External reporting is an important part of a public company's duties to the public. These reports largely effect the perception of the company's economic strength. As such, it is important that they are prepared faithfully. To do so, these external reports are governed by the US's current rules-based GAAP. Globally, public companies are most likely using International Financial Reporting Standards, either as a required or an acceptable standard for reporting. There is currently a push to have the US use the same system. While the decision is slow to be made, it warrants a look at what the US convergence with the principles-based IFRS, away from the current rules-based system used today, might bring.
With many systems and classifications, it is not always easy to pin down the right approach to accounting for a transaction. It is almost necessary for there to be multiple reporting methods. For example, there is no one method of valuating inventory that is superior to the others in all industries. Different needs have to be met, so rules are put into place to allow multiple approaches. Those vested in seeing the company succeed might think that the company should use whichever acceptable method reflects the company standing in the best light as possible each year. Changing methods each period can help the perception of the company's health, but it is not in the best interest of those using the created documents. Doing this would make period to period or even industry comparisons difficult or impossible. It makes sense, then, that rules have been put into place to help prevent such presentations of information.
These rules are generally a firm and concrete method of reporting. This does, however, allow a company to target certain areas for favorable classifications, by following the form of the law, but not necessarily the function. In many ways, rules-based accounting can allow for skirting the line of legality. An example would be in area of accounting for leases. Under the current system, leases are classified as capital leases if they are leased for 75% or more of the economic life of the asset, or the present value of the minimum payments are 90% or more of its fair value. There are many advantages to having a lease classified as operating lease over capital lease. The desire to influence classification has created the practice of entering leases for 74% of the asset's life for 89% of its fair value. Without the rule, companies would enter leases under terms that are not substantially different from purchasing the asset, yet taking full benefit of the advantages of a lease. The rule in place helps minimize the advantage of receiving both benefits.
The advantages of the rules-based system do not end there. However close they are to line, so long as they operate within the rules, they are safe from litigation. The switch to the principles-based IFRS removes such security for the company and its accountants. Classifications will be made not from predetermined criteria, but by active decisions and professional judgment. This opens them up to scrutiny, and may be the focus of a lawsuit. Further, the accountants themselves could potentially be targeted should their decisions be questioned. Companies stand to lose both a powerful tool and a level of legal security in the switch.
The switch to IFRS may help increase the integrity of the documents created by the accountants. Classifications will be made by seeing the substance of the transaction, not by the individual details. The decisions made will be based on professional judgments based on a simpler set of principles, over a long checklist of items. This flexibility allows for the more relevant information to produce a more robust report on the situation. While there is a greater possibility of a difference in judgments, there are fewer opportunities for overt manipulation.
The US convergence to IFRS is going to play a role in the years to come. Though the decision is being postponed here, IFRS continues to be used around the world. The timeline for convergence seems to be stretching farther than the initial forecast of 2014. The current rules-based system has its flaws of unclosed loopholes and inflexible reporting, but there are those who prefer it to the principles-based system, where two different reports could be prepared from the same data, based on the perceptions of those reporting.

External reporting is an important part of a public company's duties to the public. These reports largely effect the perception of the company's economic strength. As such, it is important that they are prepared faithfully. To do so, these external reports are governed by the US's current rules-based GAAP. Globally, public companies are most likely using International Financial Reporting Standards, either as a required or an acceptable standard for reporting. There is currently a push to have the US use the same system. While the decision is slow to be made, it warrants a look at what the US convergence with the principles-based IFRS, away from the current rules-based system used today, might bring.
With many systems and classifications, it is not always easy to pin down the right approach to accounting for a transaction. It is almost necessary for there to be multiple reporting methods. For example, there is no one method of valuating inventory that is superior to the others in all industries. Different needs have to be met, so rules are put into place to allow multiple approaches. Those vested in seeing the company succeed might think that the company should use whichever acceptable method reflects the company standing in the best light as possible each year. Changing methods each period can help the perception of the company's health, but it is not in the best interest of those using the created documents. Doing this would make period to period or even industry comparisons difficult or impossible. It makes sense, then, that rules have been put into place to help prevent such presentations of information.

There is no better time to get your personal finances in order than right now. This article will give you some great ideas for better financial management. Do not spend your money on expensive classes or seminars; adopt the right habits and then develop a good common sense approach to finances. Anytime you can learn something it does help.

You're not alone if you make a mistake or two with your personal finances. If you mistakenly overdraft your bank account, you can request a waiver of the fee that is charged. This is for someone with a consistent record that avoids overdraft, retains balances, and will most likely only work once.

Make sure you designate a particular time each month for bill paying. While the entire day isn't needed to pay bills, having a day specifically for it is helpful. Mark it on the calendar and cling to it with fervor. Missing this day can cause a domino effect.

Most new products already come with a 90 day or one year warranty, and if your item is going to mess-up, it probably will within that time frame. Extended warranties only serve to profit the company you bought them from.

hiruvananthapuram: The net profit of State Bank of Travancore (SBT), an associate of SBI, fell to Rs 510.46 crore in 2011-12 against Rs 727.73 crore in the previous year.
The bank, however, registered a growth of 6.19 per cent in operating profit at Rs 1,249 crore against Rs 1,176 crore last year.
The fall in net profit attributed to various factors like additional provisions for staff, NPA and income tax payment, the bank said.
The total income of the Kerala-based bank improved by 29 per cent to Rs 7,477 crore from Rs 5,819 crore in the previous year, SBT Managing Director P Nanda Kumaran and other senior managers told a press meet here last evening.
Elaborating on the bank's performance on various fronts, bank officials said "our overall performance has been much better compared to many other banks in the country during the period".
Total business registered a growth of 21.69 per cent at Rs 1,26,816...

DHANANJAY

- PGDM

The company blamed the first-quarter decline, which surprised some on Wall Street, on seasonal advertising trends.
"It was a faster slowdown than we would have guessed," said Brian Wieser, an analyst with Pivotal Research Group.
"No matter how you slice it, for a company that is perceived as growing so rapidly, to slow so much on whatever basis - sequentially or annually - it will be somewhat concerning to investors if faced with a lofty valuation," Wieser said.
Facebook is preparing to raise at least $5 billion in an initial public offering that could value the world's largest social network at up to $100 billion.
"The biggest issue is the realization that Facebook is not going to have an easy time meeting high expectations of the public market," said Jeff Sica, chief investment officer of SICA Wealth Management, which manages more than $1 billion in client assets, real estate and private equity holdings. "It will affect how people look at the IPO."
Investors are still likely to sign up in droves for the IPO; However, growth concerns may make some investors less likely to keep the stock over the long term, he added.
"I'm still encouraging people to participate in the IPO, under the acknowledgement that it could be a bumpy ride," Sica said. "There are high expectations and I hate high expectations."
The company, founded by Mark Zuckerberg in a Harvard University dorm room in 2004, surpassed 900 million monthly active users in the first quarter and said its full-time staff grew by about 1,100 employees to 3,539 in the past 12 months, according to an updated filing with the U.S. Securities and Exchange Commission on Monday.
Facebook also disclosed that it has agreed to pay Instagram $200 million if the company's recent deal to buy the photo-sharing start-up for about $1 billion does not go through.
Facebook said it paid $300 million in cash for Instagram, along with 23 million shares of Class B common stock. It said the fair value of its Class B common stock was $30.89 per share as of January 31.
Spending roughly doubled over the past 12 months, outpacing the 45 percent revenue increase during the period, it said.
Net income slid 12 percent to $205 million in the quarter, from $233 million a year earlier at the rapidly expanding company.
Facebook said its advertising business, which accounts for the bulk of its revenue, typically slows down in the first three months of the year. The rapid advertising growth may have "partially masked" such trends to date, and seasonal impacts may be more pronounced in the future, it noted.
Revenue, which totaled $1.06 billion in the three months ended March 31, declined 6 percent from the fourth quarter. It was the first quarter-on-quarter drop since at least 2010.
"It was bound to happen. You are going to see a slowdown," said Anupam Palit, an analyst at GreenCrest Capital LLC, noting that it is harder to double revenue when the base is larger.
But he also said Facebook has not worked out how to make more money in some international markets where it is growing the fastest, such as Brazil, India and the Philippines.
"They have not cracked international markets yet, while others like Google do very well internationally," Palit added.
Apart from slowing growth, Facebook is also grappling with other issues. Yahoo Inc is suing it for patent infringement even as the social networking company tries to beef up its intellectual property arsenal. On Monday, it said it would pay $550 million for hundreds of patents from Microsoft Corp.
PAYMENTS HINT
Facebook gets most of its revenue from advertising, but has a Payments business centered around Facebook Credits, a virtual currency used mainly to buy virtual goods within social games.
However, the company hinted at a possible an expansion of Facebook Credits into other areas.
Facebook gets a cut of up to 30 percent from virtual goods sales on its platform.
"In the future, if we extend Payments outside of games, the percentage fee we receive from developers may vary," the company said in its IPO filing on Monday.
Some investors expect e-commerce to be a major area of expansion for Facebook. Some industry experts said that if Facebook Credits were used for purchases of physical goods, the company's cut would have to be a lot lower than 30 percent.
(Reporting By Alistair Barr and Alexei Oreskovic; Editing by
DHANANJAY SINGH
PGDM 2ND SEM.

Meaning of Financial Management Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise. Scope/Elements Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current assets are also a part of investment decisions called as working capital decisions. Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby. Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two:

1. Dividend for shareholders- Dividend and the rate of it has to be decided.
2. Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise.

Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.
2. To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
3. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved.
5. To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.

Functions of Financial Management

1. Estimation of capital requirements: A finance manager has to make estimation with regards to capital requirements of the company. This will depend upon expected costs and profits and future programmes and policies of a concern. Estimations have to be made in an adequate manner which increases earning capacity of enterprise.
2. Determination of capital composition: Once the estimation have been made, the capital structure have to be decided. This involves short- term and long- term debt equity analysis. This will depend upon the proportion of equity capital a company is possessing and additional funds which have to be raised from outside parties.
3. Choice of sources of funds: For additional funds to be procured, a company has many choices like-
   1. Issue of shares and debentures
   2. Loans to be taken from banks and financial institutions
   3. Public deposits to be drawn like in form of bonds.
   Choice of factor will depend on relative merits and demerits of each source and period of financing.
4. Investment of funds: The finance manager has to decide to allocate funds into profitable ventures so that there is safety on investment and regular returns is possible.
5. Disposal of surplus: The net profits decision have to be made by the finance manager. This can be done in two ways:
   1. Dividend declaration - It includes identifying the rate of dividends and other benefits like bonus.
   2. Retained profits - The volume has to be decided which will depend upon expansional, innovational, diversification plans of the company.
6. Management of cash: Finance manager has to make decisions with regards to cash management. Cash is required for many purposes like payment of wages and salaries, payment of electricity and water bills, payment to creditors, meeting current liabilities, maintainance of enough stock, purchase of raw materials, etc.
7. Financial controls: The finance manager has not only to plan, procure and utilize the funds but he also has to exercise control over finances. This can be done through many techniques like ratio analysis, financial forecasting, cost and profit control, etc. Dk seth pgdm 2nd sem

We are building a company for long term and investors with a long term focus understand that, says Balakrishnan , CFO.

New Delhi: The Reserve Bank of India (RBI) may cut interest rate by about 0.25 per cent and release more liquidity in its annual credit policy meet tomorrow in the light of sagging factory output and moderation in economic growth, say bankers.
"My personal stance is that cut CRR...I would expect 75 basis point cut in CRR," SBI Chairman Pratip Chaudhuri said.
Last month, RBI slashed CRR (cash reserve ratio) – the percentage of deposits that banks have to keep with the RBI – from 5.5 per cent to 4.75 per cent. With this, the central bank had infused Rs 48,000 crore into the economy.
Indian Overseas Bank Chairman and Managing Director M Narendra said, "Given the microeconomic condition, there is expectation that the RBI would cut both repo and CRR by 25 basis points (0.25 per cent)".
Showing persistent sluggishness in the economy, industrial production growth slowed to 4.1 per cent in February this year,.
DHANANJAY SINGH
PGDM 2ND SEM.

Mumbai: The rupee fell 45 paise to a fresh three-month low of 51.75 against the American currency in the late morning trade on fresh dollar demand from banks and importers amid weak equity market.
The rupee resumed lower at 51.61/62 per dollar at the Interbank Foreign Exchange (Forex) market against last Friday's close of 51.30/31 per dollar and dropped further to 51.75 per dollar. It was quoting at 51.68/69 per dollar at 1030 hrs.
It moved in a range of 51.58 and 51.75 per dollar during the morning deals.
Fresh dollar demand from banks and importers in view of weak equity market amid firm dollar overseas affected the rupee value, a forex dealer said.
The BSE 30-scrip benchmark Sensex declined 30.94 points or 0.18 per cent to 17,063.57. Earlier, it was down 62 points.
In New York, the dollar extended gains against major currencies last Friday as investors reacted to weak data on US consumer sentiment..
DHANANJAY SINGH
PGDM2ND SEM.

In contrast to its predecessors—the gold and dollar standards—the current international monetary system has served the global economy well, even in the most difficult of times. During the Great Recession—the worst downturn in seventy years—the system exhibited great flexibility and resilience. Countries with flexible exchange rates, which account for 80 percent of global gross domestic product (GDP), used them to good effect as shock absorbers. Several countries with pegged rates switched to more flexible regimes during the crisis and some switched back again when confidence returned. These changes were nearly always orderly, with most currencies following a common path against the dollar, which retained its safe-haven status despite the fact that the United States was at the epicenter of the crisis: Currencies depreciated against the dollar during the worst of the crisis and then appreciated again once it ended. Though some currencies saw large real appreciation, most remained in line with fundamentals; misalignments occurred in only a few instances, usually related to the dysfunctional institutional set-up of the eurozone monetary union. Overall, the global economy avoided the balance of payments crises and protectionist responses that characterized previous episodes of acute economic turmoil.
For these reasons, it is difficult to conclude that today’s exchange rate system is fundamentally flawed. At the same time, a number of undesirable developments and responses have occurred in the aftermath of the Great Recession: some developing countries have excessive reserves; several countries have reluctantly resorted to capital controls; a few countries, including Brazil, Switzerland, and Japan, have seen very large exchange rate appreciations; the eurozone is in deep crisis; and fear persists that global imbalances may widen again as the recovery progresses.
by:
Jasleen kaur
II SEM

Definition of 'Weighted Average Cost Of Capital - WACC'

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. All else equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk.

The WACC equation is the cost of each capital component multiplied by its proportional weight and then summing:




Where:
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate

Rumors about Apple's (NASDAQ:AAPL - News) 6th-generation iPhone are picking up, with media reports saying the new smartphone will be out in Oct. The consumer electronic giant's newest offering is expected to have a 4-inch screen, up from the current 3.5 inches, and a sleek new unibody chassis, according to a Topeka Capital Markets analyst. Apple hit a record intraday high of 644, briefly topping a market share of $600 bil. But shares closed down 1.2% to 628.44.
ASHRAF HUSSAIN
PGDM 2ND SEM.

(NPV)

  

MUMBAI, April 4 (Reuters) - The Indian rupee fell on Wednesday weighed by gains in the dollar after expectations of fresh monetary stimulus in the United States faded and local oil importers looked to cover payment obligations before the long weekend.
A fall in local stocks also added to the selling pressure on the rupee, traders said.
Global stocks and the euro fell after the U.S. Federal Reserve dimmed hopes for fresh asset-buying, further underlining its divergence with an embattled Europe that faces recession and remains firmly in crisis-fighting mode.
The rupee ended at 51.055/065 to the dollar, 0.71 p ercent down from Tuesday's close of 50.6950/7050.
Indian financial markets are closed on Thursday and Friday for local holidays.
"We have seen the rupee pull back from near 50.50 which was a strong resistance level for it. Now, the next support for rupee is around 51.35 and then 51.55," A. Ajith Kumar, senior manager of forex trading at Federal Bank.
"Outlook on the rupee is bearish due to weak domestic fundamentals like a widening current account deficit and high global oil prices."
India's balance of payments fell into negative territory in the December quarter for the first time in three years, data released last week showed.
"I think any weakness for rupee is likely to be limited around 51.40 because the central bank may step into the market after this," said a senior foreign currency trader with a private bank.
The Reserve Bank of India has been actively intervening in the local currency market to support the rupee which fell to its record low of 54.30 last December and notched up losses of more than 12 percent in the just concluded fiscal year 2011/12.
The one-month offshore non-deliverable forward contracts were at 51.48.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and on the United Stock Exchange all ended around 51.4, on a combined volume of $4.3 billion. (Editing by Subhadip Sircar

ASHRAF HUSSAIN
PGDM-2nd Semester

MUMBAI: Tata Motors' cars portfolio hasn't had a month like March in a long, long time, with models like the Nano and the Vista fuelling robust double-digit growth over a year ago.

Still, one swallow won't make the company's summer, and the top brass has been considering a string of alternative strategies to counter lower-thananticipated sales of its flagship models, falling market shares and poor profitability of the automobile business in the face of competition from more contemporary rivals.

One of the options being weighed, said a person with direct knowledge of the matter, is de-emphasising the 14-year-old compact car brand Indica, and replacing it over time with more contemporary models in the same segment like the Vista.

Alongside, production of underperforming brands, like the Indigo Marina, and warhorse models, like the Sumo Spacio, may be stopped. The Tata Motors' top brass is also working on a plan to make optimum use of a factory in Sanand in Gujarat that currently produces only the ultra-low cost car, the Nano, and is therefore underutilised.

This would mean that production of some models being made at the factory in Pimpri on the outskirts of Pune could be shared between Pimpri and Sanand. Another measure being worked on is to lean on engine technology of Jaguar Land Rover (JLR), the two luxury brands Tata Motors had acquired in 2008 and spun off into a separate company.

A Tata Motors' spokesperson did not respond to queries emailed to him. Since 2006-07 , Tata Motors' growth has lagged that of the industry; and market share has fallen from 16.44% five years ago to under 12% in the current fiscal year till February (see graphic).

The Nano has been one of the biggest disappointments. Whilst the initial plans were to produce close to 20,000 units a month, Tata Motors has been able to average a little over half of that number. People close to the development say one way to increase utilisation levels at Sanand - and also tap into the tax incentives available - and in the process bring down costs is to have common welding , body and paint shops for the Nano and other Tata cars.

JLR will play a key role in enhancing the appeal of Tata Motors' current range of cars. For instance, JLR plans to develop a twolitre engine that will be modified to have a lower displacement and used in Tata vehicles like the sports utility vehicle , the Safari. Plans also include making the next-gen Aria (a crossover SUV), the Safari and the Land Rover Defender all on same platform.

Phasing out older models is also part of the revival strategy. Tata Motors has done this in the past when it stopped production of the Sierra and Estate models. The Indica will also become less visible as the company opts to focus on a more contemporary and fuel-efficient variant like the Vista.

Already, what began as the Indica Vista is now simply known as Vista in the company's communication material. Tata Motors' passenger car business has operating margins of 6-8 %, points out an equity analyst on condition of anonymity, as against 8-12 % for its peers. He adds that the share of passenger vehicles in the overall top line has come down from 28% in 2006-07 to under 20%.

"Since the launch of Indigo Manza (over 2 years ago), there has been nothing exciting from Tata - unlike its peers who have had many new launches . The company needs to bring new products to market and refocus marketing strategies," says Umesh Karne, auto analyst, BRICS Securities. 

Ashraf hussain
 Pgdm2ndsem.
Pg|11|07 

MUMBAI: Bajaj Auto, India's second-largest two-wheeler maker, has tightened its hold on KTM POWER SPORT by buying another 6.3%, taking it stake in the Austrian motorcycle to a little over 47%.
ET learnt that the company purchased this stake from one of the key stake holders through an open market transaction recently. The purchase was made through Bajaj Auto International Holdings, a Netherlands-based wholly-owned subsidiary of Bajaj Auto.
A senior Bajaj official confirmed the development, but declined to share the details, as the firm is bound by confidentiality agreement.
Bajaj Auto is the second-largest shareholder in KTM. Other large shareholders-Stefan Pierer and Rudolf Knuenz-hold more than 51% stake. Bajaj Auto and KTM are working on a few joint development projects.

Posted By- Nitesh Kumar Singh
PGDM 2nd SEM

Tata Group targets revenues of USD 500 billion by the financial year ending in March 2021,a newspaper report said, as the steel-to-software conglomerate aims to increase sales five times over nine years.
Ratan Tata, outgoing chairman of the group, which includes flagship companies Tata Consultancy Services , Tata Steel and Tata Motors , unveiled the growth plan at a meeting with around 500 senior group executives last month, the newspaper said.
A spokesman for the group declined to comment on the report when contacted by Reuters.
Chairman Tata will step down in December this year, and will be succeeded by Cyrus Mistry, deputy chairman and a former member of the board of holding company Tata Sons.
The 74-year-old has led the conglomerate since 1991 and has embarked on a global shopping spree that has brought companies such as UK tea brand Tetley, European steelmaker Corus and luxury car manufacturer Jaguar Land Rover into the Tata stable.
Around two-thirds of its revenue is generated overseas. The group posted revenues of USD 83 billion in the financial year ending in March 2011, and is expected to see revenues of USD 100 billion in the year that ended last month, the newspaper said.
  Dhananjay Singh
PGDM 2ND