Present tense; future perfect

IIPM Mumbai Parables - Stories that change life

Though commodities are not safe now, their future looks promising

One can almost feel the noise and smoke of the scampering steps running for cover from the recent equity meltdown. Barclays Capital’s increased commodities exposure or Goldman Sach’s prophecy – limited damage to commodities from the current credit crunch – might be enough to figure out where the crowd is stampeding. Many consider commodities to be a safe haven at the moment; but is it as safe as many think?

Well, first off all looking at the contagion there’s no second opinion that the commodity markets will get affected. Jochen Hitzfeld, Commodities Analyst, UniCredit while talking to B&E opines, “Many of the hedge funds have built up long positions on commodities and with the meltdown taking place, these hedge funds will reverse their positions in search of liquidity which will adversely affect the commodity markets.” The Reuters/Jeffries CRB Index is currently trading 3.69% (August 6, 2007) below July 31, 2007 levels.

Well, it might not be as gloomy as it looks. Firstly, commodities like oil will continue their escalation (refer to the story in the finance section, last issue). Secondly, the future of gold also looks quite bright. With the Federal Reserve expected to cut rates in the near future, there will be an injection of fresh liquidity in the global financial system. This process will see the green back going down which means a green signal for the yellow metal to move up. Finally, the China factor is very much alive and kicking. Consider this – China alone has contributed almost 100% to the total increase in lead and nickel consumption globally. In case of aluminum and steel as well, China has contributed as much as 50% (IMF report) to the total increase in consumption. Well currently, with the dragon economy growing at a stupendous 11.9%, demand for commodities has to move in only one direction – upwards.

As Jochen Hitzfeld puts it, “At this point of time, I believe that it’s a safe strategy to get into commodities.” So, even though the present looks quite shaky on the backdrop of a credit crunch, the future of commodities remains quite stable and upbeat.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Left needs to adopt a firm stand!

The BJP led government had boasted of bowling a ‘doosra’ by first conducting the nuclear test and then making the US face the reality of accepting a nuclear India. But as democracy would have it, BJP abandoned its position and dropped the return catch (123 Agreement). The Congress team, however, bowled a googly and trapped the US into agreeing to India-friendly nuclear deal. Just when the Congress was about to pop the champagne cork, the Left parties – the 12th man in the UPA team, started playing spoilsport.

The Left raised hackles over some technical details in the deal – their concern does not really relate to its impact on India’s nuclear weapons programme. They are however, more perturbed by perceived hidden aspects in the agreement, which would tie the nation’s foreign policy to US imperial interests. CPI floor leader in Parliament, Gurudas Dasgupta told B&E, “The Left has inhibitions regarding foreign policy of India as the issue is not what the government or the PM are saying but what is happening on ground. Whether it is the increased military cooperation between the US (and its allies) & India or the impact of Hyde Act, Left is more concerned over India going the American way.” The Communists are certainly worried that in the eventuality of the US launching an unjust war on Iran, India would become morally bound to support the war of aggression.

Even if the Left accepts that the US will not disturb India’s efforts to conduct a nuclear test but what if they stop nuclear supplies, if India turns down their request to contribute our army for US war efforts across the globe? The Left ’s concerns may be justified but their politics of howling at the PM are certainly not appreciated. And this surely is neither gentlemanly nor Cricket, Mr. Karat!

B&E edit bureau : Vivek Asri

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Tracking the pulse of adrenaline

Blessed with a topography as diverse as ours, it isn’t far too difficult a proposition to imagine fascinating options like skiing, biking, rock-climbing, river-rafting, etc. to enthrall the young at heart! Consider mountain biking amidst the serene spread of Ladakh, or Lahaul & Spiti in Himachal Pradesh; or rappelling down the rocky cliffs of the Aravali Hills in Dumdama and Mount Abu in Rajasthan…

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Source: IIPM Editorial, 2006

Learning to do it better, and faster

China, in some ways, can put hard core capitalists to shame. The way China is investing billions of dollars to create a global intellectual powerhouse, going all out to partner with world class educational institutions, building cutting edge research centers, revising their existing programmes, goes to show that the Chinese leadership has a definite agenda.

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Source: IIPM Editorial, 2006

MUL continues dream run

Marking Maruti Udyog Lim­ited’s (MUL) tenth consecu­tive quarter of profits, India’s largest car manufacturer has recorded a 43% surge in net profits for the quarter ending September 2005, at Rs.2.63 billion. Last year’s figures for the same period were Rs.1.84 billion. The robust growth has been attributed to sale of 150,543 units in the quarter, including exports of 11,880 units. However, operating profit margins for the com­pany were lower than expec­tations, mainly due to the roy­alty payment of its new model, Swift. In addition to the three Maruti driving schools op­erating in the country, MUL has announced plans to set up fifteen more such schools across India. Undoubtedly, here’s wishing Maruti a ‘Swift’ drive ahead.

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Source: IIPM Editorial, 2006