The World This Week -13th July to 18th July, 2015

The World This Week -13th July to 18th July, 2015 from Karvy Private Wealth

How they make gold out of dust!

In recent times, price of no other thing has inflated as much as that of precious metals.

Such has been the price escalation that one almost tends to forget that gold used to cost about Rs 6,500 per 10 grams in 2000.

At present, the price of gold has reached astronomical heights and those in gold, silver and jewellery business are leaving no stone unturned to cash in on the yellow metal's appreciated price structure.

Dust of gold whose price per 10 grams has crossed Rs 25,000 of late, naturally therefore, has substantial market value now. Many people across India deal in gold dust, which is proving to be a good business under the circumstances.

West Bengal is no exception to the rule.However, what is intriguing -- about 5,000-6,000 people are dealing in gold dust in West Bengal for months along the Ganges in and around Shibpur area of Howrah district without any licence whatsoever. On a hot afternoon, we visited innumerable shanties across the Ganges in and around Shibpur in Howrah.

"The business that thrives here is unlicensed and some of the returns reach the hands of some really powerful people," a reliable source had informed us.

On reaching the site, we had no reason to disbelieve the source. We found hundreds of people sifting bags loaded with 'black powder'. However, none agreed to share their identities with us.

For, each one of the workers knew that the business was unlicensed and disclosing their names and other details could prove fatal for their trade.

"This is gold dust, didi", said one of them, busily cleaning the powder with a broom. while another person was mixing some liquid in a tub. "The powder will soon be poured into that liquid and made into a dough".

Some of the craftsmen claimed to be working as independent traders, who bought the raw materials (bags full of gold dust) and sold 'recovered' pieces of gold to jewellery traders in Howrah and Kolkata without the help of any middleman.

At least 90 per cent of the workers were Urdu-speaking Muslims mostly hailing from Bihar and Uttar Pradesh. Recreating gold from gold dust is a rather complicated process.

However, for our benefit, the workers simplified the description.
It is given below: 

Sacks of gold dust are procured from dealers in West Bengal as well as outside.

Sacks containing gold dust arrive by road and also by water.

The gold dust is first gathered and spread out to dry in the sun.

It is mixed with water and made into a dough and then laid out to dry in the sun again.

The dried gold dust is thereafter placed in a crucible (it is a container made of clay that is strong enough to withstand fire) and crushed and melted.

Gold needs to reach a temperature of 1,064° C (1,948° F) in order to melt.

The flame is directed towards the gold dust and is held there until the dust turns into liquid first and then into a molten blob.

The blob soon turns bright red and appear satin-like as it begins to harden.

The gold is removed from the crucible with tongs and is placed on a charcoal block.

The recovered gold is allowed to cool down and is readied to be sold. There is another simpler procedure for making gold from gold dust.

In this procedure, the gold is hammered till it takes the form of sand particles.

Then the gold is poured into a steel pot and water is poured into it.

When the water comes to the boiling point, nitric acid is mixed into the pot containing gold dust and water. The concoction is left in the open and the 'impurities' evaporate.

The same process is repeated twice.

This way, what's left is 24 carat pure gold pieces.

The second procedure is most suitable for rainy season when one does not get enough sun to dry the wet gold dust. Tust as the craftsmen at work at the riverside shanties were eager to exhibit their deftness in recreating gold out of dust, they were equally reluctant to talk about their 'rules of business'.

On being asked several times, how do they manage to do business without any government licence, "we pay those who matter every week" was all the only information we could squeeze out.

A roadside teastall owner, however had something more to add: "All these people are paying the most powerful people every week.

It comprises a hefty cut from their income. Those people pay the municipality bosses who very conveniently turn a blind eye to the issue." This business started about 10 years back and has been growing steadily over the years, the man added.

The teastall owner was also of the opinion that often smuggled gold bars from across the border arrived in these shanties and were crushed and mixed with gold dust to be circulated in the gold market of the state.  Most of these workers claimed that they worked as independent businessmen.

However, there were some who said they worked in groups under the aegis of one midsize of or big trader and got paid at the rate of Rs 200-250 per day in lieu of 14-15 hours of service.

Those working independently too earned almost the same amount daily but for them, the risk was more as they needed to source the raw materials on their own, processed the dust themselves and found buyers in the end.

"However, if one works on his own, there is no fear of losing a job", said a young man in mid-30s. Raw materials or gold dust are mostly procured from gold traders across India. Price of each sack is determined rather arbitrarily.

"Price of each bag is determined by the probable percentage of gold in it," informed one of the workers.

Unwilling to quote the actual prices, the workers informed that if luck were in favour, they would earn Rs 200 a day at ease.

"But at times, a processing fault could lead to zero productivity and fruitless labour", said a middle-aged man. The gold that the craftsmen retrieve are sold to gold dealers of Burrabazar, one of the principal markets of the state.

"Generally, we manage to sell our product at the existing market price after a thorough scrutiny but at times, we get less if the buyer has some doubts about the quality of our product," informed an oldish man. The workers who make gold out of dust toil very hard for 14-16 hours a day.

They are barely equipped for such a tedious job. They wear no gloves or masks and have to withstand scorching heat of the burner for most part of the day.

"Most of us don't live for long. We either get tuberculosis of lung cancer. That comes from inhaling poisonous nitric acid that is used to process the gold dust," said a man as he made a vein attempt to cough out the toxic air that he consumed a while ago. Strangely, the state government officials said they had no idea that an unlicensed gold dust business was in vogue along the coast of the Ganges.

Our repeated calls to the Howrah municipality on the issue went mostly unanswered. One of the officials, however, told us, "It's an impossible proposition. How can we not know anything about a business manned by so many people."

When we asked him what his name was, he disconnected the phone with a curt, "We are government staff. We have no time to waste on some baseless media allegation."

S&P cuts rating outlook of SBI, ICICI, HDFC Bank

India's top 10 banks, including the SBI, ICICI Bank and HDFC Bank suffered a collateral damage following the Standard and Poor's lowering the country's sovereign rating outlook.

The global agency downgraded the rating outlook of these banks, stating the move reflects "the outlook on the sovereign credit rating on India".

While it is only the outlook which has been lowered at the moment, the S&P warned that the banks' ratings can also be revised downward if similar steps are taken for sovereign rating. Other lenders included in the latest rating outlook revision are, Axis Bank, Bank of India, IDBI Bank, Indian Overseas Bank, Indian Bank, Syndicate Bank and Union Bank of India.

Besides, the Infrastructure Development Finance Company Ltd (IDFC) is also impacted by the rating action.

Experts feel that the S&P's move will not significantly impact the cost of resource mobilisation of the Indian banks since they raise bulk of the money from the domestic sources. Justifying the move, it said, "S&P does not rate Indian banks above the rating on the sovereign because of the direct and indirect influence that the sovereign in distress would have on banks' operations including ability to service foreign currency obligations."

It said the banks get influenced if the country's sovereign rating itself is affected because they are subject to government policy and regulation and they invest a significant portion of their funds in state securities. The banks are also majority owned by the government.

"We could revise the outlook to stable if we take a similar action on the sovereign rating," it said. However, the S&P risk assessment on the country's banking industry remains unchanged. 

Indian Wealth Triples?

India may be home to a large number of poor, but the average wealth of an Indian has nearly tripled in the last 10 years to $5,500 (nearly Rs 2.70 lakh), making the country the sixth largest contributor to overall global wealth, as said by a study.

Still, the average wealth for Indians was way below the global average of $51,000 and just about one per cent of the world's highest per-adult wealth of $5,40,010 recorded in Switzerland, according to a report.

The wealth per adult in India has increased from $2,000 in the year 2000 to $5,500 currently, but the wealth distribution remains very disproportionate and poverty was still rampant in the country, as said in a report.

"While wealth has been rising strongly in India, and the ranks of the middle class and wealthy have been swelling, not everyone has shared in this growth and there is still a great deal of poverty," the report said.

43% of adults' wealth in India is below $1,000, as against the world average of 27%
Also, a very small proportion of the Indian population (just 0.4 %) has net worth of over $100,000.

The report said that the global wealth has grown by 14 %since January 2010 to $231 trillion as on June 2011, driven by strong contribution from emerging economies including India.

India was the sixth largest contributor to the global wealth accumulation, while the US was the largest wealth generator in the world over the 18 month-period, adding $4.6 trillion to global wealth.

Asia Pacific was the main contributor to the rise in global wealth during the period, with China, Japan, Australia and India among the top six contributors to global wealth accumulation.

According to what the estimate reports, there are 84,700 ultra high net worth individuals (UHNWIs) with net assets exceeding $50 million each globally.

The USA is at the top of the ladder with 35,400 UHNWIs, followed by China with 5,400 UHNWIs, Germany (4,135), Switzerland (3,820) and Japan (3,400), Russia (1,970), India (1,840), and Brazil (1,520).

In the year 2011 alone, India has acquired 34,000 new millionaires, however, a larger share of these wealthy individuals "may be more properly regarded as residents of other countries" the report said.

Source - http://www.rediff.com/business/slide-show
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$1 trillion infrastructure investment for India: Ahluwalia

The 11th Five Year Plan that begins in 2012, is going to have some pleasant surprises. One of them being ‘India will double its investments in infrastructure to $1 trillion with half of that expected from the private sector, Planning Commission Deputy Chairman Montek Singh Ahluwalia has said.
There is inclusive growth which the 11th Five Year Plan aims at. The growth is not going to be individually in private sector or foreign investment, but the generic would be highlighted too, which is nature of the policy.
Ahuluwalia claims, 'In India, it is clear: It's private sector-led growth in which the government plays a very important role in providing the infrastructure that will make this growth possible, and it's the social policy that will make growth inclusive.
Sources reveal that, Jamshyd N. Godrej, chairman and managing director of Godrej and Boyce Manufacturing Co, said that inclusive growth was transforming India. He pointed to 'Bihar, a state that had been the poster boy of no development, is now in the vanguard of growth'.
Agreeing with Godrej, Janmejaya K. Sinha, chair for Asia-Pacific region with The Boston Consulting Group, said the obligation of financial institutions and banks to serve the underprivileged people had thrown open immense opportunities.
'In India, some 55 percent of people are excluded from financial services, and most of these are below 30. So, there's an opportunity of having 400 million customers for 45 years,' Sinha said.

Source: Yahoo Finance

Aries - A new product from Karvy Private Wealth

Karvy Private Wealth, the wealth management arm of KARVY Group  launched Aries,  the first of its kind multi asset structured product in the Indian market.  With this launch, for the first time ever, Indian investors will be able to make capital protection oriented investments in multiple asset categories through a single product. The product that comes under the Alternative Asset class has been introduced by Karvy Private Wealth post releasing its India Wealth Report in 2010 which gave a unique perspective on the Indian Wealth Industry highlighting that the Alternative Asset instruments will see huge growth in the coming years.

The product brings in twofold benefits for the investors:

1) Capital appreciation by participating in the equity markets.

2) Capital preservation and diversification by adding Gold into the portfolio.

The product offers complete capital protection to the customers and pays 1.1 times the return on the positive basket performance with no upside cap which means risk averse investors not only have total protection for their principal amount but will also receive 1.1 times return on their investments based on the market performance.

See more links : Yahoo news , Msn news, Presstrust,   Indiablooms, Webnewswire, Indiaeveryday, 

India shining - 20 facts that you should know about India’s growth!

1. The Indian economy is the eleventh largest in the world by nominal GDP and the fourth largest by purchasing power parity (PPP).
2. India is poised to achieve 9 per cent economic growth in the current financial year itself, driven by robust performance by the agriculture and industry sectors. The economy grew by 8.9 per cent in the second quarter of the current fiscal.
3. India has emerged as one of the world's top ten countries in industrial production. The nation's industrial production grew at the fastest pace in three months at 10.8 per cent. Manufacturing grew 11.3 percent in October after a 4.6 percent gain in September.
4. India is one of the fastest growing automobile markets in the world, expanding at 35 per cent on average in the first four months of the current financial year.
5. The Bombay Stock Exchange has been rated as the world's best performing stock market recently. With a 13 per cent gain, Sensex is among the world's 10 biggest markets, according to data collected by Bloomberg.
6. Indian companies have become bigger and stronger in the last ten years with the average revenue of a company on the Fortune India 500 list standing at Rs 7,632.5 crore (Rs 76.32 billion).The total revenue of the Fortune India 500 companies stands at Rs 38,16,239.40 crore.
7. India is the world's largest recipient of overseas remittances. The remittances grew from $49.6 billion in 2009 to $55 billion in 2010. It is also the country with the second largest number of emigrants after Mexico, according to the World Bank.
8. India owns over 18,000 tones of above ground gold stocks worth approximately $800 billion and representing at least 11 per cent of global stock, according to estimates of World Gold Council. India ranks 11th in the world with 557.7 tons of gold reserves.
9. India is among the top 10 nations in terms of foreign exchange reserves. The country's foreign exchange reserves breached the $300-billion mark for the first time since 2008 with an addition of $2.2 billion on the back of a healthy rise in foreign currency. The nation's forex reserves currently stand at $296.40 billion.
10. India's services sector, backed by the IT revolution, remains the biggest contributor to the country's GDP, with a contribution of 58.4 per cent. The industry sector contributed 24.1 per cent and the agriculture sector contributed 17.5 per cent to the GDP.
11. India's civil aviation sector will be among the top five in the world in the next five years. Indian domestic air traffic is expected to reach 160-180 million passengers per year, while international traffic will exceed 80 million.
12. India's exports during November jumped by 26.8 per cent to $18.9 billion year-on-year. India's exports during April-September aggregated to $103.65 billion registering a year-on-year growth of 28 per cent.
13. India, China and Brazil are the top three target countries for foreign direct investment until the end of 2012 with the United States, for years number one, now in fourth place, according to the UN trade and development agency UNCTAD.
14. The Indian telecommunications industry is the world's fastest growing telecommunication industry, 723.28 million telephone (landlines and mobile) subscribers and 687.71 million mobile phone connections as of September 30, 2010.
15. The number of Internet users in India is estimated at 81 million. The Telecom Regulatory Authority of India pegs the number of broadband subscribers at 10.08 million in August 2010.
16. The Indian IT-BPO industry is expected to exceed $70 billion in fiscal 2011.The Indian IT-BPO exports are projected to grow by 13 per cent to 15 per cent while domestic IT-BPO will grow slightly more by 15 per cent to 17 per cent during fiscal 2010-11.
17. India has the largest number of post offices in the world. The world's highest post office, Hikkim is located at 15,500 feet in the Lahaul Spiti district of Himachal Pradesh.
18. The largest employer in India is the Indian Railways, employing over 1.6 million people. Indian Railways started operations on April 16, 1853.
19. India ranks second in farm output globally. India is one of the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper.
20. Tourism is the largest service industry in India, with a contribution of 6.23 per cent to the national GDP. The number of foreign tourists visiting the country during September this year is higher than that of the same month last year. Around 3.69 lakh (369,000) foreign tourists came to India in September this year as compared to 3.28 lakh (328,000) during the same month in 2009.

Source : Rediff Business

Art’s no more an object, its Objet de’ valeur

For centuries Art has been appreciated by the social elites across globe, no wonder that a black and white Coke bottle on canvas by Andy Warhol was sold for $35.36 million at an auction.

This is just one recent example to quote from the long list of sky-high returns art has given, making ‘Art Fund’ lucrative investment option and adding diversity to the portfolio.

By definition, art funds operate like mutual funds and are managed by a Fund Manager who is specially qualified in selling, buying and maintaining art. People invest in art fund and without actually spending large sums of money individually on a particular art object and at the same time reap the benefits from appreciating art market.

Given that fact that Indian art makes up only about 1 per cent of the global art market, there is tremendous scope for art funds to grow.Some examples of established art funds in India are Osian's, Yatra, Copal Art, Crayon Capital and Indian Fine Art Fund.


Source : Multiple source

Second house is an asset!

Long-term investors can benefit from investments in property such as a residential or commercial building, or land. Property investors must bear in mind that property as an investment requires adequate time to buy and sell.

Ample amenities, increased choices, improved construction quality and competitive rates make a second house a lucrative asset class that can provide a predictable income stream along with capital appreciation. Rental income from the second property can help repay a substantial part of the monthly EMIs. If your salary has increased since you took your first home loan or have already repaid your home loan debt, procuring a second loan may not be difficult.

A second house is an ideal investment option for a person with larger disposable income and lesser debts. If you invest early in a second house, you can repay the debt sooner. This enables you to set aside a larger amount towards your retirement savings much earlier in your working years.

Otherwise, a large chunk of your earning is diverted towards repaying debts, leaving very little disposable income for savings, healthcare, contingencies and retirement planning.

Increasing urbanisation, job opportunities and population growth have stretched demand for housing beyond imagination.  A second house might appear to be a lucrative investment.  The buyer must remember that he must commit extra time towards his second house too.

Managing another property that is in the same locality may be ideal. A second home is an ideal investment in these times of lenient lending rates and increased competition among builders.

Source : ET