usually denominated in US dollars, but these can also be denominated in Euros. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><b><span style="font-size: 12pt; font-family: "Times New Roman","serif";">How do Depository Receipts Created? </span></b><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">When a foreign company wants to list its securities on another country’s stock exchange, it can do so through Depository Receipts (DR) mode. . To allow creation of DRs, the shares of the foreign company, which the DRs represent, are first of all delivered and deposited with the custodian bank of the depository through which they intend to create the DR. On receipt of the delivery of shares, the custodial bank creates DRs and issues the same to investors in the country where the DRs are intended to be listed. These DRs are then listed and traded in the local stock exchanges of that country. </span></p> <table class="MsoNormalTable" style="width: 100%; border-collapse: collapse; border: medium none;" border="1" cellpadding="0" cellspacing="0" width="100%"> <tbody><tr style=""> <td style="width: 100%; border: 1pt inset rgb(17, 17, 17); padding: 0.75pt;" width="100%"> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><b><span style="font-size: 12pt; font-family: "Times New Roman","serif";">What are ADRs :</span></b><span style="font-size: 12pt; font-family: "Times New Roman","serif";"></span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">American Depository Receipts popularly known as ADRs were introduced in the American market in 1927. <b> </b>ADR is a security issued by a company outside the U.S. which physically remains in the country of issue, usually in the custody of a bank, but is traded on U.S. stock exchanges. In other words, ADR is a stock that trades in the United States but represents a specified number of shares in a foreign corporation. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Thus, we can say ADRs are one or more units of a foreign security traded in American market. They are traded just like regular stocks of other corporate but are issued / sponsored in the U.S. by a bank or brokerage. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">ADRs were introduced with a view to simplify the physical handling and legal technicalities governing foreign securities as a result of the complexities involved in buying shares in foreign countries. Trading in foreign securities is prone to number of difficulties like different prices and in different currency values, which keep in changing almost on daily basis. In view of such problems, U.S. banks found a simple methodology wherein they purchase a bulk lot of shares from foreign company and then bundle these shares into groups, and reissue them and get these quoted on American stock markets.</span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">For the American public ADRs simplify investing. So when Americans purchase Infy (the Infosys Technologies ADR) stocks listed on Nasdaq, they do so directly in dollars, without converting them from rupees. Such companies are required to declqare financial results according to a standard accounting principle, thus, making their earnings more transparent. An American investor holding an ADR does not have voting rights in the company. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">The above indicates that ADRs are issued to offer investment routes that avoid the expensive and cumbersome laws that apply sometimes to non-citizens buying shares on local exchanges. ADRs are listed on the NYSE, AMEX, or NASDAQ.<br /> <br /> <b>Global Depository Receipt (GDR): These are s</b>imilar to the ADR but are usually listed on exchanges outside the U.S., such as Luxembourg or London. Dividends are usually paid in U.S. dollars. The first GDR was issued in 1990.<br /> <br /> <b>ADVANTAGES OF ADRs:</b></span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">There are many advantages of ADRs. For individuals, ADRs are an easy and cost effective way to buy shares of a foreign company. The individuals are able to save considerable money and energy by trading in ADRs, as it reduces administrative costs and avoids foreign taxes on each transaction. Foreign entities prefer ADRs, because they get more U.S. exposure and it allows them to tap the American equity markets. .</span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">The shares represented by ADRs are without voting rights. However, any foreigner can purchase these securities whereas shares in India can be purchased on Indian Stock Exchanges only by NRIs or PIOs or FIIs. The purchaser has a theoretical right to exchange the receipt without voting rights for the shares with voting rights (RBI permission required) but in practice, no one appears to be interested in exercising this right.</span></p> </td> </tr> </tbody></table> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><b><span style="font-size: 12pt; font-family: "Times New Roman","serif";">How ADR Operates</span></b></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Indian companies have direct access to raise funds from Indian public by way of issuing Shares, Debentures etc. However Indian companies cannot do so, in such a direct manner, when it comes to raising funds from American people. That would entail the Indian companies to adopt US Accounting Norms which is also called as GAAP, maintain accounting practices as per American Financial Year (Which starts in January and ends in December of any particular year), as also follow variety of stringent standards as per American norms. Effectively, it would mean that the Indian company would have to follow two different set of rules simultaneously, one to comply with the laws of Indian Companies Act, and the other to comply with the American Laws.</span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">The method to circumvent the American norms, but still raise funds from American people is available by way of ADR or American Depository Receipts. In this system, the Indian company deposits certain amount of its Indian shares with designated American Banks. The banks, in turn, issues receipts that are equivalent in values (And also based on the intrinsic value the Indian Company’s shares would fetch in the American market) to the Indian Company. These receipts essentially would be in number of receipts. Then these Indian Companies can trade these ADRs or American Depository Receipts with the American public. These ADRs can be purchased and traded freely without any encumbrances in the American Stocks and Shares Market. This way the Indian company is able to enter into the American Stocks and Shares market, and raise funds from the American public.</span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">The role of the American bank which has issued these receipts is very crucial, since it is they who stand guarantee to the issued receipts. Hence they do exhaustive study of the Indian company from all perspectives, and only then issue the ADR to the Indian company.</span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><a name="_GoBack"></a><b><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Some Major ADRs issued by Indian Companies :</span></b><span style="font-size: 12pt; font-family: "Times New Roman","serif";"></span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Among the Indian ADRs listed on the US markets, are Infy (the Infosys Technologies ADR), WIT (the Wipro ADR), Rdy(the Dr Reddy’s Lab ADR), and Say (the Satyam Computer ADS)</span></p> <p class="MsoNormal" style="text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> <b>What are Indian Depository Receipts (IDR) :</b></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Recently SEBI has issued guidelines for foreign companies who wish to raise capital in India by issuing Indian Depository Receipts. Thus, IDRs will be transferable securities to be listed on Indian stock exchanges in the form of depository receipts. Such IDRs will be created by a Domestic Depositories in India against the underlying equity shares of the issuing company which is incorporated outside India. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Though IDRs will be freely priced., yet in the prospectus the issue price has to be justified. Each IDR will represent a certain number of shares of the foreign company. The shares will not be listed in India , but have to be listed in the home country. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">The IDRs will allow the Indian investors to tap the opportunities in stocks of foreign companies and that too without the risk of investing directly which may not be too friendly. Thus, now Indian investors will have easy access to international capital market. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Normally, the DR are allowed to be exchanged for the underlying shares held by the custodian and sold in the home country and vice-versa. However, in the case of IDRs, automatic fungibility is not permitted. </span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif"; color: black;">SEBI has issued guidelines for issuance of IDRs in April, 2006, Some of the major norms for issuance of IDRs are as follows. SEBI has set Rs 50 crore as the lower limit for the IDRs to be issued by the Indian companies. Moreover, the minimum investment required in the IDR issue by the investors has been fixed at Rs two lakh. Non-Resident Indians and Foreign Institutional Investors (FIIs) have not been allowed to purchase or possess IDRs without special permission from the Reserve Bank of India (RBI). Also, the IDR issuing company should have good track record with respect to securities market regulations and companies not meeting the criteria will not be allowed to raise funds from the domestic market If the IDR issuer fails to receive minimum 90 per cent subscription on the date of closure of the issue, or the subscription level later falls below 90 per cent due to cheques not being honoured or withdrawal of applications, the company has to refund the entire subscription amount received, SEBI said. Also, in case of delay beyond eight days after the company becomes liable to pay the amount, the company shall pay interest at the rate of 15 per cent per annum for the period of delay.</span></p> <p class="MsoNormal" style="text-align: justify; line-height: 12pt;"><span style="font-size: 12pt; font-family: "Times New Roman","serif"; color: black;"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><b style=""><span style="font-size: 12pt; font-family: "Times New Roman","serif";">VOTING RIGHTS ON DRs IN PRACTICE - ANALYSIS OF SOME RECENT DR ISSUES IN INDIA AND ABROAD</span></b></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><b style=""><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></b></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">It is understood that in case of issue of DRs, as a business arrangement, domesticcustodian bank exercises the voting rights on the shares underlying such DRs, asper the instructions of the Overseas Depository Bank which in turn is governed bythe terms of the depositary agreement / terms of issue of the DRs. Such terms ofagreement / issue of DRs vary from issuer to issuer with respect to the right of DRHolders to instruct the custodian on exercise of voting rights.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">The “terms of issue” in some of the recent GDR / ADR issues in India as well as in some foreign jurisdictions were perused. It was observed that in some of thecases, the right to give instructions to the custodian bank for exercise of votingrights is vested with the Board of Directors of the issuer company. In certain othercases, the said right is vested with the DR holders. In some cases, a combinationof the above is also used, viz. in the first instance the right to instruct is providedto the holders of DRs and in the event of their failure to exercise the said right, itis deemed to have been vested with the Board of Directors of the issuer company.It is also noted that invariably it is stated that the Depositary will not exercise any voting rights in respect of the underlying shares unless required to do so by law.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><b><span style="font-size: 12pt; font-family: "Times New Roman","serif";">Guidelines for ADR/GDR issues by the Indian Companies -Disinvestment of shares by the Indian companies in theOverseas market through issue of ADRs/GDRs</span></b></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><b><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></b></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(i) Divestment by shareholders of their holdings of Indian companies, in the overseas markets would be allowed through the mechanism of Sponsored ADR/GDR issuein respect of:-</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(a) Divestment by shareholders of their holdings of Indian companies listed in India;</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(b) Divestment by shareholders of their holdings of Indian companies not listed in India but which are listed overseas.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(ii) The process of divestment would be initiated by such Indian companies whose shares are being offered for divestment in the overseas market by sponsoringADR/GDR issues against the block of existing shares offered by the shareholdersunder the provisions of these guidelines.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(iii) Such a facility would be available pari-passu to all categories of shareholders, ofthe company whose shares are being sold in the ADR/GDR markets overseas.This would ensure that no class of shareholders gets a special dispensation.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(iv) The sponsoring company, whose shareholders propose to divest existing shares in the overseas market through issue of ADRs/GDRs will give an option to all itsshareholders indicating the number of shares to be divested and the mechanismhow the price will be determined under the ADR/GDR norms. If the sharesoffered for divestment are more than the pre-specified number to be divested,shares would be accepted for divestment in proportion to existing holdings.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(v) The proposal for divestment of the existing shares in the ADR/GDR market would have to be approved by a special resolution of the company whose shares are beingdivested.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(vi) The proceeds of the ADR/GDR issue raised abroad shall be repatriated into India within a period of one month of the closure of the issue.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(vii) Such ADR/GDR issues against existing shares arising out of the divestment would also come within the purview of the existing SEBI Takeover Code if theADRs/GDRs are cancelled and the underlying shares are to be registered with thecompany as shareholders.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(viii) Divestment of existing shares of Indian companies in the overseas markets for issue of ADRs/GDRs would be reckoned as FDI. Such proposals would requireFIPB approval as also other approvals, if any, under the FDI policy.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(ix) Such divestment inducting foreign equity would also need to conform to the FDI sectoral policy and the prescribed sectoral cap as applicable. Accordingly thefacility would not be available where the company whose shares are to be divestedis engaged in an activity where FDI is not permitted.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(x) Each case would require the approval of FIPB for foreign equity induction through offer of existing shares under the ADR/GDR route.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(xi) Other mandatory approvals such as those under the Companies Act, etc. as applicable would have to be obtained by the company prior to the ADR/GDRissue.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(xii) The issue related expenses (covering both fixed expenses like underwriting commissions, leadmanagers charges, legal expenses and reimbursable expenses) for public issue shall be subject to a ceiling of 4% in the case of GDRs and 7% inthe case of ADRs and 2% in case of private placements of ADRs/GDRs. Issue expenses beyond the ceiling would need the approval of RBI. The issue expensesshall be passed onto the shareholders participating in the sponsored issue on a prorate basis.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(xiii) The shares earmarked for the sponsored ADR/GDR issue may be kept in an escrow account created for this purpose and in any case, the retention of shares insuch escrow account shall not exceed 3 months.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(xiv) If the issues of ADR/GDR are made in more than one tranche, each tranche would have to be treated as a separate transaction.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(xv) After completing the transactions, the companies would need to furnish full particulars thereof including amount raised through ADRs/GDRs, number ofADRs/GDRs issued and the underlying shares offered, percentage of foreignequity level in the Indian company on account of issue of ADRs/GDRs, details ofissue parameters, details of repatriation, and other details to the Exchange ControlDepartment of the Reserve Bank of India, Central Office, Mumbai within 30 daysof completion of such transactions.</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(xvi) The tax provision under Section 115 AC of the Income Tax Act 1961, which is applicable to non-resident investors for ADR/GDR offering against issue of freshunderlying shares would extend to non-resident investors investing in foreignexchange in ADRs/GDRs issued against disinvested existing shares, in terms of therelevant provisions of the Income Tax Act, 1961</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";"> </span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style="font-size: 12pt; font-family: "Times New Roman","serif";">(xvii) Resident shareholders divesting their holdings will be subject to Capital Gain tax provisions applicable under the Income Tax Act 1961 i.e. Section 115 AC applicable for non-residents would not extend to them.</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt; line-height: 115%; font-family: "Times New Roman","serif";"> </span></p>eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-58518878845244487002010-09-24T22:03:00.001+05:302010-09-24T22:03:42.605+05:30Original DTC was pro-middle class. 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mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} </style> <![endif]--> <p class="MsoNormal" style="text-align: justify;"><b style=""><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN">“Old wine in a new bottle”<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span class="apple-style-span"><span style="font-size: 10pt; line-height: 115%; font-family: "Arial","sans-serif"; color: rgb(33, 33, 33);" lang="EN-IN">This is centered around expectations to minimize tax exemptions, but widen tax slab on personal finances.</span></span><b style=""><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN"><o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN">The government is quite confident of replacing archaic Income Tax Act with DTC from April 1, 2011
<br />THE DIRECT TAXES CODE PROPOSES TO introduce considerable novelty like reduction in corporate tax rate and widening of personal income tax slabs. They can give a new direction to taxation system. However, there is a little bit of uncertainty on them at this stage, following changes proposed in the original taxes code. The <a name="AHit7">DTC</a> has tinkered with the short-term capital gain tax charged from investors. Individual investors will now have to pay tax on 50% of the gains earned. The rate of short-term capital gain tax would be according to the income tax slab of that individual. For corporates, the short-term capital gain tax would be calculated at 30% after deducting 50% from the overall gains. In an overall positive reaction to the <a name="AHit8">DTC</a> Bill, the Dalal Street experts said that the new code is in favour of the common man and can even boost retail participation in stock market. On the long-term basis, the move will give a big push to the inclusive growth agenda. Retail investors will get a big booster from the proposal,” CNI Research CMD Kishore P Ostwal said. The <a name="AHit9">DTC</a> Bill seeks to increase tax exemption on income from Rs 1.6 lakh to Rs 2 lakh and fix the corporate tax at a flat 30%. Echoing a similar view, Geojit BNP Paribas Assistant vice-president Gaurang Shah said, “On long-term basis it is a healthy and a positive move for retail investors, who will have more money to invest in the market.” On the Distribution Dividend Tax, which will be at 15%, Ostwal said, “It will slightly affect the cash proportion of smaller companies. THE PROPOSED NEW DIRECT TAXES LAW will take away the special treatment that women have so far enjoyed and force individuals to overhaul the way in which they plan their savings.
<br />Women will be put on the same footing as men. Tax-free savings schemes will be fewer, with the government knocking off many from among the 16 odd available now. <a name="AHit2">DTC</a> has been cleverly packaged. The total amount of amount of tax deduction that will be available to individuals, including interest on housing loans will be around 3 lakh, roughly the same as now. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b style=""><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN">The new Bill has only tinkered at the fringes, with no significant benefits for the aam admi</span></b><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN">. The re-packaging of the savings schemes will significantly lower the savings potential”, said Sandip Mukherjee, executive director, PwC. “The exemption of 2 lakhs is four time the per capita income, which is a generous limit,” countered a senior tax department official. The maximum a person can save on her tax burden is 24,000 and that too if she earns more than 8 lakh a year. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN">Why?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN">The potential revenue loss from exemptions has forced the government to scrimp on the hikes in the threshold levels of personal income tax.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN">DTC Bill is good for the market but not for the ordinary man. One of the highlights of the DTC was the <b>i</b>ntroduction of the Exempt Exempt Taxation (EET) system of taxation on savings schemes as against the prevailing Exempt-Exempt-Exempt (EEE) system. Under the EET system of taxation of savings, a tax payer would get a tax breakon contributions to specified saving schemes (eg Public Provident Fund) as well as on any accretion/ accumulation of income in such account. However, any withdrawals would be taxed at the time of withdrawal or receipt. This would lead to drain in the savings of the tax payer when it would be required the most (eg after retirement). The DTC bill also proposes to retain corporate tax at 30 per cent, but without surcharge and cess. With them, the current tax liability on corporates comes to over 33 per cent. The government also conceded to the industry demand not to levy minimum alternate tax (MAT) on assets but book profits of the companies. So, it had to dilute earlier proposal of cutting corporate tax to 25 per cent, sources said. Tax experts said this proposal will provide much needed relief to the industry and bring the levy on par with global standards, though the industry wanted it to be reduced to 25 per cent. However, the government raised MAT to 20 per cent from 18 per cent, but it should not make much of a difference since with surcharge and cesses, MAT currently comes to 19.33 per cent.
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<br /> <!--[endif]--><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; line-height: 115%;" lang="EN-IN"><o:p> </o:p></span></p> eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-82409468546001349802010-09-24T22:01:00.001+05:302010-09-24T22:01:45.545+05:30Is GST VAT? What are the hurdles involved in implementing it?Everybody is keenly awaiting for the proposed GST draft which will replace the existing system of VAT in India. VAT is value added tax (on products). GST is like VAT but applies to Services also (apart from products). In India, we have VAT and Service Tax whereas in many countries you have only GST. VAT and GST is a tax on consumer expenditures and in theory should not fall on business activities. When a business operating in a VAT/GST country buys goods or services it pays tax to the supplier, which is called an input tax. When the same business sells goods or services, whether to another business or to a final consumer, it is required to charge tax, which is called an output tax. The business then must periodically total the input tax and deduct it from the output tax, paying the excess to the government agency responsible for collecting it.<br />GST is India’s most ambitious indirect tax reform, which seeks to stitch together a common market and reduce costs to replace the current fragmented regime. In India Dual GST would be implemented 20% & 12% split evenly between state and center. CST (Central Sales Tax) would be scrapped in a GST regime.<br />Hurdles:<br />I am opposed to it...it is unethical to tax luxury cars & sugar at the same rate says kerela FM.<br />1. Opposition from states: At present, the states are opposing the 12% single GST. Arriving at an acceptable GST rate has been bogged down by differences among the states and also between states and other entities like the TFC task force on GST architecture. Thumb rule is that larger the number of taxes subsumed in GST, lower will be the revenue neutral rate. The states have been reluctant to subsume all taxes into GST as it would mean loss of power to unilaterally change some taxes. Two drafts of the proposed new tax regime failed to find acceptability by states and the third has been referred to empowered committee of state finance ministers.<br />2. Improper Structure: There is much debate on the likely aggregate rate of the GST. It is also possible that several other design elements of the GST can undergo changes.<br />3. GST requires constitutional amendments currently the Centre cannot impose tax beyond manufacturing and states cannot levy service tax. Unlike Direct Tax Code (DTC), GST is a transaction-based tax and hence can be introduced any time.eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-69950375217091703542010-09-24T21:59:00.001+05:302010-09-24T22:01:11.155+05:30RBI – Sole Objective – to control InflationOverview:<br />The Preamble of RBI describes its function as to regulate issue of Bank Notes and keeping of reserves with a view to securing monetary stability in the country.<br />Role of RBI<br />1. Bank of Issue: Issues Bank notes of all denominations<br />2. Acts as Government banker & advisor, agent to Central and State Governments.<br />3. Controller of Credit<br />4. Custodian of Foreign Reserves<br />5. Supervisory functions : settles disputes arising among other banks under its ambit.<br />Inflation – A concern<br />Inflation is a grave concern, given the vast disparity between the rich and poor. Skyrocketing inflation robs the poor, and hurts others.<br />RBI follows a multiple indicator approach to arrive at its goals of growth, price and financial stability- rather than targeting inflation alone. Rbis OBJECTIVES R often conflicting with each other>>> It looks confused, ineffective and does not effectively tackle inflation but effectively stunts the growth pattern of the economy.<br />RBI should clear itself from this confusion and control inflation while maintaining growth. It should be reactive rather than proactive, as monetary policy is most effective when it is forward-looking. RBI’s autonomy should not be compromised either in fact or in perception<br />Why it is not possible?<br />Constraints imposed by the political system pulls down autonomy of RBI. Transparency is the best example.<br />RBI’s decision to strip Dr KC Chakrabarty of important portfolios. Monetary policy being dictated by a powerful governor/finance ministry & Subbaraos decision to reverse an increase in pension for RBI retirees.<br />Some have even mockingly dubbed RBI as the finance ministry’s ‘department of monetary policy execution’.<br />Solution: Operational Independence<br />1. RBI should seek government approval only on matters where the RBI Act (1934) calls for such approval. It should articulate need for changes in the Act. Autonomy is never given, it is earned and taken.<br />2. There should be a clear paradigm to adopt. By all means, let the RBI's fight against inflation continue. The US Fed Reserve, which is the RBI's model, does not have to resort to CRR. control is through the price of money i.e, interest rate and not the quantity. The Fed does not sequester resources of the banking system by raising CRR for it has zero CRR. Even if the Fed's monetarist model is followed, one has to allow borrowers to get credit at least at a price. Both quantity and price cannot be controlled at the same time, which is what the RBI is doing.eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-42275175899375497852010-09-24T21:58:00.000+05:302010-09-24T21:59:01.705+05:30FDI In Education<meta equiv="Content-Type" content="text/html; charset=utf-8"><meta name="ProgId" content="Word.Document"><meta name="Generator" content="Microsoft Word 12"><meta name="Originator" content="Microsoft Word 12"><link rel="File-List" href="file:///C:%5CUsers%5CSTEPHA%7E1%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_filelist.xml"><!--[if gte mso 9]><xml> <o:officedocumentsettings> <o:relyonvml/> <o:allowpng/> </o:OfficeDocumentSettings> </xml><![endif]--><link rel="themeData" href="file:///C:%5CUsers%5CSTEPHA%7E1%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_themedata.thmx"><link rel="colorSchemeMapping" 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mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} </style> <![endif]--> <p style="text-align: justify;"><span style="font-size:11pt;">India’s education sector has become a prized one with the UPA mulling over issues like opening up the sector for foreign participation. Moreover </span><span style="font-size:11pt;">the foreign education Institutions Bill which was earlier withdrawn after strong protests from the left parties now finally sees the light of day- however several universities have indicated that they will not be setting campuses in India. <o:p></o:p></span></p> <p style="text-align: justify;"><span style="font-size:11pt;">But the ministry says that it is working on several ways to increase FDI participation, which will not just be restricted to setting a base. One must understand that “FDI encompasses a whole range of initiatives in the education sector- from JVs, twinning arrangements, skill developments, and universities.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><b><span style=";font-family:";" lang="EN-IN">PROS OF FDI <o:p></o:p></span></b></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style=";font-family:";" lang="EN-IN"><o:p> </o:p></span></p> <p class="MsoListParagraphCxSpFirst" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">1.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">FDI would solve problem of lack of funding- resulting in expansion.<o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">2.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Quality education would prevent outflow of Indian students and </span><span style=";font-family:";color:black;" >$4 billion spent by them</span><span style=";font-family:";" lang="EN-IN">- thus less expensive and retention of domestic talent achieved.<o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">3.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Increased competition leading to - international competitiveness, change of curricula, increased responsiveness to students needs, technological Innovation, improved infrastructure.<o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">4.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Degrees offered to be internationally comparable and acceptable. <o:p></o:p></span></p> <p class="MsoListParagraphCxSpLast" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">5.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Creation of new institutions to generate employment.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><b><span style=";font-family:";" lang="EN-IN"><o:p> </o:p></span></b></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><b><span style=";font-family:";" lang="EN-IN">CONS OF FDI <o:p></o:p></span></b></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;"><span style=";font-family:";" lang="EN-IN"><o:p> </o:p></span></p> <p class="MsoListParagraphCxSpFirst" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">1.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Money power of foreign institutions would attract best teachers and students from local institutions. <o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">2.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Main motive is profit making. <o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">3.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Since competition entails cost reduction, infrastructure, would find least investment and also teachers and non-teaching staff being appointed without necessary qualifications. <o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">4.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">These institutes charge high fees resulting in local private institutions raising their fee to establish competitiveness– end burned on students<o:p></o:p></span></p> <p class="MsoListParagraphCxSpLast" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in; line-height: normal;"><!--[if !supportLists]--><span style=";font-family:";" lang="EN-IN"><span style="">5.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">These institutes would tend to repatriate as much profit as possible back home - accelerating outflow of foreign exchange. <o:p></o:p></span></p> <p style="margin-left: 0.5in; text-align: justify;"><span style="font-size:11pt;">Looking at both the pros & cons its clear that if implementation as well as elimination of the drawbacks is achieved FDI can work wonders. One must understand <span style="">that the industry is presently facing a dearth of skilled manpower that may hit its competitiveness.</span> Opening up the sector seems like the only way out. <o:p></o:p></span></p> <p style="margin-left: 0.5in; text-align: justify;"><span style="font-size:11pt;">One must understand that FDI is not just restricted to universities. Its slated that primary and secondary education will attract that largest FDI. At the end of the day “FDI is not about universities alone. It’s about empowerment of 220 million children who will not be going to universities,” <o:p></o:p></span></p> <p style="margin-left: 0.5in; text-align: justify;"><span lang="EN-GB" style="font-size:11pt;">“FDI in education sector is a channel of international benchmarking and should be welcome. 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list-style-image:url("file:///C:/Users/STEPHA~1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif"); mso-level-text:; mso-level-tab-stop:none; mso-level-number-position:left; text-indent:-.25in; font-family:Symbol;} ol {margin-bottom:0in;} ul {margin-bottom:0in;} --> </style><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-ansi-language:EN-IN;} </style> <![endif]--> <p class="MsoNormal" style="text-align: center; line-height: 150%;" align="center"><b style=""><u><span style="line-height: 150%;font-family:";font-size:14pt;color:black;" >Sumitomo Corporation – The story of Copper derivatives<o:p></o:p></span></u></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><b style=""><u><span style=";font-family:";color:black;" >Incident:<o:p></o:p></span></u></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">This study is a classic example of – ‘Running on the top of the tiger not knowing how to get off without being eaten.’<b style=""><o:p></o:p></b></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";color:black;" >Yasuo Hamanaka, the chief copper trader at Japan's Sumitomo Corporation caused $2.6 billion losses to the company through his unauthorized trading activities in the physical and futures market in copper at the London Metal Exchange. It was the largest unauthorized trading-related loss incurred by any Japanese company during that time. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><b style=""><u><span style=";font-family:";color:black;" >Analysis:<o:p></o:p></span></u></b></p> <p class="MsoListParagraph" style="text-align: justify; text-indent: -0.5in; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b style=""><span style=";font-family:";" lang="EN-IN">Initial Profits – Result of Manipulation <o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">Yasuo Hamanaka the head trader of Sumitomo Corporation manipulated the world copper prices through his operations on the LME (London Metal Exchange) copper futures market over the period of 1991-95. This artificial increase in copper price resulted in increased profits for Sumitomo Corporation from selling copper. Moreover Hamanaka was reporting inflated trading profits to the top management by showing invoices of fictitious option trades, which he had created through a nexus with some brokers. Whenever any hedge fund or speculator who was aware of manipulation tried to take short positions, Hamanaka invested more money into his positions thus sustaining the high price. However despite these faulty practices no action was taken against Hamanaka because of the profits he generated for the company.<b style=""><o:p></o:p></b></span></p> <p class="MsoListParagraph" style="text-align: justify; text-indent: -0.5in; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b style=""><span style=";font-family:";" lang="EN-IN">Lack Of Transparency<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">Successful manipulation of the copper prices was possible due to lack of transparency in the reporting positions of large clients at LME.<o:p></o:p></span></p> <p class="MsoListParagraph" style="text-align: justify; text-indent: -0.5in; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b style=""><span style=";font-family:";" lang="EN-IN">Action Taken Too Late <o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">During late 1995, due to increased copper production facilities particularly in China, copper prices started declining. This was ominous for Sumitomo as they had long positions in the futures market. Hamanaka failed to get rid of his positions. He tried to recover the losses by taking huge positions in copper commodity futures on the London Metal Exchange. However the huge volume of trading attracted the attention of the exchange and it gave a warning to Hamanaka. Hamanaka then struck a deal with Merrill Lynch for US $150 Mn, which enabled him to trade via Merrill at LME. Later however when LME started investigating on the alleged manipulation of copper prices Hamanaka was taken off from his position of head trader. This brought the short traders and hedge funds into the act causing the copper prices to fall further on LME.<o:p></o:p></span></p> <p class="MsoListParagraph" style="text-align: justify; text-indent: -0.5in; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b style=""><span style=";font-family:";" lang="EN-IN">Lack of Proper Managerial Supervision</span></b><span style=";font-family:";" lang="EN-IN"> <b style="">and Operational Control Systems </b><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">Transactions were made solely by Yasuo Hamanaka himself. He abused Sumitomo's name, and continued on with unauthorized trading and even borrowed money from several banks without any authorization from his seniors. Hamanaka a middle-level manager got so much power only because of the fact that he had helped Sumitomo garner a lot of profits in the past. He was given a great deal of responsibility by the company, a star trader status and his only regulators were overseas, far from Tokyo.<o:p></o:p></span></p> <p class="MsoListParagraph" style="margin-left: 39pt; text-align: justify; text-indent: -39pt; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b style=""><span style=";font-family:";" lang="EN-IN">Lack of Monitoring <o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">Trading in commodities and financial instruments was not being properly monitored by the government regulatory agencies and by the companies undertaking these transactions. This conclusion can be derived from the fact that in a short span of 16 months three major derivative disasters were seen:<o:p></o:p></span></p> <p class="MsoListParagraphCxSpFirst" style="margin-left: 39pt; text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">UK's 233-year-old Barings Bank, which lost $ 1.4 bn in February 1995 due to Nick Leeson's unauthorized trading activities in the Singapore futures market<o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin-left: 39pt; text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Japanese bank Daiwa which lost $1.1 bn in America's Treasury bond market in September 1995 due to the unauthorized trading activities of Toshihide Iguchi.<o:p></o:p></span></p> <p class="MsoListParagraphCxSpLast" style="margin-left: 39pt; text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style="">·<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span style=";font-family:";" lang="EN-IN">Japan's Sumitomo Corporation $2.6 billion losses due to unauthorized trading activities in the physical and futures market in copper at the London Metal Exchange.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">The debacle was the result of Sumitomo's poor managerial, financial and operational control systems. Due to this, Hamanaka was able to carry on unauthorized trading activities undetected by the top management. The vesting of excessive decision power on a single employee and failure to implement the job rotation policy were the other reasons cited.<o:p></o:p></span></p> <p class="MsoListParagraph" style="text-align: justify; text-indent: -0.5in; line-height: 150%;"><!--[if !supportLists]--><span lang="EN-IN" style="font-family:Symbol;"><span style=""><img src="file:///C:/Users/STEPHA%7E1/AppData/Local/Temp/msohtmlclip1/01/clip_image001.gif" alt="*" height="12" width="12" /><span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b style=""><span style=";font-family:";" lang="EN-IN">Damage Control Measures<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">In order to control mounting losses, Sumitomo began aggressive liquidation of its uncovered positions in the copper physical and futures market under its new president Kenji Miyahara. It cancelled its plans to buy back 20 million of its shares and award Yen 120 million ($1.1 million) of bonuses to its senior managers. Sumitomo was able to overcome the losses since it had a net worth of $6 bn and another $8 bn in hidden reserves. The losses estimated to be $2.6 bn amounted to only 10 per cent of Sumitomo's annual sales.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: center; line-height: 150%;" align="center"><span class="apple-style-span"><b style=""><u><span style="line-height: 150%;font-family:";font-size:14pt;color:black;" lang="EN-IN">Conclusion & lessons learnt from derivatives<o:p></o:p></span></u></b></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><span style=";font-family:";color:black;" lang="EN-IN">“Derivatives” are complex bank creations that are very hard to understand, but the basic idea is that you can insure an investment you want to go</span></span><span class="apple-converted-space"><span style=";font-family:";color:black;" lang="EN-IN"> </span></span><span class="apple-style-span"><b style=""><span style=";font-family:";color:black;" lang="EN-IN">up </span></b></span><span class="apple-style-span"><span style=";font-family:";color:black;" lang="EN-IN">by</span></span><span class="apple-style-span"><span style=";font-family:";color:black;" lang="EN-IN"> betting it will go</span></span><span class="apple-converted-space"><span style=";font-family:";color:black;" lang="EN-IN"> </span></span><span class="apple-style-span"><b style=""><span style=";font-family:";color:black;" lang="EN-IN">down</span></b></span><span class="apple-style-span"><span style=";font-family:";color:black;" lang="EN-IN">. The simplest form of derivative is a short sale: you can place a bet that some asset you own will go down, so that you are covered whichever way the asset moves. <o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">Particularly, the Sumitomo case resulted in tighter internal supervision and control procedures by trading firms and financial institutions the world over. Disclosure must lead to a serious introspection among various financial regulators and trading firms to improve the existing regulation and supervision procedures.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span style=";font-family:";" lang="EN-IN">Regulators have now become more aware and proactive than ever before as the possibilities to manipulate the markets have become more practical with the advent of complex and high leveraged instruments like derivatives. Prevention here is always better than prosecution. Companies should also restrain themselves from vesting too much power on a single employee and follow a job rotation policy. By entering into fictitious trades and manipulating accounts, Hamanaka successfully misled the management to believe that he was making huge profits. Sound operational and monitoring system need to be in place to keep track of activities of traders. Successful traders might require more, not less, scrutiny.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><b style=""><span style=";font-family:";color:black;" lang="EN-IN">What needs to be done in the future?<o:p></o:p></span></b></span></p> <p class="MsoListParagraphCxSpFirst" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><span style="">1.<span style="font: 7pt "Times New Roman";"> </span></span></span></strong><!--[endif]--><strong><span lang="EN-IN" style="color:black;">Resolving and Prosecuting Insider Crimes</span></strong><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><o:p></o:p></span></strong></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><span style="">2.<span style="font: 7pt "Times New Roman";"> </span></span></span></strong><!--[endif]--><strong><span lang="EN-IN" style="color:black;">Reducing False Positives</span></strong><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><o:p></o:p></span></strong></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><span style="">3.<span style="font: 7pt "Times New Roman";"> </span></span></span></strong><!--[endif]--><strong><span lang="EN-IN" style="color:black;">Protecting Customer Data</span></strong><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><o:p></o:p></span></strong></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style=";font-family:";color:black;" lang="EN-IN"><span style="">4.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span class="apple-style-span"><span style=";font-family:";color:black;" lang="EN-IN">Investigate irrational spurts in revenue as much as drop in profitability.</span></span><span class="apple-style-span"><span style=";font-family:";color:black;" lang="EN-IN"><o:p></o:p></span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><span style="">5.<span style="font: 7pt "Times New Roman";"> </span></span></span></strong><!--[endif]--><strong><span lang="EN-IN" style="color:black;">Fix the remuneration and fix the bonus as a fixed percentage of the CEO’s salary </span></strong><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><o:p></o:p></span></strong></p> <p class="MsoListParagraphCxSpLast" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><span style="">6.<span style="font: 7pt "Times New Roman";"> </span></span></span></strong><!--[endif]--><strong><span lang="EN-IN" style="color:black;">Create policies and procedures on risk management and educate the employees regarding the same. </span></strong><strong><span style="font-weight: normal;color:black;" lang="EN-IN"><o:p></o:p></span></strong></p> <p class="MsoNormal" style="text-align: center; line-height: 150%;" align="center"><span class="apple-style-span"><b style=""><i style=""><span style="line-height: 150%;font-family:";font-size:14pt;color:black;" lang="EN-IN">“Major crises are major opportunities for change”</span></i></b></span><b style=""><u><span style=";font-family:";color:black;" ><o:p></o:p></span></u></b></p> eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com1tag:blogger.com,1999:blog-2800879689759110049.post-3449985393627522082010-09-01T18:59:00.001+05:302010-09-01T19:07:12.741+05:30The Derivatives ChernobylThe Derivatives Chernobyl - Collapse of Bear Stearns on March 16, 2008<br />Incident:<br />The latest jolt to the massive derivatives edifice came with the collapse of Bear Stearns on March 16, 2008. Bear Stearns helped fuel the explosive growth in the credit derivative market, where banks, hedge funds and other investors have engaged in $45 trillion worth of bets on the credit-worthiness of companies and countries. Before it collapsed, Bear was the counterparty to $13 trillion in derivative trades. On March 14, 2008, Bear's ratings were downgraded by Moody's, a major rating agency; and on March 16, the brokerage was bought by JPMorgan for pennies on the dollar, a token buyout designed to avoid the legal complications of bankruptcy. The deal was backed by a $29 billion “non-recourse” loan from the Federal Reserve. “Non-recourse” meant that the Fed got only Bear's shaky paper assets as collateral. If those proved to be worthless, JPM was off the hook. It was an unprecedented move, of questionable legality; but it was said to be justified because, as one headline put it, “Fed's Rescue of Bear Halted Derivatives Chernobyl.” The notion either that Bear was “rescued” or that the Chernobyl was halted, however, was grossly misleading. The CEOs managed to salvage their enormous bonuses, but it was a “bailout” only for JPM and Bear's creditors. For the shareholders, it was a wipeout. Their stock initially dropped from $156 to $2, and 30 percent of it was held by the employees. Another big chunk was held by the pension funds of teachers and other public servants. The share price was later raised to $10 a share in response to shareholder outrage, but the shareholders were still essentially wiped out; and the fact that one Wall Street bank had to be fed to the lions to rescue the others hardly inspires a feeling of confidence. Neutron bombs are not so easily contained.<br />The Bear Stearns hit from the derivatives iceberg followed an earlier one in January, when global markets took their worst tumble since September 11, 2001. Commentators were asking if this was “the big one” - a 1929-style crash; and it probably would have been if deft market manipulations had not swiftly covered over the approaching catastrophe. The precipitous drop was blamed on the threat of downgrades in the ratings of two major monoline insurers, Ambac and MBIA, followed by a $7.2 billion loss in derivative trades by Societe Generale, France's second-largest bank.<br /><br />Analysis:<br />The Monolines serve as counterparties in a web of credit default swaps, and a downgrade in their ratings would jeopardize the whole shaky derivatives edifice. Without the Monoline insurers' AAA seal, billions of dollars worth of AAA investments would revert to junk bonds. Many institutional have a fiduciary duty to invest in only the “safest” triple-A bonds. Downgraded bonds therefore get dumped on the market, jeopardizing the banks that are still holding billions of dollars worth of these bonds. In this case, AMBAC was being used as a "cover" by the banks which originated these bundles of mortgages to get their mispriced ratings. Ambac Financial Group, Inc. is a holding company whose affiliates provide financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac's principal operating subsidiary, Ambac Assurance Corporation, is a guarantor of public finance and structured finance obligations. The downgrade of AMBAC in January signaled a simultaneous downgrade of bonds from over 100,000 municipalities and institutions, totaling more than $500 billion.<br />Now that the mortgages were failing and the banks were stuck with them, AMBAC couldn’t possibly pay; they could not cover the debt. And the banks don't wish to mark these CDOs to market [downgrade them to their real market value] because they are probably at best worth 60 cents on the dollar, but are being held by the banks on balance at roughly par. The banks would therefore no doubt need one bailout after another from the only pocket deeper than their own, the U.S. government's. But the federal government's AAA rating is already in jeopardy, due to its gargantuan $9 trillion debt.eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0tag:blogger.com,1999:blog-2800879689759110049.post-31544851607254801592010-09-01T18:55:00.001+05:302010-09-01T18:57:11.939+05:30The Societe Generale Fraud<meta equiv="Content-Type" content="text/html; charset=utf-8"><meta name="ProgId" content="Word.Document"><meta name="Generator" content="Microsoft Word 12"><meta name="Originator" content="Microsoft Word 12"><link rel="File-List" href="file:///C:%5CUsers%5CSTEPHA%7E1%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_filelist.xml"><link rel="themeData" href="file:///C:%5CUsers%5CSTEPHA%7E1%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_themedata.thmx"><link rel="colorSchemeMapping" href="file:///C:%5CUsers%5CSTEPHA%7E1%5CAppData%5CLocal%5CTemp%5Cmsohtmlclip1%5C01%5Cclip_colorschememapping.xml"><!--[if gte mso 9]><xml> <w:worddocument> 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mso-ansi-font-weight:normal;} ol {margin-bottom:0in;} ul {margin-bottom:0in;} --> </style><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-ansi-language:EN-IN;} </style> <![endif]--> <p class="MsoNormal" style="text-align: center;" align="center"><span class="headline"><b><u><span style="font-size: 14pt; line-height: 115%; font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">The Societe Generale fraud: An example of poor risk management</span></u></b></span><span class="apple-converted-space"><span lang="EN-IN"><o:p></o:p></span></span></p> <p class="MsoNormal" style="line-height: 150%;"><b style=""><u><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Incident:<o:p></o:p></span></u></b></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">The 2nd</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-family: "Times New Roman","serif"; color: black;">largest bank of France</span></a></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">,</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-family: "Times New Roman","serif"; color: black;">Societe Generale</span></a></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">, was struggling to square up the huge $ 7.2 billion loss it incurred on account of the biggest fraud committed by its young equity dealer -- the biggest loss an individual has inflicted on a bank. 31-year-old Jerome Kerviel put the survival of</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-family: "Times New Roman","serif"; color: black;">Societe Generale</span></a></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">at stake. Kerviel took positions in the derivatives trade far beyond what the bank permitted. He took positions to the extent of 50 billion Euros plus, which is much more than the market value of</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-family: "Times New Roman","serif"; color: black;">Societe Generale</span></a></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">. To cover up the positions in the market and avoid any takeover attempts, the bank was forced to mop up funds worth billions of dollars from the market.</span></span><span class="headline"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">It is estimated that</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-family: "Times New Roman","serif"; color: black;">Societe Generale</span></a></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">’s loss was to the tune of 5 Billion Euro ($7 Billion). Incidentally the biggest fraud in</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-family: "Times New Roman","serif"; color: black;">banking industry</span></a></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">was announced on the day the US Central Bank announced its biggest rate cut (since 1990) of 75 basis points. A few even wonder whether there is any link between the Fed’s announcement of rate cut and the fraud in </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-family: "Times New Roman","serif"; color: black;">Societe Generale</span></a></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">. By December 2007, he had made gains of over € 1.4 billion through such positions. By mid-January 2008, the compliance officers at Société Generale found abnormalities pertaining to the trades carried out by Kerviel and they informed the authorities. Kerviel admitted to the Head of Société Generale’s investment banking division that he had committed unauthorized trades and fictitious transactions. The CEO of the bank, its board, and the Central Bank of France were informed about these transactions and they decided to close the trading positions that Kerviel had created. However, by that time, the markets were falling sharply, and Société Generale had to incur a loss of € 6.3 billion on unwinding these positions.<o:p></o:p></span></span></p> <p class="MsoNormal" style="line-height: 150%;"><span class="apple-style-span"><b style=""><u><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Analysis:<o:p></o:p></span></u></b></span></p> <p class="MsoListParagraphCxSpFirst" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><span style="">1.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">When a bank creates policies and procedures for Risk Management it should also make sure that the employees are trained on these procedures and should be well aware of the Risk Management systems. In the case of Societe Generale <span class="apple-style-span">the bank was not able to educate its employees about the needs to ensure the secrecy of the password.<o:p></o:p></span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">It was like installing a huge ultra modern alarm in a building but with its window wide open so the thief can conduct his overnight raid.<o:p></o:p></span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><span style="">2.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">In the trading business every trader is assigned some limit within which he can trade. The traders are assigned day limit or overall limit of trade and at any point of time they cannot exceed that limit. But in practice traders cross their limits in an attempt to make more profit for their bank and pocket fat incentives for themselves. In an</span></span><span class="apple-style-span"><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> attempt to earn a huge profit for</span></span><span class="apple-converted-space"><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif"; color: black;">Societe Generale</span></a></span><span class="apple-style-span"><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">, Kerviel booked deals in excess of Euro 50 billion.<o:p></o:p></span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><span style="">3.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span class="apple-style-span"><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Usually forward contracts are off-balance sheet items, which are regarded as “<b style="">not so important</b>” by banks. Keeping this in mind </span></span><span class="apple-style-span"><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Kerviel used a fine mix of <b style="">equity </b></span></span><span class="apple-style-span"><b style=""><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">trading</span></b></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">, <b style="">futures</b> and <b style="">forward contracts. </b>On behalf of</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span lang="EN-IN"><a href="http://www.merinews.com/topic/information-financial-institutions.shtml"><span style="font-family: "Times New Roman","serif"; color: black;">Societe Generale</span></a></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">, Kerviel used to bet on the movement of the stock market index. Whenever he booked a genuine transaction, he used to book the other leg of the transaction in the form of fictitious forward contracts (an agreement to buy or sell any commodity at an agreed time in future for an agreed price), with his supervisors finding the books tallied and he appearing to be trading within the limit assigned to him. To reflect several of the booked contracts as genuine he would use his colleagues’ systems. Thus he managed to convince his auditors / bosses about the authenticity of the transactions, since the transactions ostensibly were entered by another</span></span><span class="apple-style-span"><span style="font-family: "Verdana","sans-serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">employee. For doing so, he made use of the passwords of several of his colleagues.<o:p></o:p></span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><span style="">4.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">An independent verification was not carried out on traders' positions and trade cancellations. The fictitious transactions were not monitored and reconciliations were not carried out.<o:p></o:p></span></span></p> <p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><span style="">5.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Kerviel's main responsibilities included handling proprietary deals in the futures market. He was required to purchase a portfolio of stock index futures and at the same time, sell a similar mix of futures, with slightly different value. <b style="">His main job was to hedge the funds. By purchasing a stock and at the same time selling the stock at a higher price the person is actually hedging his position.</b> His job was to take bets on small price differences between futures contracts and not to place directional bets.</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> The </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">idea was to take a long position by purchasing certain stocks and at the same time take a short position by short-selling other stocks. The combined positioned balanced or</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><b style=""><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">hedged</span></b></span><span class="apple-converted-space"><i><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></i></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">the investment fund against changes in the overall level of the market, and allowed him to profit from a change in the</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><b style=""><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">relative</span></b></span><span class="apple-converted-space"><b style=""><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></b></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">price of the two positions. Today, this is known as a "<b style="">relative value</b>" investment strategy. Thus the original meaning of the term "hedge fund" does not mean that the investment is completely hedged, but rather that it is hedged against the risk of a change in direction of the overall market.</span></span><span class="headline"><span style="font-family: "Tahoma","sans-serif"; color: rgb(102, 102, 102);" lang="EN-IN"> </span></span><span class="apple-style-span"><b style=""><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">However, instead of maintaining a hedged position, Kerviel began placing unauthorized trades by taking directional bets, which were initially in small amounts. </span></b></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">The investment strategy that he followed was <span style="">Macro</span></span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">or</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Global</span></span><span class="apple-converted-space"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"> </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">hedge. These funds </span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">take directional bets on market prices of securities, foreign currencies, commodities and derivatives. Global funds investment in emerging market economies and macro funds seek to profit from changes in interest rates and prices based on changes in a country’s macroeconomic prospects.<b style=""> </b>An example of directional bet is one instance the person shorts the 30-year bond and long the 29-year bond in the expectation of profiting from a fall in the spread between their yields. In order to execute this strategy he makes extensive use of leverage in the repurchase agreement </span></span><span class="apple-style-span"><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">or "repo" market by financing about 99% of their purchase of the 29-year bond and borrowing the 30-year bond in order to sell it short.</span></span><span class="apple-style-span"><b style=""><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><o:p></o:p></span></b></span></p> <p class="MsoListParagraphCxSpLast" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><span style="">6.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Unauthorized trading of this scale may have gone unnoticed initially due to the high volume in low-risk trades normally conducted by his department.</span></span><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><b style=""><u><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">The Cause for the disaster:<o:p></o:p></span></u></b></span></p> <p class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt 33pt; text-align: justify; text-indent: -33pt; line-height: 150%;"><!--[if !supportLists]--><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif";" lang="EN-IN"><span style="">1.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><span class="apple-style-span"><b style=""><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Lack of automated process: </span></b></span><b><span style="font-family: "Univers-CondensedBold","sans-serif";" lang="EN-IN"><span style=""> </span></span></b><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Ignored Trader Limits<b> -</b> </span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">Societe Generale only paid attention to net limits (difference between long and short trades). By ignoring the gross trading numbers, Societe Generale failed to detect huge anomalies in the long and short positions. <span style="">Failure to scrutinize Margin Calls -<b> </b></span>Societe Generale failed to scrutinize the breakdown of the margin calls and pinpoint the calls attributed to one trader.<o:p></o:p></span></p> <p class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt 33pt; text-align: justify; text-indent: -33pt; line-height: 150%;"><!--[if !supportLists]--><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif";" lang="EN-IN"><span style="">2.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Lack of Internal Controls Culture: </span></b><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Trusted Insider-<b style=""> </b></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">The trader previously worked with SocGen’s middle office. He<span style=""> </span>exploited his knowledge of controls and segmented his trades in order to ensure interaction with a different controller. <span class="apple-style-span"><b style=""><span style="color: black;">Unverified Emails - </span></b></span>SocGen failed to verify the trader’s fake emails provided as proof of hedging positions.<o:p></o:p></span></p> <p class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt 33pt; text-align: justify; text-indent: -33pt; line-height: 150%;"><!--[if !supportLists]--><span style="font-size: 12pt; line-height: 150%; font-family: "Times New Roman","serif";" lang="EN-IN"><span style="">3.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Lack of Strong Access Controls: </span></b><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Lax Access Security-<b style=""> </b></span></span><span style="font-family: "Times New Roman","serif";" lang="EN-IN">The trader used other staff’s access credentials (username & password) to gain privileged access into the bank’s systems.<b style=""><o:p></o:p></b></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><b style=""><u><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></b></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><b style=""><u><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">How directional bets using hedge funds affect the market:<o:p></o:p></span></u></b></span></p> <p class="MsoListParagraphCxSpFirst" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><span style="">1.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Although they have a small proportion of the capital in financial markets, they use leverage to take significantly large size positions in those markets. In addition, their market reputation creates followers and induces trend investors to take the same bets so that the combined effect is often the self-fulfilling investment strategy against the value of a nation’s currency.</span></span><span class="apple-style-span"><b style=""><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><o:p></o:p></span></b></span></p> <p class="MsoListParagraphCxSpLast" style="text-align: justify; text-indent: -0.25in; line-height: 150%;"><!--[if !supportLists]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><span style="">2.<span style="font: 7pt "Times New Roman";"> </span></span></span></span><!--[endif]--><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">Their use of direct credit from banks and broker-dealers to financial their trading operations, and the use of indirect credit through repurchase agreement and securities lending markets to take highly leveraged positions in securities and derivatives markets is another big issue. These credit relationships mean that a failure of a hedge fund could undermine the solvency of banks which hold government insured deposits and money centered banks which also serve critical roles in the economy’s cash payment and securities clearing systems.</span></span><span class="apple-style-span"><b style=""><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN"><o:p></o:p></span></b></span></p> <p class="MsoNormal" style="line-height: 150%;"><span class="apple-style-span"><b style=""><u><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">What needs to be done in the future?<o:p></o:p></span></u></b></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">The incident is an eye-opener; financial institutions and banks should first remind themselves to stick to the basics. While chasing money and business if we do not stick to the basics (like ensuring the secrecy of the password), in this super computer age where practically everything is possible online, we are risking our future as well as that of our organizations.<o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify; line-height: 150%;"><span class="apple-style-span"><span style="font-family: "Times New Roman","serif"; color: black;" lang="EN-IN">An effective program of governance and employee surveillance must focus on the four greatest practical threats to a financial institution in order to provide a business case for developing and extending an employee surveillance program, in order to align that program with a enterprise-wide process of corporate governance, to achieve regulatory compliance, and ultimately to reduce fraud losses. By connecting the risk analysis done across different silos of the institution, whether in risk management, operations, trading compliance, and corporate/IT security as well as putting in place a thin layer of analytics to spot specific anomalies characteristic of rogue trading schemes, an institution can take a practical approach to employee surveillance across the enterprise that positions it well to spot rogue traders early on. <o:p></o:p></span></span></p> eravandihttp://www.blogger.com/profile/07807118370905223720noreply@blogger.com0