Arthoday 2013: Changing Paradigms in the World of Finance

The Finance Conclave, Arthoday 2013, organized by Institute of Management, Nirma University commenced at 09:00 am on December 14, 2013 with the theme ‘Changing Paradigms in the world of Finance’. The business community has witnessed major upheavals in the financial world post 2008. Organisations are gearing up to insulate themselves against unexpected uncertainties and the way of doing business has changed phenomenally by bringing new unheard dynamics into the whole paradigm. The sub-themes discussed in the conclave included the emerging trends in financial reporting, corporate governance, data analytics, and the change in banking sector in light of the proposal to grant banking licenses.

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The inaugural session was addressed by Mr. Nirav Patel, Director, Accounting Advisory Services, KPMG India on the theme of changing accounting standards and the relevance of the new Companies Act, 2013. He began by talking about the current global trends of convergence to IFRS, Tax Accounting standards and the new Companies Act. IFRS has become the de-facto global language for financial reporting in 122 countries across the world, encouraging international investing and corporate governance, and reducing cost of capital and of compliance. This will also help the flow of funds into India. He then spoke about the advent of the Companies Act, 2013 in India, a fresh and welcome departure from the legacy of English influence on our laws. The Companies Act focuses on higher auditor accountability – auditors are now not only tasked with the proper perusal of financial statements of the company, probably for the first time ever in the world, they have to report any material fraud in the company directly to the government. It is for the first time that any country has mandated CSR for companies. Mr Patel expressed hope that this move will lead to development of the country in the long term. The Act also places importance on ‘Investor Protection’. The Act recognizes the independent directors and includes a separate code of conduct for them.

The first plenary session was addressed by Mr. Rajeev Shah, CEO and Executive Director, RBSA. He spoke about the role of Valuation in Mergers and Acquisitions in India. He spoke on the topic of mergers and acquisitions. The valuation of a company done through Discounted Cash flows is just an accounting estimate but the actual value is subjective to buyers’ perceptions, needs and future potential. He said that the ultimate decision in these situations is based more on intuition rather than on hard facts. He explained these concepts through live cases such as the partnership between GAIL and Vadodara Municipal Seva Sadan.

The next session was addressed by Mr. Arun Uday, Principal, Headland Fund. He started off with the basics of private equity, which falls broadly in the high risk- high return asset class. The whole process of funding is very complicated and involves many rounds if negotiations for rights of both parties. This industry started in the late 80s with modest returns. In the 2000s , it enjoyed a boom time with some companies enjoying a return of 40%. But after the 2008 crisis, there has been a crisis in this industry as well and returns and income has slumped. Out of the total of $5 billion of equity has been invested but only $30 million has been returned. The remaining money has been wiped out. He also elaborated on the entire process of funding of the companies such as Flipkart.

The valedictory session of the conclave was addressed by Mr. Nitin Purohit, CTO, Aureus Analytics on the theme of emerging trend of Big Data Analytics. Big data is all about three Vs – Volume, Velocity and Variety. Companies were not able to capture unstructured in the past, but Big Data has helped the organizations in doing so. He gave the example of Heineken Ignite – a revolutionary concept that makes use of a smart chip in Heineken bottles to observe consumption patterns, to emphasize the scope and importance of big data analytics for organizations today.

(Content Courtesy: Media Committee, Photo Courtesy: Pratikriti – The Photography Club)

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