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SHAHEED STUDIES

SUKHDEV

COLLEGE

OF

BUSINESS

(BATCH 2010-2012)

Summer Report

Internship

KPMG

Submitted by:
Saloni Jain 8145

CONTENT S

PREFACE ........................................................................................................................................................ 3

About KPMG ................................................................................................................................................. 4 About KPMG in India ................................................................................................................................ 5 Major Service Divisions ............................................................................................................................ 5 Major Service offerings ............................................................................................................................ 6 About Advisory ......................................................................................................................................... 6 About Corporate Finance ....................................................................................................................... 10 Mergers and Acquisitions ....................................................................................................................... 13

OBJECTIVES of the Internship ..................................................................................................................... 14

TOOLS USED................................................................................................................................................ 15

Areas of Work Done ................................................................................................................................... 17 Mobile Value Added Services (mVAS) .................................................................................................... 17 Areas of Responsibility ..................................................................................................................... 19 OOH Media ............................................................................................................................................. 23 Areas of Responsibility ...................................................................................................................... 23 3G, BWA and Wimax .............................................................................................................................. 28 3G ........................................................................................................................................................... 28 BWA ........................................................................................................................................................ 28 Areas of Responsibility ...................................................................................................................... 29 Rajasthan Patrika .................................................................................................................................... 33 Areas of....................................................................................................................... 34 Responsibility Some examples of the work performed are given below: ..................................................................... 35

Neemrana ............................................................................................................................. 38 Hospitality Areas of....................................................................................................................... 38 Responsibility 6. IT and ITES ........................................................................................................................ 41 Valuations Areas of....................................................................................................................... 41 Responsibility 7.Hedge Funds and Private Equity.......................................................................................................... 42 Private Equity ......................................................................................................................................... 42 Hedge Funds ........................................................................................................................................... 42 Areas Responsibility of....................................................................................................................... 43

CONCLUSION .............................................................................................................................................. 44

PREFAC E
Internships are more than just a summer job or a "semester job" with a paycheck.

Summer internship is a way through which they gain an insight into the real corporate world and how things function there. Therefore, this report has been prepared the completion of my internship at KPMG. The purpose of this report is to explain what I did and learned during my internship period with the Mergers and Acquisitions division of KPMG. The report focuses primarily on the assignments handled, working environment and the tasks assigned. It would be highly appreciated if recommendations are given after reading this report. It is hoped that this internship report serves as a cardinal vehicle in understanding the work culture and projects at KPMG.

About KPMG
KPMG in India is one of the leading providers of risk, financial and business advisory, internal audit, corporate governance, and tax and regulatory services. With a global approach to service delivery, KPMG responds to clients' complex business challenges with a broad range of services across industry sectors and national boundaries.

About KPMG in India


KPMG was established in India in September 1993, and has rapidly built a significant competitive presence in the country. The firm operates from its offices in Mumbai, Pune, Delhi, Kolkata, Chennai, Bangalore, Hyderabad , Kochi and Chandigarh, and offers its clients a full range of services, including financial and business advisory, tax and regulatory. Executive Team Russell Parera is the Chief Executive Officer for KPMG's operations in India and a member of the International Council of KPMG.

Major Service Divisions


KPMG in India provides tax and advisory services and industry insight to help organizations negotiate risks and perform in the dynamic and challenging environments in which they do business. Tax Tax addresses the needs and objectives of each client, enabling them to balance compliance and value creation.

Advisory Advisory assists companies and public sector bodies to mitigate risk, improve performance and create value. Industries KPMG can provide an informed perspective on issues faced by the global business community.

Major Service offerings


Audit Tax Accounting Advisory Services Corporate Finance Business Performance Services Forensic Financial Risk Management GRCS IT Advisory Services Transaction Services

About Advisory
Globally, Advisory has grown into a global $7.4bn business with 30,000 professional staff worldwide. In India KPMG is more than 1500 and growing at fantastic rates. Theres a minefield of regulations to tackle; constant cost pressures and increased competition from both home and abroad to consider as well as your organization's own growth agenda. Being flexible, dynamic and ready to respond are modern-day conditions of business success. KPMG has invested years into helping organizations cope in the bad times, succeed in the good times and do what they need to do (and more) the rest of the time. When KPMG visits client businesses, theyre not just looking at

isolated issues but at the whole picture to see how they can deliver the best all-round growth, governance and performance strategies. They want their clients to be successful which is why they work hard at getting the chemistry right and giving objective advice to preserve and maximize the value in client businesses. Known for tackling difficult challenges no matter where in the world they arise KPMGs Advisory Services combines technical, business and market skills with an appetite for delivering workable solutions. And because they really care about their clients success, youll find that their relationship with clients isnt a one-off but something that endures. I think you will find that Advisory Services offers a fresh perspective on traditional issues as well as a dynamic and innovative take on some of the new challenges that todays globalized economy presents. Advisory Services
BUSINESS PERFORMANCE SERVICES

Well-performing business processes create greater efficiency and can help deliver value. Working alongside clients, they help to streamline those processes, to integrate finance functions following acquisition, to enhance controls and to contain costs and business risks. They look at systems, supply chains, capital structures, contracts with third parties and intellectual property to see how they can best be optimized. They identify areas of weakness that might jeopardize achievement against objectives and help to put them right and devise and execute management systems to create sustainable business performance.
CORPORATE FINANCE

No matter where in the world you operate, KPMGs 2,000 corporate finance specialists can help clients weigh up whether an acquisition or deal is right for the client. They provide the intelligence and multiple years experience to help you develop a bidding strategy that can give the client advantage over other interested parties. They help clients to package a disposal attractively or to put in place financing structures that will give the safest and best returns. From drawing board to deal closure, they are committed to ensuring that you get best and frank advice.

FINANCIAL RISK MANAGEMENT

Risk, when understood and managed properly, can create business opportunities and deliver real value to the business. KPMG's financial risk management specialists helps companies from major international banks, insurance firms to corporate and public clients to make the most out of business and financial risk by not only identifying, assessing, managing, reporting on and mitigating the risks they face, but also by providing guidance regarding the nature of risks they could further take up within their reach to provide impetus to their business growth. With 1,600 financial risk management practitioners around the world, their experience spans across sectors, industries and geographies. They help their clients create frameworks that will help them win over regulators' and investment community's confidence in their appetite for and ability to control business and financial risk.
FORENSIC

Fraud is one of the most difficult risks to detect but is an endemic, ever-evolving and costly threat to the finances and reputations of many organizations. Operating in both developed and emerging markets, KPMGs forensic specialists provide robust and practical advice on reducing reputational risk and commercial losses. Using the latest technology to detect suspicious behaviors and anomalies, they act quickly to investigate suspected or actual fraud and to recover losses. They can help clients in commercial disputes to reach a satisfactory negotiated settlement. And, in the event of regulatory noncompliance, respond on clients behalf to enquiries from regulators. They also provide corporate intelligence to support merger and acquisition activity and can review intellectual property, licenses and contracts for valuation purpose.
GOVERNANCE RISK AND COMPLIANCE SERVICES

As the role of internal audit evolves from score-keeper to value-maker, GRCS helps in the transition. They assist with the transformation of the internal audit function from its traditional, transactions-based model to one that delivers strategic business assurance and value. They help clients preserve shareholder value and make informed business decisions by putting in place an enterprise risk management system that continuously improves the controls environment and guards against risk. They provide support with regulatory compliance, corporate governance, third party contract compliance and global sustainability by helping their clients adopt the structures, culture, procedures, controls, roles and communication processes that can optimize business performance and shareholder confidence.
IT ADVISORY

While technology presents major opportunities to improve efficiency and global reach, it also creates significant risks. They help their clients to achieve maximum value from their IT investment. They advise them in using technology to help drive growth, improve business performance and to safeguard operational integrity, security and continuity. Their global network gives them the local expertise to help companies align their IT operations and business objectives with often repeatable and distributable solutions. They help them to use technology to drive growth, improve business performance and to safeguard operational integrity, security and continuity.
TRANSACTION SERVICES

KPMGs Transaction Services provides support on mergers and acquisitions right from before the deal is signed, through to completion, integration or separation. They help clients to identify risks and opportunities in their acquisition, disposal or joint venture and also assist with buy-outs and Initial Public Offerings. Selling a business or a major asset, executing a takeover or completing a merger are all prone to uncertainties. Their role is help clients create and enhance value, to find the right opportunities, to secure stakeholder buy-in and rock solid finance while maintaining regulatory compliance and keeping the core operation running as usual.
ACCOUNTING ADVISORY SERVICES

With the recent developments in India and around the globe on areas relating to accounting and financial reporting such as re-statement requirements, increased consciousness of senior management including Audit Committees and Board of Directors on the financial reporting, convergence of Indian Accounting standards with International financial reporting standards (IFRS), KPMGs Accounting Advisory Services (AAS) team is in a unique position to service Corporate India on all matters concerning accounting and financial reporting. KPMG in India is the only practice in India to have a dedicated and focused Accounting Advisory Services, with professionals who have the practical experience and the focus to advise their clients on the forthcoming challenges and have significant credentials and experience of serving clients in this area.

About Corporate Finance


KPMG's Corporate Finance practice in India has a successful track record of providing a broad range of financial and strategic advisory services to clients across a wide array of industries. These services comprise objective advice on mergers and acquisitions, financing options and evaluating strategic alternatives. Their goal is to be seen as a trusted and objective advisor and to be acknowledged as a preferred provider of corporate finance services in the global market, and as the leading provider of those services in the Indian market. Their international network of more than 2500 professionals working from more than 100 offices across 60 countries combined with their deep sector knowledge is united in its aim of assisting their clients develop and pursue their strategic and transactional objectives. Their services include advice on: Mergers and Acquisitions Business Sales and Disposals Valuations and Fairness Opinions Global Infrastructure & Projects Group Advisory Private Equity Advisory Structured Finance/Debt Syndication Restructuring Advisory Their team, which includes investment bankers who are qualified engineers, MBAs from premier institutions and chartered accountants is industry focused and brings measurable value to a client's drive for growth, competitiveness and profitability. This places KPMG in a good position in the industry. The domestic M&A league tables have consistently placed KPMG in the top 10. KPMG in India's Corporate Finance professionals advise clients in many forms, from analyzing strategic options, to assessing value, to structuring the deal, to designing mechanisms for presenting the deal to the marketplace, to managing the transaction process, to negotiating and helping secure the optimal terms for a successful closing.

They also seek to back their professional judgment in furnishing fairness opinions and other assurance to comfort investors and regulators. KPMGs Corporate Finance practice in India has a successful track record of providing a broad suite of financial and strategic advisory services for several marquee transactions across a wide array of industries. As a result, the domestic M&A league tables have consistently placed KPMG in the top 10. Their team comprises of approximately 60 professionals across five locations in India (Mumbai, Delhi, Kolkata, Hyderabad and Chennai). The team is organised along defined products and industry lines, so as to give clients value add service offerings. The Corporate Finance team is well integrated with KPMGs International network. Their team comprises of more than 2,300 professionals including former investment bankers and senior government officials, along with lawyers, economists, business analysts and accountants working collaboratively from 105 offices in 60 countries across the globe. Their team comprising of investment bankers who are qualified engineers, MBAs from premier institutions and chartered accountants, is industry focused and brings measurable value to a clients drive for growth, competitiveness and profitability.

Service Offerings They offer a comprehensive suite of well defined product offerings to clients.

Mergers and Acquisitions Advisory Acquisitions, mergers, takeovers, buy-outs

Divestitures and demergers Joint ventures and transaction alliances Financing Advisory Equity capital raising particularly private equity Debt capital raising corporate, project and structured finance Valuation Services M&A valuations Purchase Price Allocations JV valuations PE portfolio valuations Restructuring Advisory Restructuring of businesses in stressed, distressed situations Global Infrastructure and Projects Group Advisory Their product offerings cover the creation of new infrastructure and help to enhance the value of existing infrastructure assets, through refinancing and mergers and acquisitions. They work across sectors and service lines in the infrastructure sector.

Corporate Finance - Value Proposition Globally, KPMG Corporate Finance has been ranked as the #1 M&A advisor by number of successful transactions, consistently over the past five years, making them the advisor of choice for mid-market clients. KPMG Corporate Finance has a demonstrated record of bringing tangible value add in its advisory role to clients, even in difficult market conditions. Recently, they advised key shareholders of a company in the sale of their holdings to a FMCG firm at four times the listed share price of the company.

Mergers and Acquisitions


The phrase mergers and acquisitions (abbreviated M&A ) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. An acquisition , also known as a takeover or a buyout, is the buying of one company (the =target) by another. Merger is when two companies combine together to form a new company alltogether. An acquisition may be private or public, depending on whether the acquiree or merging company is or isn't listed in public markets. An acquisition may be friendly or hostile. Whether a purchase is perceived as a friendly or hostile depends on how it is communicated to and received by the target company's board of directors, employees and shareholders. It is quite normal though for M&A deal communications to take place in a so called 'confidentiality bubble' whereby information flows are restricted due to confidentiality agreements (Harwood, 2005). In the case of a friendly transaction, the companies cooperate in negotiations; in the case of a hostile deal, the takeover target is unwilling to be bought or the target'sboard Hostile acquisitions can, and often do, turn friendly at the end, as the acquiror secures the endorsement of the transaction from the board of the acquiree company. This usually requires an improvement in the terms of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, hotheyver, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover . has no prior knowledge of the offer. Another type of acquisition is reverse merger, a deal that enables a private company to get publicly listed in a short time period. A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publicly listed shell company, usually one with no business and limited assets. Achieving acquisition success has proven to be very difficult, while various studies have shown that 50% of acquisitions were unsuccessful.

The Indian Mergers and Acquisitions Industry The Indian M&E industry has evolved significantly over the last decade and the pace of this evolution is only expected to increase going forward. With mobile phones becoming ubiquitous, rising mobile and internet penetration and increased use of search engines and social networking platforms, consumer patterns have witnessed a marked change in India.

On the whole, the year 2010 has been welcomed with a renewed sense of hope and a fresh perspective replete with the learnings of 2009. The GDP forecast at is 6.75 percent and 8 percent for the years 2009-10 and 2011-12 respectively looks promising. On the back of several factors, the overall M&E market in India is expected to grow at a compounded annual growth rate of 13 percent per annum through 2014 to reach INR 1.1 trillion. The untapped potential for growth in media reach, impact of digitisation and convergence, better consumer understanding, sustained efforts in innovation, and enhanced penetration of regional markets all augur theyll for the industry.

OBJECTIVES Internship

of

the

The internship offered me the opportunity to: 1. Gain Knowledge As a KPMG intern, I got an opportunity to gain an insight into the working and mechanism of the Mergers and Acquisitions of companies. The objective was to find out the procedure of such transactions and work on numerous deals myself so as to obtain a deep understanding of the Corporate Finance division of KPMG. 2. Find Mentors Mentors can inspire you to meet challenges and achieve success. They enable you to see a wider realm of opportunities, and they provide valuable advice to help you excel in your career. KPMG is committed to their mentoring culture. I was paired up with my mentors at the start of my internship experience to offer me guidance and help answer day-to-day questions. 3. Network As a KPMG intern, I was a member of the team, getting the chance to interact with senior executives and to work with KPMG International member firms worldwide. I also had the opportunity to make contacts and form relationships which I could use later on in my career.

4. Gain Experience An internship is a perfect opportunity for you to gain valuable experience that can make you more marketable to employers. During the internship I was assigned to a variety of client engagements. These experiences will helped gain a better understanding of KPMG and a career at a professional services firm.

TOOLS USED
The following Databases were used in the Research and Analysis:

Global Databases

Investext (Thomson Research) Datamonitor LexisNexis Economist Intelligence Unit (EIU) Factiva OneSource Amadeus Euromonitor

IBFD Perfect Info

Indian Databases

ISI Emerging Markets CRISIL Research iSource Updates Capitaline Plus Protheyss Insight Business Monitor Intl (BMI) McKinsey Quarterly Mergermarket Indiastat.com

Areas of Work Done


1. Mobile VAS

2. Out Of Home Advertising (OOH)

3. 3G, BWI and WiMax

4. Rajasthan Patrika and the Print Industry

5. Neemrana Hospitality

6. IT and ITES Valuation

7. Private Equity and Hedge Funds

Mobile Value Added Services (mVAS)


Value Added Service (VAS) in telecommunication industry refers to non-core services, the core or basic services being standard voice calls and fax transmission including bearer services. The value added services are characterized as under: Not a form of core or basic service but adds value in total service offering.

Stands alone in terms of profitability and also stimulates incremental demand for core or basic services Can sometimes be provided as stand alone. Do not cannibalize core or basic service. Can be add-on to core or basic service and as such can be sold at premium price. May provide operational synergy with core or basic services. A value added service may demonstrate one or more of these characteristics and not necessarily all of them. In some cases, the value added service becomes so closely integrated with the basic offering that neither the user nor the provider acknowledge or realize the difference. A classic example is of P2P SMS. Some of the operators do not consider P2P SMS as part of their VAS revenue.

In telecommunication industry on a conceptual level, value-added services add value to the standard service offering, spurring the subscriber to use their phone more and allowing the operator to drive up their ARPU. For mobile phones, while technologies like SMS, MMS and GPRS are usually considered value-added services, a distinction may also be made between standard (peer-to-peer) content and premium-charged content. Mobile VAS industry in India is undergoing a lot of structural changes and is poised to grow and contribute greater revenues to the telecom industry in years to come.

Areas of Responsibility

To find out the Latest Twelve Months (LTM) Revenues, EBIT (Earning Before Interest and Tax), EBITDA (Earning Before Interest, Tax and Depreciation and Amortization), Cash and Cash Equivalents, Debt, Shares Outstanding, Market Capitalization etc. of various mobile VAS companies from the various databases, as mentioned before. To perform mathematical operations on the figures so obtained from the research performed in Step 1. Ratios like Price Earning Ratio (P/E), Enterprise Value by Sales (EV/Sales), Enterprise Value by EBITDA (EV/EBITDA) were calculated. The ratios of the various companies were put together and various averages were taken out. A rigorous analysis was done of companies with one another as well as the industry trend was studied in depth with the help of the data collected above. On the basis of analysis done, it was sought to find out the suitable companies which would be willing or capable of buying out Comviva , a firm, looking for a sell. National as well as international players were studied in Comparable Company analysis and Transactional Analysis was performed. Finding the Revenue Structure of the mVAS companies and studying how exactly they earn and how and in which direction the revenues flow. To prepare Company Profiles of the prospective buyers/sellers in the industry in India and in Kuwait.

Some examples of the work performed are given below:

Collection and Analysis of Primary Data: Mobile VAS in India can be broadly categorized into the following heads depending upon the significance in contribution to the overall MVAS market: P2P: Person to Person SMS, the most common form of mobile communication apart from voice. In the Indian market, P2P is so well integrated into the offering that some of the operators refuse to consider P2P SMS as part of MVAS. Ringtones/CRBT: This is inclusive of monotones, polytones, truetones and also includes CRBT (Callerring back tones). P2A & A2P: P2A (Person to Application) SMS are the messages sent by end users for contest participation (as in Paanchvi Paas) or voting in talent shows (e.g. Indian Idol) & for seeking other information like news & updates; (A2P)Application to Person SMS comprise of service push by enterprise service providers and is part of Mobile marketing. Games: Games include download of games offered primarily by mobile operators and content developers. The games are downloaded using GPRS connectivity for e.g. Hanuman. In some cases, handset manufacturers tie up with production houses to launch new games e.g. Nokia tie up with Om Shanti Om to launch a game on Shahrukh Khan. Others: Others include upcoming services like mRadio, mCommerce, etc.

Mobile / Internet VAS Company S.no Company Stock Exchange Mkt Cap EV/Sales EV/EBITDA P/E
Asia 1 Gree, Inc. Tokyo 3,079 8.9 2 Mixi, Inc. Tokyo 778 4.3 3 Com2uS Corp. Korea 136 3.9 4 Danal Co. Korea 211 2.5 5 Tencent Holdings Hong Kong 34,958 16.1 6 ABC Comm. Holdings Hong Kong 88 5.4 15.4 18.5 22.8 31.6 30.8 NM NM 1% 15% Relevent Mean 24.3 3.6 Releveant Median 22.8 3.9 Max 31.6 16.1 Min 15.4 2.5 30.3 53.8 27.5 64.7 41.2 48.7 53.8 64.7 27.5 58% 93% 24% 75% 20% 63% 13% 35% 52% 69% EBITDA margin % GM%

USA 1 Netease.com Inc. Nasdaq 3,905 5.2 2 Sohu.com Inc. Nasdaq 1,634 2.1 3 Sina Corp. Nasdaq 2,164 4.0 4 j2 Global Comm. Nasdaq 1,055 3.4 5 Shanda Interactive Nasdaq 2,430 1.2 6 Baidu, Inc. Nasdaq 24,646 33.1 7 Tom Group Nasdaq 299 1.4

9.1 5.1 25.3 7.0 2.8 72.2 32.8 Relevent Mean 11.6 Releveant Median 8.0 Max 72.2 Min 2.8

3.7 3.7 33.1 1.2

14.4 13.7 5.1 16.1 12.2 94.4 NM 6% 28% 12.3 13.7 94.4 5.1

58% 75% 42% 76% 18% 57% 49% 82% 44% 72% 46% 71%

Europe
1 Meetic Paris 602 2.8 2 GameLoft SA Paris 346 2.1 3 XING AG Paris 175 2.2 4 Index Multimedia Paris 21 0.5 5 DADA SpA Italy 67 0.7 6 Acotel Group Italy 297 1.4 7 Buongiorno SpA Italy 107 0.6 8 2 ergo Group plc London 42 1.0 9 Velti Plc London 270 3.9 10 Bango plc London 41 1.2 Relevent Mean Releveant Median 11.8 12.7 8.1 NA NA -7% 27% 6.9 41.0 4.5 12.9 19.0 NA NA -1% 12% 14.6 12.3 1.6 1.3 3.9 0.5 52.8 21.7 180.1 10.7 10.7 180.1 12.9 NA 8% 48% 38.6 21% 46% 10% 14% 3% 32% 13% 35% 21.7 NA 13% 88% NA 27% 65% 24% 70%

Max 41.0 Min 4.5 India 1 Onmobile Global Bombay 346 4.5 2 Geodesic Ltd Bombay 207 1.8

20.0 4.0 Relevent Mean 12.0 Releveant Median 12.0 Max 20.0 Min 4.0

3.2 3.2 4.5 1.8

43.6 5.6 24.6 24.6 43.6 5.6

17% 38% 45% 63%

Muslim Mobile Subscribers Indian Population (2009) Mobile Subscribers (2009) Penetration

1,171,029,000 584,000,000 49.9%

Muslim Population (2009) 160,900,000 Subscribers- At Indian Penetration Rate 80,241,907 Subscribers- At 30% 48,270,000

Economic Condition (in INR) All Muslims % Difference Household Income (2000) 25,653 Per Capita Incomev(2000) 4,485

22,807 11% 3,678 18%

OOH Media

Areas of Responsibility

To find out about the various Out Of Home Advertisers already prevailing in India and abroad. To obtain their financials , if available from their websites and various databases. To perform Comparable Company analysis and Transactional Analysis on the data of the companies so obtained. To find out the trendprevailing in the market and fully understand the potential in this developing sector and further find out the scope in terms of revenues, contribution in GDP, Growth rate etc. To talk to the OOH advertisers and find out their operations. model of working and

To study in depth the types of services being offered by them already and the market prices of such services. On the basis of the above analysis, judging the right pricing, positioning etc. of a new firm in the OOH industry.

Some examples of the work performed are given below:

Collection of Primary Data and its Analysis The Out of Home advertising (OOH) sector was hit relatively harder by the slowdown than the other sectors of media and entertainment. The sector had displayed an exceptional growth rate of 18 to 20 percent pre 2008; however, this growth rate plummeted to 15 percent in 2008. In 2009, the Indian OOH industry witnessed a 15 percent drop taking the industry size to INR 13.65 billion. This was particularly negative when compared to the overall media sector which remained relatively stable with a 1.4 percent growth in 2009. Correspondingly, the share of OOH medium in the overall media pie reduced from 7 percent in 2007 to 6 percent in 2009. The first half of 2009 saw occupancy rates coming down from >80 percent to 30 percent levels. This was a direct effect of the slowdown in the economy as the sectors that had traditionally advertised on the OOH medium like financial services and real estate were also the sectors that were hit the most by the recession. Moreover, a lot of the players which had committed to OOH, backed out on account of the correction in the revenue projections. For example, Big Street, an advertising firm withdrew from a contract in Ahmadabad, which was signed at a lucrative price for a six year tenure. However, the second half of the year was somewhat better as OOH players reduced prices upto 50 percent for their assets. Launch of new telecom players provided another boost to demand. As a result, occupancy levels were back to the pre-slowdown period of 70-80 percent leading to better revenues in the second half. A lasting effect of the slowdown has been the reduction of prices for the OOH medium. In the latter part of the year, the occupancy rates reached the pre-slowdown levels but the rates for the displays were up 20 percent from the slowdown period of early 2009. The industry players expect the prices to go up slightly but do not see these rates rising back to the pre-slowdown period anytime soon. As a result of the changed market dynamics and the evolved pricing scenario, there has been a distinct shift in the sectors advertising on the OOH medium. The share of the Financial Services sector has reduced due to the decreased overall

advertising spends by this sector. On the other hand, the share of FMCG and M&E sectors has increased because of the increased affordability of the medium. In 2009, the industry took some pro-active measures to make the medium more resilient in future downturns. Some of these initiatives are listed below: o Creativity Industry players now realise that the effectiveness of the medium could be unlocked through greater creativity and innovation. Lately, players like Mudra Max have recruited talent to ensure creative offerings. Even the industry is recognising the importance of creative offerings and has held the Outdoor Advertising Awards to encourage original and effective outdoor advertising. o Steps towards making the industry more organised - The effect of the downturn was magnified for the outdoor players as the media agencies delayed payments. Considering that an estimated 55 percent of inventory is sold through agencies, untimely payments worsened the liquidity scenario for OOH players. Recently, outdoor media owners in metros have come together to formulate uniform credit norms across cities in the country to safeguard OOH players in future. This initiative is led by Indian Outdoor Advertising Association (IOAA), which is working towards making the sector organized and uniform across cities.

Key challenges and risks The OOH medium is still a state-driven industry. Since the industry is still in the nascent stage of development, the regulations are still evolving. The regulations are made at the state level and vary across states. Many of these regulations are formulated without taking the industry players on board. The lack of centralisation in policy making leads to discrepancies in the regulations and is a deterrent to the consolidation and standardization of the medium. One missing link to help ensure standardisation is an industry body that represents the interests of the OOH industry. This body could act as a one point interface between the government, the advertisers, the media agencies and the OOH players. There have been efforts in this direction and an association called IOAA (Indian Outdoor Advertising Association) has been formed. The association has recently taken the initiative of introducing uniform credit norms across states. While this is a step in the right direction, there is still a long way to go. Another major challenge for the industry is the lack of strong measurement metric. Currently, there are no standard benchmarks to measure the effectiveness of OOH, making it difficult for advertisers to measure effectiveness emperically. The stakeholders in the industry could benefit from the research in the area of impact measurement of the medium Vis--vis other media. Furthermore, there needs to be increased accountability from the OOH players in terms of deliverables to the clients. While MRUC (Media Research Users Council) has been active in this area, a lot more needs to be done to help ensure noticeable results.

Expected evolution of the sector

Despite the current slowdown in the growth of the sector, the OOH medium is expected to get back to its pre-slowdown growth track very soon. A very relevant growth driver for the sector is the increased investment in infrastructure. The Planning Commission has envisaged infrastructure spend of USD 500 billion and USD 1,000 billion during the 11th and 12th plans respectively.3 This would spur investments and modernisation of airports, metros and highways. Specifically, Chennai and Kolkata airports are planned to be modernised in the next 2 years followed by Chandigarh, Ahmadabad, Goa and Cochin. Another growth driver is the private sector investment in malls, multiplexes, real estate and high-end retailers. This can ensure a consistent supply of high quality advertising spaces thereby increasing the supply and demand of outdoor assets. The growth could also come from the fact that consumers are spending more time out of home in retail outlets, on roads, airports and metros. This is likely to give more avenues for advertisers to target the audience while they are on the move. The format of the medium is also likely to see a change in the near future. OOH players have already started investing in digital sign boards and digital TVs. With the emergence of organised retail outlets, modernised airports and metro stations, there is likely to be ample spaces relevant for the digital medium which is more engaging and is capable of having higher impact. The creativity in content of the medium is also bound to increase with players like Mudra and Leo Burnett making strategic investments in developing the medium. Mudra has already started an Outdoor division and has run several end to end campaigns for key clients. The outdoor industry as a whole has also started recognising the importance of creative offerings for the medium. This was evident in the recent Outdoor Advertising Awards where there was recognition given to creative offerings in outdoor advertising. With increased creativity, the impact of the medium is bound to be stronger.

3G, BWA and Wimax

3G
International Mobile Telecommunications-2000 (IMT--2000), better known as 3G or 3rd Generation, is a generation of standards for mobile phones and mobile telecommunications services fulfilling specifications by the International Telecommunication Union. Application services include wide-area wireless voice telephone, mobile Internet access, video calls andmobile TV, all in a mobile environment. Compared to the older 2G and 2.5G standards, a 3G system must allow simultaneous use of speech and data services, and provide peak data rates of at least 200 kbit/s according to the IMT-2000 specification. Recent 3G releases, often denoted 3.5G and 3.75G, also provide mobile broadband access of several Mbit/s to laptop computers and smartphones.

BWA
Broadband Wireless Access or BWA is a fairly new technology that provides highspeed wireless internet and data network access over a wide area According to the 802.16-2004 standard, broadband means 'having instantaneous bandwidth greater than around 1 MHz and supporting data rates greater than about 1.5 Mbit/s. This means that Wireless Broadband features speeds roughly equivalent to wired broadband access, such as that of ADSL or a cable modem. Also called Mobile Broadband, wireless broadband technologies include new services from companies such as Verizon, Sprint, and AT&T Mobility, which allow a more mobile version of this broadband access. Consumers can purchase a PC card, laptop card, or USB equipment to connect their PC or laptop to the Internet via cell phone towers. This type of connection would be stable in almost any area that could also receive a strong cell phone connection. These connections can cost more for portable convenience as well as having speed limitations in all but urban environments

Areas of Responsibility

To find out about the

prevalence of 3G and BWA in India and abroad.

To find out where and why India is lacking in the above stated technologies. To find out how this lack is affecting the Mergers and Acquisitions industry in India. To study about the recent allocation of 3G and BWA circles to various companies. To analyze how these companies have benefitted from such allocations and how their financials, e.g., revenues, EBIT, EBITDA and the various profitability ratios have improved. To further analyze if the companies are in a for a Buy or Sell. favourable position to go

Some examples of the work performed are given below: Primary Data collection and analysis:
3G Handsets The market for 3G in the country is expected to be huge with over 65 million wireless subscribers, who use their handsets to access data services on the Web. These subscribers are currently using mobile handsets which are internet-enabled and are potential broadband subscribers with the deployment of advanced wireless technologies such as 3G.

According to Indian Cellular Association (ICA) about 5% of mobile users already have handsets that can work on 3G spectrum. In addition, out of all those possessing the 3G enabled handsets the number of people who would use 3G services would be determined by the quality of content available. Unlike most other countries, we are looking at 3G services not only as premium services but also as an extension of 2G. Since our broadband penetration is abysmal, 3G would provide a much required boost to it. Given that mobile phones are much cheaper as compared to PCs, the demand for broadband on mobile is expected to be much greater. More importantly, 3G will solve problems more in rural India. Therefore the shift towards 3G would depend on affordability of handsets along with the quality of content available. Defining 3G 3G networks are wide area cellular telephone networks which have evolved to incorporate high-speed internet access and video telephony. 3G technologies enable network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved spectral efficiency. Services include wide-area wireless voice telephony and broadband wireless data, all in a mobile environment.

Analyzing strengths and weaknesses of 3G Pros and cons of 3G STRENGTHS WEAKNESSES 3G spectrum offers 4-5 times the voice capacity of 2G spectrum and thus 3G is a cost effective tool to deliver voice In urban India, 3G facilitates faster data/voice connectivity enabling video on demand In rural India, 3G can enable telemedicine, virtual marketplace and e-learning Operators can ensure better quality of service and reduction of network congestion Upgrading from 2.5G and CDMA to 3G is not a tough challenge compared to investing in WiMax 3G technology has wider deployments and is more matured compared to WiMAX and 4G. The high 3G spectrum and license cost may effect cost of service to the subscribers 3G handsets are too expensive for a rural subscriber In Europe, 3G growth has not justified the cost of investment for operators Due to high cost of handsets and technology, 3G would be restricted to the upper class and is not expected to reach to the masses. Technologies such as Wi-Max, 4G can give 3G a run for its money To enter the rural market, 3G first has to incorporate local content in its service delivery.

Impact of 3G

Though 3G has created lot of buzz, it is unlikely to have an immediate impact. Currently, there are not many services which are data speed dependent. But a definite impact would be considerably higher speed of Internet access and availability of content for Mobile TV, UGA, etc. A significant spectrum for 3G might go into providing better voice services. Therefore, 3G will not only be used to provide data services but also better quality voice.

Circle-wise 3G spectrum results


I N R m il l i on C i r cl e Vod afon e B ha rt i R e li a nc e Tat a I dea A i rc el St el Wi nni ng P ri c e pe r sl ot D e lh i M um b ai K ol ka t a M ah a ra sh t ra Gu j ara t A nd h ra Pra d es h 0 K ar na t a ka 0 Ta m il Na d u K er al a 0 0 0 P un j ab 0 0 H a rya n a U P ( Ea st ) U P ( We st ) 0 W e st Be ng a l a n d A &N R a ja st h a n 0 M ad h ya Pra d es h 0 0 H i ma ch a l Pr ad e sh 0 B ih a r 0 Or iss a 0 0 A ssa m 0 N o rt h E as t 0 J am m u & Ka sh mi r 0 Tot al s l ots w on 9 1 3 1 3 9 1 0 1 3 3 Tot al c onsi de r at ion 11 6 17 8 .6 1 2 29 5 4. 6 8 58 5 0. 4 5 86 4 2. 9 57 3 82 . 9 64 9 94 . 6 3 3 76 . 7 50 9 38 0 . 7 11 11 11 11 11 1 111 111 111 0 00 00 00 00 00 1 1 1 00 000 1 0 11 00 0 0 0 3 2 10 . 3 0 0 2 5 83 . 6 0 11 11 1 1 1 0 4 14 . 8 0 4 23 0 3 03 1 3 72 . 3 2 0 34 . 6 9 69 . 8 1111 11 11 0 0 5 1 40 . 4 1 0 1 2 36 . 3 0 0 2 2 25 . 8 0 3 6 45 . 7 11 111 111 1 1 1 0 00 00 1 1 00 0 000 111 1 1 0 0 0 0 3 3 16 9 . 3 0 0 0 0 3 2 47 0 . 7 00 11 11 11 0 1 1 1 0 0 1 2 57 8 . 2 0 0 1 0 76 0 . 6 0 1 3 73 1 . 4 0 1 5 79 9 . 1 0 1 4 64 9 . 4 0 3 1 24 . 8 0 3 2 20 . 1 0 5 4 42 . 6

Key
Pr es en t No t Pr es en t

Similar treatment was done for BWA allocations as well.

Rajasthan Patrika
Rajasthan Patrika is a Hindi language daily newspaper published from Jaipur, Jodhpur, Udaipur, Kota and other cities of Rajasthan and from major Indian cities such as Bhopal, Indore, Jabalpur , Ahmedabad, Gwalior, Kolkata, Chennai, New Delhi and Bangalore. Rajasthan Patrika was started as an evening newspaper with a borrowed capital of Rs. 500 in 1956. Late Shri Karpoor Chandra Kulishfounded Rajasthan Patrika on 7 March 1956. Before that he was working for Rashtradoot, a prominent newspaper of that time. The other two Hindi dailies dominated the readership of Rajasthan due to their better resources and wide coverage of news were Lokvani and a Navayug, during that time Delhi based newspapers.

In 1964, it became a morninger. Patrika launched its first Jodhpur Edition in 1981 and with the starting of Udaipur Edition a new milestone was achieved. Kota Edition in March 1986 andBikaner Edition in August 1987 were added to the newspaper. In the year 2000 the new editions at Bhilwara, Sikar, Sri Ganganagar were started. On 11 August 2002 Ahmedabad Edition and on 28 October Ajmer Edition and in the year 2003 Surat Edition were added in the list.

Now it has grown as a media house and is among the fastest growing multi media conglomerates in India. Rajasthan Patrika is no.1 Hindi newspaper in Rajasthan, Gujarat, Karnataka and Tamil Nadu.

It is one of the leading newspapers of Rajasthan and Madhya Pradesh highly trusted, and known for the use of excellent Hindi, featuring famous writers such as Gulab Kothari. The newspaper has shown social responsibility also with some programs like "Amritam Jalam", Vote for Vote , "Save the vulture" etc.

Areas of Responsibility
To find out about the already existing newspapers, magazines etc in India and abroad. To prepare a Comparable Company Analysis and Transactional Analysis of the company database thus prepared. To narrow down suitable companies which would match the criteria laid down by Rajasthan Patrika for a Buy. This was done on various bases like revenue models, geographies etc. To make Company Profiles of the most prospective company list thus obtained.

Some examples of the work performed are given below:


Data Collection and Analysis Indian Print Media Scenario India is the second largest print market in the world with a readership base of over 350 million1. Internationally, the developed markets are witnessing slowdown in circulation and readership due to the high levels of digital media penetration, market saturation and changing media consumption habits. The Indian Print market, on the other hand, continues to be attractive primarily due to low level of Print media penetration currently, supported by increasing overall media penetration and low levels of digital media penetration. However, the structure of the Indian Print Media industry is characterized by a high level of fragmentation and regional diversity.There are more than 62,000 newspapers printed, of which, approximately 92 percent consists of Hindi and other vernacular languages. English newspapers are primarily focused on the metro cities and urban areas, while Hindi and other regional newspapers primarily target the non metro population. Around 92 percent of the Indian Print market comprises Newspapers with Magazines comprising the balance 8 percent3. With low cover prices, newspapers are dependent on advertisement revenues which typically contribute around 70 percent of newspaper revenues with the balance being circulation revenues4. The mix is different for magazines with circulation revenues contributing to around 60 percent of magazine revenues due to the higher cover prices of magazines. The Indian Print Media sector is currently coming out of a challenging phase in 2009 when the economic slowdown resulted in a weak advertising market. This was reflected in the performance of the Print sector, which grew only marginally in 2009 as a decline in advertisement revenues were offset by growth in circulation revenues. The second half of 2009, has brought hope with a general perception of improvement in the overall economy leading to signs of recovery in the print sectors supported by a pick up in the advertising market.

Most of the key trends in the Print sector in 2009 were therefore linked to the impact of the economic slowdown and the measures taken by various companies. Pressure on advertisement offtake, but regional print less impacted In 2009, top 10 sectors contributed to 64 percent of revenues of the Print sector. Education, Services, Banking/ Finance, Auto and Retail theyre the major contributors with a revenue share of 49 percent6.

Outlook for the Print Industry:

Key challenges and risks facing the Print Media segment

Prior to 2009, advertisement yields were growing across English and Regional Print. The year 2009 has witnessed an overall reduction in advertisement yields, which have now established a benchmark with advertisers. Most newspapers may therefore find it challenging to grow their advertising yields to the 2008 levels and beyond

English newspapers witnessed the highest drop in rates with some English newspapers reducing advertisement rates by 1520 percent. Further, across English newspapers the level of discounts over the card rates also increased. While the major Hindi newspapers did not reduce rates substantially, there were however a number of sales promotion schemes which reduced the overall yields. Another major concern is that the content is not compelling enough to create a sustainable =pull effect. Gap in nature of content relevant among various age groups has increased over time and it is increasingly difficult to attract audiences with standardised content. Additionally, with daily schedules becoming busier, consumers are prioritising tasks with reading news becoming a non priority task to many people. Over time, TV and Radio have also emerged as cheap means of advertising in comparison to Print media. Proliferation of TV and FM Radio channels have meant that spots on some TV and Radio channels are being sold at significantly discounted rates. As a result, sectors and small and medium enterprises who initially have focused on Print advertising, are now finding these media affordable and are allocating portions of their advertising budgets towards TV and Radio. This impact was also felt in 2009 when a number of TV and Radio channel further reduced their advertisement rates. This could be a major challenge going forward as potentially sectors and companies may completely shift away from Print or may significantly reduce their Print advertising budgets

Neemrana Hospitality

Areas of Responsibility

To study the heritage hotels group Neemrana Hospitality in depth. To find prospective heritage sites that it could consider for a Buy.

To narrow down the list based on various parameters like geogaphies, size etc. and with personal judgement. To contact the owners and find their preferences.

Some examples of the work performed are given below:


Data Collection and Analysis

First property, Neemrana Fort, acquired in 1986. The entity - Neemrana Hotels was started in 1991.

Neemrana is now a 14-property chain that almost stretches the length of India from Tranquebar in Tamil Nadu to a property in Patiala in Punjab that is slated to open September. Over the years, it has developed a reputation for chic domestic tourism 85 per cent of its visitors are Indian. Yet the turnover is just Rs 20 crore or so. Thats because the duo own just four of the properties under the brand, the rest they manage.

The following are the groups properties along with their locations:

Name of the Property Location The Hill Fort Kesrauli, Alwar, Rajasthan Neemrana Fort Palace Neemrana, Alwar, Rajasthan Le Colonial Church Road, Kerala The Tower House Cochin Bungalow on the Beach Tamil Nadu Hotel De L'Orient Pondicherry Green Hills Estate South Coorg Villa Pottipati Bangalore, Karnataka The Verandah in the Forest Rajgarh, Maharashtra The Ramgarh Bangalows Rangarh, Uttaranchal Wallwood Garden Nilgiris, Tamil Nadu The Baradari Palace Patiala, Punjab The Piramal Haveli Shekhavati, Rajasthan The Pataudi Palace Gurgaon, Haryana Glasshouse of the Ganges Garhwal, Uttaranchal Forthcoming Projects Tijara Fort Palace Alwar, Rajasthan Deo Vilas Gwalior, Madhya Pradesh

6. IT and ITES Valuations

Areas of Responsibility

As a company policy, or in other words, an additional value addition to the stakeholders, KPMG comes out with IT (Information Technology) and ITES ( Information Technology Enabled Services) Valuations in its monthly publication based on the same. Mergers and Acquisitions in this field in India and abroad are covered and analysed in depth. Moreover, the latest valuations of such companies are calculated and analyzed. For the months of May and June, this valuation was done by me completely after initial guidance from my mentors.

7.Hedge Funds and Private Equity Private Equity


Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange. Investments in private equity most often involve either an investment of capital into an operating company or the acquisition of an operating company. Capital for private equity is raised primarily from institutional investors. There is a wide array of types and styles of private equity and [1] the term private equity has different connotations in different countries. Among the most common investment strategies in private equity include leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital. In a typical leveraged buyout transaction, the private equity firm buys majority control of an existing or mature firm. This is distinct from a venture capital or growth capital investment, in which the private equity firm typically invests in young or emerging companies, and rarely obtain majority control.

Hedge Funds
A hedge fund is an investment fund open to a limited range of investors that undertakes a wider range of investment and trading activities than traditional long-only investment funds, and that, in general, pays a performance fee to its investment manager. Every hedge fund has its own investment strategy that determines the type of investments and the methods of investment it undertakes. Hedge funds, as a class, invest in a broad range of investments including shares, debt and commodities. Some people consider the fund created in 1949 by Alfred Winslow Jones to be the first hedge fund.[citation needed] As the name implies, hedge funds often seek to hedge some of the risks inherent in their investments using a variety of methods, most notably short selling and derivatives. However, the term "hedge fund" has also come to be applied to certain funds that, as well as (or instead of) hedging certain risks, use short selling and other "hedging" methods as a trading strategy to generate a return on their capital.

Areas of Responsibility

To prepare a list of hedge funds and private equity players after analysis and research.

To use various databases like VC Circle were used for this purpose.

To prepare a list of companies wherein these funds had alongwith the fund amount and date of entering and exit.

invested

To analyze an further scope of investment

by these funds

To study their role in Merger and Acquisition deals done in the past.

To analyze their potential and willingness deals of such nature.

to invest in forthcoming

CONCLUSIO N
From the above given internship report, it is clear that my internship at KPMG was an enriching experience. I did a variety of work each day and worked for different LBOs (Lines of Businesses) within Corporate Finance division, besides my core area with the ICE (Information, Communication and Entertainment) team.

I had to perform various tasks including data collection and analysis, preparation and presentation of the data in the form of company profiles, company comparables, transactional comparables etc., interpretation of the data, formulation of opinions based on the research, time to time valuation of various companies and disclosing the results to the stakeholders etc.

During my internship tenure, I have learnt how and where to search for relevant information, how to filter the information according to required needs, how to analyze the data obtained and form an opinion on that basis and finally, how to present the findings and suggestions.

Finally, I would like to say that my 7 weeks internship at KPMG was full of learning and an extremely knowledgeable experience.