CYRUS MISTRY TO SUCCEED TATA......

Written by HARIKRISHNAN.T
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The suspense is finally over. Mr. Cyrus P. Mistry will take over from Mr. Ratan Tata a chairman of the Tata Group when he retires in December 2012.


He was appointed Deputy Chairman of Tata Sons at the company's board meeting on Wednesday and will work with Mr. Tata over the next year.


The 43 year old son of Mr. Pallonji Mistry, the largest single share holder in Tata sons with an 18 percent stake, a civil engineering graduate from Imperial college, London. He also has a Master of Science in Management from the London Business School.


Mr. Mistry is currently Managing Director, Shapoorji Pallonji Group.


He takes over Tata group from a man who over the last 2 decades transformed the Tata Group into a global enterprise.


Tata Steel's acquisition of Corus, Tata motors buying JLR and TCS going public were some of the significant milestones after Mr. Ratan Tata took over from JRD as Chairman of the group.


The most important thing is that Mr. Cyrus Mistry would be taking over the mantle of a group in which the promoters have largely pledged shares over the past two and half years.


Mr. Ratan Tata has taken the group to great heights and I hope Mr. Mistry will take it to greater heights.


Regards Hari " लोका समस्ता सुखिनो भवन्तु " 



BSE GETS SEBI APPROVAL FOR SME EXCHANGE.

Written by HARIKRISHNAN.T
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Finally the Bombay Stock Exchange received approval from the Securities and Exchange Board of India for its proposed SME (Small and Medium Enterprise) Exchange.

The BSE applied for permission for an SME Exchange in July 2010, and the final approval from SEBI came after 1year after studying all the aspects of SME Exchange.

The SME Exchange will now start receiving the offer documents from the merchant bankers for companies wishing to list on the exchange platform.

The CEO, BSE SME Exchange Mr. Laxman Gugulothu said that many companies already approached them and among these about 30-40 percent were very serious about getting listed on the SME Exchange.

He added that " Of the 70-80 who have approached us on the web site, 15-20 are very serious. Apart from these, 50 other companies have shown an interest in our exchange. Of these 50, around 25 have filed a mandate with merchant bankers"

The National Stock Exchange also waiting for the final approval from the SEBI for its SME Exchange.

For any company to get listed on an exchange, the company has first to file a draft RHP prospectus with SEBI. It then needs in-principle approval from both SEBI and the exchanges. This is followed by a one-month notification to the public.

This has been done away with for companies proposing to list on SME Exchange. An SME needs to only submit the offer documents and on receiving the exchange's approval alone can enter the capital market.

The only criteria for the SMEs to qualify the listing is that the promoter share holding to be diluted has to amount to a minimum of Rs. 25 crore. That is at a face value of Rs. 10 per share, the total number of shares on offer should be 2.5 crore. (2.5 crore * 10 = 25 crore)

Regards Hari " लोका समस्ता सुखिनो भवन्तु "



OPERATION TWIST.

Written by HARIKRISHNAN.T
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Federal Reserve announced the recovery policy called 'Operation Twist' in order to solve the US Debt crisis.

The main objective of this policy is to decrease the interest rates. What will happen if interest rates became low..??? 

When interest rates became weak, more people will borrow money and thus more capital flow will be pumped into the economy. As a result of this the overall growth of the economy will take place, the corporate profits will be increased, more and more opportunities will flow into the system and thus the unemployment issue in the US will overcome.

When we consider the following figures of US, we will get a clear picture.

GDP:                   1.60 percent
Interest rates:    0.25 percent
Inflation rate:    3.60 percent
Jobless rate:       9.10 percent

Here the GDP rate of US is too low compared to EMEs like India and China. For India GDP on YoY basis is 7.80 percent and for China it is 9.70 percent. Also the jobless rate for US is also high.

But the positive note for US is their inflation rate. Their inflation rate is much lower compared to India and China.

In US, the interest rate for 10 year treasuries is 1.95 percent.  This figure seems pretty interesting. This is lower than the inflation rate.

So what they are trying to do with the Operation Twist..?? This can be explained like this.

The Fed already owns $1 trillion bonds. They purchased this in the fast few years in order to bring down the medium and long term interest rates.

Among these, a lot of bonds especially medium term bonds will become expire in the coming years.

When we observe the interest rates of these bonds, they are almost Zero.

So the Fed will sell some of these medium term bonds and they will buy longer term bonds, such as 10 year to 30 year treasuries.

This is the main idea behind the Operation Twist.

The main objective of this strategy is to lower the interest rates further and thus boosting the economy by pumping more capital in to the system.

Regards Hari " लोका समस्ता सुखिनो भवन्तु "