Is speculative trading at commodity
exchanges pushing gold out of reach of retail buyers? According
to the World Gold Council, the demand for gold in India fell 43
per cent year on year in the second quarter of the current calendar
year. The price of gold jewellery during this festival season
hovered in the range of Rs 8,400-8,600 per 10 gram, about 25 per
cent higher than the prices prevailing the corresponding period
of last year. In October, international gold prices were in the
range of $560 (Rs 25,760) to $600 (Rs 27,600) per ounce (about
31 gram), compared to $460-480 (Rs 21,160-22,080) per ounce in
"Trading in the futures
commodity exchanges-fuelled mainly by unaccounted black money-is
pushing prices to artificially high levels," says Rohit Mahendru,
a Delhi-based gold trader. Joseph Massey, Deputy MD, MCX Commodity
Exchange, denies this. "The price discovery in the Indian
market largely depends on global factors. Local trading doesn't
play much of a role."
Indian demand finally picked up this Diwali only when gold prices
crashed to Rs 8,400-8,600 per 10 gram from Rs 11,000 earlier this
year, but whether this trend will continue is anybody's guess.
Benefits From Ethanol?
depot price: Rs 21; petrol depot price: Rs 35. This figure alone
should mean that ethanol, which is alcohol to most of us, is the
manna that most of us have been looking for. But is that the case?
Taxes on ethanol are significantly lower than those on petrol-16
per cent versus approximately 50 per cent on petrol (depending
on the state). Yet, since the oil marketing companies are selling
petrol at a loss, any cost benefit of 10 per cent ethanol-blended
petrol will mean a benefit of Rs 2-3 at the pump. So, the real
benefit of ethanol-doped petrol will not accrue to the consumer,
but the shareholder of the oil marketing companies-the government
Funds For SMEs
Here's more proof of the rising
profile of India Inc. on the world stage. Corporate finance companies
and venture capitalists in the UK are lining up funds to help
Indian companies acquire companies and assets in Britain. "VCs
in the UK are visiting India looking for companies interested
in acquiring businesses in that country," says Alpesh Patel,
founder of Tradermind, which is based in London and advises several
such financiers in Britain. Patel is working with some Indian
companies looking to acquire small UK companies. "We are
looking at it as a growing area-small and medium Indian companies
acquiring small UK companies." This allows Indian companies
to expand into newer markets and enables British companies to
benefit from access to low-cost Indian inputs and raw materials.
Adds Mark White, Head (Operations), UK, HBD Capital, a UK-based
venture capital firm: "Financers in the UK are more confident
about working with Indian companies with proven capabilities,"
he says adding: "UK-based financers are now ready to finance
Indian companies in almost every sector."
NorthStar, a UK-based VC, has already launched two funds for
this purpose and is actively scouting for opportunities in this
This trend is a recent phenomenon and follows several high profile
Indian or Indian-led acquisitions of large companies in the UK
and Europe. The Tata Tea takeover of Tetley and the Apeejay Group's
acquisition of Typhoo first brought Indian companies on to the
radar screens of these financiers, but what really swung the pendulum
decisively in their favour was L.N. Mittal's high profile hostile
takeover of Arcelor and then Tata Steel's ongoing acquisition
of Corus. The big fish have landed; the small fry will follow.