1. FINANCIAL CRISIS
-JONTY MOHTA (UGP/09-12)

2. HOW IT STARTED ?
In USA
• The Epicenter
• Sub-prime Mortgage Crisis
• Created fundamentally by the government policies and
institutions.
• Quasi-Government companies: Fannie Mae and Freddie Mac
IIPM AHMEDABAD
5/10/2010 2
UGP/09-12

3. IN USA…
• Lehman Brothers bankruptcy
• Sale of Merrill Lynch to Bank of America
• AIG demand of loan from the federal reserve
• Created panic in WALL STREET and throughout the global indices
IIPM AHMEDABAD
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UGP/09-12

4. DOW JONES FTSE-100 DAX SHANGHAI
US UK GERMANY CHINA
11,543 5,636 6,422 2,397
8,451 3,932 4,541 2,073
CAC-40 NIKKEI RTS SENSEX
FRANCE JAPAN RUSSIA INDIA
4,482 13,072 1,646 14,564
3,176 8,276 792 11,309
*29th Aug – 13th Oct
IIPM AHMEDABAD
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UGP/09-12

5. OTHER CONTRIBUTING FACTORS
• High prices of basic commodities
• Inflation
• Unemployment: ILO predicted 20mn jobs lost by 2009 end
• High price of oil
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5/10/2010 5
UGP/09-12

6. EFFECTS ON INDIA
• “IF THE GLOBAL FINANCIAL CRISIS CAUSES A RECESSION IN THE
MAIN ECONOMIES, THIS WILL COMPROMISE OUR EXPORTS.”
►MANMOHAN SINGH
Prime Minister,
in an interview to an French daily
le Figaro
IIPM AHMEDABAD
5/10/2010 6
UGP/09-12

7. EFFECTS…
• Credit crunch
• Lesser exports
• Decreased production
• Lesser investments
• Declining sales
• Falling rupee
• Sluggish real estate to affect demand for cement,
steel and other construction materials
IIPM AHMEDABAD
5/10/2010 7
UGP/09-12

8. THE BIG FALL
• MUKESH AMBANI
• RELIANCE INDUSTRIES
• 59.23 -54% 26.87
• AZIM PREMJI
• WIPRO
• 15.18 -55% 6.76
st th
*1 Jan - 8 Oct
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5/10/2010 8
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9. CONTD…
• K P SINGH
• DLF GROUP
• 40.81 -76% 9.57
• ANIL AMBANI
• RELINCE ADAG
• 41.85 -58% 17.47
*in $ billion
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10. GOVERNMENT „S ACTION…
• Provide liquidity
• Attract investors
• Avoid rumors
• Control basic factors as inflation(8%), repo rate(6.5%), reverse
repo rate(5%), CRR(5.5%)
• Prevent rupee depreciation
IIPM AHMEDABAD
5/10/2010 10
UGP/09-12