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Stamps and the stakes

Philately has grown from being a mere hobby to a serious investment option

PHOTO: S. SIVA SARAVANAN

LUCRATIVE HOBBY Stamps fetch a considerable price

If investment in art is big today, it could be philately a few years later. Though still considered a child's hobby, philately is now being approached with a newfound seriousness by discerning investors. Like art, stamp collectors believe these little pieces of paper can be a good investment option.

Though they admit India is still a nascent market, when it comes to investing in stamps, they believe if the Western example is followed where philately is a viable investment alternative and a standard approach is adopted, rare stamps can hold a huge investment potential.

Philately is rated as the fourth best investment over an 80-year period, according to a survey of the U.S.-based Salomon Brothers Investment Bank. "Philately is not taken seriously in India," says P. R. Krishnan, secretary, The Philatelists' Coimbatore. "People are often shy to even admit they are stamp collectors. It is a knowledge-based hobby (since each stamp tells a story) and is predominantly collector-based."

To perceive it as an investment is often not encouraged by purists. "In the West, philately is recognised as an investment, but the market here is not developed," says Pradeep Kumar Agarwal, a philatelist and businessman based in Patna.

While land, gold, shares and stock are high on the investment list in India, philatelists point to surveys that give stamps the fourth highest rate of return, at 10 per cent a year, ahead of bonds and foreign exchange. Some stamps take their own time to command a price, while for others the price may hit the roof in a jiffy.

"I bought a 40-stamp sheet of the three-rupee Raj Kumar Shukla (a disciple of Mahatma Gandhi) stamp for Rs. 120 in 2000. In 2004, I sold it for Rs. 27,500," says a philatelist who did not want to be identified. In other parts of the country, the same three-rupee stamp sold for Rs. 500. The demand for the stamp was attributed to its limited edition of one lakh.

If there is an error in the stamp and it is unavailable in the market, often an astronomical amount is paid to obtain it. It happened with the Guru Granth Sahib stamp issued last year, which was withdrawn following protests from the Sikh community. The 10-rupee Guru Granth Sahib stamp will now fetch over Rs. 20,000 in the market.

The value of a stamp is gauged by factors like its availability or rather its rarity, the quality and the printing quantity.

Speculative market

In normal course, a stamp may take 5-10 years to command a considerable price. According to Rolando Nelson, secretary, South India Philatelists Association, "It is a highly speculative market and there is no fixed pattern." So there are stamps that may become the most sought after ones in 20 days while others may take 20 years to get there.

But in spite of the time factor, what sets philately apart, according to Krishnan, is "the graph may grow slowly, but will never go downwards." A stamp will never lose its intrinsic value, say serious stamp collectors.

"With the economy booming and India and China attracting a lot of foreign investment, there is a bright future ahead," says Agarwal.

News reports say the London-based firm specialising in rare stamps, Stanley Gibbons, is struggling to find enough stock to meet the increasing demand from investors in India and China. But one should have considerable experience in stamp collection to understand its investment potential.

Agarwal urges that the young philatelists collect stamps from the post office where they get it at face value and are not likely to be cheated by dealers.

But to those who do not understand the nitty-gritty of philately, investing in it may not be a wise move. "A lay man would want faster returns and would want to know if one can easily liquidate it," says Naresh Tejwani, a member of the National Stock Exchange. It will be difficult for an ordinary person to judge the potential of a piece, he adds.

Nelson suggests greater initiative should be taken to popularise philately among youngsters so that they will consider it an investment option later in life.

Philately as an investment, Krishnan says, is a "100 per cent waiting game." And it remains to be seen if philately as an investment option will take off in India.

ANIMA BALAKRISHNAN

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