Gold crash causes collateral damage: Bullion banks invoke LCs worth Rs 4,000 cr on jeweller Winsome

It's understood that bullion banks have invoked LCs worth more than Rs 4,000 crore after Winsome failed to cough up a smaller amount

Sugata Ghosh & Ram Sahgal, ET Bureau | 24 Apr, 2013, 08.08AM 

MUMBAI: One of the biggest gold bets that has backfired involves a mid-sized jeweller, Winsome, with leading international bullionbanks who dealt with it gunning for the company. It's understood that Standard Bank of South Africa, Standard Chartered Londonand Scotiabank have invoked letters of credit (LCs) worth more than Rs 4,000 crore after the company, formerly Su-Raj Diamonds failed to cough up a smaller amount.

Zaveri Bazaar, the country's jewellery hub, bullion traders in the city, and diamond houses in Mumbai and Ahmedabad - which got a whiff of the default - are trying to figure out how Mumbai-based Winsome Diamonds & Jewellery deals with offshore banks and a string of local lenders.

Around a dozen banks in India had issuedLCs favouring the three bullion banks that belong to the elite club of gold suppliers from whom Winsome imported the bullion.

Letters of credit, a simple promise to pay, are issued by buyers' banks to comfort sellers that they will be paid as long as the terms of trade are fulfilled.

The overseas banks pulled the trigger on Winsome following the devolvement of LCs worth about Rs 500 crore.

BULLION BANKS PLAY IT SAFE WITH WINSOME

"Of the Rs 4,000-odd crore worth of LCs, many are yet to reach the due date. Some were issued for a few group firms of Winsome. But the bullion banks are unwilling to take chances with the price of gold falling sharply," said a person familiar with the development. Banks have the right to invoke LCs before maturity if they fear the buyer may default.

The buzz in the market is that the company, having contracted imports at a higher price, is backing out with gold falling unexpectedly. Sections think there could be more than what meets the eye and the drop in gold price has only compounded the problem. Since January 1, gold has fallen by almost 14% to $1435.31 an ounce through Monday.

Ramesh Parikh, director (finance) at Winsome, denied market rumours. "We did not speculate on gold... our customers are taking time to pay," Parikh told ET minutes before his meeting on Tuesday with the consortium of local banks that issued the LCs. He hoped the banks would be "supportive" and the company would be in a position to meet all its commitments.

Parikh refused to discuss the matter further as Winsome has moved the Bombay High Court to stay the invocation of LCs by Standard Bank. Scotiabank's India head Rajan Venkatesh did not respond to a text message while ET's email query to Standard Chartered Bank remained unanswered till the time of going to press.

The local banks Winsome dealt with includePunjab National Bank, Canara Bank, Vijaya Bank, Central Bank, Bank of Maharashtra,Syndicate Bank, Bank of India, Axis Bank, State Bank of Hyderabad, State Bank of Mauritius, Union Bank, Oriental Bank of Commerce and Standard Chartered India. The extent of hit some of these banks take would depend on the margins they have collected from Winsome to part-cover their LCs, future recoveries and relationships with the client. Crisil has downgraded Su-Raj's rating to 'A4' and the company continues to remain on the rating agency's 'Watch Negative' list.

This is not the first time Winsome (or Su-Raj) has hit the headlines for the wrong reasons. In 2012, the company, in its earlier avatar Su-Raj, came under the glare of US investigative agencies following allegations of undisclosed sale of synthetic diamonds. In the same year, the listed entity rechristened itself Winsome. Months later, chairman Jatin Mehta stepped down and Madan Khurjekar, a former Central Bank of India employee and an independent director in the company, took charge as non-executive director. Mehta, who holds shares in Winsome, is no longer on the board. He was unavailable for comment.

The promoters of Winsome hold 25.21% while foreign portfolio investors have 58.6% shareholding. Of these, Passage to India Master Fund holds 9.55%, Sparrow Asia Diversified Opportunities has 9.4%, and Davos International Fund owns 8.02%, according to quarterly filings as on March 31 with the Bombay Stock Exchange. The share price of Winsome has remained relatively steady at Rs 23.5 over the past month through Tuesday.

Your Brain on Math

Time :By Maia SzalavitzApril 23, 2013

Among the 100 million or so nerve cells in the brain, it turns out there is a group dedicated to making sense of numbers.

No one is born knowing their 1, 2, 3’s or A, B, C’s. However, the brain clearly handles these uniquely human but culturally varied types of knowledge differently. Many people, for example, are far stronger in one area or another, showing a propensity for verbal skills over numerical ones or vice versa.

So understanding how the brain codes these different systems could not only aid children with language disabilities, for instance, or those who struggle with processing numbers, but could also help to reveal more about how the brain works to process new information and acquire knowledge.

In a new study, which was published in the Journal of Neuroscience, researchers tested seven people with epilepsy who had electrodes implanted in their brains to determine the source of their seizures. Researchers have learned a great deal about the brain with the help of such patients, including more about how the brain works to produce speech and the effect of anesthesia on consciousness. The electrodes help inform doctors about the source of electrical disturbances that contribute to the seizures; some of these patients may then be eligible for additional surgery to remove the damaged region. Because of the unusual circumstance of having electrodes in their brain that can track neural activity, these patients are often approached to volunteer for clinical trials of brain function.

In the first experiment aimed at determining the brain’s “numeral area,” participants looked at single digits, letters, foreign numeral symbols from languages they didn’t know and at images of distorted numbers and letters that were unreadable. They were asked to press keys on the computer indicating whether or not they could read each symbol. In a second test, the volunteers saw either numbers, the words depicting numerals (one instead of 1) or words that sounded similar to number words (won instead of one), which they read aloud.

The researchers pinpointed a group of around 1 million to 2 million cells, located in a region called the inferior temporal gyrus that extends into both sides of the head near the ear canals. These cells responded much more strongly when the participants processed actual numbers than number words, meaningless symbols resembling the numbers or the numbers written in an unknown foreign language.

“This is the first ever study to show the existence of a cluster of nerve cells in the human brain that specializes in processing numerals,” Dr. Josef Parvizi, associate professor of neurology at Stanford University and the lead author of the study, said in a statement. “It’s a dramatic demonstration of our brain circuitry’s capacity to change in response to education. No one is born with the innate ability to recognize numerals.”

Because the second experiment asked the participants to distinguish between phonetically similar words for the numbers (too instead of two) and the numerals, the researchers could determine that different brain regions sent were activated by the idea of the number, not just the sound of the word.

The authors say that the region of the brain that preferentially processes numerals is close to the area that is responsible for interpreting language, which makes sense since people often read words and numbers together. That could explain why previous work showed that some types of brain damage, for example, can interfere with reading letters but leave numeral reading unaffected, or can cause verbal dyslexia but not numerical confusion.

Interestingly, however, the cells responding to numerals seem to be physically close to those that process distorted numbers and to foreign number symbols, suggesting they might share a common origin and could be specialized versions of cells that generally process visual images of lines, angles and curves. Additional research on this region of cells could inform how education and learning tease out this subgroup of these cells to process numerals in particular.

The study may also explain why such regions have not appeared in imaging studies of the brain that did not have the advantage of the implanted electrodes to track physiological activity. Since the inferior temporal gyrus is so close to the ear canals, functional MRI machines, which detect changes in oxygen use and blood flow by nerve cells, may not be as sensitive to the activity of neurons tucked away in that area.

However, say the researchers, combining different techniques should lead to deeper understanding of the brain’s inner workings and start to reveal some of its seemingly inscrutable mysteries.

Maia Szalavitz @maiasz

Maia Szalavitz is a neuroscience journalist for TIME.com 

and co-author of Born for Love: Why Empathy Is Essential — and Endangered.

3-6-3 banking costs the poor money

 Live Mint :Monika Halan ;Wed, Apr 24 2013. 02 23 PM IST

It is almost as if the seething Indian aam admi is finding one more thing to get furious about—there has been a string of financial sector failures in the past few years that have directly affected the wallets of the average Indian. While the telecom and the VIP helicopter scandals add to the widely held belief that people in positions of power or those who have access to them, are corrupt, these are still far away from directly affecting the everyday finances of the household. But the institutional theft from the wallets of the average Indian is something that hurts real time. And we’ve had plenty of these in the past few years. Speak Asia, a multi-level marketing company, lost more than Rs.2,400 crore of retail money. StockGuru lost Rs.500 crore and mis-sold life insurance products cost Indian investors more than Rs.1.5 trillion. The latest is the collapse of the Kolkata-based Saradha Group where more than Rs.20,000 crore is at risk.

India has these periodic blowouts in which the poor lose their savings when a deposit-taking company, like an unregistered chit fund or a multi-level marketing company (MLM), either decamps with the money or collapses under the weight of an unsustainable scheme. Often protected by local politicians, these MLM schemes have perfected the art of staying in the grey area between the turfs of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi). The first is supposed to regulate deposit-taking companies and the second is supposed to regulate collective investment schemes. These blowouts cause not just economic hardship leading to suicides and push people below the poverty threshold, but in a wider sense put further pressure on the already beleaguered citizen, who has one more reason to get pushed to the brink of anarchy.

So are the regulators to blame—is the solution tighter regulation? Should we just ban all MLM firms and chit funds? Banning stuff is easy, but that’s not the solution. I believe we have a demand supply mismatch in the financial sector with the demand for cash flow management, saving and credit vehicles vastly outstripping the supply. So what are the banks doing? They cater to you and me in the big cities. I knew that Indian banking is urban-centric, but not that it is so heavily Delhi- and Mumbai-focused. Writes blogger Deepak Shenoy: “Mumbai and Delhi account for 30% of all deposits and 38% of all credit” in his 22 April 2013 blog (you can read it here: http://capitalmind.in/2013/04/30-of-all-bank-deposits-are-in-mumbai-and-delhi/). Total savings bank deposits in 2011-12 were just over Rs.15 trillion.

Now look at the size of the non-bank vehicles that Indians use to make deposits and for investment. Chit funds and MLM companies are two popular vehicles for the un-banked. The All India Association of Chit Funds estimates the registered chit fund market at Rs.30,000 crore and that of the unregistered chit funds at Rs.30 trillion. Double that of the Indian deposits. Organized MLMs are about Rs.6,500 crore, but those that operate in the shadows are a multiple of this—a size that nobody is willing to put a number to. Remember, the blowout in just Saradha will be Rs.20,000 crore. On the credit side, the microfinance industry showed that the poor are credit-worthy and that there are profits to be made at the bottom of the pyramid.

Clearly, there is money that seeks financial products at all levels of income and banks are unable to cater to those outside of the urban areas. Formal finance has stayed away from places where the money does not have the comfort of air-conditioners. A former senior banker says that he believes that branches in London are preferred to branches in small-town India by the top management—“they don’t want the small ticket money, it has the stink of their sweat” was his cynical analysis of Indian banks. The 3-6-3 rule of banking is an exaggeration of what a banker does: borrow at 3%, lend at 6% and play golf at 3pm. But at its core nails the problem: lazy banking with little attempt to step out of the big cities and really understand the portfolios of the poor.

Clearly, there is money at the bottom of the pyramid and there is no dearth of enterprise in India. So why do we see so much under-the-surface activity in businesses that mimic banks? Could it be because existing regulation is a lot about preserving the business models of existing banks? What else would explain the reluctance to allow non-bank linked e-payment systems into the country, using the bogey of safety of depositor money? Why is separation of client funds such a tough idea for the RBI to understand—the mutual fund industry has used it successfully for more than 15 years now without a single instance of somebody decamping with investors’ money. Unfortunately, what we’ll get is a knee-jerk reaction that shuts off chit funds and other forms of non-bank finance, further pushing people into the clutches of illegal operators.

Monika Halan works in the area of financial literacy and financial intermediation policy and is a certified financial planner. She is editor, Mint Money, and Yale World Fellow 2011. 

Geared To Grow Ultra Rich

BT :Edition: April 2013

Shakuntala Devi: Meeting the temperamental math genius

First Post :by Kamala Thiagarajan :Apr 22, 2013

It was the summer of 1998 and I was beginning my career by freelancing for Madras Plus, a popular city supplement for The Times of India. That afternoon, the editor of the features page handed me an assignment.

I was to interview Shakuntala Devi, the mathematical genius that journalists were so fond of referring to as the ‘human computer’. I’d always admired her and followed her progress, so the prospect of meeting her in person excited me. She had booked herself into a suite at the Taj Connemara and was meeting journalists from her hotel room.

Shakuntala Devi. Agencies.

The local papers hailed her as not just a mathematical genius but also a world famous astrologer. There were claims that astrology was of course a matter of numbers and that she could read the numbers in your chart that foretold your future with precision, just as as she could compute complex fifty digit problems with ease.

After calling her secretary to confirm the interview, in a couple of hours, I found myself seated across from the woman whose intelligence the world was raving about. It’s been fifteen years, but there are details of that interview that play themselves out in technicolor in my mind. There were plenty of people milling about— journalists, members of her staff, people who had come for an astrological reading, armed with their date and time of birth, which was all she’d needed to make a ‘prediction’.

She was wearing a black cotton saree, bright red lipstick and a perpetual frown on her face. And there was no getting around the fact that she was irritable and short tempered. She snapped at the attendant who brought her a glass of water, was rude to a photographer, raised her voice when someone reminded her that people had queued up to have their charts read.

Shakuntala Devi
Born	November 4, 1929 Bangalore, India
Died	April 21, 2013 (aged 83) Bangalore, Karnataka, India
Cause of death	Heart attack
Nationality	Indian
Other names	Human computer
Occupation	Mathematician, Astrologer

‘Can’t you see I’m BUSY? Let them wait!’ she roared. And five minutes into our interview, she interrupted me abruptly mid-sentence, rapping her knuckles sharply on the gleaming polished wood of the oval table between us. “Your paper MUST publish my interview on the front page. They MUST. Tell your editor, tell her NOW.”

Taken aback though I was, I knew that if we were to progress any further, I had to soothe ruffled feathers and quickly. I reassured her that we would give her top billing and that she deserved it.

 

Then when she’d calmed down, she resumed answering my questions as though nothing was amiss. Two things struck me: her passion for mathematics (there was no mistaking that) and her curious honesty. She had no qualms in admitting that she had an unusual childhood. Her father was a circus artist, often a performing magician who was well-versed with card tricks; she was the daughter of his third wife. He would take her on road shows and people would marvel at her ability to solve complex sums and guess the card that they’d picked up from the pack. In reality, she had memorized the arrangement of the entire deck. Her memory, just as her mathematical ability, was photographic and phenomenal.

When she spoke of mathematics, her eyes lit up. She told me that mathematics was everywhere, in every symmetric petal, in the stalks of wild flowers, even in the rhythmic chirping of birds. “We’re surrounded by mathematics and yet we fail to recognize it,” she rued. “It’s all a kind of conditioning.”

She said that her future dreams involved setting up an institute for poor children to realize their potential and that she hadn’t decided the venue yet. Her books had always focused on getting the younger generation interested in maths. She steadfastly refused to answer any questions on her astrological ability.

The next day, my aunt decided that she wanted her future told. She set up an appointment to see Ms Devi. When I asked how the reading went, I realized that it was all about mathematics too. Five hundred rupees in ten minutes!

The ‘human computer’, ‘mental calculator’, math whiz Shakuntala Devi passed away here early on Sunday aged 80.

Nokia Lumia 520 review: The new budget star

Ravi Sharma, TOI Tech | Apr 23, 2013, 08.00 AM IST

NEW DELHI: After the launch of top-end Lumia 920 and Lumia 820, Nokia is busy assembling its auxiliary troops globally. India is one of the first countries to see the arrival of Lumia 520, the cheapest Windows Phone 8-powered smartphone. The phone has a lot going for it, including a big screen, free music download and eye-catching looks. But does the Lumia 520 have what it takes to stand out in the crowded budget segment of Indian smartphone market. Let's find out. 

Hardware and design
NokiaLunia 520 is a budget device, but it does not look so at all. It follows the design language of the flagship Lumia 920 in a smaller package and has a 4-inch screen, a feature that no phone by Sony, Samsung boasts of. Only LG OptimusL5 II, now available online for Rs 11,499, has the same screen real estate, resolution and pixel density.

Coming back to Lumia 520, this phone has 800x480p screen resolution and 233ppi pixel density. The device runs on a 1GHz dual-core Qualcomm processor, coupled with 512MB RAM and comes with 8GBinbuilt storage. You can also store data on memory card (up to 64GB supported) and on the cloud (7GB free SkyDrive storage).

Connectivity options in the phone include 2G, 3G, Wi-Fi, Bluetooth 3.0 and microUSB 2.0. For imaging, Nokia has provided a 5MP rear snapper, but let go of the front unit. Below the screen is the regular three key layout (back, home and search) of WP
mobile operating system.

At 124gram, the runt of Lumia line-up is not too heavy, though those accustomed to feature phones will not be pleased. The polycarbonate casing looks sturdy and can take a few drops before the device gets a cracked screen. Our's didn't.

The design is a far cry from the curved body of Lumia 620 and may look better to some. On the right side of the phone is the volume rocker, lock/power and camera keys, whereas the left side is bare. On top is the earphone jack, while the microUSB port and camera are at the bottom and rear, respectively.

Overall, the yellow coloured review unit we received exuded a youthful exuberance with its bright hue and peppy appearance, while the fit and finish inspired the feeling of reliability and sturdiness.

Software
Nokia Lumia 520 offers users Windows Phone 8 topped with Nokia customisations. These include apps like Cinemagraph, Here maps suite, Nokia Music and Smart Shoot, which do improve the user experience. The cool camera apps included by Nokia were good to use, but we have used them previously in other Lumia phones so there was no surprise. We still miss one-touch widgets in Windows Phones, and the apps in the marketplace don't do the job. Sigh.

Performance
First thing we saw in the phone is the screen and we were left a little disappointed. It is just a standard IPS panel, lacking the ClearBlack Display technology that rendered the beautiful andvibrant colours to its more expensive siblings. Therefore, the contrast we loved in Lumia 620 recently was missing, though the IPS panel, quite obviously, does a great job when it comes to viewing angles. Under direct sunlight, the smartphone's screen is okay, but could have been made better.

The phone is fast enough and scored a decent 7,378 on Antutu compound benchmark test, which assesses its performance on parameters like processing power, screen quality and storage. Rivals running on Android also post similar scores, so everyone is at
even keel here. The 512MB RAM is sufficient for Windows Phone devices, and we were pleased by the phone's computing prowess overall.

Battery performance of the phone is fine, but not impressive. We struggled to keep the phone running for a whole day with couple of hours of internet access (mix of Wi-Fi as well as 3G), 4-5 hours of music playback, less than 30 minutes of photography and an hour of videos.

Though some may feel that this usage is not appropriate, these are the primary uses for college goers, at whom the device is largely aimed. As you can see, we did not use any apps during the battery testing phase, so when you take into account the resources consumed by various apps, the battery is likely to deliver around 12-13 hours of life.

Camera, usually a treat for us when it comes to Nokia phones, is lacklustre in Lumia 520. We obviously did not expect PureView or Carl Zeiss-like technologies in this phone, but a LED flash would have been nice, especially since Android rivals feature it. The outdoor photos taken by the phone's camera are decent, but lack the colour and sharpness, while indoor images showed muted colours.

Connectivity features in the phone are standard, but there is no NFC. Of course we did not think a phone priced at Rs 10,499 should have NFC, but Lumia 620 (Rs 14,999) packs it. Internet browsing is smooth and IE app works like a charm. We detest using YouTube mobile website, but there is no way around it on WP platform.

Rivals
Lumia 520 belongs to a category that has seen a little action in the past month. Apart from the Nokia phone, this segment also saw the launch of Sony Xperia E and E Dual. LG OptimusL5 II Dual is also available on the internet presently, making it a three way fight for supremacy in theRs 10,000 price band.

Sony Xperia E/E Dual is the most potent challenger for the crown here. The phone has a respectable brand in the country and brings all the goodness of Android apps in a neat little package. The phone has a smaller 3.5-inch screen, lower pixel density and 4GB user accessible storage.

The combination of 1GHz CPU and 512MB RAM is likely to work, but not too well, as has been evident with past devices with similar specs. Android 4.1 (Jelly Bean) should keep things smooth at the software end and a 3.15MP camera should take care of imaging, considering the legacy Sony has in this department. In connectivity features, there is nothing to differentiate between the two phones, except the Bluetooth version (2.1 in Xperia E).

The other option we like to include here is LG OptimusL5 Dual, which has a similar screen and camera, but keeps its nose ahead because of the LED flash. It runs on a 1GHzMediatek processor, which is likely to deliver poorer performance than the Qualcomm unit used in Lumia 520. Connectivity features and RAM remain the same in both smartphones.

So, it seems LG OptimusL5 Dual may have a slight advantage over Lumia 520, but the company's brand value among consumers is not as strong as Nokia's. Moreover, the peppy interface and cool features of the cheapest WP8 phone make it more of a novelty than the one running on the ageing Android.

Our take
If you are considering buying Nokia Lumia 520, we'd say go for it. It offers a good package at a great cost, though a few corners have obviously been cut to keep the price under check. Most importantly, its rivals do not stand up to it in most respects, barring apps and you will have to live with that.

Microsoft says the top 50 Android apps are now on WP8, but even then, you can explore a lot more on Google's mobile OS. But not on Windows Phone! Keeping the apps issue aside, Lumia520 is a great package and you will be by and large pleased with it.

What we like:
4-inch display (one of the biggest screens at this price point);
Smooth user experience;
Good viewing angles

What we don't like:
Camera performance;
Screen contrast;
Lack of apps 

Price: Rs 10,499

Key specs
Display: 4-inch IPS screen with 800x480p resolution and 233ppi pixel density;
Operating system: Windows Phone 8;
Processor and RAM: 1GHz dual-core Qualcomm processor and 512MB RAM;
Storage: 8GB internal storage, 7GB free SkyDrive storage, microSD support up to 64GB;
Connectivity: 2G, 3G, Wi-Fi, Bluetooth 3.1, microUSB 2.0;
Camera: 5MP rear camera; and
Battery: 1,430mAh