The Secret for Stock Market success

Posted on September 27, 2018Categories Financial MarketsTags , , ,   Leave a comment on The Secret for Stock Market success

The secret for success in stock markets, is actually not a secret at all. In the words of a famous Hollywood blockbuster – Rocky – “you have got to think, like you think”! All that he means is that you devise your own distinctive plan to achieve success. What may work for you may not work for others, but it is unique and suitable for you.

The key for investment success is to identify financially sound companies with competitive advantages and then buying their stocks at a value that gives you a chance for earning profits. The secrets to investing success are divided into two:

  • Identify a distinguished organization
  • Buying at a bargain price

A lot of investors focus on the activities of High Frequency Traders (HFTs) who buy stocks in large quantities on a daily basis. They believe that they can do the same and become millionaires overnight. However, these investors do not realize that HFTs have learnt this skill after trading day in and day out for over 7-8 years. Novice investors are unwilling to do the fundamental research that’s necessary to identify an industry and a company.

In the words of the legendary Warren Buffet, one must invest in a company as though they could shut the markets tomorrow and not open for the next 10 years. If one is able to identify a good company, they can easily get a 1000% Return on Investment over 10 years.

Everybody wants an edge when investing in stocks. The key here is not to find just a business with good sales, but to find a business that’s got a competitive advantage when compared with its competitors. This advantage could be a superior product, an advanced R&D facility or just the availability of raw materials.

How does one decide a bargain price? This is a subjective topic for every investor. There are some investors who are willing to pay a higher price for a company that shows promise as compared to a company that is already performing well. This is directly related to the risk you are willing to take and the research that you have done. Only with your research will you know if a company genuinely deserves the kind of price the market is asking.

A suggestion: never buy a “great stock.” Every investor wants to own great stocks. Obviously they do and so do you, however, the “great stocks” are normally the ones that are suggested by your friends as “tips”. These stocks fall into two categories:

  • Christmas Tree Ornaments – Shiny from outside, but hollow from inside. Easily breaks up with a light touch. They catch the attention of investors easily but fail as the company does not have a sound business. In a few months, nobody even remembers their name.
  • Great, but late – Sometimes, a stock shows promise and is yet to be discovered by investors. However, if you over analyze, other investors on the market discover it and due to an increased demand, the stock becomes too expensive for you (unreasonably high).

When you are investing your hard-earned money, it makes sense to get comfortable with your decisions. In the event that a stock doesn’t feel right, don’t invest in it. There are numerous chances, so you don’t need to jump directly to any stock without analyzing it. Finally, it is the investor’s emotions which are his worst enemy. Too much of greed or fear have led many good investors down a path of loss.

BSE Institute Limited offers a short Course on Capital Markets which provides all participants a comprehensive understanding of the Indian Capital Markets. It is ideal for those who wish to begin investing and growing their portfolios. The program builds a solid foundation for every investor to grow on.

4 ways in which AI is reshaping global finance

Posted on September 25, 2018Categories MBA   Leave a comment on 4 ways in which AI is reshaping global finance

Artificial Intelligence (AI) is rapidly changing the way financial institutions attract and retain their customers. However, it requires new models of collaboration among competitors to transform this industry into something better – report by the World Economic Forum (WEF) and Deloitte.

The report, “The New Physics of Financial Services”, explores the work of AI in transforming financial institutions by radically changing operations of the front and back office, creating major shifts in the regulation of markets.

Many have seen the impressive demos of AI assistants making appointments by calling a restaurant or a hair salon. In New Zealand, many banks have planned to launch these AI based customer service offerings for their retail consumers.

The report identifies four core findings that investigate how AI is fundamentally changing the front-and back-office activities of financial institutions:

Cost center to profit center – AI enabled back-office functions will enable financial institutions to transform their services while pushing them to outsource other unimportant functions. These AI enabled processes will continuously learn and improve by themselves, using data from its collective users. By learning and improving simultaneously, the products developed here can be easily used in the real world. Thus, R&D centers can give a much lower turnaround time and can go from cost centers to profit centers.

A new battle for customer loyalty – Old methods of differentiation for financial institutions such as cost, speed and access are disintegrating. AI is offering a new set of competitive tools with which financial institutions can differentiate themselves.

For instance, the ability of institutions to recommend and advise their customers, will allow them to compete on the value offered.

Also, curating the ecosystem by uniting data from multidimensional systems that incorporate customers, corporate clients and third parties will enable financial institutions to offer better advice and improve performance.

Self-driving finance– Financial advice, a part of every product, is often impersonal and generic. It also tends to be excessively dependent on subjective advice from various customer service agents. A self-driving vision of financial institution could transform the delivery of financial advice, centering customer experience on AI. Thus, every customer may get a different advice based on his income, risk appetite, etc.

With this, individuals can interact with a single platform or an agent who recommends the exact investments/ products an investor should choose – which can be unique for every investor.

AI executes this in three ways:

  • empowered platforms which can think about and switch products and providers
  • progressively customized advice in view of information and
  • consistent optimization through calculations which will automate most routine customer decisions.

Aggregate solutions for shared problems– While AI presents increased opportunities for competition, it exhibits a solid mechanism for co-operation as there are too many shared data-sets.

There is a great potential for cross-institutional cooperation on issues, for example, fraud prevention and anti-money laundering controls, which are regularly run ineffectively and insufficiently today.

Collaborative arrangements based on shared data-sets will fundamentally increase the accuracy, convenience and execution of non-competitive capacities, improving mutual efficiency in tasks and improving the safety of the financial system.

New Zealand is one of those rare developed nations which is has advanced research & development facilities and has quickly implemented value add products that show promise. It is always one of the first countries to import and try out new technologies, which can make it a net exporter of advanced products and services. It has made a lot of progress in the field of Finance, Financial Technology and Artificial Intelligence and is currently on the cusp of becoming a major financial hub due to its efforts.

Despite all the tech and innovations, New Zealand still needs skilled talent to manage this technology.

The University of Otago is one of the best Universities in New Zealand and the world. Along with BSE Institute Limited, it offers an MS in New Zealand, pursuing which could be one of the best decisions of your lives. With 5 postgraduate courses which provide a research-led learning environment, New Zealand can truly be a destination of choice for those hoping to build an international finance career.

Innovation in Wealth Management

Posted on September 21, 2018Categories Short term programmes   Leave a comment on Innovation in Wealth Management

According to a report by Capgemini, the number of Dollar Millionaires in India have increased by 20% as compared to 2017. The major reason has been the boom in the Indian economic activity. Start-ups have made many people Millionaires. There are many individuals who have benefited by investing in start-ups; many employees who accepted a part of their salary as ESOPs and a few smart entrepreneurs who managed to build, scale and sell their businesses.

Then, there are individuals who made their millions by investing in the stock market at the right time. Most of these individuals mentioned above are looking to multiply their wealth by investing it in sensible investment opportunities, thus increasing their networth.

These people are educated, smart and demanding. The real question is whether Indian wealth managers are smart enough to tap the noveau riche and help them invest better. HNIs who grew rich by investing on their own may or may not work with wealth managers as they have successfully increased their networth by investing on their own, but the other HNIs are low hanging fruits that should not be missed.

Disruption with innovation and technology has impacted every industry and wealth management is no exception.

There are many portfolio managers and retail investment platforms which offer Robo Advisory services, Algorithmic trading services, etc which make it easier for HNIs to invest using strategies which are suitable for their personal styles of investing. These tech tools make it easier for an average investor to make sound financial decisions, based on the historical data of markets that investors get from them.

Many international Investment banks, such as Goldman Sachs, plan to offer advanced tools to retail investors in order to reach out to a large segment of the market on their own. The large number of wealth advisors and managers must sit up and take notice of this.

Another interesting aspect of technology is that it’s active 24*7. These tech tools allow investors to invest in any market in the world – thus, allowing individuals to keep their money working for them 24*7 – 365 days a year.

Traditionally, investments required a lot of paperwork/ filing. However, now it has been simplified. Product details are now demonstrated on tablets and investments can now be made within seconds using various web portals and mobile apps. This has enhanced transparency and it’s simple, easy for any HNI to monitor the investments.

Keeping these in mind, most banks are working towards digitizing all offline investments to accelerate and ease a customer’s experience.

Banks have introduced new features in their investment portals that allow customers to analyze the risks and choose products that fulfill their requirements. They have assigned Relationship Managers who act as personal wealth managers. These managers assist them with their product related queries and provide investment advice as well.

Being smart and savvy is one of the key reasons for any person to ascend the social ladder and be an HNI. Learning continuously is an important principle of any successful investor follows regularly.

BSE Institute Limited’s Course on Wealth Management is a one day course that helps you manage your money like a pro. It helps you gain a basic understanding about Financial Planning – Insurance, Investment Planning, Tax Planning and Retirement Planning.

It is said that history is full of examples of wealth transfers that happen as some people, who are not smart investors, lose out to others who are smart investors. It happens everyday of every year! The point to be highlighted is that all smart investors are smart learners. It is important to be hungry for knowledge and keep learning. By learning about new technology, it is possible to grow richer on your own. Stay hungry, stay foolish.

What is economic growth? How does a common man benefit from it?

Posted on September 21, 2018Categories MBA   Leave a comment on What is economic growth? How does a common man benefit from it?

Growth is described as a process of transformation. Economic growth is a process by which a nation’s wealth increases over time. It is measured as the percentage of increase in real Gross Domestic Product (GDP).

Economic growth means an increase in real-time GDP. This increased GDP means an increased in value of national output or national expenditure.

Why is economic growth important:

Economic growth is very important for a healthy economy.

Economic activity depends heavily on the availability of finance and credit. Most investors and bankers have the funds that can develop economies, but they don’t invest their cash too fast. Their primary concern is the ROI that they shall earn – which is heavily dependent on the growth prospects of the country.

Investors invest, only when they see a great opportunity to multiply their funds and the best way to do that is by investing in a business/ economy that has great growth prospects. The economic growth is one of the best yardsticks that most investors use to judge the growth and capability of an economy and thus estimate the ROI that they can get.

One of the biggest impacts on the long-term growth of a country is the national income and the level of employment. When a country’s GDP is increases, it means that there is more manufacturing/ business activity, which practically means that more people are being employed. It also means more earnings, exports, foreign exchange and taxes for the Government. This increases the wealth of the country and its population. It also helps improve the standard of living and thus reduces poverty.

Benefits of economic growth

  • High average incomes: With an increased economic activity and low unemployment, the average incomes of people increase dramatically.
  • Low unemployment: With a dominant economy and higher output, organizations tend to employ more people, thus reducing poverty.
  • Lower government borrowing: A growing economy creates high tax revenue. It also ensures that the Government will be spending less on benefits, such as unemployment benefits. This will help reduce the government’s borrowing. It also plays an active role in reducing the Debt to GDP ratio (tracked by investors).
  • Improved public services: Higher tax revenues help the government to spend more on public services, such as education, healthcare, etc. By spending more on education and skill development, a country has a highly skilled workforce which can innovate and take up jobs that need a highly skilled workforce. This in turn attracts businesses that need a state of the art manufacturing/ research facility, thus, creating more highly income jobs.
  • Increased research and development: Economic growth leads to profitable organizations. It allows them to spend more on research and development, which in turn allows them to come up with better, cost effective solutions that help them get an edge over their competitors.
  • Environmental protection: With an emphasis on research & development, the economy is able to come up with better technology that reduces its carbon footprints and increases economic output at the same time. This helps the society to use renewable resources for energy and many other technologies that are good for the environment.

There are many economies in the world which are experiencing and enjoying the benefits of globalization and a high economic growth. However, one country stands out amongst all these – Australia.

 The Australian economy is growing at a rate of 3.4%, after an unexpected growth in the second quarter of 2018. The economy grew by 0.9% in the second quarter of 2018, beating the expectations of 0.7% growth. It has pushed the annual rate up from 3.1% in the first quarter of 2018 to 3.4% in the second quarter of 2018. This is the strongest growth in the last 6 years.

 The Australian economy is the world’s 13th largest economy and rated AAA by all the global credit rating agencies (S&P, Fitch and Moody’s). Australia not faced a recession in the last 26 years, even during the height of the financial crisis of 2008. One of the key reasons for their growth has been a highly skilled workforce, that keeps getting re-skilled every few years. This allows them to attract all major manufacturers from across the globe to get their high precision products produced.

This is a major reason for Australia to be one of the most welcoming nations in the World for skilled professionals. In addition to this, Australia also offers some of the best educational opportunities for those who wish to learn and grow in the country.

BSE Institute Limited offers students a chance to study in Australia. It is in a collaboration with one of the best Universities in Australia, the Western Sydney University, to jointly offer a Masters in Finance and Master in Business Administration program, which reflects real business challenges, directly derived from the imperatives of business strategy & focuses on a different aspects of management.

The future is certainly bright in a country which has seen no recession in the last 26 years. However, one must make a wise informed decision before taking the plunge.

Elon Musk – a risk or a revolution?

Posted on September 21, 2018Categories Short term programmes   Leave a comment on Elon Musk – a risk or a revolution?

Elon Musk is not a person, he is a revolution. He has been able to give shape to his revolutionary ideas and convert them into billion dollars companies. He founded X.com, which later became Paypal (a $13 Billion company); SpaceX, the 1st privately profitable space exploration company; and Tesla Motors, one of the 1st large scale electric only car company. He is currently working hard on other revolutionary ideas which have taken shape in the form of Solar City, GigaFactory, Hyperloop One and The Boring Company.

We all notice how brilliant Musk is, but we fail to see the risks that he has taken to, first make the world a better place and then earn a living for himself. It is his ability to take calculated risks that have allowed him to build not 1, but 4 large Billion Dollar organizations in 16 short years!

He has been innovative since childhood. At the age of 10, he taught himself computer programming and developed a basic, but interesting, video game called Blastar. He sold this game to PC and Office Technology for US $500, a princely amount for a 10 year old in 1981.

In his late 20s, Musk and his brother Kimbal started a web software company Zip2. They sold it to Compaq computers after 4 years, for a whooping $307 million – a deal which earned Musk $22 million. A multi-millionaire at the age of 27!

Flush with funds, he started X.com, which was later known as PayPal. Once he sold this company, it earned him $180 million in 2002! Now any person with $180 million would have comfortably invested this and lived off the dividends for the rest of their lives. However, the innovator and environmental activist that Elon Musk was, had other plans. He invested the money in Space X and Tesla, technologies which were still in their nascent stages and almost drove him to bankruptcy!

He did this as he believes in the future and hence he invests in companies with an eye on the future.

Tesla offers an excellent example of the risks that Musk and his companies face. Tesla is an electric car manufacturer, named after the legendary American inventor, Nikola Tesla. The cars run on rechargeable Lithium-ion batteries. Without these batteries, the car is practically dead. The challenge here is obtaining the Lithium-ion batteries!

Currently, only Panasonic has the ability to manufacture and supply these cells in quantities that they need. In case of any delay or any other unseen contingency, Tesla’s deadlines would be negatively affected.

In order to minimize this risk and increase the number of cells available, Musk built a battery manufacturer, GigaFactory. He plans to make the factory, the largest manufacturer of lithium-ion batteries.

With the founding of the Gigafactory, Musk solved 3 problems:

  1. Stabilize and increase the supply of battery cells.
  2. Reduce the cost of batteries for Tesla
  3. Another revenue source for him, by supplying other industries which need lithium-ion batteries

Thus, Elon Musk has successfully used backward integration to mitigate the risks his business faces, control costs and has opened another revenue stream for himself.

This is an excellent example of how one can profit with appropriate risk management. Every risk is an opportunity and the ones with proper insights are always able to profit from it.

BSE Institute Limited offers a week long Certificate Course on Risk Management which helps participants identify various risks and opportunities in business. This program has been designed specifically for working professionals to understand the different types of risks involved in a business.

Turn your investment portfolio into a high performing hard hitter – with Mutual Funds

Posted on September 13, 2018Categories Mutual Funds   Leave a comment on Turn your investment portfolio into a high performing hard hitter – with Mutual Funds

In India, mutual fund houses are some of the biggest investors in Equity Markets. Recently, the value of mutual funds’ Assets under Management (AUM) crossed the Rs. 25 lakh crore mark, which is its all-time high value. In August 2017, it was Rs. 20.2 lakh crore. This reflects the popularity of mutual funds as an investment vehicle for retail Indian investors.

According to the Association of Mutual Funds of India (AMFI), the rise in AUM is due to the marketing campaigns (“Mutual funds Sahi hai”) which have been run by  them. This would however be a case of missing the forest for the trees! An investor cannot invest if he does not have the funds to do so.

A major reason for the rise in AUMs has been a rapid increase in the standard of living and an abundance of funds due to it. Many investors find it difficult to invest in equities on their own. This is because it’s tough for retail investors to identify the good stocks from the bad ones. However, a large Asset Management Company (AMC) has an army of analysts and robust processes in place which helps them identify safe investments that give great returns. There are a few Mutual Funds which have performed very very well in the last decade or so.

Most retail investors opt for Systematic Investment Plans (SIPs), which have given investors returns as high as 30% over a period of 5 years. Due to this, the amount invested in AMCs via SIPs has increased from Rs. 4947 crore in August 2017 to Rs. 7700 crore in August 2018.

Earlier, the number of Indians investing in capital markets were low due to their inability to digest a higher amount of risk and this made most retail investors turn to safe banking products such as Fixed Deposits. With an increase in investor education and an increased knowledge of the risk reward ratio, retail investors are willing to invest in better financial products for better returns on investments. With a 30% RoI, any serious investor will not want to miss this bus.

Between 2014-15 to 2017-18, assets under management (AUMs) of mutual funds doubled from Rs 10.83 lakh crore to Rs 21.36 lakh crore (97% increase). In comparison, bank deposits increased from Rs 85.33 lakh crore to Rs 114.75 lakh crore (35% increase) in the same period, according to CARE Ratings. Bank deposits still remain significantly large but the increase in the funds invested with mutual fund houses is huge when compared with bank deposits.

Within mutual funds, investors find balanced funds more attractive. It is a category where around 60-65 percent of funds are invested in equity and the rest in debt. This has given fund holders a massive 43% ROI in the last 5 years. Equity funds saw a growth of 34% while debt funds have witnessed a growth of 18% during the same period. All 3 are still better than bank deposits.

However, one has to be careful when investing in Mutual Funds. Investors can easily decipher the fund they must invest, by being conversant in reading Mutual Funds Fact Sheets. One can easily learn to read Mutual Fund Sheet. There are many online course which an investor can pursue for the same.

BSE Institute Limited’s Certificate program on Mutual Funds provides investors, professionals, distributors and students deep insights on various aspects of the functioning of stocks and the mutual fund industry. It is a great course on mutual funds that lets participants learn the basics in 4 short days.

Some banks have started raising their deposit rates, but they are still lower compared to the returns offered by Mutual Funds. Going by the past few years, it will be very difficult for anyone to offer a rate of interest that is comparable to the returns offered by a Mutual Fund. Till then – Mutual Funds Sahi Hai!

Long live the king – it’s his vision that makes the difference

Posted on September 12, 2018Categories General   Leave a comment on Long live the king – it’s his vision that makes the difference

The Indian IT sector is facing strong headwinds globally, primarily due to uncertain policies which are affecting the talent that they usually attract. Without proper talent, any organization will find it tough to attract and conduct business.

In between this news cycle, one major development barely got any visibility. An American IT major, Syntel, was acquired by the French IT giant Atos for approximately $1 Billion. While it was a large deal, the point to be pondered upon is that, Syntel is as old as Infosys and yet there is a difference in valuation between the two companies. Syntel is valued at $1 Billion, whereas Infosys is valued at $10 BIllion.

Both the companies operate in the same industry, have similar clients, employees, etc. The only difference has been the top management. A dynamic top management, that has had the vision and the courage to set goals for their managers, who, with the right training, have taken their companies to the heights visible today.

That is exactly why the top management of an organization is paid exorbitantly. Many investor activists feel that there is too much disparity between the senior management, mid management and junior executives, but what they don’t realize is that it is due to the vision and the execution of the senior management that a company attracts business, talent and is able to pay out dividends, bonuses and increments. Without their inputs, a company may not exist.

Other great examples include, tech companies such as Apple, Amazon, Google and Facebook.

1. Apple was founded in 1976 and it has a revenue of $230 Billion, 23 times of Infosys!

2. Amazon was founded in 1994 (24 years ago) and it has a revenue of $177 Billion

3. Google was founded in 1998 (19 years ago) and it has a revenue of $110 Billion

4. Facebook was founded in 2004 (14 years ago) and it has a revenue of $ 40 Billion

These are some of the most valuable/ profitable companies and also some of the youngest companies of the World. How did these companies manage to achieve the scale and size that most large conglomerates only dreamt of? The answer lies in their crystal clear vision!

Apple, Facebook and Google were started by college students who had barely completed their education. It was their vision to build a world class organization that attracted investors; employees which let them build products, which have actually changed the way we do things and helped them build Billion Dollar businesses.

A detail that is vital and yet is overlooked, is the senior management team. All the companies mentioned above have had a robust senior management team, which has believed in the product and worked very hard right from the beginning. It is these senior executives who finally went out to convince law makers, make sales call, on-board vendors and so on, which actually helped make these companies evolve into the powerhouses that they are today.

It is the commitment of the senior management that syncs the entire organization in place for achieving the goals set by CEOs/ MDs.

Most senior executives are people who have honed their skills at the middle and the top management over a long period of time. However, there are some who are able to demonstrate their versatility and their abilities at a very young age. The best example is David Knopf, the 29 year old global CFO of the Heinz Kraft Company, which was founded in 1869.

Across the world, there are many more executives like Mr. Knopf, who have got senior designations at a very young age. One of the most important factors for all these executives is the excellent education that they have received, which allows them to hit the ground running. One of the best courses for working executives who wish to advance their careers is BSE Institute’s Advance Management Program (AMP) – a course offered in association with IIM Lucknow, which aims to help professionals with over 3 years of work experience to occupy the corner office as soon as possible. The course is best suited for those planning an executive MBA – as the industry considers the AMP at par with the country’s best executive MBA programs.

Many executives dream to reach the pinnacle very early in their careers, but there are very few who are actually willing to go the extra mile by adhering to a consistency in their dedication and effort and ultimately achieve this goal.

Will the Petrodollars soon be replaced by Petroyuans?

Posted on September 12, 2018Categories Short term programmes   Leave a comment on Will the Petrodollars soon be replaced by Petroyuans?

The Petrodollar system of oil payments that was setup in the year 1974 by USA and the Kingdom of Saudi Arabia, may soon be replaced by the Chinese Yuan as the sole currency accepted for Oil Sales Contracts. The system was put in place in order to arrest the slide in the value of the US Dollar after the US Govt pulled out of the Bretton Woods agreement in 1970. This system ensured that the US Dollar would be the only currency acceptable to all OPEC (Organization of the Petroleum Exporting Countries) for their Oil Sales Contracts.

The US Dollar would thus continue to be the reserve currency of the World and all the Dollars earned by OPEC countries would be invested in US assets and securities.

The success of this system depends on 2 factors :

  1. US being the largest importer of oil
  2. US providing security and stability to the middle eastern countries.

It was a successful system that ensured the global dominance of the US economy and the US Dollar. However, the system may be on the verge of being replaced by the Petroyuan, .i.e. the Chinese Yuan for oil payments.

US has been able to extract and refine a lot of Shale oil, which has helped it to reduce its dependence on imported oil. This has led to a lower US demand for imported oil and thus, lower oil prices in the global markets.

With the rapid expansion of the Chinese economy, China is now the largest importer of oil. In order to manufacture a large number of goods, the Chinese need raw materials, with oil being the most important one.

It is easier for any country to trade in their own currency over any other currency, as you don’t need to procure your currency from any country. Thus, being able to buy oil or any other commodity in Yuan will definitely be easier than buying it in US Dollars. Also, this shall help the Yuan replace the US Dollar as a global reserve currency and announce their arrival as the largest economy of the World.

This is why the Chinese want to replace the Petrodollars with the Petroyuan!

China is trying to convince the Kingdom of Saudi Arabia to use the Petroyuan instead of the Petrodollar. Saudi Arabia is a key player in the scheme of things as it continues to be the largest oil exporter in the World and any change in the Saudi position will easily result in all the other OPEC countries following suit.

Oil exporting countries like Russia, Iran and Venezuela have been under heavy US sanctions which do not allow them to use and trade in US Dollars easily. These 3 countries are major oil exporters and oil exports are a major source of income for them. This has hurt their economies to a a great extent. China being a large importer of oil, trades with them countries using the Yuan.

Many other OPEC countries such as Algeria, Libya, Iraq, etc. depend heavily on China for extracting oil and developing their infrastructure such as ports and SEZs. Algeria uses the Yuan to trade with China, instead of the US Dollar.

This is not an ideal situation for Saudi Arabia as it is loses China as a customer and a large oil market share and revenue to other OPEC countries.

This puts Saudi Arabia in a tough spot as it cannot be the only OPEC country that does not accept Yuan. China is also lobbying hard to ensure that the Yuan replaces the US Dollar in Oil Sale Contracts.

China recently inaugurated the Shanghai International Energy Exchange, where organizations can purchase or sell oil in Yuan denominated contracts. The Yuan contracts are linked to Gold, thus allowing traders to convert their Yuans to Gold, whenever needed. The objective of this exchange is to make the Yuan a much more acceptable currency that is easily traded and thus the reserve currency of the World.

This is a significant development for the World of International Finance. There are a lot of investors and traders who earn a significant portion of their incomes by betting for or against Dollars and other global currencies. With the weakening of the US Dollar, many international businesses will be affected due to the volatile currency fluctuations.

It is therefore important to keep your ears to the ground and have sound knowledge about the industry. Doing short term courses periodically is sure to help you understand currency risks better. BSE Institute Limited offers a fantastic 2 day course on Forex Trading, which helps participants stay up to date with the current industry trends and the global market conditions.

With a lot of OPEC countries like Libya, Algeria, Kuwait, UAE, Iraq, Russia, Iran and Venezuela depending heavily on China for their various infrastructure and economic needs, it’s only a matter of time before the Petrodollar is replaced by the Petroyuan.

Fool-proof ways to be a successful Data Scientist

Posted on September 12, 2018Categories Data analytics   Leave a comment on Fool-proof ways to be a successful Data Scientist

The decades of 1990s and the 2000s are synonymous with the rise of large IT/ technology firms which have helped many professionals become US Dollar Millionaires, by just working for a firm. That’s right! Many professionals are Millionaires because of the fantastic salaries that they are able to draw.

There are many engineers and graduates who believed that they could ride the same wave and have the same bright future. Unfortunately that is not the case. With the advent of automation and an uncertain global policy framework, the future is not as rosy as it earlier was for IT professionals.

One phrase which rings true even today is that, opportunities are always on offer for those willing to look for them! Data Science is a field that was limited only to a few high end tech companies 5 years ago, but it’s a division which almost all companies with a staff of 50 or more have. Data Science today is intrinsically linked to the survival of many companies.

A data scientist is a professional responsible for collecting, analyzing and interpreting large amounts of data which help in identifying ways to grow the business of the organization.

A Data Scientist is able to sift through any data shared and inform marketers/ sales heads about the various kinds of consumers, the time they buy, their brand/ product preferences, their buying patterns, etc. This is data which was available earlier, but was not utilized. As researchers and statisticians have developed tools to use this data to our advantage, it has created many job positions which were non-existent earlier.

The demand for Data Scientists is growing significantly as many big corporations want clean information which they can use from a large data dump. According to NASSCOM there are over 5 lakh Data Scientist vacancies in India in 2018. USA alone has a shortage of 1.5 Lakh Data Scientists. A lot of people know about various vacancies, but they struggle to be prepared for it. Here’s how one can be prepared for it:

  1. Define the problem

In the words of the revered patriarch of the TTK Prestige group, Shri TT Jagganathan, it is absolutely necessary to first learn to define and understand the problem, rather than simply learn formulas and applying them wherever possible.

One of the biggest challenges with Data Science is knowing what you want to achieve. When you receive a few GB/ TB of data, it is difficult to absorb that data and make sense of it. Only if you have a defined objective in mind do you actually know what’s supposed to be done. Without an objective it is similar to finding a needle in a haystack. With set road map, your team will always know the steps to be taken and avoid any decisions that waste time.

  1. Understand the business before you start

This is a continuation of the first point. Without a sound understanding of what the business does, it is impossible to understand the challenges it faces. Conducting a SWOT analysis of the business/ industry is a must. Without having a thorough understanding of the operations, one cannot understand the areas that he/ she needs to look into. There are a few things you should know before you start solving a problem. This includes customer information, industry level data, business strategies and product details. All these details are required for proper analysis.

  1. Follow the diverge-converge thinking process

 Data analytics is an important part of innovation and customer service. The ability to think by first considering a wide variety of options/ ideas and then narrowing down to a few good options is known as the diverge-converge thinking process. You must follow a systematic way to diverge and converge. Think of all possible hypotheses which could be applicable to a problem, all the possible solutions. Start eliminating them one by one to finally come down to a handful (2-3) solutions which can be implemented and executed quickly.

Having this approach is necessary in an industry where there is Tera Bytes (TBs) of data available. Without a systematic approach to problems, people can easily get lost in a large dump of data.

  1. Always think of an alternate solution  

When one tends to dwell on a particular industry and all its data, it is very easy and dangerous to develop tunnel vision, .i.e. thinking only about one particular solution/ in one direction. Sometimes the data at hand may not be enough to come to certain conclusions. For that exact reason, we need to plan for contingencies.

In some cases, the hypotheses/ assumptions made are very close to each other. Hence, it becomes difficult to suggest one definite path for resolving a problem. Hence, it’s always necessary to have a second option to fall back on.

  1. Participate in Hackathons

 Wikipedia defines a hackathon as a (hack day/ hackfest/ codefest) an event in which programmers, analysts and all those interested in software design/ programming/ development (including subject-matter-experts), collaborate together on tough/ expert software projects.

In an industry as dynamic as Data Analytics/ Science, participating in hackathons will let professionals understand the various techniques used by competitors and other senior professionals of the industry. This gives individuals a clear insight into the way senior professionals work and the manner in which they can make a positive impact on their businesses.

  1. Learn upcoming tools  

Working with a large quantity of data is very tough hence, it shall always be an industry that needs innovative tools which help professionals manage data with ease. This industry is always ripe for disruption. Therefore, there will always be people who come up with new tools and softwares, which can help us work faster. Keep reading about the same as it is beneficial to stay updated. Learning new tools always helps you to handle a big databases.

BSE Institute Limited’s GFMP Edge Certified Data Scientist program will train you to join the Data Science field in just 4 months. It is currently one of the best data science programs for enthusiasts as one can learn about the latest tools, techniques and can practically get big data analytics training.

As an industry that was not very big a 5 years ago, Data Science is growing at a stupendous rate. Corporates of every major economy of the world are embracing data analysis at a rapid rate and even those who don’t plan to build a career in the industry need to understand its ramifications, and applications to improve their career prospects.

The Insolvency and Bankruptcy Code

Posted on September 11, 2018Categories General   Leave a comment on The Insolvency and Bankruptcy Code

What is the Insolvency and Bankruptcy Code?

The Insolvency and Bankruptcy code (IBC) 2016 is the bankruptcy law that consolidated all the laws related to insolvency in India by creating a single law. The law is passed by Government of India in May 2016 and came into effect from December 2016. Insolvency is defined as the inability of individuals or corporates to repay their debts, while bankruptcy is the legal declaration of individuals or corporates who are incapable to repay their debt. Thus, bankruptcy is just a formal/ legal declaration of insolvency.

Why was the law made?

There was no single law dealing with insolvency and bankruptcy in India. Liquidation of companies was handled by courts with many bankruptcy laws (Presidency Town Insolvency Act, Provincial Insolvency Act, Sick Industrial Companies Act, etc). These cases would be pending in courts and it would take more than 3-4 years for a company to shut down its operations in India. The new law will reduce this time to less than a year.

Key features of Insolvency and Bankruptcy Code 2016:

  • The code covers individuals, companies, Limited Liability Partnerships (LLP) and corporate.
  • The insolvency resolution process can be initiated by either the debtor or creditor.
  • A maximum time limit is set for the completion of the entire process. For corporates, the process must be completed in 180 days which can be extended by 90 days, if the case is complex. For individuals, the maximum time limit is 90 days which can be extended by 45 days.
  • Insolvency and Bankruptcy Board of India was formed bythe Government of India to regulate all the cases of insolvency. This board has members from the Ministry of Finance, the Ministry of Law and Justice and the Reserve Bank of India.
  • All insolvencycases are managed and controlled by licensed professionals known as the Insolvency Practitioner.
  • Two adjudicating authorities are formed to oversee the resolution process. They are:National Company Law Tribunal (NCLT) for corporates and Debt Recovery Tribunal (DRT) for individuals. Before NCLT, the Board for Industrial and Financial Reconstruction (BIFR) determined sickness of corporates and assisted them in reviving or shutting down their operations.
  • The code will also address cross-border insolvency through bilateral agreements with other countries.

What’s new in Insolvency and Bankruptcy Code (after 2018 amendments):

So far two amendments for Insolvency and Bankruptcy Code 2016 were passed by Government of India. Following are some important points from the amendment:

  • Individual home buyers will now have the right to initiate insolvencyproceedings against real estate builders and developers. Representation in the Committee of Creditors (CoC) makes them an integral part of the decision-making process
  • To prevent dishonest peoplefrom misusing the law, intentional/ wilful defaulters and those whose accounts were classified as ‘non-performing assets’, have been  barred from bidding for stressed assets.
  • The amendment ordinance gives special benefits to the Micro, Small and Medium Sector Enterprises. Now, the promoters of MSMEs are allowed to bid for their companies as long as they are not willful defaulters and don’t attract any other related disqualification.

Procedure for filing bankruptcy with Insolvency and Bankruptcy Code:

  1. An insolvency plea can be submitted to Adjudicating authority (NCLT or DRT) by any stakeholder- debtor or creditor.
  2. The maximum time to accept or reject the plea is 14 days.
  3. If accepted, the tribunal will appoint an Insolvency Resolution Professional who will draft the resolution plan within 180 days.
  4. After this, the court will initiate the Insolvency Resolution process.
  5. The board of directors and management of the company stand suspended for the said period. If required, the Insolvency Resolution Professional may seek help from the company’s management.
  6. If Insolvency Resolution Professional were unable to revive the company, then the liquidation process will get initiated.

Potential benefits of the Insolvency and Bankruptcy Code:

  • Ease of doing business is not just about easy entry but also easy exit. To ensure the survival of fittest in a market economy, ease of exit is also very important.
  • A clear and a transparent dispute redressal system always helps attract investors and promotes free trade.
  • Timely resolution of insolvency caseswill free up a bank’s resources and also allows companies to focus on job and value creation.

Important cases resolved with the Insolvency and Bankruptcy Code:

  • Bhushan Steel was acquired by Bamnipal Steel Ltd (BNPL), a wholly- owned subsidiary of Tata Steel. The most important outcome of the deal was that banks got Rs 35,200 crore immediately, which covers most of the principal amount Bhushan Steel owedto its lenders.
  • Electrosteel Steels was acquired by Vedanta limited. Total admitted financial claims are Rs. 13,300crores. Vedanta offered the highest bid of Rs. 5,320 crore and will hold 90 percent equity of Electrosteel Steels. The rest 10 percent will be held by existing Electrosteel Steels shareholders and creditors.
  • Lanco Infratech is headedfor liquidation as the committee of creditors (CoC) refused the resolution plan submitted by Thriveni Earthmovers. Lanco Infratech has a consolidate dept of over Rs. 45,000 crores.
  • Alok Industries was bagged by a consortium of Reliance Industries Limited- JM Financial Asset Reconstruction. Both offered to paya total of 5,000 crores against the company’s total recoverable dept of about Rs. 30,000 crores.

The Insolvency and Bankruptcy Code, 2016 is a large and a complex act designed to support investors. For those seeking to learn more, BSE Institute’s short term program on the Insolvency & the Bankruptcy Code is a great way to learn and make the most of this act.

Conclusion

The Insolvency and Bankruptcy Code will have a significant impact on improving the country’s business environment. The law lays the insolvency processes for individuals, companies and partnership firms. It has brought a significant change in the power sharing equation between creditors and debtors by giving both of them the power to initiate proceedings against each other. It shall also help improve India’s ranking in ease of doing business index.