MBA (Business Economics) Batch of 2016-18

Department of Business Economics, University of Delhi, South Campus

Pre-Orientation Assignment

Submitted by: Ainesh Kudadah

Section 1

Q.1 Evaluate the performance of RBI Governor Dr. Raghuram Rajan for his term. Do you think he was
successful in his task? Why/Why Not? Comment on the conflict between the Government & the RBI
during Dr. Rajan’s term.

Ans.1 The rupee tumbled around 20% to record level of 69 against USD, this free fall was controlled
after Mr. Rajan took over as Governor of Reserve Bank of India, an IIT-D alumni and IIM-A alumni in the
month of September, 2013. The former CE (Chief Economist) at IMF (International monetary fund),
during which he prominently predicted the 2008 global financial crisis.

Mr. Rajan successfully arrested the Indian rupee which was tip-toeing around levels of 70 with respect
to the dollar, which recovered to convincible levels following number of measures taken by the Central
Bank in Phase to stop foreign fund outflow and also attract overseas funds.

Moreover, Battling Inflation: In 2013, The Consumer Price Index Inflation (CPI) was near to a double digit
mark and the whole-sale price Inflation (WPI), was nearing close to 7%. The Governor Mr. Rajan
successfully launched his first monetary policy review, through which he raised the policy repo rate
under the liquidity adjustment facility (LAF) by 25 basis points from 7.25% to 7.5% effective
immediately, which came as a shock to the outside financial market.

Later, he changed the main inflation yardstick from WPI to retail inflation, contrary to the previous
norms of giving more weightage to WPI than CPI as the indicator of inflation for all policy reasons. In his
tenure Mr. Rajan has taken some courageous and some might say outrageous steps to curtail the
inflation and he has managed to curb the inflation, which caused huge problems for the Indian economy
before his appointment as the Governor.

There has been several conflicts between the government at present and the governor Mr. Rajan, which
was likely as he was sailing through political pressure of the bureaucracy, since there was a change of
guards in the centre during summer of 2014 when Mr. Modi led NDA government took over from UPA-II,
which hired Mr. Rajan. And Mr. Rajan was never liked by the new faces in the finance ministry, at least
not during the initial months of Modi government.

Mr. Subramanium Swamy A BJP leader suggested: "RBI Governor is not appropriate for the country. I
don't want to speak much about him. He has hiked interest rates in the garb of controlling inflation that
has damaged the country," The Governor's actions have "led to collapse of industry and rise of
unemployment in the economy", he said. "The sooner he is sent back to Chicago, the better it would be.

This basically, shows that our country has zero tolerance for people stepping out of the box, to curtail or
manage a problem. Allegations are always made against the brave in our country.
Q.2 Today there is widespread political crisis in India. Comment

Ans. 2 Crises are deemed to be negative changes in the political, societal, or environmental, especially
when they occur abruptly, with little or no, warning. And, India is a country of unprecedented
uncertainties. The Indian National Congress after Independence was India’s dominant political party, as
of 2015, in the 15 general elections since independence, it has won an outright majority on 6 different
occasions and led the ruling coalition for further four times, heading the central government for 49
years all together, which tumbled as soon as Modi led BJP government won General election of 2014
with a staggering 66.3% of votes in their favor which was a clear majority and was witnessed by the
country. Hence, very likely the political unrest and crisis would and has been a widespread epidemic in
India till date.

Like, the Make in India program launched by Modi govt. is opposed by the opposition.

The Introduction of FYUP in Delhi University and then scrapping it off in the mid-way.

The introduction of the 7th pay commission, which is causing unrest to quite a lot of people as they
demand more remuneration.

The Tours of our Prime minister to abroad which is criticized.

They conflict between previous amendments and new.

The JNU case.

The clash between the state and central government.

Etc.

Q.3 "Current ruling government is choosing heads of national institutions from the party lines & not
from the required fields. Recently Mr. Chetan Chauhan has been chosen as the Chief of National
Institute of fashion technology. At the same time conflict between the Ministry of Human Resources
with the prestigious institutes (IITs, IIMs) has also surfaced."

Do you agree with these changes? Why/Why not? What will be the consequences of these decisions in
longer run?

Ans. 3 Off course, there will be consequences in the longer run as people from the same field will have
more knowledge regarding these institutions. They will have the agenda and the power to exploit
resources when needed for the benefit of the organization. Those who aren’t from the field will
probably not be able to implement what is right.

They might not even be able to make right decision.

For instance, Pahlaj Nihalani and Udta Punjab case. The demands made by CBFC ere pretty
unreasonable. In The case of IITR and IIM, they are the most prestigious institutions of our country. So,
they need to be run keeping in mind the existing code of conduct and at the same time, policies can be
implemented that might benefit the institution.

If someone from outside this field comes in, he/she would have to study closely and also, that would
take time and resources. Even if they do study, they might not be able to grasp it completely.

And on the govt. note, the ruling parties would like a stronghold on the functioning of the institutions
so, obviously they would choose the candidates they like.
Section 2

Q.6 Write a short note on the economic repercussions of Daenery’s abolishment of slavery in slaver’s
bay and Mareen. (Game of thrones)

Ans. 6 Danerys, The mother f Dragons, the true heir to the iron throne has successfully captured Mareen
and has overthrown the practice of slavery which was and had been the main economic activity of the
Mareen since its inception. Though many attempts was made to execute the queen by the sons of Harpy
in alliance with the slave masters which themselves sold the unsullied soldiers to Danerys in the
beginning, wants her to be overthrown as they know that the only practice i.e Slavery which is the sole
identity of the slaver’s bay Mareen cannot and should not be abolished.

Slavery and trade of slaves/soldiers who know nothing beyond following blindly their buyers command,
is deeply rooted among the people of Mareen, they simply do not know what freedom feels like which
Daenerys is ready to give them, this is causing opposition of Danerys by the people and is fueled by the
allegations of the slave masters.

Not, only economic but societal and environmental repercussions would be present to be faced by the
queen and her subordinates. There is no, other alternative for Mareen to make money and do not have
anything to exchange with other 6 kingdoms except for slaves.

Danerys would have to introduce different options for the people of Mareen to earn. For e.g. they could
be taught craftsmanship, carpentry etc. to earn their livelihood.

The queen very swiftly must try and abolish the slavery, as slavery is deeply rooted in the people of
Mareen and they do not believe in anything except of slavery.

Q.7 How did PepsiCo and Coco-cola build an empire in the soft drinks industry? How would you tackle
these giants if you were to start a soft-drink company? Briefly describe your marketing plan for the first
year in the beverages industry (non-alcoholic) in India considering you have 10,000,000 INR for
marketing expenses.

Ans. 7 PepsiCo and Coco-cola are one of the biggest giants in terms of revenue generation. No, other
soft drink company has even came close to their magnitude.
Still, if I were to start a soft drink company with
Capital available = 10,000,000 INR
I would, Firstly hire Interns and researchers to conduct the research on the basic requirements of the
Indian market with respect to the Taste and price as these two are the major factors that affect the sales
of the company.

Moreover, I would appoint designers to design an logo and would choose the name accordingly that
would connect to the people and would sign a celebrity as India adores its celebrities like god.

I’ll set up contracts with other channels to promote and sell my product. I would sponsor teams basically
related to cricket as cricket is a religion in India.

That should cover the 4p’s of marketing.

Q.8 Hockey legend Dhanraj Pillay has started a hockey academy at Mumbai. He hires you as chief
marketing officer and wants you to devise strategies to make hockey as popular as cricket in Mumbai.
Briefly describe your strategies for the same.

Ans. 8 Every single big name in cricket has played in Mumbai grounds, and most of the Cricketing giants
has emerged from this very city, be it Gavaskar, Sachin Tendulkar and many more. There is so much
history of cricket indulging with Mumbai, and it is safe to say that Mumbai is the prime manufacturers of
Cricketers of all classes. A country where cricket is nothing less than an undying passion, A religion
nonetheless, and Mumbai being its core, one can hardly imagine any other sport to be associated with is
city.

Though, as the Chief marketing officer of The hockey academy started by the legend Dhanraj Pillay
himself, I would challenge as devise structure to make hockey as popular as cricket in Mumbai.

First of all, I would hire an Indian Cricketing legend preferably a Mumbaikar to promote the sport in the
city and to inaugurate the hockey academy at a large scale.

Moreover, I would try and get hold of fellow Indian Hockey players to come and play a friendly inaugural
match in respect of Mr. Pillay and would commercialize the whole match as much as possible to attract
the audience targeting mainly the youngsters and their parents to encourage them to play hockey for
fun and fitness and not only to get selected in the National side, which is nonetheless a huge incentive
itself. Moreover, there are Hockey leagues like PHL (Premier hockey league) and teams owned by film
stars like John Abraham etc. which is not as popular as IPL (Indian premier league) but they are getting
on to the viewers year by year.

The academy should attract students under the likes of Mr. Pillay himself and other fellow present
hockey players who can provide assistance on time to time basis.

Lastly, association of hockey with brands/celebrities popular among Kids and teenagers, would market
the name of hockey not only in Mumbai but to the whole country.

SECTION 3

Q.9 Marks for 25 students of a class are as below:

16,22,39,17,11,29,32,17,40,6,16,31,17,22,35,38,13,41,49,20,13,44,22,35,28
a) Complete the table as shown above; find the modal interval and the interval containing the median.
b) Calculate the population mean, median and standard deviation for the marks. c) Draw a random
sample of 6 observations, and calculate the sample mean, median and standard deviation.

Note: You can use excel for this.

Ans. 9 A)

Test Scores Frequency

41-50 3
31-40 7
21-30 5
11-20 9
1-10 1

Modal Interval = 11-20

Interval containing median = 21-30
Mean = 653/25 = 26.12

Requirement of median,

Arranging in ascending order :

6,11,13,13,16,16,17,17,17,20,22,22,22,28,29,31,32,35,35,38,39,40,41,44,49
Median = 22

Standard deviation

Test Scores Mid-point Frequency Sum (Sum)2

41-50 45.5 3 136.5 18632.25
31-40 35.5 7 248.5 61752.25
21-30 25.5 5 127.5 16256.25
11-20 15.5 9 139.5 19460.25
1-10 5.5 1 5.5 30.25

Total 25 657.5 116131.25

B)Mean = 657.5/25 = 26.3
Mean Square = 116131.25/25 = 4646.302
Variance = Mean square – (Mean)2
= 4646.302 – (26.3)2 = 3954.612
Standard Deviation = √3954.612 = 62.8857~63

C) Random sample of 6 observations = 16,22,39,17,11,29

Sample mean = 16+22+39+17+11+29 = 134/6 = 22.3333

6
For Median, arranging in ascending order: 11,16,17,22,29,39
Median = 17+22 = 39/2 = 19.5
2
Q.10 Guesstimate the number of green lays (American style cream and onion) 20 rupees packet sold in
Delhi.

Ans. 10. Since, its Introduction in 1995 in India Lays has been kind of a pioneer in potato chips making
industry in India, Lays has developed its brand so successfully that the first thing that comes to mind
when thought of Chips is Lays, same as The brand Maggi for noodles in India.

To Guesstimate the number of 20rs. A unit green Lays sold in Delhi.

--___

The above is the estimate percentage of people eating chips in Delhi.

The above is the estimate percentage of people of Delhi eating Lay’s

The above shows the estimate percentage of people favoring the American style flavored Lays as
compared to others.
Hence, the guesstimate: There are approx. 19 million people in Delhi, out of which 34% eat Chips as
their snack which comes out to be = 6,460,000 million.

Out of Which 80% consume Lays which comes out to be = 5,426,400 million.

Out of which 10% prefer American style flavoring which comes out to be = 542,640 million.

The Estimate percentage of people buying the Large packet of lays i.e 20 Rs. Packet which is 10%

Hence, the final calculation.

542,640 million prefer American style flavoring,

Out of which 10% buy 20 Rs. Packet that comes out to be = 54,264 million.

Hence, my guesstimate.

(NOTE: The above stats and charts are taken from the research conducted by Ruchika Jaiswal & Rahul
Singh of IMS Ghaziabad. Link- https://www.scribd.com/doc/14254508/project-report-on-lays-potato-
chips )
Section 4

Q.12 What is the net income of a firm that has a return on equity of 10%, a leverage ratio of 2, an asset
turnover of 2.5, and revenue of $5 million?

Ans. 12 Find – Net Income

Return on equity (ROE) = Net income/shareholder’s equity = 10% (given) -----(1)
Shareholder’s equity = Total assets – Total liabilities -----(2)
Asset turnover = Sales or Revenues/Total assets = 2.5 (given)
 Total assets = $5000000/2.5 = $2000000 -----(3)
Leverage ratio = 2 (given) = Total liabilities/shareholder’s equity = Debt/Equity ratio
 Total liabilities = 2*Shareholder’s equity -----(4)
Putting (3) and (4) in (2)
Shareholder’s equity = $2000000 – 2*Shareholder’s equity
Shareholder’s equity = $2000000 – 2(Shareholder’s equity)
3*Shareholder’s equity = $2000000
 Shareholder’s equity = $2000000/3 = 666666.6666~ 666667 -----(5)
Putting (5) in (1)
0.10 = Net income/$666667
=> Net income = 666667*0.10
Net income = $66666.7~$66667
Net Income = $66667
Hence, the net income is = $66667.

Q.13 Given the following information, compute the price/cash flow ratio for ABC Tech.

Net income per share = $50

Price per share = $200

Depreciation per share = $10

Interest expense per share = $4

Marginal tax rate = 25%

Ans. 13 Price/cash flow ratio = share price/cash flow per share

Share price = $200 (given)
Cash flow per share = Net income per share/operating cash flow
(here, Net income per share is given as $50)
Operating cash flow = Net income + Depreciation – interest – tax
= 50+10-4-50(tax=25% of 200)
=6
Cash flow per share = 50/6 = 8.3333
Thus, Price/cash flow ratio = 200/8.333 = $24 (approx.)