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Gold demand to remain upbeat this year

India retains its number one position in gold consumption in 2009, recording a total demand of 405.8 tonnes. Stable prices, seasonal festivals and a stronger rupee are likely to keep India’s gold demand strong this year, say analysts. Gold prices have been moving between $1,090 and $1,167 an ounce in the wake of renewed fear in the global economy over the European Union’s economic leniency towards Greece.

On the other hand, recovery in the US economy promoted confidence in other asset classes, including real estate, bonds and US treasuries. The effect of these would be to keep gold prices subdued.

The latest World Gold Council (WGC) report suggested the average gold price rose slightly to $1,109.12 an ounce in the first quarter of the current year from $1,099.63 an ounce in the previous quarter. During the quarter, gold traded mostly between $1,058 and $1,153 an ounce. In rupee terms, it has been trading between Rs 16,200 and 16,900 per 10 gm since the beginning of the year. Early this month, global consultancy GFMS forecast that prices would touch $3,000 an ounce by the end of the decade.

“Generally, consumers do not buy amid high volatility. Since gold prices suddenly rose to nearly Rs 17,000 per 10g, consumers pushed a pause button. But, demand will resume if prices remain at this level,” said Ketan Shroff of Pushpak Bullions, a city-based trader.
Meanwhile, WGC has started preparing for the coming festival season.

“So far, in 2010, we have promoted Baisakhi, Poila Baishak, Gudi Padwa, Lohri, Ugadi, Tamil New Year and Vishu. We also plan to promote the upcoming Akshaya Tritiya festival in a big manner, as well as the festivals during September-November, such as Rakhi, Onam, Rambha Thritiya, Ganesh Chaturthi, GuruPushya Amrut, Karva Chauth, Navratri-Durga Puja, Dussehra and Diwali-Dhanteras,” said Ajay Mitra, managing director (Middle East and India), WGC.

The council promoted eight events to promote gold sales last year. It has identified 40 events this year. The focus in 2010 was to promote all major regional festivals and new years, in addition to the major national festivals, he added.

WGC recently said India retained its number one position in gold consumption in 2009, recording a total demand of 405.8 tonnes. This was, however, 19 per cent less than 501.9 tonnes in 2008. Total gold imports were estimated at 343 tonnes in 2009, 18 per cent less than in 2008.

However, record high prices encouraged consumers to encash a part of their holdings. This led to scrap gold sales reaching a record 200 tonnes. Jewellers believe imports in the first quarter of 2010-11 have surpassed 100 tonnes, as against 32 tonnes in the corresponding quarter of the previous year. When quizzed about investment versus jewellery demand, Mitra said: “It would not be appropriate to compare investment demand vis-à-vis jewellery demand, especially in the Indian scenario.

While demand for bars, medallions and other forms of gold investment has been growing over the past few years, the demand for gold jewellery has also been growing, mainly because Indians consume gold for cultural reasons like weddings and festivals.” The India Bullion Markets Association estimates that households have nearly 22,000 tonnes gold locked away in family vaults. This makes India one of the largest stockists of physical gold in the world.

Anticipating robust jewellery demand, Bangalore-based Rajesh Exports plans to set up 300 retail stores (it presently has 25) in the next three years, with an investment of between Rs 3,000 and 4,000 crore.
Source: Business Standard

Executives from US, Europe look to Indian B-schools

Christopher Garnnic, an IT engineer with four years’ experience in the US, is keen on working in the new land of opportunity: India. But Mr Garnnic does not want to leap into the job market rightaway. He has enrolled in the Indian School of Business (ISB) this year to help him with the transition. “India is full of opportunities and the economic scenario is robust, with strong projected growth. It makes sense to work here more than anywhere else,” he says.

Like Mr Garnnic, an increasing number of executives from the US and Europe, as well as from those from West Asia, are looking to India to gain work experience in a pulsating economy. But many are adopting an arguably unusual route: a B-school programme. This year alone, the number of candidates applying to top business schools like the IIMs and ISB for their executive management programmes has gone up by almost 20% over the last year.

Several IT professionals who have worked in the West have joined IIM-Calcutta’s one-year, full-time post-graduate programme for executives (PGPEX), hoping to become entrepreneurs in health care, education and power, says chairperson C Panduranga Bhatta. Others have opted for a comparable course at IIM-Ahmedabad, the post-graduate programme in management for executives (PGPX).

Like Uttam Jhunjhunwala, a chartered accountant, who worked for five years with the Emirates Bank before enrolling in IIM-A’s one-year PGPEX programme. “While Dubai slides into recession, India continues to emerge strong and stake claim to becoming an economic superpower. There could not be a better time for me to join the course as a stepping stone to move to India, where all the action is,” says Mr Jhunjhunwala. He believes the MBA degree will also enable him have a well-rounded take on business in the country and give his career a new direction.

There are, of course, compelling reasons for the executives to look at India as an opportunity: the slide of economies in the West over the past year, the rise in salaries here and the perhaps the most binding one, family.

“The Indian economy is doing well. While family remains a reason for me to come back, the lure of a strongly emerging Indian economy is no less,” says Vivek Chudgar, who did his MS from Carnegie Mellon University in the US and worked in the information security area with McAfee for five years.

Rahul Pradhan, who did his masters in pharmacy, worked in the US for seven years and now plans to settle down in India, feels the same way. “The scope of opportunities in India is arguably the best, at a time when opportunities offered by the American economy have narrowed down,” he says. Mr Pradhan too has enrolled for a post-graduate course at IIM-A.

As far as salaries go, many executives were drawn by the nearly 30% increase offered to IIM-A’s PGPX candidates in 2010, compared to the fall in domestic pay to Rs 20 lakh across post-graduate programmes, and the dip in international pay to $1,22,000 in 2009. Further, IIM-C’s PGPEX programme did not have a single international placement.
While the salary trend may not be new, there is also a growing interest among entrepreneurs to put their ideas to test in a market that has a large pool of locals with spending power.

“As an entrepreneur I started looking for different opportunities, and India represented a cutting-edge frontier. The country will have stronger growth than many other markets,” says Atma S, a UK-based entrepreneur who studied management at the London School of Economics before starting his engineering services firm in India a year ago.
Mr Atma signed up for ISB’s one-year post-graduate management programme this year, “to improve business skills and understand Indian markets better”.

B-schools here are clearly gaining from an increased interest in Indian markets that is also weaning away candidates from management schools in developed economies. “I preferred IIM-A over Harvard despite getting a scholarship to pursue my MBA from there,” says Sumera Hasham, who is currently pursuing her one-year MBA from IIM-A.
Ms Hasham’s decision is not hard to understand. Nearly every business has an innovative side and service lines that are yet to be explored in the Indian market, and B-schools provide the perfect laboratory for those looking to begin their entrepreneurial ventures here, explains Sunil Goel, director with the executive search firm, GlobalHunt.

“The country has become a global hub for the services and products industry, and people looking for potential markets turn to India,” he says. “With local people having more buying power, entrepreneurs can easily bring their ideas to flow and register success here.”
Source: The Economic Times


	IN DEPTH
	INDIA The fastest growing free-market democracy India’s competitiveness from a natural and human resources standpoint is making it the destination of choice for investors. India is a fast-growing economy with a dynamic and robust financial system. Being a democracy ensures a stable policy environment and its independent institutions guarantee the rule of law. This highly diversified economy has shown rapid growth and remarkable resilience since 1991, when economic reforms were initiated with the progressive opening of the economy to international trade and investment. Events such as the asian currency crisis, the dotcom bust and rising oil prices have had no significant impact on India’s growth; with the economy recording an average annual GDP growth of over 6.5% in the past decade. Going forward, the country is targeting an average GDP growth rate of over 8% per annum. India is in the global arena for increased foreign investment - both through the Equity markets - termed Foreign Institutional Investment (FII) and Foreign Direct Investment (FDI). While its size and growth potential make India attractive as a market, the most compelling reason for investors to be in India is that it provides a high return on investment. India is a free-market democracy with a legal and regulatory framework that rewards free enterprise, entrepreneurship and risk taking. Large Domestic Market Over 300 million Indians (63 million households) are expected to have a household income of over US$6,000 by 2015 (over US$30,000 in PPP* terms). India is experiencing a rapid growth in consumer spending. The economic reforms since the early nineties have unleashed a new entrepreneurial spirit creating a vibrant economy supported by rising per capita income. Fast-growing disposable incomes, increased availability and use of consumer finance and credit cards complement the keenness of the average Indian to adapt to and assimilate global trends. This has led to the creation of a rapidly growing consumer base and one of the world’s largest markets for manufactured goods and services. Growth in key sectors like infrastructure, services and manufacturing continues at about 10-12% p.a. The market for basic goods such as groceries and textiles is already large, driven by the demands of an enormous population. Markets for other products are equally large and growing rapidly . Skilled Labour An unparalleled resource of an educated, hard-working, skilled and ambitious workforce is the hallmark of India’s human capital. That this workforce is also one of the world’s youngest adds to India’s attractiveness as an investment destination. Of the BRIC* countries, India is projected to stay the youngest with its working-age population estimated to rise to 70% of the total demographic by 2030 - the largest in the world. India will see 70 million new entrants to its workforce over the next 5 years. English is the language of business in India and the large English-speaking workforce is a benefit to investors and employers. In fact, the number of Indians who know English is more than the population of the USA. India’s diverse cultural heritage puts its citizens at ease with people from other cultures and vice versa. With over 380 universities, 11,200 colleges and 1,500 research institutions, India has the second largest pool of scientists and engineers in the world. Over 2.5 million graduates are added to the workforce every year, including 300,000 engineers and 150,000 IT professionals. Abundant Resources A vast geography endowed with diverse topography has made India the repository of abundant resources which provides a base for world scale manufacturing investment.With an area of 3.3 million square kilometres, India is the seventh largest country in the world, and the second largest in Asia. India’s reserves of coal, iron ore, manganese, bauxite and chromium are among the largest in the world. Large quantities of mica, titanium ore, chromite, natural gas and limestone are also to be found in India. India has the second largest area of arable land in the world, making it one of the world’s largest food producers - over 200 million tonnes of foodgrains are produced annually. India is the world’s largest producer of milk, sugarcane and tea and the second largest producer of rice, fruit and vegetables. Though an importer of petroleum and natural gas, India has abundant coal reserves and a large untapped hydroelectric power potential estimated at 150,000 MW. Business and legal systems India is a free-market democracy with a robust, well-developed legal and administrative system. The Indian legal system has been derived originally from that of the United Kingdom and is at par with that of any developed economy. Accounting standards in India are similar to those followed internationally. Many Indian companies are listed on the NYSE and NASDAQ and report their results under US GAAP. India has a long history of entrepreneurship, private enterprise and market economics that dates back to the 19th century. In fact, the Bombay Stock Exchange (BSE) was set up in 1875. The original Indian Companies Act governing the incorporation and operation of limited liability companies dates back to 1882, though it has been extensively updated thereafter. As a result of the pro-business environment, Indian companies have investments in most sectors of the economy spanning infrastructure, manufacturing and services. Several Indian companies conduct their business on a global scale and have worldwide operations. These, along with numerous companies from the small and medium enterprise (SME) sector offer considerable scope for joint ventures, collaborations and partnerships. India has well-developed support services for business and industry with professional audit and accounting firms (some are affiliated with international accounting firms) and qualified corporate law practitioners. Major international advertising companies, investment banks and consulting firms are also well-represented in India. Healthy financial system The financial sector in India is characterised by liberal and progressive policies, vibrant equity and debt markets and prudent banking norms. India has a transparent, highly technology-enabled and well-regulated stock market defined by the most modern, nationwide, on-line screen-based trading system (SBTS), a T+2 rolling settlement system and a market cap of US$1.6 trillion as on 30th December 2007. With the largest number of listed companies - 10,000 - across 23 stock exchanges, India has the third largest investor base in the world. The country also has a vibrant and modern commodities exchange market ranking among the top 3 global markets in terms of traded volumes and trades totalling over US$650 billion in 2006-07. NCDEX, MCX and NMCEI are the major national exchanges with a diversified portfolio of commodities that include agri-products, bullion, metals and energy. The exchanges offer future contracts and India was the first to provide trading in steel futures. India’s healthy banking system with a network of 70,000 branches is among the largest in the world. Aggregate deposits of commercial banks were about US$445 billion in June 2007 (50% of GDP) and the total bank credit stood at US$320 billion in June 2007 (36% of GDP). NPA levels of banks in India are under 3%, one of the lowest among emerging nations. The banking system is Basel I-compliant and moving towards Basel II norms. The Reserve Bank of India (RBI), the country’s central bank, has effectively managed the country’s monetary policy over the last five decades. The country’s current Prime Minister, Dr. Manmohan Singh is a former Governor of the Reserve Bank of India and a former Finance Minister. India’s financial sector has been one of the fastest growing sectors in the economy. It has also witnessed increased private sector activity including an explosion of foreign banks, insurance companies, mutual funds, venture capital and investment institutions. Enriched Life quality India offers a multi-cultural, tolerant, inclusive, environment and well-developed social urban infrastructure with enabling environments for foreigners to settle and do business in the country. India has five major metros and many large cities that are fast finding a place on the world map. The capital of India is Delhi - a unique amalgam of the modern tree lined avenues of “New” Delhi juxtaposed with the old-world charm of the old city. Delhi is the centre of national politics, international embassies and has one of the highest per capita income levels in India. Mumbai (formerly Bombay) is the commercial capital of India and one of the largest cities in the world, supporting a population of over 16 million. It is also the fashion and entertainment capital of the country. Bengaluru (formerly Bangalore), known as the Silicon Valley of India is the nerve-centre of the country’s software industry. It has also gained the reputation of one of the world’s prime Business Process Outsourcing centres. Kolkata (formerly Calcutta) is one of the largest metropolitan cities of India with strong cultural and literary traditions and is home to many old businesses and trading houses. Chennai (formerly Madras) is a traditional city in South India and with a large industrial base. It is home to many of India’s engineering and technical enterprises. India is a country on the move! Hotels, clubs, shopping malls, golf courses, theatres, fast-food chains, fast cars ... all these define the pace, character and modernity of lifestyle in Indian cities. Indian cuisine is fast gaining popularity all over the world. International cuisines are also widely available and are received enthusiastically by the local population. Most large Indian cities have internationally recognised schools and colleges and world-class health care facilities. In addition to extensive domestic connectivity, India is internationally well-connected by air and sea. All the major cities are on the international air routes, and international air traffic is growing rapidly. *Source: http://www.investmentcommission.in/*

FEATURE OF THE WEEK

Gold Investment and the Way Forward…

Why invest in gold, is the question many want to get an answer for. If you're still thinking about Gold Investment, and rationalising what can be a difficult decision we recommend, Why Gold is a good investment option...

Gold has been considered as one of the important instruments of investment across the country, especially in retail households. Small household units in India are now turning up as potential investors for gold. It’s not just the demand for consumption purpose that is the main driver for rising demand for the yellow metal, but the systematic investments in retail gold futures is the latest crush among the small investors in the country.

In India, gold has been a traded commodity on the exchanges over several years, but the volumes of lots are simply out of the reach of a retail investor who would hardly be able to invest a small portion of his limited income. A recent trend in the retail investment is seen because the limited income group or the employees have started realizing the potential of return on gold with not-so-high risk. But the constraint was the convenient lot size that the small investors can afford to invest into.

The international gold prices have yielded over 15.5% return on the investments over past one year. Prices have risen from USD 950 per ounce in the early April in 2009 to around USD 1107 per ounce in recent trades. The prices have touched a bottom of USD 867.40 and a high of USD 1217.40 so far during the given period.

The return has been attractive over previous year, when the gold prices had remained almost range bound at USD 850 to USD 980 per ounce with high volatility during 2008-2009. The current year has created ample opportunity for the investors to cash on their gold investments. As the prices have shot up to its lifetime high of over USD 1200 per ounce by giving maximum return for the traders, it has become once again a favourite investment option for investors.

Keeping the above scenario in mind, we at the RGI India have come up with a unique investment opportunity for one and all. You neither have to bother about the volatile market conditions nor about the returns on your investment since our ‘RGI Talents’ scheme ensures that you get the assured returns on your investment.

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