Thursday, May 7, 2009

ADRs and GDRs

Indian companies are permitted to raise foreign currency resources through issue of ordinary equity shares through depository receipts, namely, Global Depository Receipt(GDRs)/American Depository Receipts (ADRs) to foreign investors i.e. institutional investors or individuals (including NRIs) residing abroad.
A depository receipt (DR) is any negotiable instrument in the form of a certificate denominated in US dollars. The certificates are issued by an overseas depository bank against certain underlying stock/shares. It is non-voting equity holding. One of the basic advantage of DRs is facilitation of cross border trading and settlement, minimized transactions costs and broadened potential base, especially among institutional investors.
An American Depository Receipt (ADR) is a negotiable U.S. certificate representing ownership of shares in a non-U.S. corporation. ADRs are quoted and traded in U.S. dollars in the U.S. securities market.
I found out some of the important advantages of ADR:

1. ADRs allow you to diversify your portfolio with foreign securities easily.
2. ADRs trade, clear and settle in accordance with U.S. market regulations and permit prompt dividend payments and corporate action notification.
3. If an ADR is exchange-listed, investor also benefits from readily available price and trading information.
Global Depository Receipts (GDRs) may be defined as a global finance vehicle that allows an issuer to raise capital simultaneously in two or more markets through a global offering. GDRs may be used in either the public or private markets inside or outside the US. GDR, a negotiable certificate usually represents a company’s publicly traded equity or debt. ADRs and GDRs are identical from a legal, operational, technical and administrative standpoint. The word ‘global’ denotes receipts issued are on a global basis that is to investors not restricted to US.

There are many more technicalities relates to ADR and GDR relating them to Arbitrage and other instruments. These all will be discussed in upcoming posts.

Wednesday, April 29, 2009

Intermediate Time Period - In Vicinity

In my previous post I have emphasized primarily on the development methodology and working of a the XYZ Company. I am highly satisfied with your response and hence would continue analyzing the Company further. I would appreciate further assistance from the readers.

Coming on the topic, having a stream-lined batch flow is a very good approach looking at the straight way of producing with a predefined and processes to follow. This kind of approach gives a very well structured and organized way for production of goods. This leads to optimization of production capability and experience of workers.

Above saying is truly seen from Macro point of view, going on a micro sense we can analyze the way the production take place. This kind of Streamlined development leads to a very high level of production optimization.

Also this approach has an important advantage of knowing the stages of production process, this helps in analyzing the prototype produced. This can be used in optimizing the the prototype which will be then used as input in the next process.

Going on the Research phase, at micro level having a very inflexible and rigid process flow it is very difficult to change the process flow and hence optimization takes place compromising the effectiveness it may have produced when a process slot may have been replaced. The system at macro level looks very structure and organized, but in micro sense this leads to a very huge amount of cost as the byproducts produced are discarded. This is due to the fact that utilizing them may require process deformation, which is highly discarded as well as discouraged.

But changing the production methodology is also not done in this scenario. This would require a huge training and development of manpower to understand and implement the new methodology.

hence the companies tend to use the same methodology, but try to optimize the other resources so as to cut the cost. This started by using the technique of Bulk-buying. Here a company used to buy raw materials in bulk. This used to decrease the total cost of purchase. This lead to a very high, fast and sophisticated process development where a large capacity was input and output was in huge masses. This process yielded good results but the main problem of By-products was still prevailing.

Would emphasize on the other important properties in my next blog.

Do comment if u like the approach and do keep reviewing and helping me in this work.

Tuesday, April 28, 2009

Older Scenario Part I - Production Strategy

We always have come across the same kinda rules when forced to follow.

The same is the situation with the Corporate World. The scenario can be well explained with our resistive nature to change the path we are following even if the new path may provide a cost-cutting way. That is why Change Management has always been given epitome importance while restructuring(once in a century or even scarce) the company.

Changing the methodology of working involves one of the most daunting task to educate the internal customers(employees) about the new system and its methodology.

Having a several hundred years of existence,the Technique was known as the Mass Production, which was then highly simplified and implemented by Mr. Henry Ford the technique is also know as division by labor. Manufacturing companies started using a fresh new technique to provide a strong impetus to production and processing.

In this technique, always there was a streamlined-batch flow of data(goods as inputs) to produce outputs. The scheme got immediate recognition, as before this the production took place using some Ape-Intellectual Methods. These were random methods with less to do with certainty, usefulness and predictability.

After advent of Mass Production the total input cost decreased by a huge ratio, taking in consideration the historic method used. The most important advantage was the advent of Machine Age replacing the long practiced Manual Production. Also the output at a certain stage was highly known due to the rigidity and inflexibility of the process.

Having a clean and precise flow, the input went through several stages of and several workers, each assigned their own task with one depending on the output provided by his immediate predecessor. The method used to be rather irrelevant where one used to depend on other for input leading to rather most vague BATCH feeling. This is because this production process is highly inflexible and hence it is difficult to alter the design or production process. Also the yield is highly finished in nature, making it hard to make changes the output. Also this lead to wastage of some goods in form of by-products to say.

Companies have been wasting their resources and benefits which could have been used in some other work.

Would like to have reviews about the post and any improvements as well as corrections from your side will be taken care of!!!

XYZ Company

Here is a company which has undergone rigorous changes in due course of recession or any other phenomena.

We will analyze the various changes it came through during period of recession.

Changes may be Forced or Adapted and Regular-to-do fixed time changes.

How a company restructures itself to adapt to new technology after recession and all other mechanism.

I would like my visitors to help me access this company profile and add their valuable inputs to the post if I am not able to touch those points!!

Happy Reading and stay INTERCEPTED!!!

Monday, April 27, 2009


Acquisition means buying of one company by another called as the target company. An Acquisition may be friendly or hostile. In former case, the companies cooperate in negotiations leading to both side willing to merge. But in later case, the acquisition of target is somewhat unwilling to be bought or the target's board has no prior knowledge of the offer.

Acquisition in most cases refers to the purchase of a smaller firm by a larger one. Sometimes however a larger firm may be acquired by a smaller firm. This is known as Reverse Takeover.

Acquisition may be by purchasing of shares, and therefore control of the target company. Ownership control of the company in turn conveys effective control over the assets of the company. This form of transaction carries with it all the liabilities accrued by the business in the past.

Another form may be by buying the assets of the target company. The cash the target receives from the sell-off is paid back to its shareholders by dividend or through liquidation. A disadvantage of this structure is the tax that many jurisdictions impose on transfers of the individual assets, whereas stock transactions can frequently be structured as like-kind exchanges or other arrangements that are tax-free or tax-neutral, both to the buyer and to the seller's shareholders.

These acquisitions may lead to changes in Earning per Share(EPS), changes may be positive or negative. In one case the EPS may increase this is a case when a company with higher P/E ratio acquires one with low P/E ratio. In other case EPS decreases, when a higher P/E ratio company is acquired by a lower P/E ratio marked comapny.

Sunday, April 26, 2009

Asia - modest recovery in 2010: IMF

According to International Monetary Fund(IMF), Asian economies will witness a modest growth in 2010 due to the stronger export demand and stimulus spending by IMF.

I my previous post, IMF has increased the Power Quota Shares of some Developing Asian Economies to catalyze the development process both in Macro and Micro ways. Since The Great Depression in 1930, Trade in Asia have got its worst setback with a exponential decrease in the trade market.


The report exposes a risk of fall in global demand to more lower levels. This can be due to Economic Imbalance in stronger nations and its continuation. But the most important factor is to restore an economic balance in these economies with increase in exports ratio as a source of growth. Protcetionism has also been given due consideration so as to boost trade ratio in economies like India and China, in particular.

Saturday, April 25, 2009

IT and Bank Sector Weakening

The outlook for the country’s IT sector remains bleak given the lacklustre performance by its large players during the quarter ended March 31, 2009. With the massive fraud hit Indian Techy Market, the place once known to be a powerhouse has seen a very huge deceleration in performance in last several quarters.

Recovery in Business Sentiments seems to be sluggish enough, leading to increase in pressure over billing structure resulting in lower volumes and hence eroding the revenue.

India Infoline IT analyst Rajiv Mehta

There has been a decelerative trend seen in the development activities in the country's top IT companies including IT-majors like TCS and Infy.

Adding to the crundh is the failing of Bank sector to perform, even when the indicators of RBI have been slashed to bare minimum.

ICICI Bank, India's largest in the private sector, has reported a 9.6 per cent drop in net profit after tax at Rs 3,758 crore (741 mn $) for the year ended March 31, against Rs 4,158 crore ($820 million) for the year before. Bank has however earned a higher net interest income by almost 15% y-o-y.

Friday, April 24, 2009

Worst and The Best Chief Executives(CEOs) ever

Known well for their business acumen, Software czar Bill Gates, legendary investor Warren Buffett and Apple's Steve Jobs have been named in American best ever known CEOs.

The list of '20 Best CEOs' complied by US publication Conde Nast Portfolio is topped by auto maker Ford Motor's Henry Ford, while financial services major J P Morgan's J P Morgan has cornered the second place.

Bill Gates has been named in one of the most strategically influential people of all times because of his clear-cut decisions and ability to adapt to conditions.

Oracle's Lawrence J Ellison has emerged as the highest paid chief executive in the US with a pay packet of USD 556.58 million in 2008, approx. He was followed by Ray Irani, the Chief Executive of Occidental Petroleum has a stipulated compensation of USD 222.64 million.

Seeing an Indian perspective Indira Nooyi, the CEO of PepsiCo. has been included in the top 500 CEOs ever.

Comming to the darker side:

In times of recession many countries have been hardly hit, some even getting Chapter 9 or 11 Bankruptcy, in the race were the biggies like Lehmann Brothers and Citi Group. Others included Wachovia and Bear Stearns. Known as the Crusader to Titanic-like giant CitiGroup, Indian born, Vikram Pundit was unable to stear down the title and has been included in 'Top 20 worst CEOs'. The CEOs were lead by Lehmann CEO, Dick Fuld.

According to the report, Salary of Indian-born is about 1$ in contrast to last years 38.2 million USD.

Thursday, April 23, 2009

World Bank - India and China crusaders of Global Economy

Firstly it was IMF and now its World Bank................

Yes you got it right!!

CHINDIA is now backed by the worlds two most important institutions- International Monetary Fund and the World Bank.

The eptome Bank on Thursday in a press release said

According to their reoprt of the World Development Indicators,

According to the reports, initially the emerging economies used to contribute 36% of global output in 2000, it has now increased to 43%, the difference has been highly compensated by CHINDIA, upto 5%. The contribution has been significant from our side. Also to say was the Investment in BRIC countries. It increased by 50% from 2004(present stats).

Looking forward in near future, more than 80% of the concentration of KPO will be in CHINDIA out of which 70% will be influenced by India. Looking at the latest advances and recession, India is hoped to increase the count of 7 in Fortune 500 significantly in near future.

Bretton Woods System

Bretton Woods System of Monetary Management established the rules for financial and monetary relations among the world's major industrial states in mid 20th Century. It was the first fully negotiated plan of its kind so as to govern and emphasize the monetary stimulus of the global economy. The International Monetary Fund(IMF) was established by the planners of the Bretton Woods so as to regulate international monetary activities.

The basic feature of this Management System was an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a predefined fixed value with minor deviations. Considering US Dollar as the major Currency of exchange, the allied countries had to exchange the funds through US Dollar so as to maintain currency approximation.

The basic aim of Bretton Woods was to disburse power and influence among the countries and to bring out countries ready to lead the global economy after Great Depression and World War 2. In initial times the favored mechanism was to impart Capitalism. For a pur Capitalistic Economy intervention of public sector was very important. In initial cases France demanded for state intervention leading to a lesser Capitalistic environment.

All the participating governments at Bretton Woods agreed that the monetary chaos of the interwar period had yielded several valuable lessons.

So as to keep the global economy away from the chaos it has just emerged from. So as to implement this strategy many of the most vital trading options were to be sacrificed. Trade in the 1930s became largely restricted to currency blocs. These blocs retarded the international flow of capital and foreign investment opportunities. Although this strategy tended to increase government revenues in the short run, it dramatically worsened the situation in the medium and longer run.

Seeing and experiencing the above impact, countries started to consider the importance of Government Intervention in Economic matters.

The various activities included in the Charter of Bretton Woods System are:
  1. To understand and simplify Fixed Rate Changes.
  2. To understand the complexity of Trade.
  3. To design a Charter for effecient working of International Monetary Fund.
  4. To plan Financing of Trade Deficits.
  5. Reconstruction and Development of Developing Nations.
Bretton Woods was a very important part in restructuring of Financial and Economic global system. But it had an implication which led to high imbalance in Balance Of Payments. Also the Dollar to Gold ratio started to weakening when France demanded Gold supervised by US. There were many other factors and many more implications.

So as to mitigate the above condition's impact a parallel monetary system was implemented for all Traded Funds by International Monetary Fund(IMF). The system till now is implemented and various consequences have been handled successfully with an active cooperation and assistance with leading NGOs.

Tuesday, April 21, 2009

BICS to gain largest IMF Quota Shares

The International Monetary Fund(IMF) has been developed to stabilize international exchange rates and facilitate development with an macroeconomic perspective. It also provides its members with financial and technical assistance.

Brazil, China, India, South Korea and Mexico will recieve the largest share of fund from IMF so as to fasten the speed of economic development in these key economies. The 5 nations will be among the 54 nations which will recieve extended shares once the 2008 reforms will be implemented. While these 54 countries will get an increase in quota shares of 4.9 percentage points, 135 countries will see an increase in voting share of 5.4 percentage points due to the combined effects of the increase in quotas and basic votes. Quotas basically are the voting powers of a country in the 185 countries drafted committee.

The final verdict will be done in the Conference of Finance Leaders and Governors from 24th to 26th April. The other issues included are the Rebalancing of Countries in 2011, this may include strengthening on Developing countries hold in IMF quotas.

This capital quota share hike has been due to the double-punch the Developing economies have to bear including the Crashing of Internal Capital Indices along with recessionary acts leading to weakening of Gross Domestic Product(GDP). The major notion behind this initiative is to influx more capital in these economies.

Many other strategic steps including development of a riskfree investing environment and enhancement in analysis of risk and linkages in the real economy and financial sector.

Reverse Merger or Reverse Takeover

Reverse Takeover is the Acquisition of a Public Company by a Private Company to exit the complex step in going public(Launching of IPO). The result of this acquisition leads to developing up of a new Company with change credentials in accordance to the Private Company.

In this process the Public Company is also referred to as Shell Company. The Private Company Purchases control over Shell Company.

The transaction involves the private and shell company exchanging information on each other, negotiating the merger terms, and signing a share exchange agreement. At the closing, the shell company issues a substantial majority of its shares and board control to the shareholders of the private company. The private company's share-holders pay to the shell company by contributing assets they have in the private company to the shell company.


  1. One of the basic advantage includes the possibility of commanding a higher price for a later offering of the company's securities.
  2. Going public through this process allows a company to become publicly held at a lesser cost, and with less stock dilution than through an initial public offering(IPO).
  3. There will be no need to influx more capital to go public.
  4. Also going through an IPO includes the conditional supervision of market which may be quite volatile at times, even the senior management has no control over market conditions.
  5. In addition, during the tenure of putting an IPO together, market conditions can deteriorate, making the completion of an IPO unfavorable.

  1. As the private company is new, it may be a case when it may be unknown to pending lawsuits and unforseen liabilities.
  2. Shells may sometimes come with angry or deceitful shareholders who are anxious to "dump" their stock at the first chance they get.
  3. Reverse Takeover only introduces liquidity in the previous private company if it has a bonafide public interest in the company.
The major use of this takeover is the influx of liquidity in the system and the broadening spectrum in Capital Markets.

  1. ValuJet Airlines was acquired by AirWays Corp. to form AirTran Holdings.
  2. The game company Atrai was acquired by JT Storage.
  3. US Airways was acquired by America West Airlines.
  4. The New York Stock Exchange was acquired by Archipelago Holdings to form NYSE Group.

Monday, April 20, 2009

PM, Tata, Ambanis among the powerfuls

Prime Minister, Manmohan Singh, Opposition Leader, L K Advani, Mukesh Ambani, Anil Ambani, the Corporate CZAR of the Country, Ratan Tata including the Batting Maestro, Sachin Tendulkar have been added in the Country's 50 most Powerful people by American Magazine, TheBusinessWeek.

Others in the list include: (Happy Go Clicking)
Congress President Sonia Gandhi, Gujarat Chief Minister Narendra Modi, Congress leader Pranab Mukherjee, music maestro A R Rahman, BSP chief Mayawati, Olympics gold medallist Abhinav Bindra, Security and Exchange Board of India (SEBI) Chairman C B Bhave, Communist Party of India (Marxist) General Secretary Prakash Karat, Mahindra and Mahindra's Managing Director Anand Mahindra, steel czar Lakshmi Mittal, telecom tycoon Sunil Mittal, Indian Premier League Chairman Lalit Modi and Indian Space Research Organisation's Chairman G Madhavan Nair and bankers -- K V Kamath and Deepak Parekh also feature in the list. also feature in the league of 50.

As being viewed, Satyam Scandal has influenced the Rankings very strongly.

The years rankings have been highly volatile with short-term changes drastically changing the List in every form.

Also in the list are the eites like:

RBI chairman D. Subbarao, Rashtriya Janata Dal Party's Lalu Prasad Yadav, Infosys Chief Mentor Narayana Murthy, Wipro's Azim Premji, TCS Chief Subramanian Ramadorai and Google India's Managing Director Shailesh Rao.

The list has been drafted on the basis of success and popularity of the respective elites, and their advancements in the upcomming year.

Thursday, April 16, 2009

IMF speaks on Recession

Seeing the current economic scenario there is a need of rigorous Fiscal and monetary Stimulus Packages all round the world. The Financial Sector needs to be brought in confidence again with some good economic and strategic policies.

International Monetary Fund

New IMF analysis published on Thursday shows recessions tied to financial crises, such as the current one which has its roots in reckless bank lending to the U.S. housing market, are more difficult to shake because they are often held back by weak demand.

Worse to add to this situation is the weakening of the strongest economies. In this fiscal quarter the downturn has been more than previous quarters giving a clear negative trend till the end of this year.
Analysts have predicted the Recovery period to come in phase by the end of the year.

The fund's analysis also says that emerging market economies, including those with sound economic policies, are not insulated from recessions beginning in major economies since they are often accompanied by a drop in exports and capital flows.

Clearly, given that capital flows are an important ingredient for emerging economies, it is most likely going to be the case that the recovery will not be possible without a recovery first taking place in advanced economies.

Stephen Danninger, a senior economist in the IMF's research department

According to the research the may last longer by a 1.5 times then expected, giving a deviation of atleast 40%(A very big figure to think of).

The analysis suggested that the combination of financial crisis and a globally synchronized downturn is likely to result in an unusually severe and long-lasting recession the IMF said.

Adding to the heat is the Downgrading of the Developed Economies. Turning to emerging economies, the IMF said the current level of financial stress in emerging market countries has already hit peaks seen during the 1997-98 Asian crisis.

This also been due to abrupt variances in the Capital Market and the Currency Burden they have to come up with.

In the Last Words the IMF hinted the emergence of some Developing Economies as Powers by the end of t his Turbulent Recession.

Wednesday, April 15, 2009

Satyam to Tech Mahindra's Venturbay Consultants, Complete review

Indian IT Industry got a fierce setback when Satyam Chairman, Mr. Ramalinga Raju, opened up his original documents and their values leading to the "Biggest Fraud in Indian Corporate Inc.".

Raju admitted that the financial statements of the company were cooked up from last 10 years.

Confession Letter of Mr. Raju.

On 6th January, Mr. Raju made a shocking confession that he had fudged accounts to the tune of over Rs. 7,100 crore.

On the same day, the Satyam’s stock crashed down by 70 percent to Rs 52 from Wednesday’s high of Rs 188.70. It had a client list that boasted of Fortune 500 companies.

The chairman’s acceptance about the fraud in balance sheet puts question mark over the corporate practices of companies in India. He states that Satyam’s balance sheet as on Sep 30, 2008, carries an inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 reflected in the books). Further, it carries an accrued interest of Rs 376 crore which is non-existent.

The PricewaterhouseCoopers was auditor of the company. It also poses a big question over the credibility of auditors.

As the bidding for Satyam enters the last lap, bidders have a few more hurdles to clear before the bids are admitted.

Before submitting the bids, bidders will have to waive the right to legal recourse in case the board decides to reject their bids. The bidder will have to prove its financial ability to bring in the total acquisition funds (TAF) within four days of winning.

The final bidders will have to furnish additional two irrevocable and unconditional performance bank guarantee of Rs 5 crore and Rs 100 crore. This will be refunded to all unsuccessful bidders.

Upon completion of the process, the new investor will be locked in for three years.

The various bidders who went on to the final step were
  1. Tech Mahindra - Locked the deal with Rs. 58 per share
  2. L&T - Locked their patrt with Rs. 46.5 per share
  3. Wilbur Ross - LOcked their bid at just Rs. 20 per share
  4. Cognizant - Pulled off.
Spice Corp, IBM and iGate were among those confirmed names that dropped out of the race after showing an interest in the company. iGate decided to drop out of the race for Satyam after concerns on falling revenues and not enough clarity on customers and margins. Spice Corp claimed that the bidding process lacked transparency and pulled out of the race.

The Satyam board has selected Venturbay Consultants, a subsidiary of Tech Mahindra as the highest bidder to acquire a controlling stake in the company, subject to the approval of the Company Law Board.

Tech Mahindra would pay Rs 1,900 cr within the next four days for the 31 per cent stake in Satyam and Satyam would operate as a special purpose vehicle until Tech Mahindra raises its stake to 51%.

Tech Mahindra would infuse Rs 1756 cr ($351 mn) based on the exchange rate of 50/$.

Monday, April 13, 2009

Tuesday, April 7, 2009

Bold Actions Of G20 London Summit

As I recognize it, there remains a debate between those who believe that the current economic environment compels a dramatic rethink of the foundations, systems and structures upon which the global economy operates, and those who believe that such sweeping reforms are both unnecessary and politically impossible.

In short, there are those who seek to begin the process of crafting a ‘new Bretton Woods’ and those who seek to ban the use of that phrase altogether.

In my earlier post, I wrote(scribbled) about "the global financial sector is in need of structural reform". I believe that the current economic crisis provides an opportunity to reshape the global financial system in ways that more accurately reflect the global nature and risks inherent in 21st-century banking, finance and capital flows.

This G20 gathering represents a true ‘free market’ where there is competition for ideas, creativity and leadership. It provides the perfect opportunity for a 21st-century successor to the intellectual and creative leadership of John Maynard Keynes to emerge.
To be successful, it is imperative that the United States play an active leadership role at the London Summit. The US has a unique role. The failure of the US to assume a leadership role, especially with the presence of President Obama, would undoubtedly be seen as an
opportunity missed.

The most innovative and bold structural proposals have come from Europe, where a recent report by the High Level Group on Financial Supervision in the EU, under the direction of Jacques de Larosière, contains some very worthy, realistic and detailed recommendations.
Unofficial groups, such as the G30 Financial Reform Working Group chaired by Paul Volcker, have similarly issued reports which I urge summit participants to review carefully and consider seriously.
The proposal is important because it seeks to address the systemic nature of risk, which underpins the existing financial system, and also because of its inherent inconsistency.
Given the magnitude and scale of the issues now confronting summit participants, those officials tasked with its preparation should not feel bound to adhere strictl to the agenda and working groups created four months ago.
Now is not the time for caution, but rather the time for bold assertion of leadership, ideally by the United States, but hopefully with the collective support of the global community.

Friday, April 3, 2009

G-20 London Summit

India's Prime Minister Dr Manmohan Singh outlined his hopes for G20 London Summit in a statement before he travelled to the UK.

In it, Dr Singh said the G-20 has an important role to play in addressing the global economic and financial slowdown by taking coordinated and purposeful action.

The report said as follows:
"It is important that the Summit took credible decisions to reverse the current slowdown and to instil a sense of confidence in the global economy"

The statement set out a number of issues that Dr Singh views as requiring particular focus. The need to:

  1. Ensure the adequate flow of finances to the developing countries to overcome the reversal of international capital flows and not retard progress towards the "Millennium Development Goals"
  2. Avoid protectionism in the trade of both goods and services
  3. Facilitate trade finance
  4. Reform and restructure international financial market

Dr Singh emphasized that the time has come for the international economic and financial architecture to reflect contemporary economic strengths.

Although the meet do provide some of the most required stimulus to Global Economy with a power-packed 1.1t$ stimulus, the summit was the least to bother for India.

Seeing India as the 4th most strong country of G20, expectations were more on accomplishing goals concerning all Developing Countries including BRIC(Brazil, Russia, India, China). But the Summit was more like a G8(G7 + Russia) + China affair with India as a spectator to some extent.

The only good thing which happened was the statement by our PM:

"We need no more foreign help to strengthen our nation by asking IMF to interfere but would like to help IMF by providing an AID if required "

Though the outcome of the meet was not in India's favour many of those "so-called respectable people" wrote it to be a path breaking success for India.

It is clearly visible in the link that its US who is leaning not India.

Sunday, March 29, 2009

End Of Dollar Dominance

There is now an important new addition to the list of global currency enthusiast, the Chinese Central Bank. According to the Governor the world needs a common currency managed by International Monetary Fund(IMF).

Leaders of G20 are to meet in London to discuss on the Global Economy along with it they are to discuss the new issue of Global Currency.

As in my previous post(Petro-Dollar) I have emphasised on how the US got hand on the Currency business and how the strength is going down. The report has come somewhat true.

Thats why I usually say:
"Bloggers are never WRONG".

Dollar Dominance is likely to be under threat as world economic power gets disbursed.

According to experts setting an all together new currency wont be that easy. For this to happen, all the countries will have to converge to similar levels of public debt and inflation.

To jump-start a new global reserve currency, economists say, it would require someone effectively subsidizing the cost of bringing buyers and sellers together for the time it takes the currency to get the traction.

Benefits of a global currency would be independence of countries on one separate national currency, because as USA falls the currency may weaken in global market leading to the weakening of other nations(especially Developing) for no fault of theirs.


Wednesday, March 18, 2009

India Healing From Recession

With the world's most developed economies reeling under the incubus of what is already being called the Great Recession, India at the beginning of the year took stock and issued a revised estimate for Gross Domestic Product(GDP) growth in the 2008-2009 fiscal year. Its projection came out at a healthy 7.1 percent. But the last quarter yielded some drastic results.

Looking at the Pre-Globalization times, the Hindu Country was way behind the rest of Asia having a very small growth rate of about 3%.
But after liberalization Indian Economic Recovery was phenomenal. T
he country's tech-savvy information-technology pioneers, software engineers, and call-center operators have made the country an economic success story. India has managed to multiply its per capita income levels many times over since 1950, and has done so far faster in recent years than the United Kingdom or the United States did during and after their industrial revolutions.

India's financial system suffers from few of the creative and risky derivative instruments that caused such problems in the Western economies. A tradition of conservative banking regulation and the presence of a tough-minded governor of the Reserve Bank (India's central bank) ensured that the Indian banking system did not acquire the toxic debts flowing from sub-prime loans, credit-default swaps, and over-inflated housing prices that assailed banks in Western countries.

The negative effect of the United States' financial setbacks on Indian stock markets, therefore, have made little sense, since they bore no relation to the real value of Indian companies. Instead to say it was the Liquidity Crunch which was present from the side of Foreign Investors.

India had and will have a big pool of Foreign Money(Forex) so the M-o-M(Market-To-Market) ratio will always confront as a strong point to any economy having a good pool of Forex money.

Indian Private Sector was the most hit, but the system in India will bounce-back faster than expected due to reforms by RBI and Government. The recovery has started with major bail-outs being canceled and companies becoming strong again with projects from all round the world.

According to a report, Indian Economy can triple in the next 15 to 25 yrs making it a super-power likely to surpass USA.

Tuesday, March 17, 2009

China- The new SUPERPOWER

The global economic downturn, and efforts to reverse it, will probably make China an even stronger economic competitor than it was before the crisis.

"China has bittered all odds and has emerged as a super-power."
G7 Summit

The third largest economy of world has already become more assertive; now it is exploiting its unusual position as a country with piles of cash and a strong banking system, at a time when many countries have neither, to acquire natural resources and make new friends for fresh investments.

"China's leaders are turning economic crisis to competitive advantage"

Friday, March 13, 2009

Satyam Bidding Process

At last 8 bidders have entered the bidding fray for the Indian Enron- Fraud hit Satyam Computer Services. Among the 8 bidders are some of the top multinational companies including L&T, Spice Comm. and Tech. Mahindra.
Tare MNC suitors, who have entered the fray through special purpose vehicle (SPV) structures in an apparent move to insulate themselves from future legal risks. The structure and exact nature of the SPVs are not clear at this stage.
The next stage in the bidding process is the submission of the expression of interest (EoI) along with proof of $300 million cash. This is supposed to happen by March 20. At this stage, the bidders will have access to a ‘broad set of numbers’, as they get ready to put in a price bid.

While L&T being the most powerful contender with nearly 1800cr+ Rs inventory to show, Spice Comm. has entered the bidding by selling its 40.8% stakes in Spice to Aditya Birla Group's Idea Cellular last year making its bid strength to increase to 2720cr Rs.
Another entrant to bidding is Tech. Mahindra which currently is not having sufficient balances
to bid and would require to raise another 1000cr+ Rs. so as to be in the bidding arena.....

Thursday, March 12, 2009

The Global Crisis And Indian Finance

Initially, it was speculated that India would be totally immune to Global Financial Downturn. It is clear that important elements of the balance of payments and the domestic financial sector have been affected. The impact of such imbalance lead to implications in banking sector and has consequently lead to credit crunch.

The Chinese government, seriously noting the collapse in imports, has brought in a range of extensive fiscal and monetary measures designed to counteract the effects of the global downturn. As explained in my previous Post.

Recession has lead to downturn in many of the highly "Trade Integrated" economies of Southeast Asia that has sent in alarming signals and harsh indicators in those countries with no fault of theirs.

The current slowdown in Gross Development Product (GDP) is sharper than the Government would like to admit, and more significantly it has been accompanied by a much steeper than expected reduction in employment, especially in export sectors leading to volatility in economic infrastructure.

Some of the most important effects have been:

Decline in Foreign Exchange Reserves.

Decline in Stock Market Indices (BSE).

Weakening of Rupee in consideration to US Dollars.

Foreign Institutional Investors and Stock Market.

Monday, March 9, 2009

China- The New Super-Power as India Degrades!

It seems like everything is turning upside down. America was considered the center point of the economic universe. They could save anything... anybody... any country. But not any longer. The U.S. is in the middle of one of the worst recessions ever experienced. Meanwhile, on the other side of the world, China's economy seems to be heading in the right direction. Since November, the Shanghai Index has outperformed the S&P by 75%. And China's banks are more solid than those in the U.S. They weren’t loaded with sub-prime toxic loans.

You could even say China is the U.S.'s biggest banker. That's because China has been buying up U.S. dollars. In fact, it now owns nearly $1 out of every $10 in U.S. public debt. China maintains the world's largest cash reserves of roughly $1.9 trillion. And you know what they're doing with some of that money? They're buying up oil assets at pennies on the dollar.

Needless to say, the speculators once said that China would be the first country to get hit as mostly every single penny Chinese earn is derived from USA. But China has emerged stronger than USA and is ruling the Economic markets all-round the world.

Coming on to India, India will be the next big thing, but at this moment all the strength which was commanded by Indians has been thrashed due to their over-dependence on Exchanges around the world, leading to devaluation of their assets in a sharp free-fall.

India was the most isolated country as far as Sub Prime market was concerned but had its major Forex shares derived from US Majors which have either declared Chapter 9 Bankruptcy or have been bailed-out, hitting Indian Economic Market hardly and ruining the Standard currency.

Saturday, March 7, 2009

Budget of India

Divine Interception believes in promoting the right to speech that Indian constitution provides every Indian with, and as a testimony to the same, we know present you with Poonam Thanvi, the first guest blogger on Divine Interception.

A budget is an itemized summary of probable expenses and income for a given period. References to budget can be found in Kautilya's Arthashastra. It states:

"Chancellor should first esimate revenue from each place and sphere of activity under different heads of accounts and sphere of activity under different heads of accounts
and then arrive at a grand total"

The below link from Wikipedia can be useful for getting gist of Arthashastra.

The term budget has been derived from the old French word "bougette", which means a leather bag or wallet. Initially, budget referred solely to the Chancellor's annual speech on the nation's finances. Now, the term is used for annual financial statement of income and expenditure of a government.

Indian Budget is one of the biggest budget presented by Union Finance Minister. The FM is made responsible by the President Of India to prepare the "Annual Financial Statement" or the budget, and present it in the Parliament every year on 28th Feb or last working day of February.

Indian Budget was previously declared at 5 pm, but since 1999 General Budget is being presented at 11 am.
Normally Budget-making starts in the 3rd quarter of the Financial year.
Indian Budget has four stages:
  1. Estimates of Expenditure and Revenues.
  2. First estimate of Deficit.
  3. Narrowing of Deficit.
  4. Presentation and approval of Budget.
When signed by President of India, Bill becomes an Act.
FM is assisted by number of advisors and bureaucrats. Various accounting and finance related organizations send in their opinion and suggestions.
The main players in Formulation are:
  1. Ministry of Finance
  2. Administrative Ministries
  3. Planning Commission
  4. Auditor General.
Thank you Poonam, that was one informative post. I hope you keep writing for Divine Interception, and all you readers keep encouraging her!

Want to write as well?! Mail me your entry on

Thursday, March 5, 2009

Global Symbol for Indian Rupee

India has started a contest to design a global symbol for the rupee so that the currency can join the likes of US$, Yen, Euro, Pound etc.

The new symbol will be the "identity of the Indian currency". The currency is at present denoted simply by "Rs" or "INR" which is short for Indian rupee.

Guidelines for the contest listed on the finance ministry website stipulate the "symbol should represent the historical and cultural ethos of India."

According to the stated link the symbol should be applicable to the standard computer keyboard.

Though it is true that the Rupee may be weakening, but this is a time for celebration for an Indian National.

Indian Rupee Weakening!!

Not only Indian currency, all the Asian currencies are going down. They have started to doubt their strength.

If we compare the rupee with dollar it has come down at their 2 year low. The declining rupee is affecting the economy. Indian companies are losing huge chunks money. Many companies have recorded mark to market losses running on their foreign currency liabilities.

Using the Keynesian Graph, the demand-supply curve shows a very high demand of US$ but a limited supply is available leading to higher price of Unit Dollar present thus weakening the Indian Rupee.

In this graph Demand and supply both meet at a lower margin indicating a lesser requirement of $ in that economy. This means "An economy having a lower margin with Dollar has a stronger currency making and demand of $ lesser in such an economy".

In this graph the demand is more depicting a weaker currency with a huge demand of $ to satisfy its internal working structure.
This case aptly corresponds to India.

So as to strengthen Indian Rupee, Reserve Bank of India(RBI) has started to sell dollars but it is not making any difference. Demand of dollar is so high that it is not easy to control their appreciation. Oil companies have to make their payment in dollars. They are making huge demand of dollar.

The impact of weakening rupee share market is also in turbulence. Investors have started to think on strength of the economy.

It is still unclear, when this weakness will come to an end. But this is not an indication of a strong economy. People are in hope that it will take some time to be settled down.

Tuesday, March 3, 2009

GDP to go down to 3%

The much discussed GDP and its value has shocked a million of them leaving the values rock-bottomed to a value 20% below the speculated and the fight is not yet over(it may be the beginning).

The Financial last Quarter GDP seem to take a toll of misery with a strange value of 5.3%.

According to the reports

"Based on bull-bear case outlook for G7 (club of developed countries), we see bull scenario growth for India at 5 per cent in 2009 and 7.4 per cent in 2010 and bear case at 3 per cent in 2009 and 4.5 per cent in 2010".

Being a possible G7 entrant India has to keep its pace and reduce the Fiscal Deficit hampering the overall effect of positive Monetary Benefits to the Economy.

With the inflation bottomed at a 4 year low the pressure would now be on the upcoming government to take steps in order to reduce Fiscal deficit and cope up to the standards of G7 countries.

It is been speculated that India to surpass US by 2050, but for now the main concern is to stabilize the internal working of the economy.

However the average projected GDP for year 2009 will be 4.3% with a 25% increment in the next financial year.

The third quarter growth (October-December 2008) rate has been estimated at 5.3%, down from 8.9% posted during the corresponding period last year.

Adding to the misery is the Stringent Industrial Development with a record of 16-year low of 2% this may further increase burden of loans leading to further pressure on GDP.

Saturday, February 21, 2009

Capitalism is the Mother of Reinvention

For so long we have been discussing about the economic recession and its impacts.

Every now and then we witness such a correction, we consistently speculate the "End of Capitalism is here". I used to consistently disagree with this approach. Because according to me

"Capitalism Re-invents Itself"

According to me, at this moment all the companies are back to the place where they were during their formation. This is the place where Capitalism starts to grow but with a different approach.

Initially in 90s companies used Mass Production mechanisms, this mechanism got huge responses and companies upgraded their methodology to this kind of manufacturing.

But as we know world is ever changing and improving in all aspects of life which get explored from time to time, Sakichi Toyoda, Founder of Toyota Motors along with Ohno, invented a new methodology named as Lean Manufacturing(Also known as Toyota Production System).

This technology was better than its rivals and hence got immediate recognition. This mechanism is based on elimination of waste in mass methodology.

New companies which came up after Lean was invented used it.

We can see GM and Ford used Mass Production and hence are today Bailed-out, but Toyota still is standing firm.

So in the post what I meant to say is that, after this recession the companies require a revival of their internal structure and various other processing mechanisms which they are using at this moment.

Doing this, it would revive the definition of modern day capitalism and make it more modern and immune to previous mishaps.......................

Friday, February 20, 2009

The worst is yet to come

Dow Jones Industrial Average slid to its lowest layers in the last 6 years.

This came due to the speculation of Banks edging Bankruptcy and the deepening of the Recession in the economy of USA.

Exerts have oft-quoted:
"the worse is yet to come!!"

The impact of this hit can bring many more hostilities and can ruin the economy all-together leading to a metaphorical review of what was witnessed in 1930s.

According to reports, the 30-stock blue-chip gauge fell as to 7,447.55, breaking through the November 21 Bear Market low to levels not seen since March 2003.

GDP of Japan fell to its lowest in the last 35 yrs. A clear cut of 12% in GDP was observed giving
a clear indication of big economies becoming cost ridden.

In order to prevent total collapse of the world's 2nd richest economy IMF has signed a $100 Billion contract so that the economic stability can once again be restored.

In my recent posts I have been expressing my views about the downturn and many of them have been proved with a much stronger impact..
But who knows this is a moving market and the impact of this can be anything worse than what I or any other person can view.......................

Tuesday, February 17, 2009

India: A Rising Tide Of RED Ink!!

The Interim budget announced by Pranab Mukherjee shows a red ink slashing the Indian Economy. The next Government will either have to

"Get this sea to recede or build dykes to protect the land".

So says this web-link, and I so agree with it!

The next couple of years won't be easy to digest and are likely to be tough ones for the world economy and for India.
But according to me, India has been highly insulated from Economic recession(oot Cause is Subprime Crisis), but this storm will show its effect and will be a sustained phenomena for the upcoming one and a half year or so.
It could be said that India is observing a growth recession, which usually means an economy growing at such a low pace that more jobs are been shed then been added.

Governments are expected to heavily influx market during such growth recessions even though tax collections are anaemic. They have to run in heavy fiscal deficits. The main problem is that the entrant political government will have very little power to attack this problem and would again add up to fiscal and other deficits, again drowning economy back to '91 kind of situations.

The Indian Fiscal Deficit including Budget Bond Issuance is now at a record high. This situation for India is ironical. Manmohan Singh took the first stab at bringing down the deficits in the early '90s. Then P Chidambaram tried to cut the deficit during his reign as Finance Minister in mid '90s.


The stand-in Finance Minister candidly admitted that a record slippage was likely to push the fiscal deficit or external borrowings, in 2008-09 to three times the value of its initial target of 2.5% of GDP after taking into account all off-budget bonds.

The Stock Market reacted negatively and BSE's benchmark index ended at days low.

According to FinMin there can be a deviation of upto 20% from the projected values in the budget.

Tax collections, which contributes nearly 90% of revenue to government will be on a low air this fiscal year.

In case of 3G spectrum(non-tax receipts), the government will raise approx. 20,000 crore RS in 2009-10(which is nearly half of what was estimated and is expected by the Telecom ministry's projections).

The strain is to show upto 164% increase in the total fiscal deficit.

The fiscal deficit is expected to be about 5.5% of the total GDP(excluding crude).

It is estimated that average price of crude wil be below 70$ a barrel.

In all seeing a drop of nearly 12% GDP in Japan(worst in last 35 yrs), India is still fairly insulated nut the this is just the start of recession India will have to manage and keep up the pace of Growth so that the next fiscal year can be handled easily and without any strain..

But I would like to raise the point which I always use to ask-
The last five years were the one long clash between politics and economics. And there are no prizes for guessin which side did win......................

Thursday, February 12, 2009

Enron Scandal

Enron Corporation has been one of the biggies in the field of Power and Electricity Generation.

The Company traces its roots to the Northern Natural Gas Company formed in 1932. But the company got a stand-alone reputation in 1979, by buying a lower rated Houston Natural Gas Group, and establishing Enron Corporation.

The Company had a good hold on American Power Business and was presented the best Power firm for 6 consecutive years. With a capital of above 100bn$, the company was strongly steering to become the ultimate in Power Business.

Company having more than 50% hold on American Market, was seen to be the next big thing in Global Economy.

But the company was caught in a fierce scandal when many revelations about financing and accounting reports came up. The Company's Auditor Firm, Arthur Anderson, was responsible for irregular accounting procedures conducted throughout the decade on 1990.

Company was on the verge of Bankruptcy within 6 months of the disclosure of the scandal.A White knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable. Enron filed for bankruptcy on December 2, 2001.

The basis of scandal was the revelation that maximum part of profits and revenue of the company were due to the Special Purpose Entity.

Enron was using SPE's appropriately by placing non energy related business into separate legal entities. What they did wrong was that they apparently tried to manufacture earnings by manipulating the capital structure of the SPEs; hide their losses; did not have independent outside partners that prevented full disclosure and did not disclose the risks in their financial statements.

So the financial debts and the losses that it reported were not reported in the financial statements. This scandal caused dissolution of one of the largest firm Arthur Anderson.

As the news of scandal was on air many of speculations were made for the dissolution of the company, this lead to decrease in the faith of investors in the company. This lead to the downfall of the shares of the company from somewhere about 100$ to about 50 cents. This was the basic reason that the company was on the verge of bankruptcy.

Financial Instruments of the Company dragged down to such an extent that the market capitalization decreased to about 1% of what it had before the scandal.

Enron planned to retain their three cross pipeline business and also some external invested assets. Post Bankruptcy the company had to sell-off all its pipelines business to make a new entity CrossCountry Energy, making the Company a small shell with limited scope of development.

So as to pay the debts to the investors and to pay all the outstanding in the market the company resolved into a Enron Creditors Group Corporation. Its goal is to pay off the old Enron's remaining creditors and wind up Enron's affairs.........................

Wednesday, February 11, 2009

Derivatives- Means To Mass Destruction!!!

In Capital Markets, there have been many ways to multiply your profit, in recent times the craving in this direction has increased heavily.

Derivatives have been in the industry for almost 3 centuries. The financial derivatives came into spotlight in post-1970 period due to growing instability in the financial markets.

Derivative is a product whose value is derived from the value of one or more basic variables, called underlying. The underlying asset can be equity, index, foreign exchange (forex), commodity or any other asset.
Derivatives can be essentially used to diminish or tone down the risk of economic loss arising from the changes in the value of the underlying.

Because the value of a derivative is contingent on the value of the underlying, the notional value of derivatives is recorded off the balance sheet of an institution, although the market value of derivatives is recorded on the balance sheet.

Uses of Derivatives are in Hedging and Speculation and Arbitrage.


Derivatives allow risk incurred in the value of the underlying asset to be transferred from one party to another. Such a mechanism is know as Hedging.
We can say a buyer and seller can sign a contract about a particular value of an asset in future(The value is speculated for future value on the basis of the market and demand forecasting in future).

Hedging also occurs when an individual or institution buys an asset (like a commodity, a bond that has coupon payments, a stock that pays dividends, and so on) and sells it using a futures contract.

Speculation and Arbitrage

Derivatives can be used to acquire risk, rather than to insure or hedge against risk.
Speculation means Implied Gambling(Gambling with some results favoring it). Individuals and Institutions enter into a derivative contract to speculate on the value of the underlying asset, betting that the party seeking insurance will be wrong about the future value of the underlying asset.

Individuals and institutions may also look for arbitrage opportunities, as when the current buying price of an asset falls below the price specified in a futures contract to sell the asset.
Arbitrage means Intermediate Market conditions.
An example can be-
There is always a difference in price of Shares in NSE and BSE. Some people may buy Shares in NSE and sell them in BSE if the value is more(earning profit excluding minor transaction charges).
Arbitrage is no loss work which has become a famous undertaking in recent times.


Warren Buffet once said "Derivatives are a means of Mass Destruction"
, clearly the saying goes with the happening. The Tornado of Economic Recession which is DESTRUCTIVE and still going on has been the, u can say "EYE WITNESS", of the above saying.

Derivatives massively leverage the debt in an economy, making it ever more difficult for the underlying real economy to service its debt obligations and curtailing real economic activity, which can cause a recession or even depression.

The use of derivatives can result in large losses due to the use of leverage, or borrowing. Derivatives allow investors to earn large returns from small movements in the underlying asset's price. However, investors could lose large amounts if the price of the underlying moves against them significantly.

There have been instances of massive losses in derivative markets such as-
1. The need to recapitalize insurer American International Group(AIG) with $85 billion of debt provided by the US federal . An AIG subsidiary had lost more than $18 billion over the previous three quarters on Credit Default Swaps (CDS) it had written. It was reported that the recapitalization was necessary because further losses were foreseeable over the next few quarters.

2. The bankruptcy of Orange County, CA in 1994, the largest municipal bankruptcy in U.S. history. On December 6, 1994, Orange County declared Chapter 9 bankruptcy, from which it emerged in June 1995. The county lost about $1.6 billion through derivatives trading.(Courtesy: Economic Times) Orange County was neither bankrupt nor insolvent at the time; however, because of the strategy the county employed it was unable to generate the cash flows needed to maintain services. Orange County is a good example of what happens when derivatives are used incorrectly and positions liquidated in an unplanned manner; had they not liquidated they would not have lost any money as their positions rebounded. Potentially problematic use of interest-rate derivatives by US municipalities has continued in recent years..................

Tuesday, February 10, 2009

Instruments in Capital Markets

The changes in the regulatory framework of the capital market and fiscal policies have resulted in newer kinds of financial instruments (securities) being introduced in the market.

The variations in all the instruments depend on the tenure, the nature of security, the interest rate, the collateral security offered and the trading features, etc.


These are issued by companies and regulated under the SEBI guideline. The rights of investors as debenture holders are governed by the Companies Act, which prohibits the issue of debentures with voting rights.
There are many types of Debentures like Participating debentures, Convertible debentures with options, Third party convertible debentures and many more.


Indian Development Financial Institutions (DFIs) in India, like IDBI, ICICI and IFCI have been raising capital for their operations by issuing bonds like Income Bonds, Tax-free bonds, Capital Bonds etc.
In addition to the interest rates and maturity profiles of these instruments, the issuer institutions have been including a put/call option.

Preference Shares

Owners of preference shares enjoy a preferential treatment with regard to corporate actions like dividend. They also have a higher right of repayment in case of winding up of a company.
The various types of Preference Shares are:
• Cumulative and non-cumulative
• Participating
• Cumulative & Redeemable fully convertible to preference shares
• Cumulative & Redeemable fully convertible to equity shares.

Equity Shares

These represent the proportionate ownership of the company. This right is expressed in the form of participation in the profits of the company. Some hybrid securities like equity shares with detachable warrants are also available.

Some other Variants are Derivatives and Hedging.

of securities occurs when securities issued in physical form are destroyed and an equivalent number of securities are credited into the beneficiary owner's account.
India has adopted dematerialisation route to depository. In a depository system, the investors stand to gain by way of efficient settlements, lower costs and lower risks of theft or forgery, etc....................

Wednesday, January 28, 2009

Who will be David for Satyam??

You have heard a lot and read a lot more already about what is being termed as India's Enron. So I am not going to blabber about the same.

After the ongoing scam-like situation leading into the so called, Biggest Fraud in the Corporate History of Corporate India Inc., rumours, as usual, are on air for speculating observances on the selling of Satyam.

The Hyderabad based giant is in talks with L&T board for further manipulation. All things might get clear by the end of the Board Meet on 31st Jan.

Speculatuions are getting ripe as L&T(having a stake of 4.4%) has increased its stake to about 12% in the fallen Goliath. According to the Company Law, if a company acuires above 15% stake of a private firm it has the rigth to take the company under its control.

Seeing the trend L&T has started the buying and is estimated to buy a large share of 7.6% more making it a 16% stake-holder, the highest is the list.

Data provided(as per the NSE and BSE) showed that, on Friday, L&T paid about Rs 176 crore to buy 5.1 crore shares of the IT company.

The two have been in serious talks so as to prevent attrition and other misfortunes for the company. LIC, IDBI, BoB(Courtesy: Economic Times) has provided cash assistance to Satyam so that they can pay the internal customers of the company, their wages, actually!! this is hapenning and true...............