SUMMERINTERSHIP PROJECT “FUTURE OF METALS AS COMMODITY IN INDIA” Project Report Submitted Towards Partial Fulfillment of “Master of Business Administration Degree” (Affiliated to MTU and Approved by AICTE) 2013-2014 SUBMITTED TO: - SUBMITTED BY:- Mrs. Kavita Indrapurkar VARUN KUMAR RAVI 1271270097 PREFACE The successful completion of this project was a unique experience for me because by visiting many place and interacting various person, I achieved a better knowledge about commodity metal market. The experience which I gained by doing this project was essential at this turning point of my carrier. This project is being submitted which content detailed analysis of the research under taken by me. The research provides an opportunity to the students to devote his skills knowledge and competencies required during the technical session. The research on the topic “FUTURE OF METALS AS COMMODITY IN INDIA” ACKNOWLEDGEMENT “For any successful work, it owes its thanks to many” Hardwork, knowledge, dedication, and positive attitude all are necessary to do any task successfully but one ingredient which is also very important than others and at a time more important than others in co-operation and guidance of experts and experienced person. I I am very gratatefeful toto Prof. Kavita Indrapurkar who was my guidide duriring ththe develolopment of ththis projoject and it was her r guidance and assistance which help me in completing my project and I am thankful for her support and friendly guidance. I would also like to express my heartful regards to my parents, my frfriends and company mentor (Mr. Ashok kumar, Area Co-- ordinator, Reliance LEAP) & staff of Reliance Securities and others who directly or indirectly help me a lot for the successful completion of my project report. So now where my training has been completed and my heart is full of gratification, so I cannot forgot to thanks the Almighty God. His blessisings help me everywhere in my lilife. Thanks God…… ((Varun Kumar Ravi) DECLARATION I Varun Kumar Ravi student of IIMT Group of Colleges Batch(2012-14) declare that every part of the Project Report Future of Metals As Commodity in India I have submitted is my original work I was in regular contact with the nominated faculty guide and contacted Prof. Kavita Indrapurkar several times for discussing the project. Date of project submission:______________ (Varun Kumar Ravi) Faculty’s Comments : _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ ___________ (Prof. Kavita Indrapurkar) TABLE OF CONTENTS CONTENT PAGE NO. INTRODUCTION 6 COMPANY PROFILE 12 ORGANISATION STRUCTURE VISION & MISSION OF THE ORGANIZATION OBJECTIVE OF STUDY 29 RESEARCH METHODOLOGY 31 DATA ANALYSIS AND INTERPRETATION 37 CONCLUSION 80 LIMITATIONS OF STUDY 82 RECOMMENDATION 84 BIBLIOGRAPHY 86 ANNEXURE 88 INTRODUCTION TO “COMMODITY” Any product that can be used for commerce or an article of commerce which is traded on an authorized commodity exchange is known as commodity. The article should be movable of value, something which is bought or sold and which is produced or used as the subject or barter or sale. In short commodity includes all kinds of goods. Indian Forward Contracts (Regulation) Act (FCRA), 1952 defines “goods” as “every kind of movable property other than actionable claims, money and securities”. In current situation, all goods and products of agricultural (including plantation), mineral and fossil origin are allowed for commodity trading recognized under the FCRA. The national commodity exchanges, recognized by the Central Government, permits commodities which include precious (gold and silver) and non-ferrous metals, cereals and pulses, ginned and un-ginned cotton, oilseeds, oils and oilcakes, raw jute and jute goods, sugar and gur, potatoes and onions, coffee and tea, rubber and spices etc. COMMODITY EXCHANGE A commodity exchange is an association or a company or any other body corporate organizing futures trading in commodities for which license has been granted by regulating authority. COMMODITY MARKET Commodity market refers to physical or virtual transactions of buying and selling involving raw or primary commodities. A soft commodity generally refers to commodities harvested as products like coffee, cocoa, sugar , corn, wheat, soybean, and fruit traded in the commodity market. Hard commodities usually refer to commodities that are extracted such as (gold, rubber , oil). While commodities may be grouped for regulation purposes etc., in large classes such as energy, agricultural including livestock, precious metals, industrial metals, other Gold has been highly valued for thousands of years and is as popular now as it has ever been; as jewellery, as a financial asset and as an industrial product. However, the social value that the gold industry adds to societies around the world, especially in poorer countries, is less understood. Gold mining is vital to the fragile economies of many developing countries, which account for over 70% of global gold production. In addition to generating export revenue in these countries, gold production provides royalty and tax income to their governments, technology transfer, worker training and the creation of a skilled workforce. Gold mining can also bring substantial improvements in physical, social, legal and financial infrastructure. In many of these countries, gold mining is a foundation industry that often provides the critical mass for the development of electricity, water, road and rail transport in a region, factors that are the essential foundations of an economy. This characteristic of the industry is particularly important in Africa where lack of infrastructure has been identified as one of the major hindrances to economic development. The majority of the jewellery purchased in the Middle East and Asia is used as a means of saving in addition to its function as an adornment. The use of jewellery as savings is often important in rural areas where access to a reliable and appropriate banking system is difficult or impossible. Gold also offers protection against a weak currency or high domestic inflation levels, which are prevalent and presistant problems in the developing world. Investment in gold - why? The real value of gold is not that it provides a quick, speculative fix, but that it can provide a sure and steady means of protecting wealth and enhance the consistency of returns. With gold's role as a portfolio diversifier, a hedge against inflation and exposure to the dollar, there are several compelling arguments for investing a portion of one's portfolio in the yellow metal. 1.Portfolio Diverfication Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset class. Portfolios that contain gold are generally more robust and better able to cope with market uncertainties than those that don't. Adding gold to a portfolio introduces an entirely different class of asset. Gold is unusual because it is both a commodity and a monetary asset and is an effective diversifier because its performance tends to move independently of other investments. 2. Dollar Hedge: Gold is often cited as being an effective hedge against fluctuations in the US dollar, the world's main trading currency. If the dollar appreciates, the dollar gold price falls and similarly a fall in the dollar relative to the other main currencies produces a rise in the gold price. Like all physical commodities, gold is an asset that bears no credit risk. Holding assets in the yellow metal involves no counterparty and is no one's liability. In addition to that, the physical properties of the metal make it an excellent alternative to money. 3. Durable: Gold is durable. Unlike many of the other commodities examined, other things remaining equal (i.e. assuming no changes in price), there is no depreciation in the value of gold, other than any storage costs that might apply. Gold is fungible. It is, at least in theory, infinitely divisible with virtually no losses (other than any operational costs the process might incur). Furthermore, gold has a high value to volume ratio, which makes it easily transferable, with low transport and storage costs. Moreover, gold is one of the deepest commodity markets with the highest levels of liquidity, second only to oil. 4. Inflation The purchasing power of gold has not bread. Today, an ounce of gold still buys 350 loaves. The value of gold therefore, in terms of real goods and services that it can buy, has remained remarkably stable. In contrast, the purchasing power of many currencies has generally declined. There is a growing body of research to bolster gold's reputation as a protector of wealth against the ravages of inflation. Market cycles come and go, but gold has maintained its long term value. 5. Safe Havon In volatile and uncertain times, we often witness a ‘flight to quality', as investors seek to protect their capital by moving it into assets considered to be safer stores of value. Gold is among only a handful of financial assets that is not matched by a liability. It can provide insurance against extreme movements on the value of traditional asset classes that can happen in unsettled times. 6. Liquidity Gold's liquidity is one of its critical investment attributes. Gold can be traded around the clock in larger size, at narrower spreads and more rapidly than many competing diversifiers or mainstream investments. B) Silver Introduction Silver is a white colored shiny element that is highly ductile and malleable and is used in making jewelry, coins and tableware. It is also used in chemical experiments as it provides a high electrical and thermal conductivity. It is found in the metallic state and also in a large amount of minerals mainly in argentite. That is why it is called argentum in Latin Silver is a metal that is associated with metals like gold, lead, zinc and copper, though it’s unusual properties makes it very different from them.