Sugar prices ease by Rs. 10 in a year, Rs 30 in a week





The retail price of sugar has dropped by Rs 2-3 per kg during the past week, bringing sweet relief to households burdened by the rising cost of living. Loose sugar is selling for Rs 30 per kg while the finer packaged variety is available for Rs 3435. Rates had reached an alltime high of Rs 40-45 in 2014.

TOI had reported on Thursday how Maharashtra is likely to show record sugar output at 103 lakh tonne in 2015. Experts say imports from Brazil have also lowered rates.

The surfeit has pleased consumers. At Lokhandwala Complex, prices have dropped from Rs 36 per kg to Rs 34. Housewife Neeta Nainani said, "We were paying an exorbitant rate of Rs 40-45 per kg for sugar through 2013-14. Families are already burdened by the rising cost of cooking gas, pulses, edible oil and spices. So it is nice to see the price of one or two essential items reduce.Potato has also stabilized at Rs 12-15 per kg this year compared to the absurd Rs 25-30 of 2013-14."

At Apna Bazar's Mulund outlet, loose sugar is selling for Rs 30 per kg while ready packs of slightly refined quality are available for Rs 35, said salesman Ravindra Surve. In Pali Hill, Bandra, shopkeeper Sachin Mamniya of Vijay Stores is selling at the same rate.

Mukesh Kuwadia, honorary secretary of the Bombay Sugar Merchants Association, said wholesale rates had fallen by Rs 30 per quintal a fortnight ago but rose again by Rs 10-15 this week."Since 2014, the price per quintal (100 kg) has dropped to Rs, 2,750 from Rs 3,300.Local demand is low while exports are negligible.Brazil and Thailand are exporting large volumes at lower rates so Indian sugar is no longer viable internationally ," he said.

POLL KHOL SAWAAL A fun clip on election promises

Re's Sudden Fall may Push Cos to Hedge Currency





The sudden fall in the Indian rupee has woken up many corporates to the ground realities of the currency market. After six months of stability, complacency had set in. Indian corporates, after remaining unhedged, may now start covering their currency exposure.

Some companies tend to stay away from hedging as its cost eats into the net receivables.

"Sustained RBI purchases of dollars, uncertain geopolitics and the prospects of early withdrawal of the monetary accommodation in the US do appear as risks to the rupee," said Ananth Narayan, regional head of financial markets, South Asia, Standard Chartered Bank. "In such a context, Indian importers would be well advised to seek option protection as insurance against any shock moves in the local currency ."

Between May 22 and August 14, the Indian rupee dropped about 4% to close at 60.77 per US dollar on August 14 from 58.46 on May 22. It had risen 5.60% till May 22 since the beginning of the year. Strong Reserve Bank of India intervention in mopping up dollar inflows has prevented the rupee's significant appreciation, as any sharp rise in the local unit would hurt exporters.

According to the latest data, the central bank has bought a net $2.4 billion collective ly in May and June compared with $2.3 bil lion sold in the year-earlier period when the rupee was falling against the greenback. In the last few weeks, the dollar has been strengthening as investors seek the safety of the US currency on the back of tensions in Iraq, Ukraine and Gaza that could also hurt crude oil prices.

Moreover, improving economic fundamen tals in the US are attracting investors with their eye on a possible interest rate increase. This too has helped in arresting the rupee's rise.

"Despite all, the local unit has clearly out performed when compared with other cur rencies like in Brazil, Russia or Korea," said NS Venkatesh, executive director at IDBI Bank. "Both exporters and importers should hedge their currency exposures as and when they get the right opportunity at a reasonable price.Chances of rupee appreciation are higher than its depreciation."

The one-year forward rupee-dollar forward rate is currently quoting at about 8.20% or a premium of about ` . 4.90 over the spot market. In the current perspective, it looks attractive for exporters to take positions at these levels with the expectation of more overseas inflows in the coming days. However, it's still a bit expensive for importers, who may be considering their options, dealers said.

"Volatility is likely to increase in the domestic currency market," said Pramit Brahmbhatt, CEO, Veracity Financial Services. "While foreign inflows are likely to increase further in 2014-15, external factors may strengthen the dollar against other currencies."

According to Narayan, going forward, domestic factors look much more favourable than 12 months ago.

Foreign exchange reserves have improved significantly by about $4 billion to $319 billion on August 8 since May 16 this year. The prospects for a growth revival look good given the positive indicators and that the government is looking to boost the economy.

"Given improved India fundamentals and steep forward premia, exporters continue to see merit in increasing hedge ratios, despite lack of rupee appreciation," Narayan said.

NSEL chief held in 5,600cr mkt fraud

Mumbai: The economic offences wing (EOW) of the Mumbai police, which is probing the Rs 5,600 crore cheating case involving the National Stock Exchange (NSEL), on Wednesday arrested Jignesh Shah, chairman of the Financial Technologies (FTIL) group, and MCX CEO Sreekanth Javalgekar for their alleged role in the biggest payment default in the Indian commodity market.      With the two fresh arrests, the number of people behind bars has gone up to 11. Shah was initially summoned by the EOW at 3pm for questioning and allowed to go. However, he was again called at 6pm and placed under arrest. He and Javalgekar have been kept at the Mumbai crime branch's lock-up in the police commissionerate compound near Crawford Market, and will be produced before a special court on Thursday.  EXCHANGE CRISIS  July 31, 2013 | Jignesh Shah-led NSEL suspends trading after govt nudge on faulty contracts  Who was to pay 5,600cr | 21 commodity suppliers/planters  Who was to get it | 13,000 investors, mostly HNIs IN THE NET  Shah, Javalgekar  knew about  fraud, says EOW  Mumbai: Rajvardhan Sinha, additional commissioner of police (EOW) who has been supervising the NSEL fraud probe, said, "The EOW has arrested Shah and Javalgekar and they are being interrogated. Earlier, we arrested certain borrowers and middlemen like Sanjeev Bhasin, Rajesh Mehta of Lotus group and Indrajit Namdhari of Namdhari Food International. During Javalgekar's interrogation, it transpired that as group financial manager of FTIL, he was in full control of the Indian Bullion Merchants Association (IBMA, in which FTIL has a major stake) and NSEL for a long time. We found that he was in criminal conspiracy with other accused in the NSEL crisis."      Sinha added that it was found that IBMA had a large chunk of bogus clients whose addresses and other details could not be traced, leading to suspicion that black money and other unaccounted funds were flowing into the exchange circuit. He said that Shah, head of FTIL, director of NSEL and a member of the NSEL audit committee, had approved the entry of all borrowers as members of the exchange.      "He also approved several contracts. Shah personally represented to the government the scheme of NSEL, which was nothing but a platform for running a non-banking financial company. It was found that their (Javalgekar and Shah) defence claiming ignorance of this fraud is incorrect," said Sinha.      Shah was earlier questioned and summoned at least 16 times by the EOW. "However, he could not give satisfactory replies. The accused also evaded crucial replies and hence their custodial interrogation was felt necessary," added Sinha. "Till today we have secured properties and assets of the accused worth Rs 5,100 crore."      Shah and Javalgekar are also accused of using their clients' bank accounts without their knowledge. Sinha said that the probe was still open about the role of brokers and auditors. In December 2013, the EOW had attached properties, frozen shares and sealed a bungalow and a row house belonging to Shah. They were collectively valued at Rs 192 crore.      Police had seized 1.2 lakh shares of Shah that were in FTIL. The estimated value of these shares was around Rs 179 crore. Besides this, police also sealed Shah's Juhu  bungalow, a row house at Aarey Colony (worth Rs 78 lakh), a plot in Pune worth Rs 1.6 crore, shares worth Rs 51 lakh in India Energy Exchange, and FDs worth Rs 11.8 crore in a private bank. Five demat accounts were also frozen. Shah earned Rs 160 crore by way of dividend from FTIL, police said.      The police in January chargesheeted five persons including Anjani Sinha, NSEL's former managing director; Amit Mukherjee, exassistant vice-president of business development at NSEL; Jai Bahukhandi, exassistant vice-president of warehousing at NSEL; Nilesh Patel, MD of N K Proteins Ltd; and Arun Kumar Sharma, MD of Lotus Refineries Pvt Ltd. Later, the police arrested Surendra Gupta, MD of Dunar Food, Indrajit Namdhari of Namdhari Food International Limited, Rajesh Mehta of Lotus and Sanjeev Bhasin.      Till date, the EOW has frozen 322 bank accounts holding Rs 171 crore, attached over 210 properties worth Rs 2,600 crore and seized 15 high-end cars worth Rs 5.8 crore.

SC: CAG can audit pvt firms in revenue-share deals with govt Telecom Verdict May Affect Other Sectors Like Coal Mining, Gas

New Delhi: In a path-breaking judgment, the Supreme Court on Thursday ruled that the Comptroller and Auditor General (CAG) can audit account books of private companies which are doing business using national wealth or natural resources on a revenue-sharing basis with the Centre. 

    Though the judgment has a direct bearing on telecom service providers doing business using spectrum on a revenue-sharing basis, it will also have a vital impact on private firms engaged in natural gas extraction and coal mining as these sectors too operate on the basis of variants of revenue-sharing models, mostly termed as production-sharing contracts. "When nation's wealth, like spectrum, is being dealt with either by the Union, state or its instrumentalities or even the private parties, like service providers, they are accountable to the people and to Parliament. Parliamentary democracy also envisages the accountability of the council of ministers to the legislature," said a bench of Justices K S Radhakrishnan and Vikramjit Sen. 
    The verdict comes at a time when the SC is dealing with the 2G spectrum scam, coal block allocation irregularities and also hearing arguments on MP Gurudas Dasgupta's petition alleging that Reliance and the Union petroleum ministry were hand-in-glove to give RIL 'windfall profit' causing consequent loss to exchequer.SC: Govt is sometimes hand in glove with licence providers 
    The bench said such audit by CAG was important when the Executive dealt with natural resources, like spectrum, which actually belonged to the people of India.Writing a judgment that paves the way for CAG to audit private telecom companies, Justice Radhakrishnan said the Supreme Court was of the firm belief that CAG must audit the accounts of private firms because "instances are not rare where even the Executive, at times, acts hand in glove with license providers, who deal with the natural resources, hence, necessity of parliamentary control over the resources." 
    Dismissing petitions by Association of Unified Tele Services Providers and Cellular Operators Association of India, the bench said: "CAG's examination of the accounts of service providers in a revenue sharing contract is extremely important to ascertain whether there is an unlawful gain to the service provider and an unlawful loss to the Union of India, because the revenue generated out of that has to be credited to the Consolidated Fund of India." 
    "Parliament should know how the nation's wealth has been dealt with by the Executive and even by the UAS License holders and the quantum of revenue generated out of the use of the spectrum and whether the same has been properly assessed, collected and accounted for by the Union and the license holders," the bench said. 
    The court rejected the telecom service providers' argument that CAG could not be given unhindered access to the account books and could look into only those relating to revenue sharing. "We are of the view that unless the underlying records which are in the exclusive custody of the service providers are examined, it would not be possible to ascertain whether the Union of India, as per the agreement, has received its full and complete share of revenue, by way of licence fee and spectrum charges," the bench said.

MCX to advise FTIL to cut stake in bourse to 2%

Mumbai: The board of Multi Commodity Exchange (MCX) on Thursday has decided to write to Financial Technologies (FTIL), its main promoter, to reduce the latter's stake in the commodity bourse to 2% or even less within the next one month to comply with an order by Forward Markets Commission (FMC), that found FTIL failing to meet the 'fit & proper' criteria to be a promoter of an exchange. The decision by the MCX board was taken after the Bombay high court last week did not put a stay on the FMC directive of December 17. 

    In a communication to BSE, MCX said its board of directors has decided to advise FTIL "to implement FMC order dated December 17 by reducing its stake in the company (MCX) from 26% to 2% or below, within a period of one month." The commodity bourse also withdrew the representation of Miten Mehta on MCX board in view of the FMC letter. Mehta was designated as FTIL's nominee on MCX board after the group's main promoter, Jignesh Shah resigned from MCX board last month. 
    Earlier this month, FMC had found that FTIL, along with Shah and two other former executives at the group, Joseph Massey and Shreekant Javalgekar, not 'fit & proper' to hold more than 2% stake in MCX for their role in the Rs 5,600-crore NSEL scam. The order also implies that Shah, Massey and Javalgekar can neither run nor be on the board of any commodities exchange. 
    In its order, FMC said several shortcomings were noticed in the functioning of NSEL, which included problems with warehousing, risk management, corporate governance and related party transactions. 
    The regulator also said that because of the huge profit of about Rs 125 crore earned by NSEL during fiscal 2013, the value of the shares of Shah in FTIL shot up manifold, which gave him the benefit of a spectacular market capitalization of his investments in FTIL running into thousands of crores of rupees.In an unrelated development, a group of NSEL investors have written to the Economic Offences Wing of city police, pointing out the role of brokers in the NSEL scam.

Price rise has hit school fees the most since 2004 Up 433% In 9 Years Of UPA Rule

 The fact that inflation has been an area of concern for some years now is well known, but exactly what goods and services have seen prices rise most sharply? School fees, a CSO study shows, have seen the most dramatic spike over the tenure of the UPA, up 433% between March 2004 and March 2013. 

    The chart topper is quite ironic given the much-talked about Right to Education law enacted by the UPA. The CSO study tracks rural retail prices and shows school fees were Rs 48.7 per student on average in March 2004 and had risen to Rs 259.6 by March 2013. 
    Mango prices recorded the second highest increase, up 320% from about Rs 16 per kg to just over Rs 67 per kg on average over this nine-year period. Oranges (275%), black pepper (232%), beef (229%), and buffalo meat (228%) were the others at the top of the list. 
    Among more widely consumed items, mutton (210%), salt (182%) and moong dal unwashed (190%) have been others that have really burnt holes in pockets. Cigarettes too have on average become dearer by 188%. These are, of course, rural retail prices, so the actual prices and increases that the average urban Indian faces are likely to be different, in most cases higher. However, the broad trend is clearly unlikely to be very different between rural and urban areas. Rail fares down 7% in 9 yrs of UPA O n the positive side, some goods and services have seen prices stagnate or even decline over these nine years. Among them are postcards, inland letters and local railway fares. 
    The minimum rail fare for an adult has reduced from Rs 8.8 to Rs 8.1 in these last nine years, areduction of 7%. There has been no hike in inland letter cards, which cost Rs 2.50 in March 2004 and were priced at the same level in March 2013. Postcards too have seen their price remaining unchanged at 50 paise each. 
    The average price of a transistor radio was Rs 421 then and has risen to 481 – a modest rise of just under 10% in nine years.

Gold premiums hit another peak on scarce supplies Local prices were USD 150-160 an ounce higher than London prices, compared with USD 125 earlier this week, traders said. Read more at: http://www.moneycontrol.com/news/commodities/gold-premiums-hit-another-peakscarce-supplies_1002968.html?utm_source=executive-briefing

ndian gold premiums hit another record on Thursday, driven by lower supplies to meet firm demand for weddings, which will continue till May. Local prices were USD 150-160 an ounce higher than London prices, compared with USD 125 earlier this week, traders said. "Only Scotia Bank, State Bank of India  and some trading agencies like MMTC etc are importing and most of it is going to exporters. There is no other option for domestic jewellers but to pay high premiums," said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the eastern city of Kolkata. Most of the wedding demand is being met through recycling old jewellery or through smuggling, traders said. Gold is often gifted to brides in India, which is vying with China for the world's number one consumer. India, struggling with a record high trade deficit, has made it difficult and expensive to get supplies of gold by imposing a record 10 percent import duty on the metal, and stipulating that 20 percent of imports should be used for exports. "Imports have reduced to 25 percent of the normal average imports... domestic jewellers are facing the brunt of this in the wedding season," said an official with a private bank importing bullion. The government would wait till the first quarter of the next fiscal year and may not relax rules now after implementing a policy which has faced so much opposition, the official added. Imports plunged to 23.5 tonnes in October from a peak of 162 tonnes in May. Demand in the rest of Asia picked up after prices fell below USD 1,220 an ounce, dealers said. Premiums in Hong Kong and Singapore remained stable this week.

Re gains 29p to hit 5-week high of 61.77

Mumbai: The rupee rose to a five-week high against the dollar as the foreign exchange markets moved in line with sentiment in the equity markets after exit polls forecast a strong performance by the BJP. 

    The domestic currency touched a high of 61.52 against the dollar before closing at 61.77, up 29 paise from its previous close of 62.06 against the dollar. 
    What is also boosting the rupee is the $34 billion mobilized by RBI by swapping dollars raised by banks through non-resident deposits and ECBs. The dollar mop-up by RBI is expected to increase the foreign exchange reserves by $18-19 billion, according to Yes Bank.

CAD shrinks to $5bn on gold curbs Deficit At 1.2% Of GDP In Q2 RBI Advances Release Of Data To Reassure Mkts

Mumbai: The country's current account deficit shrunk to $5.2 billion (1.2% of gross domestic product) for the quarter ended September 2013, which is nearly 76% less than the deficit of $21.8 billion for the quarter ended June 2013.      The reduction in CAD is attributed to curbs on gold imports coupled with a smart recovery in exports following the depreciation of the rupee.      The current account deficit – which reflects the shortfall of export earning over import income – has dropped because merchandise exports have risen by nearly 10% over the first quarter of FY13 even as exports shrunk 8%.      The Reserve Bank of India (RBI) on Monday advanced its release of trade data, which was due toward the monthend, ostensibly to reassure markets as it withdrew most of the support measures introduced in the previous quarter to bolster the rupee. The rupee rose to a near twoweek high on Monday before settling down at 62.32 against the greenback.      The measures that were withdrawn include a facility whereby RBI lent dollars to oil marketing companies, which was discontinued last week.      "Given the backdrop of broad stability returning to the forex market, on the basis of an ongoing review of the demand conditions in the market, OMCs have been allowed to source dollars even beyond their normal daily requirements," RBI said in a statement. The central bank also discontinued a facility where it subsidized banks for mobilizing foreign deposits and converting them into rupees. RBI said that it raised $34 billion by exchanging dollars mobilized by banks – through NRI deposits and ECBs – for rupees through a swap facility. To encourage banks raise dollars through NRI deposits and foreign borrowings, RBI had subsidized the cost of converting these deposits into dollars and hedging currency risk.      The announcement came on a day when Morgan Stanley raised its 2013 and 2014 GDP growth estimates to 4.7% and 5.1%, respectively, from 4.4% and 4.6% based on improving macro numbers and reduced chances of the US Fed withdrawing its stimulus package.      While the trade deficit showed a marked improvement, the overall balance of payments (which factors in capital flows in addition to trade flows) showed a worsening of the deficit. The BoP deficit stood at $10.4 billion of the second quarter compared to a $200 million deficit in the same period last year. The BoP deficit, despite the improvement in trade numbers, was on account of foreign institutional investors pulling out money from the country on fears of US Fed tapering.

CNG prices may rise by up to 50%

Mumbai: Prices of Compressed Natural Gas (CNG) could go up by anything between Rs 15 and Rs 20 in Mumbai from Sunday.      The hike, which could be as high as 50%, taking rates from the current Rs 38.95 per kg to a maximum of Rs 59 per kg, could directly affect fares of taxis, autos, buses and fleet cabs.      The price of piped natural gas (PNG) is also likely to go up by 40% to 60%, from the existing Rs 24 per standard cubic meter (scm) to anywhere between Rs 34 and Rs 39 per scm early next month, a move that may force many households to go back to subsidised cooking gas cylinders.      Vipin Chandra Chittoda, MD of Mahanagar Gas Ltd, which supplies CNG across the city, confirmed "the price of CNG will go up by Rs 15-20 akg and PNG by Rs 15 per kg".      An MGL official said the rates would be increased because the Supreme Court had recently upheld a Gujarat high court order saying prices should be uniform across the country.      CNG prices are not uniform across India due to short supply of gas. While some firms get subsidised APM (administered price mechanism) gas, others have to rely on expensive imported LNG. CNG price hike will be fourth in 13 months  Mumbai: Mahanagar Gas Ltd managing director V C Chittoda told TOI: "Our APM gassupply at$4.2 per mmBtuislikely tobe cut by 30%, and we have imported that gas paying $19 per mmBtu or four times the price. We operate on very thin margins, so we can't absorb the price hike and will have to pass it [the cost] on to the consumers."      Union petroleum secretary Vivek Rae said, "MGL will be the worst hit because they werecompletely dependentupon subsidised APM gas. We can't help it because of the Gujarat HC order and have asked GAIL India, the national gas carrier, to divert APM gas to utilities in Gujarat [in keeping withtheorder]."      This will be the fourth hike in 13 months.CNG priceswerehikedby 85 paise in Mumbai in November 2012, followed by aRs2hikein July this year and a thirdhike of Rs3on September 1.      Post-hike,CNG priceswillbe almoston a par with diesel prices, and PNG prices will be on a par with subsidized cooking gascylinder rates.      Citizens are worried about the impact the hike will have on public transport, with unions likely to demand a fareincrease.  The auto andtaxifarehike matter is already in the high court, and despite three CNG hikes in the past one year, the state  transport department has not hiked fares of taxis, autos and fleet cabs. In fact, transportofficialshavebeen saying they willonly "abide by court directives and not take any decision on farehikeson their own." State-run buseswill notbe affecteddue  totheCNGhike asthey ply on diesel. THE PAST THREE HIKES SEPT 1 2013  The price was hiked by 3, taking the CNG rate per kg  in Mumbai up from 35.95 to 38.95. The reason given for the hike: to recover part of increase in input costs, especially towards sudden and rapid depreciation of rupee against the US$. While the transport department did not hike fares of autos and taxis, BEST has got an approval for hiking fares by 1-5 for various stages from April 2014. JUL 2013  CNG prices went up in  Mumbai region by 2. The reason cited was increase in input costs. PNG prices went up by 2.19 per scm.NOV 2012  CNG rates went up by 85  paise, but it had an impact on public transport. Bus fares were hiked by one rupee from April 2013. Fares of autos and taxis remained unchanged.

Rupee touches Everest! It’s a canine first

Kathmandu: Slumdog mountaineer! A homeless eightmonth-old Indian dog named 'Rupee' has scripted history by becoming the first canine to reach Mount Everest Base Camp. Rupee, the first dog ever officially recorded at the Everest Base Camp at 5,364 metres, undertook the gruelling challenge against all odds after being rescued by Joanne Lefson from a dump site in Leh.      The puppy was dying of dehydration and starvation when he was adopted by Lefson from South Africa last September, media reports said. Lefson previously hit the headlines after travelling the world with Oscar, the famous globe-trotting dog. The pair visited hundreds of famous landmarks raising awareness for needy dogs until Oscar sadly passed away in January this year following a car accident.      Lefson found Rupee and adopted the canine, thus began their travels and now Rupee has become the first dog to reach the Everest Base Camp.      "This dog came running for me and collapsed at my feet, a puppy on his last legs," Lefson was quoted as saying by South Africa's Independent Online news portal.      "The puppy couldn't have been in a lower place. The little fellow had heart, I could tell that, but he was so weak having no food or water for days, if not weeks," Lefson said.      After eight-and-a-half days, facing snow delays, rainstorms, mudslides and a yak attack en route, Rupee and Lefson reached the Base Camp, before a galloping three-and-ahalf-days back down. The team summited Base Camp on October 26 and a pair of embroidered prayer flags were tied, "with the wish that the gods above will bestow a home on all the homeless dogs below". "The trek to the top of the world was done in Oscar's honour," an emotional Lefson said. PTI HOT DOG: Rupee, an Indian stray dog, at the Everest base camp

MEN & MORALS Our bullion-dollar troubles can end if India goes for gold

It was a subdued Diwali this year. Gold trading on Dhanteras was down by 50%. Traders blamed it on mostly on the lack of gold supply which was 83% lower than last year. But policy makers cheered. Their draconian policy of restricting gold imports was working. India's trade deficit had declined and the rupee had calmed. But it is a temporary victory. Gold smuggling is on the rise and will eventually triumph, undermining a great victory of the 1991 reforms, which was to kill the havala market. There is breathing room, however, as gold forecasters expect world prices to fall. Western and Chinese investors are losing interest in gold as their economies pick up, which should also dampen Indian investor interest. 

    India absorbs about a quarter of the world's gold, and the finance minister is quite right in wanting to limit its import. A recurring theme of world history is the constant loss of Western gold and silver to India. Two thousand years ago Roman senators grumbled that their women used too many Indian spices, silks and fine cottons, and India was draining the Roman empire of bullion. Pliny the Elder called India the 'sink of the world's precious metal' when he heard that a Roman ship touched an Indian port daily. 
    The Portuguese similarly complained in the 16th century that their hard won gold and silver from South America was being lost to India. The British Parliament echoed this refrain in the 17th century. But India kept sucking Western bullion because Western consumers hankered after Indian luxuries and Indians were not interested in Western goods. As books had to be balanced, they were balanced with bullion. Only Britain's Industrial Revolution reversed the flow in the 19th century when Indians finally found something they wanted from the West—cheap, durable cottons from the mills of Lancashire — as handlooms worldwide gave way to machine-made cloth. 
    Soon after Independence, India's leaders forgot their grand trading heritage and closed our economy in the mistaken belief that trade had impoverished India. Touting the false mantra of 'self-reliance', they adopted an import-substituting path, and India lost out in the great trading boom after World War II. India's share of world trade declined from 2.2% in 1947 to 0.5% in 1990. It was only after 1991 that India regained its historic pre-eminence in the world economy. 
    Given the one-way flow of gold over the centuries, a staggering amount has accumulated in India. The World Gold Council estimates it to be over 20,000 tonnes, worth $1.1 trillion or half of India's GDP. For years economists have wanted to use this unproductive asset for pro ductive investment. And happily, the process has begun. Gold loans, bonds, and deposit schemes are all steps in the right direction. In these schemes owners of gold earn interest by depositing it with banks, which in turn releas es part of it in the market, thus reducing India's demand for imported gold. 
    The bigger prize is to convince temples to do the right thing and deposit their vast gold stocks in banks and earn interest. Jamal Mecklai, the currency expert, had suggested earlier this year that if Tirupati temple were to deposit a third of its holdings at two per cent interest, it could earn Rs 3,000 crore a year. Tirupati did just that in May, beginning with a 2,250-kg deposit with the State Bank of India. This is a triumph! If major temples follow suit, gold will soon flood the domestic market, imports will stop, the global gold price will fall and the rupee will strengthen. 
    But this government is shy to go for an all out public campaign. It worries about people's sentiments and of the opposition playing the religious card. Gold is, after all stridhana, 'woman's wealth'. Although a daughter now legally inherits her share of family property, families still insist on giving her inheritance at marriage as gold jewellery. But young Indians today are sensible and they will buy the idea that an inflation-proof gold linked certificate exchangeable for gold is the hip thing to receive at marriage rather than a bunch of clunky sets. So go for it, Reserve Bank. The road to India's economic future may well be paved with gold.

GLIMMER OF HOPE: Temple gold deposited in banks can bail us out of the economic crisis

Jignesh Shah resigns from MCX board Says FMC Can’t Draw Adverse View About Fit & Proper Tag Till Probe Is Completed

Mumbai: Jignesh Shah, founder, vice-chairman and a director of Multi-Commodity Exchange (MCX), resigned from the bourse's board on Thursday even as he replied to a show-cause notice to by Forward Markets Commission (FMC) about why he should not be disqualified from being a 'fit & proper person' to be on the board of an exchange. 

    FMC had slapped the notice on Shah for his alleged role in the Rs 5,600-crore payment crisis at the National Spot Exchange (NSEL), a group company of MCX, the only listed exchange in the country. 
    The 'fit & proper person' test for a person to be on an exchange's board requires that he/she should be honest, with high integrity, a good reputation and solvent. Regulators in India take into account all these factors before allowing a person to be either a shareholder-director or an independent director on an exchange's board. 
    Shah's resignation came exactly three months after the NSEL scam came to light. Shah, along with some others, set up MCX from the scratch over the last decade — it is now one of the largest commodity bourses in the world. Shah was on the board of MCX as a nominee of Financial Technologies (FTIL), the main promoter of the commodities bourse. 
    Shah has already resigned from the MCX Stock Exchange (MCX-SX). He, however, continues to be a director on the boards of FTIL and NSEL. 
    The resignation came at a time when the economic offences wing of the Mumbai Police has taken some of the former top NSEL officials into custody, and also Nilesh Patel, the promoter of N K Proteins, one of the biggest borrowers of the exchange which owes investors about Rs 970 crore. 
    On Wednesday, Mohan India, another large borrower in NSEL, agreed to pay Rs 600 crore to settle its dues that totalled about Rs 770 crore. There are talks that Patel is also on the verge of paying up Rs 600 crore to settle his dues with the commodity bourse. 
    In his reply to FMC's showcause notice, Shah pointed out that proceedings initiated by various agencies into the NSEL fiasco were pending and, hence, it would be premature to draw any adverse inference either against him or FTIL on account of such proceedings, sources said. Shah also defended his position as a qualified board member of the bourse on the basis that neither him, nor FTIL has been found to have played any role in the NSEL scam.

Jignesh Shah

Fwd: NOOSE TIGHTENS AROUND FT GROUP OWNER

FMC Show-Cause to MCX Promoter FT

Lookout notices against Jignesh Shah, Anjani Sinha and NSEL defaulters

The Forward Markets Commission (FMC) has issued a notice to Financial Technologies (FT), the promoter of commodity exchange MCX, FT Group owner Jignesh Shah and other officials, asking them to show cause why they should not be declared not 'fit and proper' to be shareholders and directors on MCX. 
Besides Shah, who is the chairman & CEO of FT Group, notices have also been issued to Joseph Massey, MD & CEO of MCX Stock Exchange, and Shreekant Javalgekar, MD & CEO of MCX. 
"The show-cause notice has been issued on Friday," said two government officials privy to the development. "Financial Technologies and the three officials have been given two weeks to reply to the notice." 
In a potentially significant finding, the officials added, the notice found the board of National Spot Exchange (NSEL) was aware of the happenings that led to the . 5,500-crore payments crisis. 
"The board approved the paired contracts in 2009, which were not allowed as they were a financing activity. Bye-laws on warehousing too were not followed. FMC has found there were 2,000 payment defaults in two years through 2012," one of the officials said. 'Board can't Absolve Itself' 
Despite the payment defaults on NSEL, "the borrowers were not barred from trading. On the contrary, they were given margin exemption and allowed to do more trading on NSEL, resulting in their outstanding exposure rising from . 2,009 crore in March 2011 to . 6,800 crore by June this year", one of the officials said. While Shah continues to be a director on NSEL, Javalgekar and Massey were past directors on the board. Shah and Javalgekar are also on the MCX board while Massey resigned as a director on September 30. 
The show cause notice also says that trading by group company Indian Bullion Market Association on NSEL and MCX was against rules. Further, former MD & CEO of NSEL, Anjani Sinha, was a key management personnel on the exchange and according to Accounting Standard 18, such a person's role is defined and approved by the board. Thus, the board cannot absolve itself of any responsibility for the fiasco, the officials added. Another potentially significant finding, according to them, was that the NSEL board gave corporate guarantees to banks against which some of the defaulting members could borrow. 
LOOKOUT NOTICE AGAINST 
SHAH, OTHERS 
In a related development, the Maharashtra Police unit investigating the NSEL defaults case issued a lookout notice against Jignesh Shah, who will now not be allowed to leave India without permission. 
"We have issued such notices against 22-24 persons, including the promoters, office-bearers and certain defaulters on NSEL," said Rajvardhan Sinha, additional police commissioner, Economic Offences 
Wing (EOW), Maharashtra Police. "This is a normal legal procedure whereby a criminal case is filed and it is (feared) that a person with financial standing could possibly leave the country to evade the consequences. It is done as a matter of abundant caution." 
The so-called lookout notices have been issued by EOW against Shah, Anjani Sinha, other office-bearers of NSEL and key personnel of some of the biggest defaulters, including Mohan India, NK Proteins and Lotus Refineries. 
The lookout notices have been sent to all immigration check posts in the country. 
NSEL and its promoter Financial Technologies are among entities facing police investigation following a complaint filed by an investor with EOW. Around two dozen members have defaulted on payments amounting to Rs 5,500 crore to more than 13,000 investors. 
The money was borrowed on NSEL through paired contracts. First, an investor bought commodities from a borrower on the second day of placing a trade. In the second part, the investor undertook to sell the commodity back to the borrower after 25-36 days. In the bargain, the investor earned an annualised return of more than 13%. The crisis erupted when it was found that most exchange-accredited warehouses had inadequate or non-existent stocks against which borrowers had raised funds. 
Apart from EOW, other agencies examining the matter include FMC, the ministry of corporate affairs and the income-tax department.

India, Japan in $50bn currency swap

The rupee surged 87 paise on Friday after Japan extended support to India's fight against currency volatility by agreeing to more than treble the scope of the bilateral swap arrangement to $50 billion. 

    The facility between the Reserve Bank of India and the Bank of Japan enables both countries to swap Japanese yen or the Indian rupee for US dollars in an unforeseen situation. It is essentially an arrangement to tide over short-term foreign exchange crunch. The deal was first signed in 2008 and was limited to $3 billion, but the size was increased to $15 billion when the arrangement was renewed in 2011. 
    The rupee opened at 66 up from its previous close of 66.12 against the dollar and gained during the day to close at 65.25 against the dollar. "The swap arrangement with Japan was a positive factor for the rupee. This supplements RBI's earlier measures 
whereby it has agreed to swap dollars raised by banks through long-term non-resident deposits and borrowings at 350 basis points," said Ashish Vaidya, head of fixed income, currencies and commodities, at UBS India. He added that these measures under which RBI borrows dollars will complement its swap facility with oil companies where it lends dollars. 
    "The two governments expect that this will contribute to the stability of global financial markets, including emerging economies," India and Japan said in a joint statement after a meeting between Prime Minister Manmohan Singh and Japanese deputy PM Taro Aso on the sidelines of the G-20 summit. 
    Forex dealers said that the tide appears to have turned for the rupee and this could result in unwinding of long dollar positions. But uncertainty continues to hang over the market in respect of the situation in Syria and the outcome of the meeting of the US Federal Reserve on September 17. "A reduction in the Fed's bond buyback has already been factored in. The question now is how much?" said a dealer.

Re’s lost over 20% this year Re Plunges 188 Paise To 66.19/$,

The Sharpest-Ever Fall In Absolute & Percentage Terms. Rattled By 1.3 Lakh Cr Food Bill, Stock Market Loses 2 Lakh Cr In A Day. And Gold Hits All-Time High 

Fear Of US Strike On Syria Roils Emerging Mkts

Mumbai:The rupee on Tuesday hit a record low of 66.30 before closing at 66.19, down 188 paise from Monday's close of 64.31, over concerns that the food security bill would throw government finances into disarray and fears of a US strike against Syria. 
    The rupee is emerging as a front-runner in a race to the bottom among emerging market currencies. In both absolute and percentage terms, Tuesday's drop is the highest ever. The rupee has fallen by around 20% 
since the beginning of the year. The only currency that has done worse is the South African rand which has fallen nearly 23%. Turkey's lira has dropped 14% while Brazil's real has fallen over 17%. The Chinese yuan has been the outlier, having gained nearly 2% in 2013. 
    Given the uncertainty over the rupee, gold, seen as a safe haven investment, soared to a new high of Rs 32,585/10 grams. Silver also rose, to a sixmonth high to retrace the Rs 56,000-per kg level. India faces risk of ratings downgrade, warn bankers 
Mumbai: The concerns over the food security bill and a possible US strike on Syria that caused the rupee to fall also dragged the sensex down 590 points to 17,968 on Tuesday. Bankers said with the government living beyond its means, India faced the risk of a downgrade by rating agencies. This would accelerate the outflow of foreign capital. 
    The general slowdown in the economy is also impacting the real estate market. Data released by National Housing Bank showed that property prices in 22 of the 26 cities covered, including Mumbai, Delhi, Bangalore and Chennai, have recorded a decline in prices during the quarter ended June as compared to the preceding quarter. 
    However, finance minister P Chidambaram said that the government would not exceed the fiscal deficit target projected for the year. He also said that the cabinet had approved infrastructure projects amounting to Rs 1,83,000 crore—including power projects. 
    "While the rising dollar is hurting all emerging markets, a lot of our pain is self-inflicted," said Ashish Vaidya, head of fixed income commodities and currency trading at UBS India. "The current crisis clearly threatens corporate balance sheets which usually have a reasonable line of overseas funding, which is going to take a hit," said Vaidya. He added that while depreciation leads to imported inflation, the food security bill will add to demand-led inflation as it will increase disposable income of the beneficiaries. 
    "The food security bill is expected to add to the fiscal burden. We believe crude oil has emerged as a key risk in the nearterm, which is not a good sign for the INR. Thus, the macroeconomic outlook has weakened and risks have clearly strengthened," said Sanjeev Zarbade, vice president, Kotak Securities. 
    "We estimate that the total cost of NFSB in its first full year could be Rs 1,17,000 crore, which amounts to an additional Rs 27,000 crore (0.25% of GDP) over the budgeted amount for FY14," said A Prasanna of ICICI Securities PD.

5 defaulters traded on NSEL without stock

Mumbai: Five of the nine defaulting members on the troubled commodity bourse NSEL did not have adequate commodity stocks in their warehouses even as they traded in hundreds of crores worth of contracts, which led to a crisis worth about Rs 5,600 crore.      NSEL said on Monday it is investigating the matter relating to Ark Imports, Lotus Refineries, N K Proteins, Vimladevi Agrotech and Yathuri Associates.      Similar investigations are expected to start on the other four defaulters: Loil Overseas Foods, NCS Sugars, Spin Cot Textiles and Tavishi Enterprises. These nine defaulting companies together owe about Rs 83 crore to NSEL investors, which they failed to pay last week.      In a related development, FMC chairman Ramesh Abhishek told the NSEL Investors Forum that the regulator was considering declaring the promoter of NSEL, Jignesh Shah, not fit and proper to operate exchanges.

Re hits record low of 64.54

Mumbai: The rupee closed below the 64-level for the first time on Wednesday with the currency ending the day at 64.04, 81 paise below its previous close of Rs 63.23 against the dollar. The British pound also created a new record closing above the 100 mark at 100.42 as against 99.03 on Tuesday. 

    With most bankers feeling that the 65-level may be taken anytime now, economists are now talking about the rupee touching 70. On Wednesday, Deutsche Bank said that the rupee could fall to 70 in around a month's time. On Tuesday, UBS had forecast the 70 level for the rupee this year. 
    The rupee fell to an intraday low of Rs 64.54 as the dollar strengthened ahead of the release of minutes of the US Federal Reserves July meeting. If the meeting reveals that a US recovery is seen to be underway by Fed committee members the rupee may fall further on expectation that the Fed may start to withdraw its monetary stimulus. 
    Dealers said that markets were confused over RBI measures to bring downlong-term rates through buyback of bonds even as it sought to keep rates high at the shorter end. 
    "The RBI took steps on Tuesday to contain longterm yields and ensure that credit flows were not unduly disrupted by the recent currency stabilization measures. Juggling currency and growth concerns at the same time is not easy and if not done carefully it risks sending mixed messages about policy intentions. That would neither help the currency or growth," said Leif Lybecker Esksen, chief economist for India & ASEAN, HSBC Global Research. 
    The day started on a positive note for the equity markets as bonds staged the best recovery in four years with yields falling by 50 basis points. However, the fall in the rupee spread panic in equity markets with indices closing lower.

NSEL to liquidate defaulters’ assets FMC Asks Exchange To Recover 83Cr Payment Dues From 9 Entities

Mumbai: The Forward Markets Commission (FMC), the regulator for the futures trading in commodities in the country, on Wednesday asked the crisis-ridden National Spot Exchange (NSEL) to take possession of the assets of all those nine defaulters to liquidate and recover the Rs 83 crore that they have jointly failed to pay to the exchange.      The nine defaulters now stand to lose some of their assets to auction for meeting their pay-in obligation to NSEL. These nine entities include Ark Imports, Loil Overseas, Lotus Refineries, N K Protiens, NCS Sugars, Spin Cot Textiles, Tavishi Enterprises, Vimladevi Agrotech and Yathuri Associates.      In its payout on Tuesday, compared to a total outstanding liability of Rs 174.7 crore, the exchange could pay to its investors only about Rs 92 crore. This was the first of its 30 such weekly payouts scheduled to take place every Tuesday till March 2014, and the total amount involved is close to Rs 5,600 crore. However, with the exchange defaulting nearly 50% of the amount in its first payout itself, investors are now skeptical about how much of the total liability the exchange will be able to meet.      In a letter to the NSEL board, FMC pointed out that under the rules of trading on the commodity bourse, the exchange should ask all the defaulters to hand over their "books, documents, papers, assets, cheque books and other documents, as may be specified by the exchange and the same should vest with the exchange for the benefit of the creditors". It instructed NSEL to move to liquidate all realizable assets of the defaulter members to meet their pay-in obligations, which in turn should be passed on to the investors who are to receive money from the exchange.      FMC told NSEL that the proceeds of commodities auctioned and money realized from the defaulter should be done in the shortest possible time. The money received by auctioning the assets of the defaulters should be deposited in the escrow account opened for this purpose. In turn this money should be paid to those who are to receive pay-ins from the exchange, but the same should be done with the approval of the regulator.      On Wednesday, NSEL investors who were to receive money from the exchange, received part of their money into their bank accounts. Each investor got about 1.64% of the total receivable after 5% of the net receivable being deducted as value added tax (VAT), one of the investors said. According to the earlier plan published by NSEL, each investor was to receive about 3% of their net receivable every week for the next 20 weeks, and then about 1.5% every week till March 2014. They are also entitled to get interest at the rate of 8% per annum for the delay in payment.  Govt won't take over NSEL board  New Delhi:The government is unlikely to take over the board of NSEL, arguing that it does not have the technical wherewithal to deal with the crisis. "Taking over the NSEL board is not a big issue but the problem is managing it since we do not have the expertise," atop source in the ministry of consumer affairs said. Government officials said the move was also not being pursued as the promoters would be able to get away without ensuring pay outs that add up to nearly Rs 5,600 crore. The ministry said it wanted the finance ministry and Sebi to take charge of the commodities market. TNN GETTING INTO A SPOT  May 2005 | NSEL is incorporated as a company  2006 & 2007 | Signs MoUs with various state governments  June 2007 | Receives govt exemption to launch contracts that allow delivery of goods after several days  Oct 2008 | Commences live trading, providing deliverybased spot trading in 52 commodities  March 2010 | Launches first contract under e-series that uses demat accounts for traders and investors  Apr-Aug 2012 | FMC seeks data, suspects norm violation July 31, 2013 | NSEL suspends trading in most contracts after a ministerial directive to change the structure of contracts; the move affects volumes and leads to a payment crisis  Aug 14 | NSEL seeks eight months to settle dues  Aug 19 | NSEL giving wrong info, says FMC as govt mulls stock audit  Aug 20 | NSEL defaults on dues; top brass, including its chief executive, is sacked  Aug 21 | FMC tells NSEL to take possession of the assets of nine defaulters who failed to pay the exchange an aggregate amount of Rs 83 crore