Solutions to Key talking points 6

1. Most of the time, with reduced inflation, the farmer gets a lower rate for his produce. At the same time he spends less on the goods he buys. But note that there is a negative impact on his savings. So he may be on the slight negative side.
Curbing inflation may mean that only the end price is reduced and may sometime have little impact on the price that the farmer gets. (E.g., in case of petrol price cut). In that case he does not get affected.

2. It will have downward impact.
Increased interest rates means more savings and lesser money supply in the market. Hence downward impact. Also real estate prices will go down and hence downward impact again.

3. It will have an upward impact.
No tax benefits mean that people don’t save as much and hence upward impact with increased money supply. But also note that this may be a little dented, since Government collects 30% of that money as tax and hence may be able to control the impact to an extent.

4. It will have a downward impact.
Real estate will go down. Though it is not a part of WPI/CPI, it will have a downward impact on inflation. The price of the tomatoes you buy from foodworld (or even the local market) also includes the real estate cost to certain extent. Lesser money in real estate market means lower money supply too and hence downward impact again.
The money (tax part) shifts hand from people to the Government. And hence Government has the ability to control better

5. Negative inflation is a sign of recession. Inflation is a sign of a growing economy. But if it is high, the positives from the growth are dented.

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Solutions to Key Talking Point 5

Hi guys,

Here comes my analysis of the situation. My answers are at logger-heads with all comments. So if you disagree after reading my answers, lets have a discussion.

Note that the audience of cable channels and DD are almost mutually exclusive. Most people who have cable, though they get DD, do not watch it these days (Anybody contesting this??:). Hence the ordinance gives an opportunity to the right holders to reach an audience that they never reached before, and also they get paid for it (Additional 75% of DD ad revenues)

1. The revenues from current broadcast will not go down since the audience has remained the same. Will get additional revenue (75% of DD Ads) by sharing it with DD. Hence the total Ad revenue goes up

2. Current cable subscribers who subscribe channels only for certain events will drop out and hence may be harmful to some extent. Boquet offerings like Sony, Zee etc who give a bunch of channels may suffer lesser
They will still retain many viewers because of post match analysis, highlights, other sports etc
On the positive side, they get to reach a wider audience and hence more ad revenue.
The above points may balance out slightly towards the positive side for the right holders

3. No, since it gets hardly any Ad revenue for the whole day telecast. Considering that it cud have sold those slots for better Ads. Note that DD still will gets good Ad revenue since it reaches an audience that other channels wont. Plus it gets lot of Govt Ads too
It will benifit if it puts the feed only in DD sports, which is languishing completely

4. Since overall it looks positive for the cable industry, the future biddings would go up.

5. No. You dont want DD to turn a mirror of other sport channels. DD will suffer in the long run.

Additionally, the cable industry may want to insist that they shud be given rights to sell the Ad space rather than DD doing it. With a strong stake, they will be able to sell higher.
Also understand the difference between wider audience Vs target audience that I have described in detail in the comments section of the case. Click here to go

In short, plus for people, plus for cable, negative for DD. So it is a political master stroke. It takes a little revenue out of DD and invests it in the political future of Congress.

Parting shot (In support of my take)
If it were to have a negative impact, cable guys would have protested or gone to court. The very fact that they have not done it shows it is positive for them :)

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Solutions to Key talking point - 4

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Hey guys,

I was surprised that not many people were keen on reading the articles and answering the questions. Though I think that it is a great way of learning and we shud all read well, I did not get a great buy-in from the group. I even registered on NYtimes so that everyone need not waste time.

Anyway, my comments and points together

Article #1
1. Aparna was right, business gets affected. Real estate value does decrease, but I guess little does the govt bother.
Additionally, people travelling thru the area get taxed for no reason.
People having offices/businesses also get taxed for daily travel.
Traffic may slow down because of toll booths
--- Can we alternatively have high parking fee so that office-goers and pass-thru-commuters dont get affected? Or can we remove parking altogether from main roads and have parking bulidings (could be private too)

2. Very good points by Aparna on this, especially point 3. I think an extension of point 2 is that people get used to public transport (as long as govt ensures there is enough)

Article #2
1. Since the demand for corn goes up, the corn prices go up and hence more people would shift to growing corn (instead of rice, wheat etc). Hence the supply of other agricultural products reduce causing inflation.
On the balancing side, fuel prices may go down in short term (in long term they have to stabilise) and hence will have a downward impact on inflation

Other things
1. World would be a cleaner place and global warming may go down
2. India would benifit because of lower oil dependancy

Any more additions and comments from people are welcome

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Solutions to Key talking points - 3

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Hey all,

Many complained to me that the questions were very tough. I am sorry for the same, though after reading some of the answers I am sure you would learn some basics. Will try to keep them more ‘within syllabus’ next time :) In the meantime, let me know any area you want me cover in the future group discussions

Note: When you answer these questions, you have to note that ‘the rest of the factors are constant’.
1. If Government goes ahead with the decision to invest about 5% of pension funds in the stock market, would is push the stock market higher?
It goes up since there are more buyers (more money). It may go up very small percentage as b2b noted.
Another reason, apart from maths, why it will go up is that it shows the intent of the Government to be more pro-active in investing its funds in the market

2. A company has a PE ratio of x and is doing 30% profit growth every year. If starts doing 50% growth a year, does the PE ratio go up?
PE ratio = price/’earning per share’. PE ratio is not just a numerator vs denominator ratio value. It is an indicator of how the market sees the “company’s future potential”. E.g., If company A has a higher PE ration than B, that means that the market believes that the company A will give it better returns than company B in the future. So instead of 30%, if a company starts doing 50% earnings the price will go up and so will the PE ratio. Numerator will go up more than the denominator.
Note that the PE of the sensex itself has gone up in the last 6 months indicating that the market has more confidence in the future economy than it had in the past. So rather than people saying that the index has gone up, saying that PE has gone up shows that the market is more bullish on the economy. It is a hint for the next GD topic :)

3. If company A has profits higher than that of company B, who would have a higher PE ratio, with both being in the same industry
Sorry that the question was a little vague. I meant earning per share when I said profits. As it follows from the previous explanation, in a fair market A should have a higher PE ratio.

4. If returns become higher by investing in stock market, why are people opposed to pension funds investing in stock market?
All were on the mark. Risk is also going up.

5. If a stock worth Rs 1000 is split into two stocks worth Rs 500, would it have an upward impact on the price?
Liquidity is increased and hence the price should go up with other factors remaining constant, though by a small amount

6. If the exports of India were to increase by 25% next year, would it have an appreciating effect on the rupee?
Yes it would. The demand for rupee has gone up and hence should appreciate. Similarly if imports go up, dollar demand increases and hence rupee should depreciate.
Again with all factors constant

7. If reserve bank of India increases the lending rate, would it have an upward impact on the real estate prices?
Downward impact as most pointed out since the demand goes down

8. If the prices of fuel were to go up, would it have upward pressure on inflation?
Yes it would since essential commodity prices would go up

9. If the prices of dal were to go up, would it have upward pressure on inflation?
Dal is a part of the inflation calculation (CPI and WPI) as some pointed and hence it goes up. Read up on WPI and CPI from the net.

10. If the prices of cars were to go up would it have upward pressure on inflation?
Cars not part of inflation calculation and hence it would not go up

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Complete Key Talking Analysis

Hey guys,

Here are the list of all 'Key talking points' analysis so that they can be at one place for you all to review before going for Group Discussion and personal interviews

Key Talking Points 6
Key Talking Points 5
Key Talking Points 4
Key Talking Points 3
Key Talking Points 2
Key Talking Points 1

Solutions to Key talking points - 2

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Except for some confusions, I think people have been fairly on the mark for the first set

1. Most are correct. He is not 'entitled' to more than 5% inspite of the fact that he gave it in goodwill at a lower than market price and Chandu profited from it

2. Rakesh has the right to oppose since he would have considered all factors in balance sheet while paying a certain amount of money for his stake

3. Even though it is 51-49 ratio, it does not mean that Chandu can take any decision. He cannot give his uncle 20%.
Simple example to elucidate - Chandu cannot double his salary without Rakesh permitting just because he has 51%. Nor can he employ his uncle for one day and give him 1 lakh :)

4. The answers wont change :) that was an easy one

For Set Two
Good attempt here too by all. One thing to understand is the funda of company being a legal entity. For the acts of company, only company can be sued. Neither employees, nor shareholders.

1. No, they cannot claim. It is a limited liability firm and the court has ruled against the company and not Chandu/Rakesh. The very idea of a limited firm is that the liabilities are limited to the investment and thats it!
Example to elucidate: If Infosys had closed before they paid out the dues to Rekha (Phanish Murthy case), she could not have come knocking at my door just because I owner Infy shares

2. The company has declared to close down and has no money to give. HDFC can claim but there is nothing for it to get

3. As for the same reason as answer 1, HDFC cannot claim it from Chandu and Rakesh (or from any of the investors)

4. No they cannot claim. They themselves are owners too

5. The answers will not change since it is still a limited company. Public or private does not matter.

I am sure that there will still be small confusions lurking. Put it across and lets resolve them. Hope this is helping all
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Solutions to Key talking points - 1

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1. Yes most of the guys are right, The company owns the intellectual property rights. But only if it is mentioned in the agreement of employment, and it is usually is. Note that my company cannot have IPR on the blog I write, since it will not be covered in the agreement

2. Neither Anand, not the company can file for a patent. Computer programs/algorithms are covered under 'Copyright' only. And the copyright is owned by the company

3. Anand cannot use it since the company owns the IPR (even if the company has not 'filed' for copyright). He can use it in different disguise, but is always prone to suing. He will have to prove that either it is essential different or that it is common market algorithm/architecture etc

4. Not obligated. But may want to share to retain and motivate
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