Archive for the ‘General’ Category

Silver

Monday, May 9th, 2011

This is a post by Mr. Indraneel Sen Gupta. He is Financial,Economic Writer and Research Analyst.
SILVER ALERT

In Ancient Egypt and Medieval Europe, Silver was often morevaluable than gold. Till today the same theory is being followed. But last weekthe world market of metals were rattled with the fall of silver and gold prices.Silver made the steepest decline compared to 1983 levels of fall in the lastweek.

Margin Crash Ride

Silver prices plunged across the world market keeping every one onthe table of quest of what made the fall of silver prices. Base metal priceswere very much over leveraged or over brought in the past couple of months on acontinuous basis. Silver is expected to have another correction from the lastweeks closing by another 5% to 10%.

Silver will correcting is not only due to over bought ad overstretched valuations but also due to New York Comex exchange. They have hikedthe margin requirements for silver trading to 84% making the requirements to riseup from $11,745 to $21,600. The margin requirements for hedgers are increasedfrom $8,700 to $16,000.

Two days prior to this, the COMEX had also raised marginrequirements. On April 27th, margin for initial contracts were increased from$11,745 to $12,825 and margin for maintenance contracts was increased from$8,700 to $9,500. As margin prices increases, this forces the market players tocome up with more margins for playing in silver.

The collapse in silver prices on Thursday May 5th, triggered bythe COMEX margin increases, indicates that many players were forced toliquidate positions to match the margin requirements going to hit floor from9th of May. Before the increases, margins were about 5% of the value of afutures contract, which is for 5,000 ounces. After the plunge in prices, thecost after May 9 would be about 12% of a contract, using last settlement. Thelast two margin increases by the COMEX, after silver had already declined byover 17%.To add fuel to the fire liquidation of silver holdings by a hedge fundrun by George Soros was also executed at that point of time. This is why thesilver was in the headlines of financial streets.

You’re Demand and My SilverInvestments.

In my last article I depicted the story of the upcoming growth ofdemand of silver which played according to its vomited words in the article.Silver is not only a being treated a as a substitute of Gold but also beingextensively used in alternative energy segment. The industrial applications ofsilver increased by almost 21% to 487.4 million ounce.

In 2010 we find the demand for silver coming from globalinvestment and fabrication demand. According to World Silver Survey demand ofsilver during 2010 increased despite of a 38% average increase in the price ofsilver to $20.19. The increase in silver prices during 2010 was the largestprice gain since 1980.Silver investments demand increased by 40% in 2010 to279.3 million ounces, double of 2009.

When we sneak into the ETF growth of silver globally we find astaggering growth to 582.6 million ounces during 2010, an increase of 114.9million ounces over 2009. When we dig into the global use of silver in primarycomponents we find some interesting growth demand:

• Silver used in coin and medal production rose by 28% to 101.3million ounces.

• Sales of U.S. Silver Eagles reached 34.6 million, far ahead ofthe previous record of 29 million reached in 2009.

• Sales of bullion coins by mints in Australia and Canada also hitnew highs.

• Investors also purchased 55.6 million ounces of silver in theform of bullion bars during 2010.

• Silver fabrication demand hit a ten year high of 878.8 millionounces, an increase of almost 13% over 2010.

• Jewelry increased by 5%, showing the biggest increase in demandsince 2003.

Silver is going to make new records not only in 2011 but also inthe next 3 years. We made an extensive research where we found that new demandfor silver consumption is increasing.

• New industrial applications using silver are expected to accountfor an additional 40 million ounces of demand by 2015.

• Silver’s unique chemical properties are constantly leading tonew industrial demand, one example being the development of products usingsilver as an antibacterial agent.

But with the increase of the demand of silver we need to keep inmind that procurement of silver form mines needs higher attention. Silverproduction increased by a very modest 2.5% during 2010 to 753.9 million ounces.We need to keep an eye on the explorations being carried out by the largestsilver producer in 2010.The biggest mining zones are  Mexico, followed by Peru, China, Australia andChile.

So by now my investors, my research colleges and other layman ofthe industry might be clear about the upcoming demand of silver the Substituteof Gold .This demand will make the price of silver to touch new heights in thecoming days. The recent crash of silver price is a buying opportunity and itshould be used accordingly. I have come across few investors who are fightingwith anxiety of the recent fall as they have purchased at higher levels. Asimple advice for them is that silver is a long term assets and not like shortterm. It’s a commodity and should not be entangled with other asset classes.Since every commodity has a life cycle and when the cycle end at the maturitystage the value of the asset increases along with its demand and price. Silveris just witnessing one of these types of cycles.

I between all I forgot to accentuate your attention that China isnow on the buying spree of Silver along with Gold. Earlier we knew that chinawas accumulating gold and now silver has found the new address of accumulationin China. China desires to replace dollar as the safe currency and convert thesavings into Gold and Silver. If china desires to replace dollar as a currencyfor reserves then China will have to accumulate gold to the tune of two timeswhat US gold reserve has within the next two years. China has 1054 tonnes ofGold and US has 8133 tonnes of gold. So one can imagine how aggressive Chinawill become in coming days for buying Gold.

Paper currency is now longer a value growth based asset. Therising defaults (bailouts of every economy) and rising crude import bill ofevery economy in the coming next 10 years will force all the nations to savetheir savings in Gold and Silver.

Silver should be bought at lower levels as they long term demandmakes the price of silver to shine more than the original shine of silver.Silver should be brought and regarding these margin hikes and other activitiesone needs to treat them as a buying opportunity. Invest in silver for long termwithering out the short term hiccups.

Fair Competition and Economic Development

Tuesday, April 5th, 2011

 This is a post by CMA Ananda Mohapatra

ANALYTICAL NOTES ON FAIR COMPETITION AND ECONOMIC DEVELOPMENT

 

References

1.                  Announcement dated 8th March-11 of CCI for a National level Essay Competition.

2.                  Historical Supreme Court verdict dated 3rd March-2011 overruling GOI (Govt of India) and its holy Opinion on the qualification criteria for appointment /selection of CVC.

3.                  Historical 2G Spectrum Scam of Indian Republic and arrest of Mr. A Raja, Ex-Union Minister IT and his judicial custody.

4.                  The Statement of Srj. Navin Patnaik, Hon’ble Chief Minister of Odisha of date 5th Mar-2011 on the formulae of economic development in the occasion of 95th birth celebration of his beloved Father, Legendry Man of Odisha and Ex-Union Minister & Ex- Chief Minister of Odisha Late Srj. Bijayananda Patnaik.

5.                  Division and equal of UPA Govt in the matter of dis-interest shown by Srj. Karunanidhi, Hon’ble Chief Minister of Tamilnadu and with the Statement of Srj. Pyari Mohapatra, Hon’ble Rajya Sabha MP and the day after dated 7th March-11 statement of Srj. Navin Patnaik, Hon’ble CM Odisha on the issue.

6.                  Admission of Commission of mistakes in words of statement of Dr. Manmohan Singh in both the august houses of Parliament against the demands of Opposition.

7.                  The widely circulation of the Publication of “NIAKHUNTA”, an oldest pre-independence Odiya News Magazine, the founder of which legend- renowned freedom fighter, economist, Journalist, writer, poet, critics, analysts etc Srj. Godabarisha Mohapatra where question of integrity has arisen in case of an IAS Officer who is leading the State Power Sector Srj. Pradeep Kumar Jena.

8.                  Constitutional Provisions on term and continuance of august House of Assembly and Parliament and terms and conditions of appointment to Civil Service of UPSC (Union Public Service Commission).

9.                  Different Theories of Economic Development and its Formulae of Sustainable Development I.E., “Professionalism-Competition-Financial Viability-Customer Service” vrs “Energy-Environment-Employment-Economics” communicated previously.

10.              Development of ODISHA so also Nation and the role of Media, the Fourth Pillar of Indian Democracy after showing due regards to Indian Culture and religion, the culture of his Lord ShreeJagannatha and his Mausi and Mausi’s sister Maa Samaleswari and the teachings of Thakur Anukulchandra  on Economics, Politics etc.

11.              (I)Registered Grievance in e Abhijoga web portal of CM vide registration No. CMOFF/E/2010/01181 dated 4th Sep-10 & II) Registered Grievance in web portal of President of India vide Registration no. PRSEC/E/2011/00243 dated 6th Jan-2011.

 

In continuation of our previous notes, submissions and communications on the referred subjects, the following note is submitted herewith for kind information and necessary actions of all concerned for attaining a common goal of sustainable development. Competition Commission of India (CCI) has been set up under the Act of Parliament in an environment of further liberalisation of economic activities by repealing the MRTP Act-1969, became operational since Nov-2009, the aims and objectives of which are sustainable economic development in taking into consideration citizen’s constitutional rights and duties to prevent practices having adverse effect on Competition and to promote and sustain fair and transparent Competition in order to protect the interest of the consumers so also people of the Nation.

 

CCI in the meantime has taken another important step after its expression on the National Television on dated 25th Feb-2011 vide its announcement yesterday dated 8th March-2011 for organising a National level essay competition, the Cash Rewards of which Rs. 10000/- for winner and many other prizes for participants, the details of which are attached herewith for information.

 

Competition is a common term used by human beings in the socio economic life at different suitable degrees. Competition is concerned with Work force or labour force. The degrees of competition depends on the quality of labour force available in the market. Competition is related with sustainable growth and in the other hand if productivity signs fall back, then we say that there is no competition but we can not say negative competition. Competition does not stand with the theory of “Divide and Rule” rather it is self reliant and grows by himself abiding by the law of the land. The good competition prevails only in democracy. While we take up competition at corporate level, the quality of work force of the entities are required to be considered in determining the feasibility, level, rate and prevalence of competition in the market.

 

Competition is very easy and prevails automatically but is not noticeable or understood by commons. So it is only noticeable by experts of development Suo motto. These are the traditional theories of competition. While we take up competition for economic development or in other words for generation of Income without Investment, then the Authority concerned is required to work for creation of an environment/platform and in this case we may apply the doctrine of Law “Expression precludes implication”. In ancient Indian economics, Guru Chanakya alias Kautilya divided the total workforce of the State into Four categories, such as   1) BRAHMANA  2) KHETRIYA  3) VAISYA and 4) SUDRA without any caste-ism  and administered the work force productively for sustainable development by applying the principle of Inter and Intra work force competition. This theory is then called as “Division of Labour” of Arthasatra and this period of History is called as Golden period. People were very happy at that time, RAMA RAJYA was prevailing during that time. But subsequently after Chanakya, the theory of State was wrongly interpreted and Caste-ism or corruption entered into society due to adoption of wrong theory of economic development i.e., Human wants are unlimited. But actually this sentence is wrong so far as the economics of Chanakya is concerned. As per our theory “Human wants can not be unlimited”. This can not be unlimited human wants is applicable in the competition we mean above.

 

Competition undermines the following socio-culture-economic activities like corruption, illegal favouritism, arrogance approach, collusive activities both individually and collectively, rigging and ragging, dictatorship and monopolistic attitude in the part of the individuals so also groups which are detrimental to the interest of the millions or masses. However, Fair Competition advocates in favour of mutual help and cooperation between individuals and groups within the boundary of law of limitation and laws of the land and it is very much suited in democracy and socialistic pattern of society. It also advocates in favour of natural justice and human rights which is very much essential for inclusive growth of the individual, groups, States and so also Nation. It maintains globe brotherhood and approves the theory of “BASUDEVA KUTUMBAKAM” OF Indian Culture and religion. It is pro-environment and tries to upkeep the interest of the Opponent.    

 

Liberalisation of economic activities of the State was the call of the day then inducted by Dr. Manmohan Singh, the then Hon’ble Union Finance Minister brought new thoughts of economic development with exclusion of inclusive growth and sustainability, then it was added with the advocacy in favour of competition. In the age of liberalisation and information technology with unlimited necessary growth plea, most applicable to developing nations where competition is considered impartial, we have divided the total workforce into SEVEN category of Professions, such as 1) Agriculture2) Accountancy/Finance 3) Engineering  4) Law  5) Doctor 6) Journalism and 7) Business. We have stated previously about the controlling authorities of the aforesaid profession where Indian culture and religions are associated with. We can not go with the FOUR Professions of Kautilya in Arthasastra as stated above in the present age of globalisation where Planning and Strategy of the nations speaks always about growth and development. So time has come now to monitor closely in letter and spirit to the above seven professions for prevalence of Competition we mean above. CCI has announced cash rewards for students with acknowledgement for participation in the National level essay competition. So I would like to request you for circulation again for a common goal.

 

As India seeks to maintain investor confidence and ensure that its current high growth is sustainable in the long term, our organisations need to greatly improve their standards of professionalism. So what is professionalism in an organisation? It is when its members continuously uphold a uniform set of standards and behaviours aligned to the core values of the organisation. For instance, professional organisations that believe in transparency as a core value do not surprise customers with hidden fees or cover up deficiencies in their products. Others that state their concern for integrity work not only to create a culture among staff that nurtures honesty but also to implement appropriate institutional checks and balances to prevent dishonesty. Some other common characteristics associated with professionalism include objective decision-making, accountability, transparency, ethical behaviour, sufficient technical knowledge, team work, high quality of work, effective communication and non-discriminatory behaviour.
Customers and business partners generally have greater trust for professional organisations that continuously follow uniform and high standards of behaviour because they know what to expect from them. They believe that the organisation will fulfil its promises of client-service delivery.

 

Organisations also benefit internally from professional standards. The trust, transparency and understanding it creates between staff enables greater productivity and innovation. Yet organisations should not let our economy’s high growth lull them into forsaking professional standards. Although India came through strongly, the 2008 global financial crisis and the lack of professionalism in the financial services industry remains a telling warning. The crisis exposed the way financial managers ignored ethical behaviour and risk management practices as they became increasingly obsessed with short term gains. In the end, many organisations posted serious losses and even went bankrupt.

 

The crisis triggered renewed calls in several countries for an introduction of professional standards. These included requiring organisations to abide by a code of ethics, have suitable qualifications, understand risk management and demonstrate the attitudes and behaviours their profession requires. India should heed these calls as well. One of the biggest gaps in professional standards in this country exists at the Board Directors and senior management level.

 

To instil the professionalism needed to differentiate themselves, these organisations must have senior executives who set the example. As the most visible members, the way they behave has the greatest impact on the overall professionalism of the organisation they lead. Ultimately, they can help create effective organisations that set standards of professionalism, which give a good name to the industry they work in. Or, as in the recent cases of corruption, bring a bad name to not only their own organisations and industries, but to the country itself. Let’s hope it is the former. Because as India becomes more important to rest of the world, it will be our professionalism – or lack of – that determines our success in encouraging future inclusive economic growth and visits by other cashed up heads of state.

 

In its historical rulings, Hon’ble Supreme Court of India rejected the Candidature of Srj. P J Thomas, IAS for appointment to the post of Chief Vigilance Commissioner shortly on dated 3rd March-11. CVC is an important post to protect constitution and it is the authority who works for lessening disease of Corruption from society, a fence/hurdle on the way of inclusive growth and sustainable development. Considering the situation of Indian economy and corruption in the part of the constitutional authorities, Hon’ble Court lost confidence on IAS Officer and expressed opinion that Professionals of high integrity and honesty can be selected for the post. Hon’ble Court has expressly stated in favour of Professionalism and in favour of decentralisation of powers.  This order of the court is a warning to the IAS Officers of the nation, now time has come so also the situation has  enforced the IAS Officers to rethink what they are doing and what is their duties and responsibilities towards the nation.  

 

The 2G Spectrum Scam is now subjudice under Supreme Court and in the meantime Mr. A Raja, a Member of DMK Political Party and Ex-Union Minister IT has been arrested by CBI and undergoing in judicial custody. Joint Parliamentary Committee (JPC) has been constituted for probing the Scam and this decision of UPA is a victory to the Indian democracy. The ruling party felt the demands of Opposition. Dr. Manmohan Singh, Hon’ble Prime Minister of India expressly admitted his mistakes in both houses of Parliament, properly and suitably supported by Madam Susama Swaraj, Hon’ble leader of Opposition in Loksabha. These events indicate the atmosphere of healthy and true democracy. While one individual commits mistakes, he should expressly admit the same before the concerned stake holders, so that he discourages himself to commit the mistake once again.

 

In this juncture, we can not forget to note the express statement Mr. Suresh Pujari, one young and energetic man of Sambalpur and Ex- President of BJP, State of Odisha of date 5th Mar-2011 in KANAK TV 9.00 PM News Bulletin that “whoever he may be,  be the Leaders of BJP, Leaders of INC or Leaders of BJD. who commits or involve in Corruption, then immediate stringent disciplinary action is required to be initiated without any fear or favour.” This is absolutely a good express statement and was required from BJP in this crucial period, the Opposition Party of Indian Parliament.      

 

Dr. Manmohan Singh has set an exemplary for the nation and calls for Competition. The leaders (Public Representative) are elected or selected, directly or indirectly to the august house of Parliament or Assembly and have stipulated periods of tenure of rulings. If the representatives Political party do not perform to the expectation of we the people, then after completion of tenure of rulings of 5 years, we the people do reject and punish the party and choose the next best alternative Party. So the work, efficiency and performance of the Leaders are assessed by Masses and there is reward and punishment in every 5 years but in case of Civil service holders, the same is neither assessed nor punished nor rewards even after completion of the tenure of service, say may be 30 years or 40 years. In the last 60 years of Indian democracy this side has not been properly taken up for any reason in the cost of the motherland. In the governance of the State, the Leaders and Administrators are directly related and complementary to each other. They are also Head and Tail of the same coin. This nexus of India democracy is required to be redressed properly and suitably keeping in view the objective of the State for up keeping sustainable growth of the nation.  Or else, we can not step up one more step further on the path of development. This is the high time now to implement in letter and spirit our theory of development “Professionalism-Competition-Financial Viability-Customer Service, where all the work force/labour force or Women/Man hours of the Nation is associated. If one analyses 110 crore of population of nation, then each member has a place in the definition of our Professionalism.

 

Srj. Navin Patnaik, Hon’ble Chief Minister of Odisha expressly stated on dated 5th Mar-11 in the occasion of celebration of 95th Birth Anniversary of his beloved Father, the legendry man of Odisha, Ex-Chief Minister of Odisha and Ex-Union Minister at a Public meeting at BBSR that Information and Technology is playing vital role in sustainable economic development and warns the consequences of backwardness in case its non-implementation. He further stressed on development of Agriculture and Industry side by side for up keeping the pace of sustainable development. In his message so also in the message of Hon’ble Governor of Odisha which find place in the Souvenir (Odisha Power Sector at a Glance-2010) released by OERC on dated 5th Jan-11, the heads of the State expressly stated about the role of power sector in economic development along with protection of environment and implementation of Competition. The aforesaid orders and directions in the part of Leaders are very important to carry in the part of administrators.  Here we would like to reiterate the express statement of Srj. Bijay Kumar Patnaik, Senior IAS and Hon’ble Chief Secretary of Odisha of date 31st Aug-2010 while he took over the charge from retiring CS Srj T K Mishra that he is a civil servant and has no separate plan and strategy, he will work as per the desire of Government. So this is the appropriate time in the part of Hon’ble Chief Secretary of Odisha to act accordingly for the sustainable development of motherland Odisha and then his good statement of the same day i.e., “I want to see such Odisha where everybody would say I am an Odiya” will be true to the best of the knowledge of the “we the people of Odisha”.

 

In the political scene of India , an IT (Information Technology) cyclone arrived instantly and disappeared then without causing any harm to anybody. Mr. Karunanidhi, President of  DMK Political Party of Tamilnadu disagreed with INC in the matter of allocation of Assembly Seats and sent message of separation from UPA to Chairperson UPA Govt, Madam Sonia Gandhi and directed his Members to do needful by resigning from Union ministry, meant by loss of majority of UPA Govt in Parliament. This news was breaking news so also an opportunity for State of Odisha to be seen in the national picture and Govt. of Odisha played finely to the bouncer ball of UPA. It was also an blessing opportunity for Srj. Pyari Mohan Mohapatra, Hon’ble MP Rajya Sabha  to come forward and expressly stated his personal will (n) of extension of cooperation to UPA Govt but the decision on the subject matter left on President of BJD, Srj. Navin Patnaik. Hon’ble Chief Minister of Odisha, who  read the ball very well and played very well by stating the day after the former’s statement on 7th Mar-11 that “in case DMK withdraws his support to UPA, then BJD of Odisha  will not support UPA Govt. This statement of Srj. Navin Patnaik made and enforced the national leaders to review the file of Odisha where its backwardness is related. This was a very good IT (Information & Technology) politics of the nation and we the people have passed the exam.

 

In this crucial period we the people felt very sorry for being an Odiya by reading the news publication of “NIAKHUNTA”, one oldest Pre-independence Cartoon News Magazine weekly, the founder of which was an eminent Politician, Cartoonist, Writer, Thinker, National Poet, etc Srj. Godabarisha Mohapatra, to whom good National Poetries we the people have read during our High schooling  period where the nuisance of the Head of Authority (HOA) of Odisha Power Sector is presented in a cartooning way. The PDF file of above publication reached us vide email ID of under named Author, i.e., anandamohapatra05@yahoo.co.in , energyeconomics@yahoo.com . In the said news the question of integrity of discharging civil service duties in the part of Srj. Pradeep Kumar Jena, IAS, HOA of Odisha Power Sector & Commissioner-Cum-Secretary, Department of Energy (DOE), Government of Odisha (GOO) along with his colleague one retired Additional Secretary Srj. Binod Bihari Mohanty.  Further the question of disobedience to the rules and regulations of civil service has arisen in the said publication. In the said publication, it has also been stated with records of up keeping illegal and objectionable relations with the Head of Authority of the 3/4th Power distribution Sector of Odisha, the Managing Director of Reliance controlled DISCOMs  Srj. V K Sood, a technocrat who is a loss party to the major Stakeholders of Odisha Power Sector. The details of publication of the said news are attached herewith for kind information.

 

In our last communications and submissions we have stated on the poor scenario of Odisha Power Sector by analysing its different aspects and further state that the Loss of Odisha Power Sector is highest in India . Loss of the Sector is now beyond control. The HOA of the Odisha Power Sector along with his colleagues have proved themselves failure and have imposed huge irrevocable, irrecoverable and irreparable cost on Motherland, requires kind attention of all concerned. After the disinvestment of Power distribution sector of Odisha, the State of Odisha have lost income/Investment worth Rs. 10000/- crores in its minima side along with huge damages to environment and loss of economy of other Sectors which can not be forecasted due to the cascading effect of accountancy. 

 

I am very much thankful to Mr. Om Prakash, one renowned eminent Journalist of Odisha whose writings is being published weekly in DHARITRI, one leading circulated odiya daily newspaper in Odisha and who is closely associated with a Web News Magazine, i.e., www.ptic.co.in Public Trust of India, Hungers for Truth approved by Govt. of Odisha for his extensive support to our theory of sustainable development and allowed adequate space in his good web page magazine for publication of one of our theory of development, i.e., “Humane wants can not be Unlimited” on dated 28th Day of Dec-2010 along with the Passport size Photograph of the Author. Public Trust of India, Hunger for Truth web page News Magazine has designed to author Expert in Applied Economics and Analyst, Power Sector. We express our thankfulness to Mr. Om Prakash by this communication for his kind support to our theory of development.We also express our thankful to Cma Debarajan of Mumbai, Fellow Member of ICWAI for his express support to the writings of the Author and publishing/posting  the same in the web portal of cmaindia.informe.com from time to time, where around 2000 CMA Members have registered themselves in the said web portal.

 

In the above backdrop, this analytical notes on sustainable development of Power Sector is submitted herewith in support to the thesis of development submitted previously before Hon’ble Chief Minister of Odisha from time to time for kind perusal and would like to pray again to review my last prayers and do needful for attaining a common goal and to find out solution of my case. The copies of this note is sent herewith vide email ID to all concerned for kind information with request to circulation of the announcement of National Essay Competition on the subject matter of “Fair Competition: The Engine of Economic Development & “Attaining Competitiveness through Competition” organised by Competition Commission of India for the necessary information of the participants.  

CURRENCY ETF-THE NEW DIVERSIFICATION

Friday, February 11th, 2011

This is a post by Mr. Indraneel Sen Gupta. Indraneel is an economic and financial writer and a research analyst.

 

CALL OF THE HOUR.

 

With Global imbalances on the never ending rise and huge budget deficits of the Developed economies currency fluctuation is the new tremor of the quakes being felt. With the recent debacle of European nations we find

 

In other words in the coming year of 2011 we will find Europe and US going for massive budget cuts and imposition of higher rate of taxes. This will create burden and slower growth opportunities to the tune of 100% .Since budget cuts will lead to slower growth and imposition of higher taxes will result to less savings for the consumer. All these will exert pressure on the Euro, Pound and US dollar. Their will be a huge reflection of fluctuation in all these currencies. Moreover when we look towards the Asian and Developing economies we find interest rates pull back from post recession levels to pre-recession levels will exert further pressure on Yen, Rupee primarily.

 

In the past couple of months many economist across the world have raised their voices on currency war and many such subjects. Well say as diplomat one should make money from any war. Hence these currency wars need to be exploited and money needs to make from the war. Currencies are driven by the macro environment which is it a hot topic, and because currencies are valued relative to other currencies, if one goes up then the other one is going down. Thus an investor is always able to profit through currencies, regardless of the market direction.

 

GLOBAL ETF:

If we look globally we find that their have been huge demand and financial products related to Currency ETF. In the developed economies currency ETF have made investments and currency fluctuation a profit making game of the financial streets. If we make a quick look towards the probable currency ETF we find on the ladder of Developed economies then one will find the proof of the pudding.

 

Broad Currency ETFs

 

• AYT – Barclays Global Emerging Markets Strategy (GEMS) Asia 8 Index ETN

 

• ICI – Barclay’s iPath Optimized Currency Carry ETN

 

• DBV – PowerShares DB G10 Currency Harvest ETF

 

• CCX - WisdomTree Dreyfus Commodity Currency Fund

 

• CEW – WisdomTree Dreyfus Emerging Currency ETF

 

• JEM - Barclays GEMS Index ETN

 

• PGD - Barclays Asian & Gulf Currency Reval ETN

 

ETFs that Track a Single Currency

 

United States Dollar ETFs

 

• UUP - PowerShares US Dollar Bullish ETF

 

• UDN - PowerShares US Dollar Bearish ETF

United States Dollar / Foreign Currency ETFs

 

• GBB – iPath GBP / USD Exchange Rate ETN

 

• CNY – Market Vectors Chinese Renminbi / USD ETN

 

• ERO – iPath EUR / USD Exchange Rate ETN

 

• INR – Market Vectors Indian Rupee / USD ETN

 

• JYN – iPath JPY / USD Exchange Rate ETN

 

• ADE - ELEMENTS Australian Dollar / USD Exchange Rate ETN

 

• EGB - ELEMENTS British Pound /USD Exchange Rate ETN

 

• ERE - ELEMENTS Euro / USD Exchange Rate ETN

 

• CUD - ELEMENTS USD / Canadian Dollar Exchange Rate ETN

 

• SZE - ELEMENTS USD / Swiss Franc Exchange Rate ETN

 

Euro ETFs

 

• FXE - CurrencyShares Euro Trust

 

• ERO – iPath EUR / USD Exchange Rate ETN

 

• EU – WisdomTree Dreyfus Euro ETF

 

• ULE – ProShares Ultra Euro ETF

 

• EUO – ProShares UltraShort Euro ETF

 

• URR – Market Vectors Double Long Euro ETN

 

• DRR - Market Vectors Double Short Euro ETN

 

• ERE - ELEMENTS Euro / USD Exchange Rate ETN

 

British Pound ETFs

 

• FXB – CurrencyShares British Pound Sterling Trust

 

• GBB – iPath GBP/USD Exchange Rate ETN

 

• EGB - ELEMENTS British Pound /USD Exchange Rate ETN

 

Even when we look into the pockets of Developing economies and Asian economies we will not find such numbert of ETF as compared to Developed Economies.

 

Japanese Yen ETFs

 

• FXY – CurrencyShares Japanese Yen Trust

 

• JYN – iPath JPY / USD Exchange Rate ETN

 

• JYF – WisdomTree Dreyfus Japanese Yen ETF

 

• YCL – ProShares Ultra Yen ETF

 

• YCS – ProShares UltraShort Yen ETF

 

Australian and New Zealand Dollar ETFs

 

• FXA - CurrencyShares Australian Dollar Trust

 

• BNZ – WisdomTree Dreyfus New Zealand Dollar ETF

 

• ADE - ELEMENTS Australian Dollar / USD Exchange Rate ETN

 

Broad and Sector China ETFs

 

• CHIB - Global X China Technology ETF

 

• CHIE - Global X China Energy ETF

 

• CHII - Global X China Industrials ETF

 

• CHIM - Global X China Materials ETF

 

• CHIQ - Global X China Consumer ETF

 

• CHIX - Global X China Financials ETF

 

• CHXX - China Infrastructure Index ETF

 

• CQQQ - Claymore China Technology ETF

 

• CZI - Dixerion Daily China Bear 3x Shares ETF

 

• CZM - Dixerion Daily China Bull 3x Shares ETF

 

• ECNS - iShares MSCI China Small-Cap Index Fund

 

• EWGC - Rydex Russell Greater China Large Cap Equal Weight ETF

 

• EWH - iShares MSCI Hong Kong Index ETF

 

• FXI - iShares FTSE/Xinhua China 25 Index ETF

 

• FXP - UltraShort FTSE/Xinhua China25 Proshares ETF

 

• GXC - STRK SPDR S&P China ETF

 

• HAO - Claymore/AlphaShares China Small Cap ETF

 

• PEK - Market Vectors China ETF

 

• PGJ - PowerShares Golden Dragon Halter USX China ETF

 

• SNO - NETS Hang Seng Index ETF

 

• TAO - Claymore/AlphaShares China Real Estate ETF

 

• YAO - Claymore/AlphaShares China All-Cap ETF

 

• YXI - Proshares Short FTSE / Xinhua China 25 ETF

 

Chinese Currency ETFs

 

• CYB - WisdomTree Dreyfus Chinese Yuan ETF

 

• CNY - Market Vectors Renminbi/USD ETN

 

Broad Currency ETFs that include China Currency

 

• AYT - Barclays GEMS Asia-8 ETN

 

• CEW - WisdomTree Dreyfus Emerging Currency ETF

 

• PGO - Barclays Asian & Gulf Currency Reval ETN

 

This clearly indicates that Asian economies and developing economies are becoming new island of new financial products. The last several years have seen tremendous innovation on the product development front in the ETF industry. As a result, investors now have more options than ever before, including increasingly targeted products and access to increasingly complex asset classes and investment strategies. The industry remains very top-heavy, with a handful of funds accounting for the bulk of assets and trading volume. “The last several years have seen tremendous innovation on the product development front in the ETF industry. As a result, investors now have more options than ever before, including increasingly targeted products and access to increasingly complex asset classes and investment strategies. The industry remains very top-heavy, with a handful of funds accounting for the bulk of assets and trading volume. The economies are coming up with new currency products since earlier this type of global currency imbalance was not their. As the word of globalization has spreads the more demand to protect the downside risk of currency fluctuation have been developed.

MECHANISIM OF CURRENCY ETF GROWTH.

 

Investors are shifting from traditional financial products to new globalised products. Earlier financial products used to remain with the wall of a particular country where as now with the wind of globalization in trade practices currency ETF is picking up in the Developing economies. While designing investment portfolio Currency ETF is now becoming a new trend of demand. We will find currency ETF demand coming primarily from IT industry. Since they are prune to the highest degree to currency fluctuation. Global cross border investments needs currency ETF and this demand of trade is picking up each day in the Asian as well as developing economies.

 

Earlier currency ETF was acclaimed as risky product since it was quite hard to predict and speculate the movement of the currency. But after recession and further blast of financial time bombs across the world have rattled the currency market and hence brought imbalances as the new guest. Currency fluctuation is the new child which will keep on growing as long as Developed economies will not bring down fiscal deficit and GDP and other economic wheels don’t pick up the pre-recession growth numbers. Until then we will find money being printed from currency ETF. Interest rate fluctuation across the global market is another boon for the currency ETF market.

 

In the developed economies we can foresight a prolonged lower rate of interest rates and no near future of rise in rates. Where as in developing nation we have witnessed interest rates hike followed with more hikes to come up in 2011.Infaltion is one of the most important game players behind currency ETF. When ever inflation goes up as incase of India and China monetary measures are applied resulting surge in currency ETF gains. When ever inflation don’t come up as in case of US printing of money brings gains for currency ETF. So in either of the both ways currency ETF will bring growth for the investments.

 

GLOBAL CURRENCY ETF GROWTH/RETURN.

 

SIMPLICITY ADVANTAGES .

Currency ETF is not like the derivative products where complexity is the other name of its identity. Currency ETF are much safe as compared to them. Indian economy is yet to witness products of currency ETF particularly from the mutual fund industry. The mutual fund industry can find lot of opportunities from Currency ETF products. As less people are interested to keep their savings under any currency form as its quite impossible to predict which currency will devalue the savings, in that case currency ETF will give them a balanced position to and risk control over fluctuating currency.

 

Currency ETF favors an investment opportunity in many ways. Shedding away the unnecessary part of the advantages of currency ETF and just finding out the prime growth drivers of the product we find:

 

Foreign Exposure

 

If you feel there are some foreign regions that are potential growth areas or emerging markets, a country ETF may be the perfect asset to increase your international exposure.

 

Diversification

 

If your portfolio is heavy on domestic investments, some foreign exposure may help balance your overall stratagem. Adding a country or region ETF to your portfolio can expand your investment horizon.

 

Risk Management

 

If your portfolio or business has exposure to a certain region, investing in a foreign ETF may be a good way to reduce that risk and protect you against negative developments in certain countries.

 

INDIAN MUTUAL CURRENCY ETF :

Indian mutual fund industry needs to bring currency ETF into the market so as investors in this segment are not from only HNI or retail. We will find Indian corporate doing parking of funds to rep the profits of currency fluctuation. Apart from profit one makes diversification and risk management will be the key driver of Indian Currency ETF products. I will not be surprised to find debt funds loosing sheen and surge in currency ETF investment avenues.

 

The Indian mutual fund industry is yet to grow in product specification. We have developed a number of funds of same nature but less new diversified products matching the global risk management have been developed. We need products where domestic as well as global investments in Indian mutual funds will take new shape and size. We might see many new mutual funds in India in the new decade. But we need to design them accordingly.



CHINA COMES TO RESCUE

Sunday, February 6th, 2011

This is a post by Indraneel Sengupta. He is a financial, economic writer and a research analyst.


CHINA COMES TO RESCUE

 

 

Last year the financial media was busy in covering the growth strategies and the asset bubbles being spooked by the Chinese government over the various asset classes. The world markets was suspecting another round asset bubble burst out which will bring out the Recession dinosaur .But thanks to the government of the china that they identified this growth and acted well before they assets were going to burst out the recession dinosaur was about to take to birth. This article will try to bring out the invisible investments being made by china despite being awarded with “Manipulated Mark”.

 

CHINA THE STRATEGIST

 

China is well known for its strategic growth- strategies being developed during 2009 when it torn out the recession skin from the Asian markets. The Indian market should thank China for showing the early recovery way out the recession dark nights. In 2010 china was under the top ladder of currency manipulation and we well portrayed as a villain for destroying domestic markets of the world. But looking in a different angle we find out that china currency was never undervalued or manipulated. In fact other currencies were overvalued leading the CPI to increase in those countries. China has a huge mass of population where the present living cost is still unbearable for the Chinese citizens living in china. Looking at the tall skyscrapers its is quite hard to find out the real living cost of China. Over here I would like to quote from William Shakespeare Gilded tombs do worms enfold.

 

CHINA COMES TO RESCUE:

 

With global currency imbalances due to large imbalanced fiscal debts among the various nations have resulted volatile currency valuations. This further has spooked commodity prices to rise up and eradicate the middle class living from the earth. The middle class is the worst suffers of the rising commodity prices resulting cut backs on normal living standards. The interest rates GOD have been awakened to control the devil of Inflation. The blessing so the GOD of Interest rates is that cost of borrowing is going up and resulting further increase in the cost of production and commodity prices.

 

India has started feeling the heat of rising cost of interest rate in the winter season. These heats have forced the Indian corporate to look for cheap overseas funds. Over here again China have come for the rescue. Yes China the much debated, the much adducted economic country of the world.

 

Currently India needs 100000 megawatt power projects by 2017.For this alone the Indian banks have raised their hands helplessly that they will not be able to meet the desired projects funding. $45 billion dollars will be required for the power plants equipments alone. India is looking forward to china for investments into Information & Technology sector. India needs around $1.5 trillion investments in Indian infrastructure for the next 10 years to keep the GDP growth around 10%. The ongoing five-year plan called for $500 billion of infrastructure investment. The next, which runs until 2017, will argue for $1 trillion. With India’s public debt at over 60% of GDP, and a current account deficit touching 4% hence funding is going to be quite a hard stuff.By the time you read this data you have already found the FDI investments into India have dropped to levels of March 2003.

 

CHINA DESPITE BEING THE VILLIAN

 

We find the China who was being blamed in front of the media by the Wall Street heavy weights have silently entered in to joint ventures and corporate tie ups with Chinese investments. You might be shocked but that is the hard core fact that when the bugle of manipulated china was being blown, corporate tie-ups were happening at that point of time. Last year Chinese investments into Us was around the mark of $6billion.A small number but bigger that $100 million in 2005.

 

China have made investments in US business primarily into manufacturing plants, solar plants, and automotive. Total size of the trade among China and US last year was hanging around to the figure of $400 billion. China is attracted towards US solar sector for investments. Venture capitalist investments in US solar industry was to the tune of $1.67billion, an increase of 18% over the 2009 figure. At home china did an investment of $34billion in solar sector.

 

According to latest data released by the World Bank, China has extended loans to the tune of $110 billion to the emerging economies. This simply reveals that China is busy in shifting its resources from its own home to other nations. Development Bank and Import & Export Bank of China are the main leaders in the loans to emerging economies.

 

1377 Chinese companies have found investments avenues and growth areas in North America. The group of the companies primarily consist of small and medium enterprise.495 of this class of corporate have found investments avenues in North American manufacturing where as 14% in hospitality,14% in wholesale market and 13% in financial sector and last but not the least 56% wants to setup distribution channel in Canada.

 

Now if we look into the mirror of China and US we find from the other angle that is US investments in china is on the upward trend. US is shifting its operation jobs to China low cost based units. Over here I would like to draw the attention of the US government that what steps are being taken to reduce the unemployment. In fact if the manpower doesn’t shifts and only jobs then unemployment in US will be around 10%+ in 2011-2012.Jobs shifting results higher unemployment and burden of government debts.

 

In a recent report by the American Chamber of Commerce 79% of the business community wants to invest in Beijing alone. Now please explain yourself and ask questions to the US government what makes Dow Jones 11100 mark and what polices are being made in real and true sense to control the unemployment and why US is not having investments opportunities at home. Well when all these questions comes into the mind its time to move further ahead to find some cheese of cross border investments being made by china in my next article.

 

TURN AROUND BUDGET

 

Well if India needs funding to the tune of $1.5 trillion the Indian Banking System needs a radical change followed with Foreign banks givens adequate instruments in hands to finance the and meets the demand of $1.5 trillion. Securitisations and credit default swaps followed with insurance industry being allowed to invest more in infrastructure will reduce the burden to a certain mark up. Even FDI investments will not be suffice enough to support. At the same time India needs to solve the problems related to the Indian legal system of Environments, land acquisition, red tape and other infrastructure bottle necks. Since we all know that India is renowned for delay in execution of projects .If these bottlenecks are not removed the fund requirement unofficially will peg around $2.5trillion.Budget 2011 will be a path breaking if the government formulates policies keeping the above factors in mind.2011 Budget can be a “Turn Around Budget” for Indian economy

Theory of Consumption of Economics needs to be re-looked and reviewed.

Tuesday, January 11th, 2011

 This is a post by CMA.Ananda Mohapatra.

Theory of Consumption of Economics needs to be re-looked and reviewed.

 

The theory of Consumption of elementary economics began long ago with birth of mankind. During the beginning period of human civilisation, it was there but not explored, later on eminent Philosophers of the World gave it a name and derived other connective theory of economics. So consumption theory of economics is the route of other theories of economics. During mid 19th Century Philosophers like Dr. Alfred Marshall stated many things about consumption and developed different theories.    

 

Today State of Odisha so also Nation and world is running through a crucial period in connection with growth and development. The situation of World economy is worsen and facing recession and depression. Several countries of world including USA, UK, France and Russia is searching for alternative ways of growth while global warming and pollution become very serious and has become dangerous to humane civilisation. India and State of Odisha is of no excuse of above problems. Besides, Corruption in the Society beginning from households to national level has found prominence. This has made serious concerns in the part of Leaders and administrator of the State and Nation.

 

Corruption in the society is now at full swing and common as is evident from the daily news of print and electronics media. 2G Spectrum Scam, Adarsa Housing Scam of Maharashtra, land scam case of Karnataka, Vedanta, mining, coal and energy scam of Odisha etc. have proved the depth and route of the level of corruption in governance and administration. So in this crucial period, I would like to request to Leaders of the State, Nation and World to have a view on the following submissions of corrections and review, so that a path can be made out today for a better tomorrow.

 

Elementary Economics is a topic read by all streams of students, may be Arts, Commerce, Science, Engineering, Management etc. The Theory of Consumption constitutes the basic and fundamental element of economics and from which the Demand and supply theory have been derived along with others. Every students of higher education have read this basic law and concept of economics that “HUMANE WANTS ARE UN-LIMITED”. From this formula several other theories have been developed.

 

Humane wants are Unlimited. Whether this is true? In my view this not true in the present state of affairs. Let us I would like to put forth some examples. In our society, while we wake up in the morning, we plan for daily work with the limited resources and then as the day passes we achieve something or do not achieve the same due to constraints. This phenomenon of humane beings is common to all. The intelligent people are like to set realistic target with their resources available and perform necessary works for its achievement. If the plans and targets are un-realistic, then there is failure. So to conclude, the aforesaid behaviour of humane beings are based on limited wants.

 

We may take the case of the man with unlimited wants. If wants in the part of man becomes un-limited, then he will face confusion, counterfeiting, unattainable and pessimistic problems during the time of planning and fixing targets for the day to come. So while the wants of a man becomes unlimited, it will be very difficult in his part to work and to achieve results. The life of a man with un-limited wants is very difficult in an age of competition. With unlimited wants, people want to full fill their desires by hook or crook. Due to unlimited wants or we may rename it as huge desire, humane beings are self concentric and forego its responsibility towards society. He earns money in the cost of society; he even dares to earn money in unfair means. The ecology and environment becomes meaningless to him. While he earns money, he least thinks about its externalities.

 

We may relook our past. We born and brought up in an atmosphere of un-limited wants. Every student of Odisha so also India and world have read elementary economics because it is a common and compulsory subject for all and are taught and learnt that “Humane wants are unlimited. This concept of economics has born during the time of great man of economics Dr. Alfred Marshall and it has become a draconian law of economics. There after other great economist derived other theories of economics from this draconian law. All beginners of economics subject are started with this consumption theory, i.e., Humane wants are unlimited.

 

As time passes by with this faulty theory, we come across several events and happenings. Competition born in society followed by free trade then forced Philosophers to think reform in functioning and governance. In the other side of the coin corruption expanded its area without any attention like a disease neglecting the good ecology and environment. There was least scope to be realistic and people became materialistic and neglected the philosophical idea and run around the circular way. They did not escape even today. The Leaders and Administrators are not excused from the said circle. People ran on their way of life individually along with their family without looking to anybody, even neglecting the god gifted environment.

 

Favouring so also promoting to the theory of limited wants of economics, I would like to state about the Law of diminishing marginal utility. In this theory, when a man consumes commodity, his satisfaction level changes as he consumes the additional commodity. His satisfaction level of consumption becomes less and less while he consumes more and more. This is very much true in consumption behaviour of every man, being realistic in approach. This law of economics is contradicting to the Un-Limited wants law of consumption. In reality, had humane wants are unlimited, then there would be the law of increasing marginal utility instead of law of diminishing marginal utility. But the law of increasing marginal utility is not practical and possible. So, humane wants are limited and it can not be unlimited.

 

The above law of un-limited wants of economics is being impulsed in the past when the subjects like information/technology, deep corruption and sustainable development of economy had not in the society. Further it is being imported to India, a continent of hot and black from west, continents of cool and fair. While the latter continents have felt its necessity at a time of negative growth and economic crisis, the former is murmuring in the vicious circle of sustainable development and is not escaping. So time has come now to relook and review the basic theory of economics on priority: Consumption Theory, Humane wants are limited and make necessary arrangements for its propagation and regularisation in society, Schools, Collages, Universities and Institutes, so that the mind set of work force/manpower of the nation will be reset for attaining sustainable development of the economy.  

 

Humane wants can not be unlimited. This has been wrongly propagated in the past as unlimited at a time when idea of economic development was at premature state & there was poor environment of IT. So we have already come across that period and time has come now what is to be prescribed?  Considering the present socio-economic scenario of the State and nation, it is submitted that “Humane wants are limited and can not be unlimited”. At least we are to be alerted and prompted to regularise the above notion, may not be able to get result shortly but the direction of development shall be properly oriented without any doubt.

 

So, to maintain sustainable growth/development of economy of Odisha, India so also World, I would like to request the State Leaders and national Leaders including Hon’ble Chief Minister of Odisha, his Excellency Governor, Govt of Odisha, Mr. Kapil Sibal, Union HRD Minister, Prime Minister and President of Union Govt, President of UPA Madam Sonia Gandhi to look into the matter and direct the State and Nation to regularise in educational institution the above consumption law of economics, i.e., Humane wants are limited and to arrest the corrupted functionaries of governance and administration so that the good environment and ecology can be saved and preserved. I would also like to draw the kind attentions of economist of Odisha, India so also World to have a comment on the above changed law of economics and it is solicited/appreciated.

 

Thanks.

 

Energy Economics.

Odisha.

Nobody Sells ‘Millions of Copies

Wednesday, December 29th, 2010
Thomas E. Woods, Jr., is a senior fellow of the Ludwig von Mises Institute.He holds a bachelor’s degree in history from Harvard and his master’s, M.Phil., and Ph.D. from Columbia University. He is the author of ten books, most recently Nullification: How to Resist Federal Tyranny in the 21st Century.  His other books include the New York Times bestsellers Meltdown:  A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things WorseThe Politically Incorrect Guide to American History

Before I became an author myself, I held an inflated estimate of the number of copies the typical book (bestselling or otherwise) sold. I also thought the author earned more per book than he really does. In my experience, the general public shares the misconceptions I once held.

Now for the terrible truth.

Books, says one of my publishers, are some of the hardest things in the world to sell. Nonfiction books, which I’m discussing here, are especially difficult — next to no one, relatively speaking, reads nonfiction. (Fiction carries its own challenges; competition is particularly fierce, given that half the world claims to be working on a novel.) It doesn’t help that there were 195,000 distinct titles published in 2005 alone (the latest statistic of which I am aware). I happen to know of a major publisher all readers of this site have heard of, which, at the time I heard the statistic, had published 3000 different books in one year. How many of those sold more than 2000 copies? About 200.

Books do not sell.

I know of people who expected to write a book and live off the royalties. They were deluded.

Then there’s the question of how much an author earns. Many people assume the author receives 50 percent of the cover price. That is impossible, since the bookstore is already getting a 50 percent discount (and book clubs get at least 70 percent off). If the author receives the other 50 percent, where would the publisher’s earnings come from?

An author with a trade publisher typically earns 15 percent of the cover price of a hardcover. Common contractual terms run as follows: 10 percent for the first 5000 copies, 12.5 percent for the next 5000, and 15 percent for all copies thereafter. Paperback editions earn the author 7.5 percent of the hardcover price. That’s before taxes, though one small consolation is that royalty income is not subject to self-employment tax. It’s also before any agency fees — your literary agent, if you have one, will typically earn 15 percent. Mine, who has helped me with several of my titles, earned every penny, but it’s still a deduction from your income.

University and academic presses are typically less generous. Sometimes you are actually expected to prepare your own index, if you don’t want to be docked to have one of their in-house people perform that service. I did the indexes for a couple of my early titles. It is an unspeakable task. Royalties, moreover, typically don’t exceed 10 percent, and usually operate on a sliding scale beginning with 5 percent.

It’s embarrassing to recall, but I remember thinking The Church Confronts Modernity, my book with Columbia University Press, would sell around 10,000—20,000 copies! After all, I thought, at least that many people would be interested in the subject matter it deals with, so of course it’ll sell that many. Ahem.

My most successful book, The Politically Incorrect Guide to American History (2004), has sold about 170,000 copies so far. That is a veritable miracle for an unknown author with little access to mass media. But it’s well below what most people assume I have sold.

Not long ago, someone referred matter-of-factly to the “millions of copies” of Meltdown I must have sold. Would that it were so. No one sells millions of copies of a nonfiction title, with a few exceedingly rare exceptions: (1) people with television or radio talk shows, who can promote their books before a huge audience every day; (2) authors whose books are featured on Oprah; and (3) the occasional outlier with a clever or quirky idea that attracts a lot of media.

Even with all the attention Meltdown got, it sold about 55,000 copies. This is astonishingly low to most people, particularly given the ten weeks it spent on the New York Times bestseller list. But the publishing world, which knows the dreary nonfiction sales figures all too well, was envious of my publisher for having such a big hit during a depressed period for publishing.

Having done this for a number of years now, I’ve come to expect sales to be at about this level. I realize it’s extremely difficult to sell in excess of 50,000 copies of a nonfiction title, which I have so far managed to do three times (my book on the Catholic Church and Western civilization being the third). But when you tell people the real figures, they are (understandably) stunned and disappointed. It’s like telling a relative at a family cookout that you were just accepted at the University of Pennsylvania or the University of Chicago. Someone in the know realizes you’ve just reached a great milestone. Many average people, on the other hand, figure you just got accepted at a run-of-the-mill school.

Even though nonfiction titles sell fewer copies than you may have thought, they are not for that reason a waste of time, particularly if you derive intellectual pleasure, as I do, from the challenge that comes with writing them. Writing a book (with a major publisher) can open major print, radio, and television outlets to you and your ideas, thereby giving you a chance to spread your message to a wider audience than just the reading public. Authors receive speaking invitations that give them the opportunity to reach a broader audience still, while adding to their (erratic) income. And so on.

If you want to write a book, then, just be sure to go into it with your eyes open. Understand that the chances you will become rich as a nonfiction author are slim to none. But writing a book brings satisfactions other than money, and if those are worth the expenditure of time that your project will demand, then by all means get to work.



				

Energy-Environment-Economic Development

Friday, December 24th, 2010

This is a post by CMA.Ananda Mohapatra.

In continuation of last submissions and communications including my grievances lodged in the GOO e-Abhijoga web portal registered under Regd No. CMOFF/E/2010/01181 dated 4th Sep-2010 on the subject cited, we have number of opportunities to read positive responses from several admirers the State so also Nation. Some of have contacted in Cell phones and have expressed-extended their support.

 

Today is the following day of the end of the Winter Session of 14th Assembly and hon’ble Chief Minister of Odisha flied to New Delhi in the morning Plane and by this time he is at Delhi to pursue and to talk with Hon’ble Prime Minister of GOI Dr. Manmohan Singh and Hon’ble Finance Minister GOI Srj. Pranab Dada in the matter of sanction of funds for the people of Odisha, particularly for agriculturalists. He is now expecting to get grant-in-aid to the extent of Rs. 800 crores, but did not prefer to go through my communications and submissions where multi billion dollars are there. I have kept this huge money just in front of the door of the Hon’ble Chief Minister of Odisha but he is missing again and again. I do not know how much grant-in-aid Odisha will get by this trip after persuasions (this can not be treated as begging in my part), but my theory (my theory means the theory of the development of the State) of development will generate funds spontaneously without any difficulties for the sustainable development of the people of Odisha and this is beyond doubt, requires only kind attention, induction and Implementation. However, once again I would like to request before the real executive head of the State for drawing kind attention towards my last submissions and communications for appreciation. 

 

The subject matter of energy is coming under the Concurrent List of Indian Constitution which provides for quassi-federal structure of Indian Democracy. The Legendry man of Odisha married to Madam Gyana Devi in the past while he was doing his practical engineering in air craft service. His relationship with Indian Congress Party, a Party which once upon a time was presided by the Father of the Nation and with Punjab, being the Father-in-Law house have not attended appropriately by the good media of Odisha to upkeep the sustainable development of the State. Dr. Manmohan Singh, being the Uncle of our Chief Minister would naturally be attained to Odisha because we know that how uncle feels happy on the development of cousin. This is BASUDEVA KUTUMBAKAM. Globe Brotherhood.

 

In the meantime we have news in connection with our theory of development. Mr. Nishikanta Mishra, Advocate filed an appeal before Odisha High Court for suspension of the remuneration hike proposal of respectful MLAs, citing the reason of loss of food grains due to last abnormal rain. So hon’ble HC have to dealt with the case in the area of why abnormal rain? What is commercial viability and consumer service? Etc. In my view the remuneration hike proposal of respectful MLAs is appropriate and pro-development. Had remuneration been hiked till the day when Mr. Santosh Singh Saluja, Hon’ble MLA of Kantabanji threw pen stands towards the wall beside Hon’ble Speaker of the Assembly deliberately to show his discontentment (like Shoe throwing case of Mr. George Bush or Mr. Chidambaram) aggressively, then he would have punished with cut in his remuneration. Further, we the people of Odisha would be in a position to charge against our elected Members for irregularities and then demand for cut or stop in payment of monthly remuneration to him. Further after cut in remuneration, if hon’ble Member prefers to come to Assembly then this may be treated as his personal interest in attending the House. The irregularity matters will be rated and tabled automatically before the people of Odisha over a period of time.

 

Puri Vedanta issue is now subjudice under Supreme Court, relaxes leaders and administrators. The last Saturday’s adjournment motion put up in the august house of Assembly by the Opposition Members on energy scam of Rs.1000/- Crore and illegal favour to ADAG’s Reliance  Infra by allowing him to run his operation even after completion of agreed period by more than Six years. In the discussion both two major Opposition Party Leaders including Srj. Anup Sai, INC, Srj. Kanak Bardhan Singhdeo, BJP, Dr. Prafulla Majhi, Srj. Surendra Prasad Paramanik and Srj. Santosh Singh Saluja pleaded in favour of the Subjects, where hon’ble Minister Energy countered the allegations supported by his good fellow party Members Like Srj Priti Ranjan Ghadai (I am sending him my communications), Prabhat Kumar Tripathy, Srj. Sanjay Das Verma and Srj. Niranjan Pujari. In nutshell Five Members supported the subject and five Members rejected the subjects.

 

Let us coming to the scam of energy sector. It has been alleged that funds of Rs. 1000/- Cr. has been mis-utilised for pecuniary interest which was meant for the development of the people of Odisha. But as per my calculation it is under assessed. Actually in the last 10 years funds of at least Rs. 10000/- Cr. without compounding, has been mis-utilised for pecuniary interest which was meant for the development of energy sector so also for people of Odisha. Now time has not come to state more about the topic or to give details about how money has been mis-utilised, though it is known to all in my last communications and submissions.

 

Yesterday dated 22nd Dec-10, again Samaj published funds scam of Rs.1.5 crore in Kalahandi Electrical Divisions in connivance of the DISCOM functionaries and Rice Millers. Very good presentations of scam with details, which once upon a time I had submitted with more data and analysis on my audit report to Managing Director WESCO during the year 2003. In my report I had mentioned about rice mills and about its system and electrical installations and the regulations to regulate it to attain commercial viability. The report was very much appreciated then and Company had taken measures to recover money. All this things, I have mentioned in my 112 reply to WESCO, now under the consideration of Deptt of Energy GOO. In the said reply I have mentioned several scams of loss of money of multi million crore for pecuniary interest, neglecting the interest of the people of Odisha.

 

Few days back, I had the opportunity to visit the web site of Competition Commission of India functioning under the administrative control of Union Ministry of Corporate Affairs, GOI and read the message of definition of Competition of hon’ble Minister Srj. Salman Khursid for sustainable economic development and it is really appreciable. In the said web page advocacy has been done in favour of Competition and a manual is there for “Abuse of Dominance”. I would like to request Hon’ble Minister Energy so also to Chief Minister of Odisha kindly regulate for implementation of Competition Act-2002 and its amendment of 2007 in the governance of corporate sectors of Odisha. Attached herewith “the Abuse of Dominance” manual issued by CCI, GOI for kind information and necessary action.

 

Lastly, in the above backgrounds I would like to draw the kind attention of Hon’ble Chief Minister of Odisha through his good ministry of Energy to have a view on my multi-billion dollars development theory of State and request for an appreciation of my work for Odisha so also nation.

 

Thanks and Regards.

 

Cma Ananda Mohapatra

Sambalpur, Odisha

Mob No. 9439212649.

Power Sector Development-Environment-Economic Development‏

Saturday, December 4th, 2010

Power Sector Development-Environment-Economic Development‏

This is a post by CMA. Ananda Mohapatra. 

With reference to my previous submissions and communications, grievances lodged in the Odisha State Grievance Redressal Portal e-Abhijoga, i.e www.cmgcorissa.gov.in   on dated 4th Sep-10, duly registered vide acknowledgement no. CMOFF/E/2010/01181 and the reminders there after, report of State pollution control board & launching of CAPEX Program for Odisha DISCOMs by hon’ble Chief Minister of Odisha on dated 22nd Nov-10 at Hotel Marrion BBSR, I would like to submit some more observations in this crucial period and reiterate my old prayer to draw kind attention and appreciation of my work done for improvement of DISCOMs and economy of Odisha, where I had not missed to weigh the good ecology of motherland.

In my last submissions including my reply 112 pages to WESCO to different authorities of Odisha Power sector starting from Reliance to Office of CMO, I have communicated my work and services for power sector, seriousness for reduction of ATC Loss, alarming Losses of DISCOMs is closely/directly related with pollution and warming of environment and the actions and reactions of WESCO/Reliance functionaries, where I tendered resignation from service on protest.

The reports and recommendations of Odisha State Pollution Control Board to Department of Forest and Environment of GOO as stated by Srj. Bhagirathi Behera of OSPCB to Daily Newspaper DHARITRI  and published on dated 18th Nov-10 that Industries of Odisha are disposing/exhausting  off 82.1652 Million Tonnes (MT) of Carbon Dioxide (CO2) per day. The thermal power plants of the state are exhausting a major share of 54.9 MT of Carbon Dioxide gas per day which is alarming. Out of 0.0249 Million Tonnes (MT) of Methane (CH4) gas disposed off per day, the coal mines are contributing 0.0239 MT of Methane per day. The detail account of carbon dioxide gas released per day from different source is as follows: Thermal Plants-54.9 MT, Cement Industries- 1.22 MT, Blast Furnaces- 6.475 MT, Sponge Iron Industries- 5.1 MT, Senator Plants- 1.048 MT, Ferro Alloys Plants- 1.573 MT, Coke Ovens- 1.799 MT, Aluminium Industries- 1.4124 MT, Transportation- 5.707 MT, Other Industries- 2.683 MT of CO2 per day. As per the report out of the total green house gas generated, 68% of the CO2 Gas is generated from Thermal power plants where as in all India level it is 58%. Out of the total green house Gas generated per day in MT, Odisha is contributing 6% of total as reported by Pollution control board. Due to change of environment, it has been reflected in the productions of food grains.

The above report of State Pollution Control Board of Odisha is a warning to functionaries of power sector. On above, it is easily assessed how the inefficiencies of the Power Sector is contributing to the Pollution and affecting the livelihood of the people of Odisha. Every people of Odisha, who are not capable enough of using Air Conditioners for domestic purposes have felt the acute warming of summer this year, followed by low rain fall and now warming in winter. The ecology of Odisha has been affected a lot due to the mis-management and inefficiencies of power sector, which can not be allowed by a welfare Government. While the draft report of climate change was notified and issued for public comment by the Hon’ble Chief Minister of Odisha in the first week of June-10, early this year, I had the opportunity to forward the same along with a note to different personalities of Odisha Power sector including the leaders of Unions and Associations of the Sector and sought their comments. The said notes along the attachment of draft report of climate change, forwarded to all concerned then is re-forwarded herewith for kind information.  At that time facts and figures were not clear but it was felt, but now the facts and figures are on our Table.

The much awaited Capex (Capital Expenditure) Program of Rs. 2400 Crore was launched by the Hon’ble Chief Minister of Odisha in the very first day of the month of Margasira, Monday 22nd Nov-10 at Hotel Marrion, BBSR in a ceremony where imminent personalities of Odisha power sector were present including the the DISCOM’s functionaries. The purpose and modulation of the program is prima-facily known to all and has come in all daily newspapers of Odisha, need not require stating more.  However, I would like to note some observations and to draw the kind attentions of all concerned for the success of the Program with the following background, modulation and reactions of the Program:

1.                  Power sector reforms could not get the much needed result during last 15 years as is evident from the rising trend of ATC Loss of DISCOMs which is now stand at alarming stage of 40% or more and unreliable power supply. The reasonability and affordability of electricity tariff, a mandate of national tariff policy is doubtful.

2.                   To strengthen the electricity network/infrastructure, so that the technical loss will be reduced by 12% over a period of 4 years @ 3% per year.

3.                  The target based loan will be considered for conversion into grant after its full utilisation and reaching the target, or else it will be shown as loan in the Balance Sheet of DISCOMs.

4.                  There is a three-tier monitoring system for the funds invested, i.e., DISCOMs level-GRIDCO level and GOO (Govt. Of Odisha) level.

5.                  As stated, the present strength of electricity consumer of the state is stood at 28 lakh and is being estimated to rose to 70 lakh within next two years, i.e. by 2012 after considering right to electricity to all and the electrification programs like RGGVY, BGY & BSY.

6.                  The launch of the above program is propagated as challenging with nothing new as it was during the initial period of power sector reforms, once again it is trusted to provide reliable power, reasonable and affordable tariff to the people of Odisha.

7.                  Along with others, some eminent personalities of Odisha power sector who have attached with the sector since beginning of electricity in Odisha like Srj. Sarat Chandra Mohanty, Worker Union Leaders and Member SAC of OERC, Srj. Jatin Ray, Worker Union Leader and Srj Lalit Kumar Nayak, Social Activist and Leader of BJD have opposed to the program with citing some reservations. As stated by them, the Reliance managed DISCOMs have violated all norms, rules and regulations for proper distribution of power in the State. They have stated that instead of investing in CAPEX, the GOO should take over the DISCOMs and should order a crime branch probe in the money generated and spent by the three DISCOMs. 

With reference to the above points of the program, I would like to reiterate that in the past huge funds have been invested into the sector but it has been mis-utilised manifoldly as reported in my reply to WESCO, while I tendered resignation on protest. The carelessness approach and earning money in back door has become responsible for failure of the program. It is once again stated that the above Capex funds will be utilised in upgradation and installation of distribution Transformers, Metering, uprating conductor, energy audit and implementation of IT. But what is the mind set of DISCOM functionaries.

Implementation of IT into the sector is dissuaded & feared by the corrupted functionaries at corporate level who are leading the sector with the apprehension of loosing their illegal pocket money. Now question arises why the DTR (Distribution Transformer) has overloaded? The answer is that without practicing the norms and standards, power supply is allowed to new consumers for earning illegal money. This does not mean that consumer is benefited. Consumer is paying money more than applicable due to his ignorance about the laws of electricity and the technicality involved in the distribution business. The field Officers are exploiting the innocent/ignorant  consumer after loading huge cost on distribution network. I have verified records of service connections of different Sections, SDOs, Divisions, Circles and Corporate of DISCOMs and found huge nuisances and irregularities in the process of allowing and permitting power supply to the new consumers and upgrading the old consumers. The distribution sector is being regulated with different orders, laws, directions, mandates but these are not followed. It is run by the sweet will of DISCOM people. How the system is functioning is stated by me with records and evidences and communicated the matter to different authorities including the office of hon’ble Chief Monister but this has not been taken care of properly as on date.

We have regulations like Voltage Regulation (VR) Calculations and remunerative norm calculations while allowing new connections to industrial consumers. But this has not been taken up while redressing the applications. VR calculation is made in it’s sweet will only for meeting procedural and statutory requirement but the data like rating of transformer, sizes of conductor, distances of location of consumer from the sub-station is all put up in sweet will, only for making the proposal feasible and earning black money. The remunerative calculation regulation which is mostly consumer-friendly is not applied at all while permitting new connections to consumers in the cost of line infrastructure of Odisha. More than 90% of the field Officers of WESCO are ignorant about calculation of remunerative norms which has been reported. So if this practice is continued, then how much money will be invested in the system? All these nuisances are made and tolerated for earning black money, gratification, ratification etc. I have mentioned some examples in my reply to WESCO, how the system is being affected by the nuisances of its functionaries.

Let us come into investment in energy audit. In the year 2005, huge funds invested in metering of feeders, Transformers and consumers. A separate energy audit Cell was opened at Corporate level with its branches at Circles and divisions. Huge new man powers were inducted to carry these jobs. Mr. Dutta monitored the work strictly and completed the metering and appointment works. But what happened then. WESCO people alleaged that Major General has earned money illegally in procuring defective Elymer meters. Some miscreants(only 4 to 5 Officers)  of WESCO started anti-energy audit campaign and exposed Dutta even in media, paralysed the energy audit cell, deliberately disturbed the Feeder Meters, declared the good meters into defective, deliberately burnt the costly metering units and etc. after one year in 2007, the investment in energy audit was forced to be declared as failure. Mr. Dutta, then quit the service of WESCO. These are the realities of the sector which I have stated in my reply date wise. Then question arises, why DISCOMs are not interested to carry on energy audit? The answer is again same, fear of loosing black money. If every thing is metered, then accountability will be easily fixed on field officers, resulting they will be caught easily for earning black money. So the top 4-5 dishonest Officers of WESCO decided not to allow success to energy audit, so that the sector will be under their control in the cost of motherland.

So all investment into the sector have not been shown desired result due to corrupt practices  of 4-5 dishonest Officers who are leading the Company. Then it was planned to restructure the DISCOMs and gave birth to my theory of development i.e.,  Implementation of professionalism, role of commerce, candidature for doing the work of commerce, composition of commerce department, role of accounts, audit in the sector, role of electrical engineering professionals in commerce, role of black money in the sector, change of attitude of professionals for finding opportunity of earning illegal money, neglect of line infrastructure by going against restructuring, illegal associations, pollution/warming of environment and lastly the economic development of Odisha. Though the HRD Deptt of DISCOMs including Reliance HRD were well briefed about the facts and figures in writing but they preferred to keep silence and tried to see the drama only by doing the role of a man who is pretending to be in asleep and it was tolerated.

As reported in daily newspaper TOI (Times of India) dated 18th Nov-10 that CAG has expanded its scope of functioning from auditing conventional compliances/performances to newer areas such as environment auditing as told by Accountant General of Odisha Srj. Saubhagya Ranjan Dhall on Tuesday on 16th Nov-10 at BBSR. While compliance audit looks into whether the work has been completed in due course, performance audit goes beyond to probe if the work has been carried out in right way and efficiency. In case of environment auditing, the probe goes into qualifying the environmental impact of a Project. “Environment auditing being a new area, by going another step ahead, CAG is coming up with an International Training Centre on the subject,” said Mr. Dhall while speaking at a function to mark 150th Anniversary of CAG at BBSR. The International Centre for Environmental Audit and sustainable development will come up near Jaipur, Rajastan on the Jaipur Delhi High way. CAG recommended incorporating recycling and re-use in waste management strategies as they have a long term viability and are internationally accepted. 

So, being a Member of ICWAI, a Statutory Professional Body functioning under the Union Ministry of Corporate Affairs, a professional body which is being born by an Act of the august house of Parliament, the mission of which is socio-economic development and the profession of which is covered by accountancy, audit, economics and Finance, a profession of anti-corruption, I firmly support to the above enlargement of the scope of audit as done by CAG, GOI. This is a very good development for the profession of Accountancy with the objective to built the nation developed and strong.

So, to conclude on the above submissions, Investment into the sector has not been proved fruitful due to the greediness to earning illegal money in the part of the top 4-5 Officers of WESCO and the similar situations are in other DISCOMs. So to let the Investment be fruitful, let us arrest those 16-20 Officers of Odisha DISCOMs for the good cause of saving motherland, saving the good environment of Odisha and expediting the process of sustainable development of the economy of Odisha so also nation.  Here I may request to the above team of corrupt Officers, kindly looked into the ground where they stand up, the ground/platform on which they have stood up is really very week, so shift to a different good platform and include themselves in the good team or else the millions of people of Odisha so also their daughters/sons, grand daughters/grand sons shall not find an opportunity to excuse.    

Lastly, I may request to Hon’ble Chief Minister of Odisha through his good ministry of Energy to have a look of the above submissions and find out the realities of the sector without being biased by the above 16-20 corrupted Officers and initiate appropriate action on priority for the safe of millions of people of Odisha and for their development. I am duty bound not miss to request for redressal of my grievances as referred above and include me in his good team of power sector development, so that I shall be able to earn for my livelihood and shall be obliged for ever.

Indian Power

Monday, November 22nd, 2010

This is a guest post by Mr.Indraneel Sengupta. Indraneel is a CMA student. He is a finance and economic writer and a research analyst.

INDIAN POWER………………

Power Conference 2010 held in Hyderabad, Andhra Pradesh. The conference was organized by Confederation of Indian Industry and was attended by over 200 delegates from various central and state utilities like NTPC, NHPC, PGCIL, KPTCL and UGVCL along with prominent system suppliers. In this conference apart from presentation and discussion the most appreciating part was the target achievement made followed with the process of ongoing projects.

 

The 11th five year plan (2007-2012), which is near about double the 10th five year plan is expected to meet about 80% of its targeted addition of 78,700 MW from conventional sources and 14,000 from renewable sources. From a current level of about 157 GW the installed capacity by end of March 2012 is expected to go up to about 212 GW. The target for the 12th five year plan (2012-17) is addition of 100GW.But still the India’s finance ministry estimates that India produces about 10% less electricity than it needs, and roads, which account for 65% of the nation’s cargo, are plagued by single lanes and irregular surfaces.

 

We are delighted with the number and the growth achieved by the companies in meeting its target. But among all these the sector reels under certain major issue which acts as a bottleneck for the growth of the industry. We find delay in operation of projects and finally that exerts pressure on the long term outlook of the sector and stock too. In this article I will try to present the few of the major reasons which fails to make the companies to deliver the growth according to the desired plans.Along with this the investment opportunities and PE and Corporate Finance opportunities for the sector in the coming days.

 

Land Acquisition and Environment Clearance

When a new power projects comes up the statutory guidelines of the government of India poses a big threat to the futures plans of the projects. We have heard earlier that all the infrastructure projects in India have gone up by 35% in terms of cost due to various delays. Among them the prominent reasons for the delays is the clearance of Land Acquisition and Environment Clearance from the governments. The old traditional land reform bill is still pending on the tables of parliament. Land is available but the policy regarding the acquisition is the biggest ball game among starting the plants. The environmental policy is designed to keep the said purpose free and healthy for our livings. But the stringent regulation so getting the clearance makes the projects delayed more than its usual course of operation.

 

Manpower

Manpower and human resources for the setting up the projects is another big hurdle which companies have to face in the recent industrial growth. Companies and the Indian government made arrangements of growth of the Indian economy but not the wheel of the growth. As more industrial growth will happens the requirement of SKILLED manpower increases. Currently every industry at every corner is facing the trouble of shortage of manpower. Everybody is interested to work under White color Collar and not blue. India is having one of the 2nd highest populations in the world but that population is illiterate and not capable to meet the demand of the industrial force. Companies are earning more cost due to training and other facilities to improve and develop the skill to match their demands.

 

Technical Equipment shortage is another big round problem which forces the companies to go for overseas technical knowhow. Reliance Power became the first Indian private sector firm to ink a record $8.3-billion deal with a Chinese firm. SEC will supply 36 coal-fired thermal powers. Currently the industry is facing shortage of capital intensive goods from ABB, Larsen and Turbo and Bhel.

 

Fuel Availability

Fuel availability is another round of problem which further puts brakes on the plant process..Coal and other fuels requirement is one of the biggest problems. Supply constraints for domestic coal remain and are expected to continue going forward. Consequently, public and private sector entities have embarked upon imported coal as a means to bridge the deficit. This has led to some Indian entities to take upon the task of purchasing, developing and operating coal mines in international geographies. While this is expected to secure coal supplies it has again thrown upon further challenges. The failure to achieve the planned target from the captive coal blocks presents itself as a major challenge to the power sector, as only 24 blocks have become operational out of the total 210. Experts believe that the non-operational status of majority of these blocks is attributed to land acquisition (R&R) issues, permit delays and infrastructure problems.

 

For example, the main international market for coal supply to India – Indonesia, poses significant political and legal risks in the form of changing regulatory framework towards foreign companies. Again over here the Indian mining policy needs to be changed. Unless this policy gets changed new coal blocks will not be discovered and which will lead to huge increase of coal export followed with steep increase in international market will exert pressure on the POWER PRICING.

 

India Helps

Despite of all these hurdles the Indian government have taken steps to boost the growth and plug-in the loopholes of the system.

 

• The government has introduced a separate visa regime — called `P’ (Project) Visa — within the employment visa for foreign nationals coming to India for “execution of projects in the power and steel sectors”.

 

• The new regime will pave the way for foreign companies to bring “highly skilled or skilled” foreign nationals to India for executing projects of their Indian clients (companies) for a maximum period of one year without getting into the nitty-gritty of the two existing work-related visa regimes — Business (B) and Employment (E) Visas.

 

• Only these two sector have been given the grants to meet the shortage of skilled technical manpower .

 

• Hence India needs huge pool of talents and in house manufacturing hubs of this technical knowhow so that overseas talent don’t eat up our talent pools .It’s a serious invisible threat for the long term.

 

100% FDI permitted in Generation, Transmission & Distribution - the Government is keen to draw private investment into the sector

 

• Policy framework: Electricity Act 2003 and National Electricity Policy 2005

 

• Incentives: Income tax holiday for a block of 10 years in the first 15 years of operation; waiver of capital goods’ import duties on mega power projects (above 1,000 MW generation capacity)

 

• Independent Regulators: Central Electricity Regulatory Commission for central PSUs and inter-state issues. Each state has its own Electricity Regulatory Commission

 

Cash the Dues.

If we make a quick look towards the probable investments opportunities and the growth there of in this sector we find :

 

• Hydel power potential of 150,000 MW is untapped as assessed by the Government of India

 

• Over 78,000 MW of new generation capacity is planned in the next five years

 

• A corresponding investment is required in Transmission and Distribution networks

 

• Power costs need to be reduced from the current high of 8-10 cents/unit by a combination of lower AT & C losses, increased generation efficiencies and added low-cost generating capacity

 

• Large demand-supply gap: All India average energy shortfall of 9% and peak demand shortfall of 14%

 

• The implementation of key reforms is likely to foster growth in all segments

 

o Unbundling of vertically integrated SEBs

 

o “Open Access” to Transmission and Distribution networks

 

o Select distribution circles to be franchised/privatised

 

o Tariff reforms by regulatory authorities

 

• Opportunities in Generation for:

 

o Ultra Mega Power Plants (UMPP) – 9 projects of 4000 MW each

 

o Coal based plants at pithead or coastal locations (imported coal)

 

o Natural Gas/CNG-based turbines at load centres or near gas terminals

 

o Renovation, modernisation, up-rating and life extension of old thermal and hydro power plants

 

• Opportunities in Transmission network ventures - additional 60,000 circuit km of Transmission network expected by 2012

 

o Private sector participation possible through JV and 100% equity mode

 

• Total investment opportunity of about US$ 150 billion over a 5 year horizon

 

I think huge quantum of private equity and corporate finance will be required in this sector as the day’s progresses.

 

• The value of these 15 investments is estimated at $ 751.2 million (Rs 3,600 crore). private equity (PE) players to park their money, with close to $1.64 billion worth of infrastructure funds, mainly in power, awaiting their launch.

 

• According to Venture Intelligence, a research service focused on PE and mergers and acquisitions, investments in this sector for a comparative period in 2006 were $122 million, which increased to $495 million in 2007. Some of the funds currently in India are IDFC Private Equity, 3i India Infrastructure Fund, IL&FS Investment Managers Limited, SBI Macquarie Infrastructure, IDFC Project Equity and ICICI Venture are doing the major investments as private equity and corporate finance in Power sector.

 

• GVK Energy Ltd, a subsidiary of GVK Power & Infrastructure Limited, has raised Rs 1,200 crore (~ $274 million) in private equity funding round led by 3i India Infrastructure Fund. The deal to pick up a 21.1% stake in the power arm of the infrastructure group values the unit at nearly Rs 5,700 crore ($1.3 billion).

 

• 3i would be investing Rs 800 crore in what will be the infrastructure firm’s second investment the power sector after Adani Power.

 

One can clearly understand the growth of ROI one will get from doing investments in the Indian power sector. The hurdles mentioned above are subject matter of time and will get over under the flagship of UPA-II.

 

Once these hurdles are overcome Indian power sector will see one of the brightest days of its history. Investors should stay invested in this sector for longer time frame as delays in operation are subject matter of time. Once they are on the verge of getting over one may not get the chance to invest at these levels. One might have to accept at higher levels. Stay invested for a long ride which will be sweet at the end.One more thing I would like to add is that one can understand how Indian economy will acheive the GDP growth Dreamt by Pranb Mukherjee ourFinance Minister of India.Its possible.Very Much possible.

Invest for long in Consumer

Sunday, November 21st, 2010

 This is a guest post by Mr.Indraneel Sengupta. Indraneel is a CMA student. He is a financial, economic writer and a research analyst.


The ultimate objective of all production is consumption for the satisfaction of varied needs of man. A free market economy provides freedom to the consumers to buy and consume goods of their choice. Buying preferences of the consumers send signals to the producers to produce various commodities in required quantities. Producers, therefore, produces only those commodities which are desired by the consumers. Consumer behaviour is related to likes and dislikes and expectations of the consumers. Consumer behaviour has changed in recent years owing to enhanced awareness, information technology and more importantly governmental intervention through legislations Everyone from every corner of the world wants to be a part of the Indian economic growth. But where are the real gems of growth and resorces are lying hidden is needs to be identified and act accordingly.What we need to indentify  the resources which wil bring growth of India in the coming decades.

But is this growth is only for the Indian corporate and business dealers. To be very precise yes it is, but it is half true. Indian citizens have developed not only in terms of lifestyles but also in mindsets. Indian consumer minds have changed dramatically in the last 5 years if examined under a microscope. Indian Consumer mind have taken major changes in making India to dream the GDP growth of 10%.The urban population in India is India is currently 30% urbanised, while 70% of consumers are still in rural India. As far as consumption goes, 404 Million are either consuming or are aspiring consumers. 742 Million though are still under privileged. The urban populations have increased its appetite not only for Indian made goods but also foreign made goods. This is one of the main reasons why FDI investments in Indian consumer products have increased over the time.

The below  image shows the population pattern of Urban and Rural.

 

One of the prime reasons for a one way growth in consumer product market is higher percentage of savings. Indian currently have savings a rate of 63.8% as compared to 28.4%.This high savings rate is making the one way growth of consumer product market. Higher per capita income, radical changes in the salary and business income growth opportunities are making the Indian consumer market to propel like mango groove.

 

Recent shift of focus by the Indian corporate towards the Indian rural market is the next growth opportunity being identified and delivered by the industry. Earlier we never saw tooth paste being sold at Rs.2/-.Now we find highest consumption of Rs.2/- packet toothpaste as compared to 100gm or more sized packets. Earlier purchasing electrical goods like TV, Refrigerator and other products were a dream. Now with falling prices (due to the blessing of competition) all these dreams are now a real part of day to day activities.

 

Opening up shops in rural India was a nightmare. Now due to lack of space we find mobile shops being run across the villages. Banks have also achieved one way growth to a certain extent with the business of loans. Banks have replaced the credit crisis of rural India but only to some extent.

 

In the coming years the Indian consumer market will find a host of radical changes which will force the Indian GDP to climb to 10%.

We alreday see that shooping places have got converted from old Bazar types to malls followed with various other type of chnages from watching movie to going for an holiday tour.All thse will bring the GDP growth of 10% for India.
Household assets are climbing in urban area and hence we will see a saturation point in the urban area in terms of consumer growth. Hence we will find a paradigm shift of focus towards rural Indian market. Over here the most interesting part will be the demand of cost competitive products and pricing of goods. Target oriented pricing will only improve the quality and market of rural India. What we need is affordability outlook from the rural consumer mindset.

 

The below image shows the consumer pattern in Urban and Rural India.

 

Rural market will improve further with adequate infrastructure development. Since proper infrastructure support will enable more companies in India to open up shops in villages and shift their resources to uplift the rural Indian economy. India is still ruled by a huge margin of many differences. Among all of them few are:

 

• 80% urban India is low/lower middle class in income terms – below Rs. 12,500 p.m

 

• Only 15% is middle class, 5% upper class (64 million)

 

• Avg. monthly family income of urban Indians is Rs. 8,910 p.m

 

• 2/3rd urban Indians live in the tier 3 small towns (only 20% urban Indians live in the metros)

 

• Metros account for only 25% of the uppermost socio-economic class

 

• Only urban affluent (5%) lead the popularly perceived modern lifestyle

 

• Only 20% urban Indians have gone to college, only 3% have had their education completely in English

 

• Only 1 in 3 ‘employed’ in Metros works in the corporate world, an equally sizeable chunk are shop owners/traders/skilled workers

 

• Less than 3% urban Indians prefer to read in English

 

We find this GDP numbers not to climb from only on the shoulder of the consumer but also on the AGE and employee factor of the Indian population. Some analysis of the data will make it easier for all of you to understand what I wanted to communicate.

 

• Gen Now’ (roughly 30 to 45 yrs of age) is the biggest generation group in India (308 million individuals).

 

• ‘Gen Next’ (roughly 15 to 30 yrs of age) is a close second at 300 million individuals

 

• Only 16% ‘Gen Next’ are gainfully employed (2/3rd are students)

 

• ‘Gen Yest’ (roughly 45 to 60 yrs) are the most employed (60%) and have the best individual incomes (avg. of Rs. 4,985 or USD 110).

 

• ‘Gen Yest’ also have the highest penetration of credit cards, life insurance, and takes leisure holidays somewhat more frequently.

 

• There are only 40 million working women in India (9% of all women). 260 million are housewives.

 

• 2 out of 3 working women are also working moms.

 

Now its well clear that this pattern of change in the Indian population and behavioral change will bring the real growth for Indian corporate and GDP. One must understand that any countries GDP is dependent on the behavior of the consumers of that country.

 

We will find growth in long term perspective in doing investment in consumer goods related industry. I would like to accentuate the attention to this regard that a consumer goods industry includes health products too. So pharmacy will be another booming sector despite of several fights out with the patents. Mobile health centres are going to be the next improvised version of health care system.

 

Long term investments strategy should be the key investment theory in consumer goods industry. Short term investments will not provide you immediate results as investments in this sector and expansion of the business and gestation period of profitability is the key factor for taking long term call on investments and ROI. Rural India needs small consumer products at affordable prices. Companies dreaming to en-cash the potentiality will have to keep in mind this law of consumer