PROJECT ON INTERNATIONAL FINANCE

Submitted to: Mrs Vandana Submitted by: Nitin Wasan

Roll no: PG20095316
Question 1 :) Trace USD/INR rates from 19July to 28 July date’s on X axis and Rates on Y axis?

Answer1 :-)

US/INR RATES

7/19/2010 Monday 46.60514 INR

7/20/2010 Tuesday 47.25699 INR

7/21/2010 Wednesday 47.09766 INR

7/22/2010 Thursday 47.15588 INR

7/23/2010 Friday 46.59691 INR

7/24/2010 Saturday 46.92475 INR

7/25/2010 Sunday 46.80650 INR

7/26/2010 Monday 47.03360 INR

7/27/2010 Tuesday 46.58539 INR

7/28/2010 Wednesday 46.5700 INR

47.4

47.26

47.2
47.16

47.1

47.03

47

46.92

46.81
46.8 Series 2

46.61 46.6
46.6 46.59
46.57

46.4

46.2
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Question 2:) Case Study on a company choosing Joint Venture, Licensing, Exports, or Merger Acquisition

route to go international?

Answer2 :) BHARTI-AIRTEL AND ZAIN DEAL

BhartiAirtel Limited formerly known as Bharti Tele-Ventures LTD (BTVL) is an Indian company offering
telecommunication services in 18 countries. It is the largest cellular service provider in India, with more than
137 million subscriptions as of June 2010.BhartiAirtel is the world's third largest, single-country mobile
operator and fifth largest telecom operator in the world in terms of subscriber base. It also offers fixed line
services and broadband services. The company also provides telephone services and broadband Internet access
(DSL) in over 96 cities in India

ABOUT ZAIN GROUP

Zain Group is a mobile telecommunications company founded in 1983 in Kuwait as MTC or Mobile
Telecommunications Company, and was later rebranded to Zain in 2007. Zain has commercial presence in 8
countries across Africa and the Middle East and employs over 5000 people.On 8 June 2010, the Indian
company BhartiAirtel completed a deal to buy Zain businesses in 15 African countries for $10.7 billion.

THE DEAL

The board of Kuwait’s ZainTelecom accepted a $10.7-billion (Rs 49,700 crore) offer from BhartiAirtel for the
bulk of its African assets, breathing new life into the Indian company’s cherished ambition of transforming
itself into an emerging-market multinational. Bharti acquired 100% of Zain’s African operations.The
acquisition will give Bharti a firm foothold in a relatively untapped market and pit it in direct competition with
MTN, with which it has tried and failed to merge twice. The operations spread across 15 African countries that
Bharti was seeking to buy and were grouped under an entity called Zain International.Subsequently, Bharti
would become a majority holder of Zain and the total value of the deal would be around $10 billion. Getting it
right for the future relies heavily on bedrock of cost leadership.

OUTCOME OF THE DEAL

”Sunil Bharti Mittal, CMD, BhartiAirtel, announced the closure of the Zain acquisition. Bharti’s $10.7-billion
acquisition of the Zain group's operations in 15 African countries will make Bharti airtel the world's No. 5
wireless carrier by subscribers Of the $10.7 billion enterprise value of Zain, Bharti paid $8.3 billion upfront and
was to pay $700 million after a year. It would also take over approximately $1.7 billion of Zain’s debts as on 31
December, 2009.The countries in which Bharti had acquired the operations were - Burkina Faso, Chad, Congo
Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria,
Sierra Leone, Tanzania, Uganda, and Zambia. Zain is the market leader in 10 of the 15 countries and second in
four countries.
 REASONS FOR THE DEAL

1) Competition in India (13 operator each of 22 circles)

2) Cut call rates from Rs 16.80 pm to .50 pm.

3) Decrease in Average Revenue per user from 500 Rs to 145 Rs today. In last five years telecom density in

India is almost 47.89 %

4) Expected 80% sales in 2015

MUTUAL BENEFIT FROM THE DEAL

A) ZAIN from BHARTI

1) Bharti may bring in tariff schemes for low average revenue per user but high volume market.
2) Zain can also benefit from Bharti‘s efficiency in managing network operations.

B) BHARTI from ZAIN

1) Bharti can understand African market better.

2) It can learn a lot from Zain expertise in data service such as 3G.

Question 3: ) Find the Two News on Export and Import and find the learning’s out of them?

Answer3: COAL INDIA TO PLAN TO FIRST TERMINAL FOR IMPORTS

Coal India Ltd. plans to invest in its first port terminal to handle imports to help meet increasing demand for the
fuel, according to a company official said.\The Company intends to build a terminal in a venture with
Visakhapatnam Port Trust in southeast India by 2013 with a capacity to import as much as 6 million metric tons
annually l. Coal India also intends to form a joint venture with NTPC Ltd, to buy the fuel from overseas.

UNDERSTANDINGS FROM THE SAME

The reason being is that it is used as a fuel for generating power and electricity since the electricity
consumption is more in India.

Secondly, it is also due to the high coal demand by the metallurgical and other industries.

Thirdly, CIL and its subsidiaries, accounting 92% of total coal production in India are not able to meet the
projected demand alone and hence arises the need for coal import.
 DABUR INDIA PROFITS UP 19% ON HIGHER EXPORTS
Dabur India today announced a 19% increase in net profit at Rs 107 crore for the first quarter ended June 30,
2010 on 29% increase in exports. Total sales increased 19% to Rs 916 crore from Rs 768 crore reported in
Q1FY10.

UNDERSTANDINGS FROM THE SAME

The strong volume growth of categories like hair oil, skin care, toothpaste, health supplements,
digestive food and home care have contributed towards the high profit.

Secondly, the improvements in macro environmental factors like change in cultural tastes, govt.
regulations, change in interest rates, competitors and good monsoons have also been favourable for the
company.

Question 4 :) Discuss the currency regime of any country and comment?

Answer: -) currency regime of euro:-

HISTORICAL BACKGROUND OF EURO EXCHANGE RATE

The Euro was introduced in the year 1999 which replaced the European Currency Unit (ECU) with 1:1 ratio.
The euro and the euro dollar exchange rate are managed by the European Central Bank (ECB) which is
currently based in Frankfurt, Germany and the European System of Central Banks (ECSB) which is composed
of the member states’ central banks.

THE SYMBOL, €

The Euro currency symbol was designed and created by Alain Biliet, a Belgian. The symbol is actually a
combination of the Greek epsilon, symbolizes the weight of the European civilization. The “E” which stands for
Europe; and the two parallel lines crossing through mean Euro’s stability.

COUNTRIES PEGGED TO THE EURO

The euro also has several foreign currencies that were pegged to it. These currencies include: the Bosnia and
Herzegovina convertible mark, the Bulgarian lev, the CFP franc, the CFA franc, the Comorian franc, and the
Cap Verdean escudo. Hence, the euro is the official currency of the European states (13 states) and five (5)
territories or states outside the union.

Moreover, there are twenty five (25) states and/or territories where there currencies are pegged to the euro
including countries in mainland Africa, other five (5) European Union members which will eventually join the
coalition, some French Pacific territories, two (2) African island countries, a Balkan country, Bosnia and
Herzegovina.

THE EURO EXCHANGE RATE MOVEMENTS

When the euro was introduced to the financial market, the euro dollar exchange rate against other major
currencies has fallen heavily, and most especially against the US dollar. In 1999, the dollar to euro exchange
rate was at US$1.18 per euro but on October of 2000, the euro exchange rate fell to $0.8228 per US dollar. This
was the lowest exchange rate for euro of all – time. The euro recovered in 2001 rising to $0.96 as its exchange
rate but it fell again on July of the same year. The exchange rate for euro at that time was $0.8344, a little higher
than the all-time low.

When the coins and notes have started to appear in 2002 and with the replacement of all currencies (national),
the euro started to steadily appreciate. Since November 2003, the euro to dollar exchange rate has remained
above $1.15 and no longer fell below $1.25 starting August of 2006. Last October 2007, the euro dollar
exchange rate has reached $1.4299. Now, with the current US crisis, the euro dollar exchange rate is on the
verge of breaking the $1.6 barrier.

ADVANTAGES OF A SINGLE CURRENCY

1) If the euro is to be successful, it must have a solid economic foundation.

2) Having a single currency among European Union member states removes the trade cost of exchanging
money. In banking transactions, banks in the Euro zone must treat cross-border transactions as a simple
domestic transaction, consequently lowering the consumer’s intra-member transaction fees.

3) Another advantage of a unified single currency is the price parity. The differences in prices of a certain
product and/or level should decrease because of the ‘law of one price’. The price transparency across
member states will allow consumers to find more affordable goods and/or services.