Commodities Trading

Commodities exchange

What does commodities trading involve? the how, what and were of the field :-

HAVE you ever given a thought to why the price of gold changes each time you go to buy ornaments? Or why the government keeps announcing hikes and cuts in diesel prices every now and then? These issues concern the common man, but the reasons behind them might not be comprehensible to the average person, who cannot do much, except, express pleasure or displeasure.

A commodity is defined as an article, product or material that is bought and sold. It can be classified as every kind of movable property, except actionable claims, money and securities.The prices of commodities such as precious metal, base metal, crude oil, energy and soft commodities like palm oil, coffee, etc are regulated and priced in international commodity markets, and it is these prices and fluctuations that get passed on to the ultimate consumer. In due course, several other exchanges were created in the country to trade in diverse commodities.

THE CURRENT SCENARIO

Circa 2007, we have certainly come a long way.The size of the commodities markets in India is quite significant, with 58% of the country's GDP being related to commodities. The Indian stock markets have seen an unprecedented growth in the last three years. The equity-space is also more specialised, as the risk and return, both stand to be high, with prices not being as related to fundamentals, as on sentiments, as compared to what most goods ought to be.

"Commodities actually offer immense potential to become a separate asset class for market-savvy investors, arbitrageurs and speculators, as in the case of commodities, fundamentals of demand and supply are far easier to understand than the equity markets," says Nitin Bhandari, a trader at one of India's leading commodity trading firms. Historically, too, pricing in commodities futures have been less volatile compared with equity and bonds. Currently, the various commodities across the country clock an annual turnover of over Rs 1,40,000 crore and with the introduction of futures trading, the size of the commodities market is likely to grow exponentially.

Over the last few years, the Indian government has allowed the setting-up of national commodity exchanges, similar to the BSE and NSE that would deal in commodity derivatives via an electronic trading platform The Forward Markets Commission (FMC) would regulate these exchanges. Among the prominent national commodity exchanges set up are the Multi Commodity Exchange (MCX), Mumbai, the National Commodity and Derivatives Exchange Ltd (NCDEX), Mumbai, the National Multi Commodity Exchange (NMCE), Ahmedabad and the National Board of Trade (NBOT), Indore. Resident individuals and corporates in India are allowed by the Indian government to trade commodity derivatives. However, the provision has not been extended to banks, funds and financial institutions in India so far.

HOW COMMODITIES ARE TRADED

Commodities are traded in two distinct forms, via over-the-counter (OTC) market and via the exchange-based market. The spot transactions in the commodity segment are over-the-counter markets and only those players are allowed to participate, who are involved with that commodity, for example, the farmer, processor, wholesaler, etc. Derivative trading in the commodity space, however, takes place through exchangebased markets with standardised contracts, settlements etc.

A commodity derivative is defined as a financial instrument, traded on or off an exchange, the price of which is directly dependant upon the value of the underlying commodity, or upon any agreed upon pricing index or arrangement. Derivatives involve the trading of rights or obligations based on the underlying product but do not directly transfer property.

"The oddity about commodity derivatives is that, unlike financial derivatives, where the financial assets to be exchanged are not bulky and do not need special facility for storage, commodities, due to the bulky nature of the underlying assets, physical settlement in commodity derivatives creates the need for warehousing. Another irregularity in a commodity contract settlement is that the quality of asset can vary, which cannot happen in the case of financial derivatives," adds Bhandari.

OPPORTUNITIES

There are typically three types of roles in this sector, which are:

Traders

Traders are the most important and highly paid resources in this sector. They not only look at the market movement, but also have to keep in mind each and every fundamental such as demand and supply, weather, government policies, and take decisions based on the same.

Analysts

These individuals are usually highly skilled in economics and number-crunching and are specialists in specific sectors. They are the ones who provide in-depth and regular research to the traders, who then use the same to combine with their judgment and experience and make decisions on buying and selling.

Brokers/dealers

Commodities can be traded on exchanges only if one has membership of these exchanges, which proves to be very costly and cannot be afforded by most individuals and corporates. Broking firms usually provide a platform for trading for the resident individuals, corporates and traders, and are able to trade on exchanges, as they are members of the same.

They have service teams, who take orders from clients, manage the order execution, settlement, paper-work etc. Now, with the Indian government taking away most of the restrictions on the commodity markets, it is time for the common man to take interest in these commodities and their markets, as it is expected to be the next rocketgrowth-story after the Indian equity markets.

Sunil Sharma

Moderator

Dil Se Desi Group

Medical Profession

STUDENTS SHOULD FOCUS MORE ON GAINING PRACTICAL KNOWLEDGE AT THE WORKPLACE THAN DREAMING OF FAT SALARIES

THE global medical industry is one of the world's fastest growing industries, absorbing over 10% of gross domestic product of most developed nations. It constitutes of broad services offered by various hospitals, physicians, nursing homes, diagnostic laboratories, pharmacies and is ably supported by drugs, pharmaceuticals, chemicals, medical equipment, manufacturers and suppliers.

The medical and healthcare industry provides enormous employment opportunities to choose from. Apart from using the services of medical professionals, this industry also utilises the expert services of public policy workers, medical writers, clinical research lab workers, IT professionals, sales/marketing professionals and health insurance providers.

The Indian healthcare market, according to industry sources, is reported to be growing at over 30% annually. A recent McKinsey study on healthcare says that medical tourism alone can contribute Rs 5,000 - 10,000 crore additional revenue for upmarket tertiary hospitals by 2012, and will account for 3-5% of the total healthcare delivery market.

The Indian pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leaders holding nearly 7% of the market share.

As regards laparoscopic surgery, also called minimal access surgery (MAS), it is not only limited to general/gastro intestinal surgery but has wide a scope in other fields of surgery as well like gynaecology, neurosurgery, ENT and thoracic surgery.

INDIAN SCENARIO

The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8,000 smallscale units, which form the core of the pharmaceutical industry in India (including five central public sector units). These units produce the complete range of pharmaceutical formulations, ie, medicines ready for consumption by patients and about 350 bulk drugs, ie, chemicals having therapeutic value and used for production of pharmaceutical formulations.

Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The pharmaceutical industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.

CAREER WISE

Planning for a career in any field of medical profession is an excellent investment for your future. As the fastest growing industry in the world, new job opportunities are being created every day.

Each department in a medical profession has a number of positions that one can go for. With the growth of the industry, the demand for well-trained professionals in this field has shot up.

Good training in this field is a must and there are some good training centers available in the country today. A postgraduate degree (MS/DNB/Mch) in the speciality is a must to practice the art of MAS.

REMUNERATION

A whole lot of specialised avenues such as lifestyle clinics, emergency medicine units, pharmaceutical firms, hospital information systems, e-health ventures, credit rating firms, NGOs and health insurance now require trained manpower specialised in hospital administration.

A management level graduate earns anywhere between Rs 2.5-3 lakh per-annum, while middle and lower-level can earn between Rs 2-2.5 lakh. Freshers should focus more on gaining practical knowledge at the workplace than dreaming of fat salary packages.

Managers with a medical background command higher price in the market, even though the industry has a preference for such people, non-medicos are putting a brave face on it. Having a medical background definitely helps but even non-medicos can excel as what matters ultimately is how good are your managerial skills.

In times to come most of the surgical procedures will be done laparoscopically thus requiring more and more well trained surgeons.

Sunil Sharma

Moderator

Dil Se Desi Group

Projects on Community Issues

Student projects on community issues

SHUBHAM Balasahib Chaudhary and Onkar Sarjero Zirange, students of class VI of Jawaharlal Nehru Vidyalaya of Kolapur, Maharashtra, with the use of technology worked on a survey to determine the multiple intelligence of students from a nearby school.The project aimed to find out what students of schools would like to become.

"We prepared online tests for students on the basis of the chapter on multiple intelligence in our English textbook and what we found was that most of the students are quite extraordinary with their creative and visual skills. Maths skills were least developed, ’’ said Chaudhary. Likewise, Anvesha Satpathi and Devi Prasad, class X students of Jawaharlal Nehru Vidyalaya , Sambalpur, Orissa, have raised awareness in their rural surroundings on water-related problems and diseases. As part of the project titled, Towards a safer living,' they prepared a presentation and showed it to the villagers.

"Few families in the villages have now started drinking boiled water," added Prasad.Will they be continuing their work on water scarcity and conservation? The students feel that it is important to educate their classmates before taking their message to the villages. "The youth can change the nation and if we sensitise our classmates, they can play a key role in solving water-related problems," added Satpathi.

Lauding the work of the students, A K Rath, secretary, Ministry of Human Resources and Development (MHRD), said: "Navodaya Vidyalayas are beacons in rural areas. No one has ever thought of them becoming qualitylevel schools with the poorest children winning international prizes for working on community causes.''

Along with students, teachers too were awarded for their projects in rural India. G V S Nageshwara won seven national awards for his work. A teacher in JNV, Visakhapatnam, who worked on raising awareness on energy conservation, said: "I have not attended any technology classes other than what Intel organised for us and then I started working on innovations. After seeing my presentation, the mess workers in my residential school have started using techniques to conserve gas used in the kitchen."


Sunil Sharma
Moderator
Dil Se Desi Group

Executive MBA (EMBA)

ON STRONGER GROUND

An Executive MBA (EMBA) does more than just add a degree to your CV, it upgrades your skills and knowledge, enabling you to survive better in the competitive corporate world.

In the cut-throat world of business, obsolescence is fairly common. So if you’re looking to avoid stagnation, going back to the basics may be a noteworthy option. For most executives, climbing the rungs of the corporate ladder is always a challenge. While professionals find it difficult to get out of the rut, organisations face a dearth of qualified personnel to delegate responsibility to. Overcoming this two-fold predicament, business schools that look to the future have devised a unique solution: Executive Education. Says V H Iyer, dean, MDP, Welingkar Institute of Management Development and Research, “In the changing business dynamics, the industry needs people who can think of business as a whole.

Knowledge is paramount; in such a situation there is a definite need for management education. Hence, people who missed out on their MBA earlier, throng towards executive management programmes.” Adds Dinesh Harsolekar, director, IES Management College and Research Centre: “There are two reasons why we are introducing an executive MBA programme this coming July- Firstly, this is a golden opportunity for those professionals who, for a number of reasons, missed the chance to complete an MBA in the course of their academic tenure. Secondly, university courses are generally three- year courses, which are too time-consuming for working professionals to commit to. The EMBA is a fast track 15 to 18 month programme to cater specifically to such professionals.”

While the popularity of an executive education programme may be due to a desire to acquire professional education or a need to gain a broader perspective of the industry, the lure of the MBA stamp is clearly working its way across organisations. As Vivek Kejriwal, third year student of the part time EMBA, at NMIMS succinctly questions, “After having made the most of the ideal working age, when you’re offered a course that provides you a certificate along with your experience, it simply makes sense to go for it, doesn’t it?” However, if that’s not reason enough to drive you back to school, perhaps a better understanding of the course may just do the trick.“All EMBA programmes are encapsulated courses of study, considering the profile and work experience of people. They are applicationoriented and taught by specialists who are well up in industry practices as well as academics, bringing in rich experience to the classrooms to make the programme very relevant,” elucidates Iyer.

Highlighting the difference between a regular MBA and an EMBA course, Arun Mudbidri, director, Symbiosis Institute of Business Management says, “Because of the experiential base of the executive MBA students, the programme is more accelerated and interactive, and peer oriented. For example, students may be organised in learning teams of three-four students who work together throughout the duration of the programme. Moreover a higher level of seniority facilitates an improved exchange of each other’s experiences and makes the participation a worthwhile investment of time and money.”

Currently, while some B-schools offer shortterm management diploma programmes for executives, others offer the EMBA programme, which is for a longer duration. Obviously, choosing the right course is relative to each individual’s requirement as well as his or her organisation’s support. Tailor made, as it is, there is no specific format for the EMBA course, the options ranging from part-time to full-time courses, varying from school to school. While a minimum work experience of about three years seems to be universal, organisational sponsorship may be a requirement for particular programmes. “We see students coming in from all walks of life. Over the past few years there’s been a trend of practicing doctors coming in to do their MBAs. Entrepreneurs and their family members choose the executive MBA programme to pick up professional skills. So although working executives looking to boost their careers are most common, service professionals are not the only ones who want an MBA today,” reveals Prof Nitin Putcha, VP Marketing of the Institute for Technology and Management (ITM).

To sum up, an executive MBA is a course for those motivated professionals who desire to transition and upgrade themselves to a better implementation of their skills and knowledge. It brings about renewed confidence and a broader perspective so as to always remain in demand. “MBA programmes for working professionals help them immensely to upgrade their managerial and analytical skills; and thereby enable them to take better decision in their functional areas. The assessment and evaluation process for working professionals needs to be based more on project work and team presentations than traditional method of written examinations,” says P L Arya, director, N L Dalmia Institute of Management Studies and Research.

Finally, it provides an individual with one of the most potent tools required to survive in today’s corporate world- a key networking opportunity, which is one of the best assets you can inherit after an EMBA programme. As Mudbidri likes to put it, “We are at a point where the Executive MBA may soon become an essential part of the experienced Indian manager’s career progression. As the world economy shows signs of consolidated growth, and corporate results bring renewed confidence to boardrooms, business schools are reporting strong demand for their executive MBA programmes.” So if the word of top executives and education czars is anything to go by, this course is certain to transport you to the fast track to success!

Institutes offering EMBA courses (Indicative listing)

Welingkar Institute of Management Development and Research

Narsee Monjee Institute of Management Studies

SP Jain Institute of Management Studies

Symbiosis Institute of Management Studies

Indian Institutes of Management



Sunil Sharma
Moderator
Dil Se Desi Group

Future of English Language

A SEMINAR ON ENGLISH LANGUAGE UNDERLINED THE NEED TO DEVELOP THE LANGUAGE WITH OTHER REGIONAL LANGUAGE

THE importance of knowing English in today's world cannot be denied. But English should not be imparted at the cost of other regional languages. If English has to develop in India, it has to be developed in partnership with other regional languages.

A seminar on English, India and Globalisation highlighted the dangers that might arise if due care is not taken to respect other regional languages. "Indeed English as a language is high in demand which forces parents and schools to ram it down the throats of children resulting in producing a class of people that is neither fully literate in its own language nor trained in English.This is dangerous because a person needs to be at home with languages he communicates with," said Mark Tully, author and journalist, while speaking about the past and future of English language in India at a seminar. Tully emphasised that English needed to be promoted in India in partnership with other regional languages.

The seminar recently organised by the English Speaking Union in association with the British Council in the Capital, brought to light many issues concerning promotion of English language in India. English has played a very important role in India's growth story as India became a preferred destination for business process outsourcing because Indians speak better English than Chinese or South-Asian counterparts.

"The importance of English as the language of a growing Indian economy cannot be denied. But since English is not the only language in multi-cultural multi-lingual India, which has 16 official languages, there is a need to respect vernacular languages. If English is not promoted in partnership with these languages, the people who favour classical languages might prevent the development of English in their respective regions," warned Tully, who was concerned that this clash could reinforce the belief that English is a language acquired by colonial rule. On the other hand, Gurcharan Das, author and journalist, drew concerns of English language becoming the language of the masses. He said, "Learning English as a tool for communication has gained importance across India, in that sense English has got democratised, but at the same time this increasing demand for English has upset the growth of other regional languages.

All the books on science, maths and technology in higher education are in English." But would the teaching of so many languages create a problem for the child? "Indians have a natural ability to be multi-lingual. There is no reason why English can't be taught with other languages and vice versa.It is useful to have English as a second language in schools because it is a passport to the world. We too promote English among non-native English speakers but with respect to the vernacular language," said Valarie Mitchell, director-general, English Speaking Union.



Sunil Sharma
Moderator
Dil Se Desi Group