Enterprise &Economic Update Kerala
Mar 09, 2016
Enterprise and Industrial Update is the first English business newsmagazine on Kerala’s industry and economy. Published at present as a newsletter, Update will be launched in December 2010 as a newsmagazine in association with Kerala State Industrial Development Corporation (KSIDC).
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EditorK J Jacob
Principal Correspondents
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Kerala is on the threshold of a big change in the way it moves people. The Kochi
metro rail project, the high speed rail corridor covering the entire length of the State and the monorail projects at Thiruvanathapuram and Kozhikode are sure to change the way we trav-el. But that is not all. The State is planning to change the way it moves goods too.
Mother earth has endowed each region with unique resources. Some have coal, some minerals, some others oil, and Kerala water. Familiarity breeds contempt and abundance, wastefulness. Even though our waterways served as our lifelines, transporting goods and people from times immemorial, they were put to disuse when new modes of transport ar-rived. Our water bodies became places to be reclaimed for land. Even our canals were en-croached upon.
No society can move forward for long by ignoring its key strengths. Competitive pres-sures will eventually force them back to their moorings. The same is happening here too. The State is once again looking at ways to utilise its network of waterways to move cargo, and ease the pressure on its roadways. The many advantages of water transport are aiding this shift. The cover story of this issue details out the plan the State government has for develop-ing coastal shipping in the State. Let us reclaim our waterways and take to water again.
The rediscovery of the waterways will help the economy in more ways than one. It will make cargo movement cheaper, and our prod-ucts more competitive in the global market. It will decongest our roads and help reduce travel time. It will open up new vistas for tourism, an industry which has benefitted by the public-private partnership. We are sure that imagina-tive entrepreneurs would come up with new tourism products using the waterways. Even-tually, it would be another major attraction of Kerala tourism.
Vol.1 Issue11&12 December 2011- January 2012
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Life by water
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4
ContentsCOVER STORY
28 Taking to
Kerala, with a 590-km coast, is waking up to the possibilities of water transport of cargo. The government is putting in place a coastal management project which, by 2017, will decongest the roads and give a fillip to the tourism industry
the water
5
Contents
19 It’s emerging, finally
Emerging Kerala investor meet to showcase Kerala’s investment potential
The Other Side
42 Long-term investingIt’s dead! The buy it-keep it-forget it argument may not work in the stock market anymore
16 Kerala chips40 years after forming Keltron, Kerala takes a decisive step to become an electronics power house with an electronic hub
21 The One-Rail wonderWith the State government planning monorails in Thiruvananthapuram and Kozhikode, Kerala will have an MRTS in all its major cities
23 United colours of printing Anaswara, the most awarded printing house in South India, is looking for big growth
36 CLOUD COMPUTINGGoing skywards
40 New Pension SchemeFor the autumn days An idea for private companies who want to secure their employees’ old age
6
The Kannur International airport is coming up on a picturesque 1300 acres at Mattanur, 25 km from
Kannur. Around 1,276 acres of land has already been acquired by Kinfra and handed over to the Kannur
International Airport Limited, the special purpose vehicle formed to build the greenfield airport.The Cochin International Airport Limited will submit the
detailed project report in April and then the tender would be floated to find the builder.
It is set to be operational by 2015.The total project cost of the airport has been fixed at `1,130 crore, of which `500 crore would come by way
of equity and the rest through debt. The airport is expected to have an annual traffic of more than
1 million international passengers and about 3 lakh domestic passengers.
Photo: V Sivaram
7
8
Cover StoryKochi Refineries has been fuelling Kerala for almost 50 years now. But it has maintained a low profile and its contributions have not been appreciated by the media and the general public in the State. The on time completion of its capacity ex-pansion and modernisation projects, has proved that mega projects can be implemented in the State. That the company could lay its pipelines through the Kochi city, without much of a fuss, should bring cheer to the brains behind the huge infra-structure projects such as the Metro being planned in the city.
That Kochi Refinery would soon become the largest public sector refiner in the country was news to me. So were its plans to start a joint venture to produce propylene and usher in the petrochemical industry in the State. The planned invest-ment of `30000 crore is huge, even when one considers the country as a whole, not to mention the State. Compare this to the SmartCity project which got a much bigger media coverage, and has an outlay of just `2000 crore.
Kerala has been a laggard State when it comes to industrialisation. The militant labour, shortage of land and other resources, etc were often blamed for the situation. But times have changed now. It is from cities such as Gurgaon and Chennai that we hear about labour strikes in industries today, while Kerala has been calm. The availability of gas, along with the country’s only ICTT should also turn the tide in
the State’s favour. The petrochemical complex being proposed by BPCL should be viewed in this back-ground. It is a golden chance for the State to industrialise itself. The State should do everything possible to make it a reality.
Telecom incubatorMobMe’s plan to set up an incuba-tor - the Startup Village – clearly shows the potential of the incuba-tion system. The Technopark TBI, in which MobMe was the first incubatee, today is home to over 100 start ups. Let us hope that the Startup Village being set up in Kochi, will spawn a similar number of ventures.
MultiplexesThe growth of multiplexes is a welcome relief for the cine goers in the State. Going to movie the-atres had become a pain and many like me had given up on the habit altogether. The best in class facilities, that the multiplexes offer has once again brought back the charm of the cinema to the viewers. Their pres-ence in shopping malls, make it all the more convenient for the public.
PokkaliIt is heartening to know that Pok-
kali farming is making a comeback in the State. We have lost many of our indigenous farming methods, crop varieties and animal breeds. The blind adherence to modern farming, without understanding the true value of our own methods led to the decline. It isn’t just enough that the government supports such efforts – it should also develop a market for the produce so that the effort becomes sustainable.
Eastern son riseIt’s nice to see that Eastern is in safe and able hands. Navas seems to be a man with a vision and mis-sion. Despite his young age Navas is more than capable of filling the boots of his late father. Wish him luck and prays for him for his all future endeavours.
The photographsThe two photo segments The Big Picture and Business Called Life were top notch. The Big picture with its definition gave a picture of the different stages of construction and demolitions going to happen in and around the Kaloor North Bridge. Business called life is one of the best ever photographs I have seen in a business magazine. Kudos to the photographer.
9
I SAy!
Entrepreneurship cannot be taught in a
classroom. Nine out of ten attempts will fail.
Society has to be more forgiving. Failure has to be seen as a step to
success
VK Mathews, chairman, IBS Group, and member, Nasscom executive
council, while talking on the Nasscom plan to mentor
entrepreneurs in Kerala
Ratan Tata has been able to do what even Hitler couldn’t. The Nano can easily take four of us
Capt Krishnan Nair, who owns a Nano, referring to the German dictator’s failed attempts to
build an inexpensive people’s car
Business is also for solving problems in society and not merely to make money
Muhammed Yunus, founder of the Grameen Bank in Bangladesh and Nobel laureate, while inaugurating a
three-day International Conference on Technology Enhanced Education organised by
Amrita University at Amritapuri, Kollam
Indian companies are innovative enough to survive. We don't need protection. Mahindra's demise was predicted many times, but we’re still around
Anand Mahindra, vice-chairman and managing director of Mahindra&Mahindra, in response to an
argument that the local retailers must be strengthened first before protection is removed
I think half the problems start from the World Economic Forum
Rajiv Bajaj, managing director of Bajaj Auto, when asked about his plans to attend the meeting of the
WEF held in Davos, the exclusive ski resort
10
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11Customer Care: 94470 65360 | email: [email protected]
The New is built on METCON
Metcon. Trusted TMT steel of Kerala
Metcon TMT bars revolutionized the construction
sector in Kerala with its technology, strength,
durability and value-for-money. When many brands
claimed themselves to be TMT, Metcon’s German
CMCS technology made the silent yet assertive
statement in consistency.Tough outer layer(martensite)
Ductile inner layer(Ferrite pearlite)
AT A GLANCE
Africa, fastest growing mobile phone marketAfrica has become the fastest-growing mobile-phone market in the world. The continent - the second largest mobile market in terms of con-nections, after Asia - now has 649 million mobile connections. It has record-ed an annual growth of 20 per cent, over the past 5 years and the number of subscribers is expected to reach 735 million by the end of 2012, GSMA Af-rica Mobile Observatory 2011 report said. Voice services dominate the market; prepaid connec-tions account for 96 per cent of the subscriptions. The sector generates $56 billion in revenues, 3.5 per cent of the total GDP of Africa and provides em-ployment to 5.4 million. But the potential remains huge, with 36 per cent of Africans still having no access to mobile services.
Inflation falls in ChinaChina’s annual inflation rate has come down to 5.5 per cent in October from 6.1 per cent the month before. Food prices rose 11 per cent in October, down from the 13.4 per cent rise in September. The tight monetary policy has had a negative impact on growth though. Manufacturing activity slumped to its lowest level in 32 months in Novem-ber. Weakening export demand and a slowdown in domestic demand are
expected to keep the growth sluggish. But with inflation under control, the government now has more freedom to adopt policies that promote growth.
Australia to sell uranium to IndiaAustralia, home to 40 per cent of the world’s extractable uranium reserves and the third largest uranium exporter in the world, has indi-cated its willingness to sell uranium to India. Aus-tralia had earlier agreed to supply India with ura-nium, but the plan came aground after the then ruling Conservative Party lost the elections to the Labour Party in 2007. The Labour Party along with the Green Party which supports its government have been opposing the sale as India has not yet signed the Nuclear Non-Proliferation Treaty. Changing geo-politics has changed the scene though. Australian Prime Minister Julia Gillard has expressed support for the sale in the backdrop of the plans to forge a US-Australia-India-Japan strategic alliance.
Finally, Russia to enter WTORussia’s unruly markets are likely to get a sense of order soon with the coun-try set to join the World Trade Organisation after 18 years of negotiations. The Russian government was not too enthusiastic
about joining the WTO till now, since oil and gas which constitutes most of its exports, is not subject to tariff barriers and doesn’t come under WTO’s purview. Joining the group would subject the country to interna-tional rules, limit its policy choices and force its inef-ficient enterprises to face international competition. But today the country is seeking a role change from that of a raw mate-rial supplier to a manu-facturer, and the WTO membership is expected to help it make the transi-tion. The World Bank estimates the move will increase Russia’s GDP by 11 per cent in a decade, as the country benefits from foreign investments and efficiencies.
Ranbaxy starts selling the generic Lipitor in the USThe move is dubbed the largest generic product launch in the US, with Lipitor being the largest selling drug in the world. Chemically known as Atorvastatin the cho-lesterol lowering drug has annual sales of $10 billion. Pfizer was the only company selling the drug in the US till now. Ranbaxy had created a copy of the drug and had challenged the patents held by Pfizer in 2003. The companies settled their dispute in 2008, signing an agreement which allowed Ranbaxy to launch the drug in the US
from November 30, 2011 with a 180-day exclusivity period.Ranbaxy has already launched the drug in many other countries such as India, South Africa, Finland, Ukraine and Ro-mania and its entry into the US market, which accounts for most of the sales, is expected to boost its worldwide market share of the product.
3-yr-old Groupon valued at $13 b
The internet boom seems to be back in vogue, with investors lapping up shares of recently launched internet compa-nies. Groupon Inc which sells “daily deals” online, was the latest to profit, raising $700 million through the IPO route, for a 5 per cent stake. This values the company, launched just three years back at $13 billion. This is the biggest IPO by an Internet company since Google went public to raise $1.7 billion in 2004. Groupon offered 35 mil-lion shares, at a price of $20 each. Earlier, in May this year, LinkedIn, the biggest social networking site for professionals had raised $352.8 million in its IPO, when it floated 8.3 per cent of its shares at $45 a share.
12
AT A GLANCE
Bengaluru best Indian city to live
It’s Bengaluru, and not the metros of New Delhi, Mumbai, Kolkata or Chennai, which is the best city to live in India. How-ever, Bengaluru’s world-wide rank is very low at 141st position in a list of 221 cities globally in terms of standard of liv-ing, according to a survey conducted by global hu-man resources consultancy major Mercer. The metros, however, are not very far behind Bengaluru: New Delhi comes at 143rd, Mumbai at 144th, Chen-nai at 150th and Kolkata at 151st. The survey ranked Vienna as the world’s best city to live in, followed by Zurich, Auckland, Munich, Dusseldorf, Van-couver, Frankfurt, Geneva, Copenhagen and Bern. In terms of personal safety standards, Luxembourg is the best, followed by Bern, Helsinki, Zurich, Vienna, Geneva and Stockholm.
Reliance Retail to return with a bangAbandoning its earlier model of leased proper-ties and small formats, Reliance Retail is moving into the big-box for-mat. It has hired a new operations team from Walmart China for the purpose. Rob Cissell, former COO, Walmart China, and Shawn Gray,
former VP in-charge of store operations, Walmart China will lead the effort. The company is buying real estate in 20 towns and cities to build big-box hy-permarkets, with a size of 60,000-80,000 sq ft each. It has already bought land parcels of 1-1.5 acres in Mumbai, Aurangabad, Kolhapur, Pune, Mysore and Madurai. The first of the hypermarkets, which offer a wide range of products from soap to fur-niture, opened in Mumbai recently.
Facebook bets big on India
Social networking site Facebook which com-mands a user base of 800 million expects its largest number of users to come from India in the near future. At present Indone-sia has the most number of Facebook users - 45 million – followed by US and India respectively. But the number is growing at a very fast pace in India, growing 85 per cent from 18 million to 34 million over the last one year. India adds 5-7 million internet users a month and the company expects to profit from this growth. Facebook also expects the usage to boom here as more and more people ac-cess it on their mobiles.
Software product cos come of ageServices might have been
India’s strength in the software sector, but the country is all set to make its mark in the software products space also. Many Indian software product companies today command valuations of around a billion dollars, indicating the maturing of the space. Leading the pack is Makemytrip, the online travel company that listed on the Nas-daq last year and has a market capitalisation of more than a billion dollars today. Mobile ad network InMobi and online retail-er Flipkart are also valued at around $1 billion. These firms are taking advantage of the lower costs involved in starting and running businesses and the ability to reach and serve cus-tomers over the internet to establish themselves in the market.
Indian gold reserves up by `1,00,000 cr
The value of gold held in reserve by the Indian gov-ernment has increased by `100,000 crore in the last two years. The increase was due to the doubling of the price of gold in the
period and addition of new gold to the reserves. The RBI had bought 200 tonnes of gold from the IMF in 2009 at a rate of 15000 per 10 grams, as part of its strategy to diversify its foreign ex-change reserves. Gold is at present priced at around 29000 per 10 grams. An RBI working paper has advocated purchas-ing more of the precious metal. RBI is estimated to hold 557.7 tonnes of gold as reserves, but it is only 9 per cent of its forex reserves. The US govern-ment, which has the big-gest gold holding in the world at 8,133.5 tonnes, maintains 75.5 per cent of its total reserves in gold.
Car sales turn around in NovSales of cars in the coun-try reversed the trend in November after 4 consec-utive months of declines. It registered a 7 per cent growth to touch 1,71,131 units in Nov 2011, against 1,59,939 units recorded in the same month last year. Demand in the entry level car segment, which has the biggest share in the market, has been hit be rising fuel prices and interest rates. Market leader Maruti, plagued by labour issues saw its sales drop 16.59 per cent yoy to 73,078 units. But strong performance by other players – Hyun-dai registered a 10.7 per cent growth to 34,878 units and Tata Motors a 92.41 per cent increase to 23,540 – made up for the loss.
13
25 MNC CEOs to visit Kerala
Kerala’s attempts to woo investors to the State got a boost when World Economic Forum (WEF) executive chairman Klaus Schwab informed Chief Minister Oommen Chandy that he would be leading a team of 25 chief executive officers to Ker-ala in 2012. Mr Chandy had been wooing investors to the State at the WEF’s India Economic Summit, held in Mumbai. He met top officials of various MNCs such as Swiss Reinsurance Company, SAS UK, Focus Energy, Gamesha and EPMG and discussed various invest-ment opportunities in the State. He had also invited them to the ‘Emerging Kerala’ meet to be held at Kochi in 2012.
Sam Pitroda to mentor KeralaThe State government has decided to appoint Mr Sam Pitroda as the men-tor for the State’s develop-ment initiatives. The move comes at a time when the State is at the threshold of launching many ambitious projects. Mr Pitroda, who is credited with starting the telecom revolution in the country, is currently
adviser to the Prime Min-ister on public informa-tion infrastructure and innovations. Mr Pitroda is expected to visit the State shortly and help the State prepare the development plans for the year 2030.
BSE to open regional office in KochiThe Bombay Stock Ex-change will open a new regional office in Kochi shortly. The country’s
135-year-old premier bourse is planning to set up offices in other big cit-ies in the country such as Ahmedabad, Chennai and Hyderabad also. It already has offices in Delhi and Kolkota. The new office is
expected to offer inves-tors a host of membership services across business lines, investor services and educational activities. The exchange is also planning
a big initiative to enhance investor awareness in the country. As part of the plan, it will launch websites with market knowledge and informa-tion in regional languages including Malayalam.
Kerala Tourism standwins WTM awardThe Kerala pavilion won the ‘Best Stand Feature’ award at the World Travel Market 2011, in London. The pavilion was set up on the theme ‘backwater with Chinese fishing net’. “This simple stand proved eye-catching for the judges thanks to a couple of fea-tures. A huge image of a Kerala backwater covering one wall was enhanced by a real-life fishing net stretching out into the stand as well as a canoe.
"The image told the story of the destination per-fectly,’’ said the jury which awarded the pavilion. The pavilion, spread over 117 sq m, is the biggest set up by any State from India at the four-day meet. Kerala Tourism also stood out as the only State destina-tion to win the Best Stand Award. All other winners were national boards or international destina-tions. Kerala Tourism also bagged the CNBC Awaaz Travel Award 2011 for the ‘Best Tourism Board’ in the country. The State won the award for the second time in a row.
Multi-modal tourism takes wings
Cochin international airport reported its high-est daily passenger traffic – 17,000 passengers
per day – in November, thanks to tourists who came here, attracted by tours that use multiple modes of transport. The possibilities of inter-modal tourism, taking advantage of the sea port and airport was amply demonstrated when about 4000 tourists came calling at Kochi in a single day. As many as 2500 tourists came to Kochi on a single day on various regular flights and six chartered flights. After spend-ing the day shopping and sightseeing in the city, the tourists went to Colombo the next day via the ship Aida Diva berthed at the port. At the same time, around the same number of tourists, who had come to the city, the day before on the ship, returned on the flights that came in with the tourists. The airport had arranged special facilities such as extra immigra-tion and customs counters to cater to the tourist rush. Around 17000 passengers travelled through the air-port - the highest traffic till date - as against an aver-age of 12,000 passengers per day.
AT A GLANCE
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When my information changes, I change my opinion.What do you do, sir?
John Maynard Keynes (1883-1946)
The most influential economist of the 20th century.
15
Everybody knows that technology changes business. Today, the change flows through the net.
And the fact is, Kerala is the most networked State in India.
Information changes
Be updated
For subscription: +91 97444 17980 or [email protected]
----------------------------------------------------------------------------------------------- After all, our opinions ought to change!
Of the 978 Panchayats in Kerala, 99% have broadband connectivity.
16
40 years after forming Keltron, Kerala takes a decisive step to become an electronics power house with an electronic hub
IT parks are the talk of the town. Kerala has quite a few, includ-ing Technopark, India’s first. The
State has, over the years, built one of the best IT infrastructure in the country; most leading IT companies have set up shop in the State and professionals from the State man key positions in global companies. Having dug its heels firmly in the IT services field, the State now wants to get a hold on the other end of the IT chain. It wants to get into manufac-turing of electronic hardware and is setting up a park for the purpose.
In the backdrop of the huge po-tential it offers (see box), the State government is going ahead with its plans to set up a world class facil-ity to host units in the electronic
hardware industry. The electronic hardware park the government is planning will come up on 334 acres in the Amballoor village in Kanay-annur taluk of Ernakulam district. The Kerala State Industrial Devel-opment Corporation (KSIDC), the
InFRASTRuCTuRE
Kerala chipsinvestment promotion arm of the government, is the nodal agency for the project.
The hub would offer world class facilities for original equipment manufacturers, contract manufactur-ers, semi-conductor manufacturers and R&D institutions in the elec-tronic industry. It will also provide facilities for ancillary units.
A tool room facility for use by small-scale industries, which might not be able to set up one on their own, will be an important part of the hub. The proposed facility will have machines such as CNC lathes, turning machines, milling machines, drilling machines, contour cutting machines, and planing machines. Entrepreneurs can use the tools at the hub to develop new products.
The hub will have a PCB/chip de-sign/embedded technology training centre which will train entrepreneurs in developing new technology prod-ucts using the existing hardware. The hub will also host R&D units devel-oping new technologies for hardware building blocks such as smart cards, high-power semi-conductors, ASIC IP such as microprocessors, DSPs, and analog RF functions, MEMS transducers, etc.
The hub will also house an incu-bation centre, which will offer basic facilities for budding entrepreneurs to develop and test their ideas before hitting the market.
KSIDC sources said the hub is conceived as an industrial centre complete with social infrastructure comprising commercial and residen-tial complexes, service facilities, ho-
The hub would offer world class facilities for
original equipment manufacturers, contract
manufacturers, semi-conductor manufacturers and R&D institutions in the electronic industry
17
tels and recreation facilities to attract companies and professionals.
The project is estimated to cost `750 crore. It will be financed using equity capital of `175 crore to which with the State government (`125 crore) and KSIDC (`50 crore) will contribute. The hub is expected to re-ceive grant in aid of `125 crore from the Central government and a term loan of `450 crore.
The proposed site at Amballoor meets the qualifications that make it ideal for the hub. It is located on the outskirts of the Kochi city, within 50 kms of the Cochin International Airport and the Vallarppadam in-ternational container transshipment terminal (ICTT). The area is sparse-ly populated and well-connected by wide roads, capable of handling container traffic. Its proximity to the National Waterway-3 opens up the possibility of establishing a water link to the ICTT.
KSIDC plans to develop the land by laying internal roads throughout the hub area, totalling a length of 20 kms. A 20 MVA, 110 KV substation is proposed to be set up to ensure availability of quality power. Duct-ing for cables and pipes will also be provided. A rain water harvesting project to ensure water supply is also being planned.
The electronics industry in Kera-la is valued at $100 million. The State got a head start in the industry with the formation of Keltron in 1973, which was a pioneering organisation in electronic hardware industry when it was in its nascent stage. At present, global electronics majors have a pres-ence in the State. TE connectivity (Tyco Electronics) has its own man-
Electronic gadgets have been a part of our life for quite some
now. But the IT and mobile revo-lutions have changed the scene drastically. They have profoundly affected the way we live our lives. Electronic gadgets like smart phones and tablets are the most talked about products in the world today.
Not surprisingly, the $1.75 trillion electronics industry is the largest and fastest growing manu-facturing industry in the world today. And India is one of the fast-est growing markets for electronic hardware, thanks to rising incomes and aspiration levels. The mar-ket for electronic hardware in the country is expected to touch $400 billion by 2020, from the current figure of $45 billion.
According to the Department of Information Technology of the government of India, electronics hardware manufacturing com-prises five sub-sectors: industrial electronics, computers and periph-erals, communication & broadcast equipment, strategic electronics and components.
Even though India is a big consumer of electronic items, it has not been a big producer of the same. The focus on the software
sector caused us to ignore this sunrise sector and today we import more than half of our demand. The electronic hardware production in the country is estimated at $20 billion in 2009, just around 1 per cent of the global production, and less than a third of the revenues from the software industry. At the current rate of growth, the domes-tic production will grow to around $100 billion by 2020, leaving a huge gap of $300 billion worth of products to be imported - more than the amount spent for import-ing oil.
Realising the gravity of the situation, the Central government has announced a new National Electronics Policy. It proposes setting up a National Electronics Mission, an Electronics Develop-ment Fund and a Special Incentive Package for investments in manu-facturing. As part of the plan, the Central government is planning to provide incentives for setting up of over 200 Electronic Manufactur-ing Clusters (EMCs) with world class logistics and infrastructure all over the country. These EMCs will also get the benefits under the Na-tional Manufacturing Policy and National Investment and Manu-facturing Zones (NIMZs).
The proposed site is located on the outskirts of the Kochi city, within
50 kms of the Cochin International Airport and the Vallarppadam
ICTT
ufacturing unit in the State, while other majors Framatone Connectors and CII have joint ventures, namely FCI OEN and CII Guardian. Home grown players such as Keltron, NeST and OEN also have a formidable presence in the industry. Several global majors have outsourced their production to the units in the State. While some units produce a range of products such as capacitors, re-sistors, relays, counters, etc, some
others manufacture whole units. A number of factors have helped
make Kerala a formidable presence in electronic hardware manufactur-ing. They include the high density of science and technology person-nel, thanks to its technical education infrastructure consisting of more than 100 engineering colleges and hundreds of poly-techniques which provide the skilled and semi-skilled workers needed for the industry.
The opportunityThe $1.75 trillion electronics industry is the largest and fastest
growing manufacturing industry in the world today
18
Land acquisition for Bekal airstrip beginsThe process of acquiring land for building the air strip at Bekal has started. The District Collector had earlier identified 80.41 acres of land for the project at Kaniyamkundu in Periya village, Bekal. 54.12 acres of it is revenue land and the remaining are in private hands. The land acqui-sition is expected to cost `2.7 crores. The proposed airstrip will be able to receive 50-seater aircraft and will ensure better connectivity between Bekal and Mangalore, and the upcoming airport at Kannur. Studies had revealed that upmarket tourists were shunning Bekal due to lack of connectivity. The project report for the airstrip has been prepared by Cochin International Airport Ltd (CIAL). Tourism Minister A P Anilkumar said that the work on the airstrip will start in the current financial year itself. The airstrip is expected to be commissioned by 2013. The State government is also planning to build an airstrip in Wayanad, to draw more tourists to the region.
CIAL to prepare project report for Kannur airportThe Cochin International Airport Limited will prepare the project report of the proposed Kannur Airport. A decision to entrust the task to CIAL was taken at the director board meeting of the Kannur International Airport Limited. The meeting also decided to acquire an additional 150 acres of land for the construction of the runway. The application of the Airports Authority of India to subscribe 13 per cent equity in the project has also been approved. The Kannur International Airport will come up near Mattanur, about 20kms from Kannur city. It will have a runway of 3400 meters, and is expected to serve more than 1 million passengers annually on completion.
Kerala moots 4 new companiesChief Minister Oommen Chandy has announced the setting up of four new companies — the Kerala Bus Shelter Company, Drink-ing Water Distribution Company, Public Toilet Company and Clean City Company - as part of the one year action plan for Kerala’s devel-opment. The State government will hold 26 per cent equity in each of these companies. The rest of the capital will be brought in by private investors. The companies can earn revenue from advertisements and by collecting user fees from the consumers. The Chief Minister also announced ambitious plans for infrastructure development in the State. The government plans to lay 1,000 km of world-class roads across the State and take over 8,740 km of roads maintained by the local bodies currently.
Vizhinjam Port bidder gets MEA nod
The Australia-based consortium led by Leighton Holdings Private Ltd, that bid for the ICTT project at Vizhinjam has got clearance from the Ministry of External Affairs. Welspun Infrastructure Limited (India) and Welspun Corp Limited (India) as other members of the
consortium. It had earlier responded to the international tender floated by the Vizhinjam International Seaports Ltd(VISL), the special purpose vehicle charged with developing the ICTT at Vizhin-jam by the State government. State Minister for Ports Mr K Babu said the clearance from the Union Home Ministry was now needed. The financial bids for the project would be opened and the operator decided once that is obtained. The port will be developed under Public Private Partnership model in three phases at a cumulative cost of `6595 crore.
Cochin Shipyard plans to expand
Cochin Shipyard’s plans to expand its capacity got moving when the Union Minister for Shipping, Shri G K Vasan, who visited the Ship-yard directed it to study the feasi-bility for setting up a ship repair facility/shipyard at Vizhinjam, Poovar or Azhikkal. The State gov-ernment had earlier requested it to look at these sites for setting up the facility. The yard hopes to complete the study in two months. The yard had expressed its interest in setting up a facility at Vizhinjam, in view of the port coming up there and the deep draft available. It has already set up India’s largest bollard pull test facility there. The shipyard is cur-rently operating at full capacity: it is currently constructing 34 ships, 20 FPVS for Indian Coast Guard and an Indigenous Aircraft Carrier for the Indian Navy.
PROjECT TRACKER
19
Emerging Kerala investor meet to showcase Kerala’s investment potential
Over the years, Kerala qui-etly reworked its industrial infrastructure. It is perhaps
the only south Indian State with no official or unofficial power cut; it has built an international container terminal and is planning another. It built three international airports and is building a fourth. It set up an LNG terminal and is laying the pipelines to carry the gas to its hin-terland. Almost all of its villages have broadband internet connection. It is aggressively pursuing mass rapid transit systems in its three major towns.
Coupled with the excellent social infrastructure it has created over the decades, these new milestones would have ensured that investment flowed here. But it was not to be, thanks to
many reasons which included the image of a troubled industrial rela-tions and the lack of concerted ef-forts by the State government. Those who assess the State know that hard-ly a man-day is lost in Kerala today
due to labour unrest; and for the lat-ter, the government has, at last, cho-sen to make a serious effort.
The State government is organis-ing ‘Emerging Kerala’, a global con-nect of the stakeholders of the State’s economy in September. The three-day jamboree, beginning on Septem-ber 12, seeks to make Kerala a pre-mier global hub of economic activity.
Emerging Kerala is conceived as a biennial event in which thought leaders, influencers, visionaries, in-vestors, enterprises, government institutions and the general public come together to think about Kerala. According to officials of Kerala State Industrial Development Corpora-tion (KSIDC), the nodal agency for the event, efforts are on to bring in heads of governments, foreign digni-
It’s emerging, finallyThe Vallarpadam International Container
Transshipment Terminal (in pic) is one of the several major infrastructure projects Kerala launched in the last decade. The
State now wants to cash in on them and attract more industries
Emerging Kerala is conceived as a biennial event in which thought
leaders, influencers, visionaries, investors,
enterprises, government institutions and the general public come
together to think about Kerala
20
taries, renowned scholars, Nobel lau-reates, leading economists, eminent personalities and business leaders to the event.
A high power committee, under the chairmanship of the Chief Sec-retary with top government func-tionaries as members, is coordinating the activities for the event.
The State government has identi-fied 26 core sectors for investment in the State and formed Sectoral Task Forces/Project Committees to pre-pare project profiles and investment ideas to be presented to the poten-tial investors and entrepreneurs. The committees have already prepared more than 200 ideas, which will be available on the website.
The core sectors are: ● IT and IT Enabled Services ● Tourism● Health Care services● Manufacturing, Engineering & Automotive● Trade and Retailing● Food and Agro Processing and value addition● Gems and Jewellery● Rare Earth Minerals● Textiles & Garments● Ports, Ship building and related industries● Electronics● Knowledge/Education sector● Gas based infrastructure● Green Energy
● Bio-Technology, Nano Technol-ogy, Pharmaceuticals● Urban Infrastructure development● Infotainment● Logistic Parks● Petrochemicals● Environment Technologies● Water Technologies● Basic & Industrial Infrastructure development● Airport Infrastructure and Aero-plane & Helicopter services● Water Transportation● Centres of Excellence● Infrastructure development (Road, Rail Power, Water Supply, Sewage)
Of these, 10 are identified as focus sectors● IT and IT Enabled Services● Tourism, & Medical Tourism (Ayurveda)● Health Care services● Food and Agro Processing and value addition● Ports, Ship building and related industries
● Knowledge/Education sector● Energy including Green Energy● Bio-Technology, Nano Technol-ogy & other sunrise sector ● Water Technologies & Inland Wa-terways● Infrastructure development
Chief Minister Oommen Chandy unveils the ‘Emerging Kerala’ logo at a function.
The State government has identified 26 core sectors
for investment in the State and formed Sectoral Task
Forces/Project Committees to prepare
project profiles On offer● Projects and investment ideas for potential investors and en-trepreneurs● Business to Business (B2B) as well as Business to Government (B2G) connects● Round tables● Cultural performances● Exclusive NRK session ● Networking lunches/dinners
Special to Emerging KeralaFast track clearance of bottle-necks and impediments to proj-ects
Special package of incen-tives for prospective projects coming up in the State
All necessary government support to investors for setting up viable projects in these sec-tors in the State
Sectoral sessions
● IT&ITES, Knowledge/ Edu-cation● Tourism● Food & Agro Processing● Ports, Shipbuilding & Logis-tics● Healthcare Services● Energy including Green En-ergy● Biotechnology, Nanotechnol-ogy & other sunrise sectors● Infrastructure Development (Power, Water Resources, Rail, Road, etc)● Manufacturing, Trade & Commerce● Financial Services
21
With the State government planning monorails in Thiruvananthapuram and Kozhikode, Kerala will have an MRTS in all its major cities
InFRASTRuCTuRE
The One-Rail wonder
A 28-km long monorail corridor from
Kazhakootam to Balaramapuram in the capital is expected to
cost ` 3,400 crore
Tourists and kids love them. Their single elevated rails provide a ride with a view.
But now their low space requirement and elevated nature is making con-gested cities with narrow roads turn to them, as a safe and efficient means of public transport. And Kerala is all set to make the most of the one-rail wonder.
With the State government planning to introduce monorails in Thiruvanathapuram and Kozhikode, Kerala will have the unique distinc-tion of having a mass rapid tran-sit system (MRTS) in all its major towns. A metro project for Kochi, the State’s commercial capital, is under advanced stages of receiving final approval from the Union gov-ernment.
A 28-km long monorail corridor from Kazhakootam to Balarama-puram via Sreekariyam, Ulloor, Ke-savadasapuram, Pattom, PMG, M G Road, Overbridge and Karamana has been proposed in Thiruvanatha-puram. The project is expected to cost `3,400 crore. The system would have four cars capable of carrying more than 200 persons at a time at a speed of 40km/hr. The National Transportation Planning and Re-search Centre (NATPAC), entrust-ed by the State government to con-duct feasibility study on the project, is expected to submit its report soon.
Says Mr Tomy Cyriac, a scien-tist with NATPAC, “We considered three types of mass rapid transit systems – the metro, the bus rapid
transport system (BRTS) and mono-rail – for these cities. The ridership in these cities, with a population less than a million, is not large enough for a metro. Unlike in Kochi, where a metro has been proposed, these cit-ies do not have a large population in the suburbs, which could add to the traffic. And the roads are not wide enough for a BRTS. The monorail, with its low space requirement, and lower cost is ideal for these cities. It
is also apt for the ridership figures in these cities.”
Kozhikode is the second city in the State to go for the system. The government has already decided to start the tendering process for the project, which aims to build a monorail from Kozhikode airport to Medical College – a distance of 35 kms – in three phases. The Kerala public works department had ear-lier conducted a feasibility study on the project and estimated the cost at `110 crore per km. The first phase from Medical College to Meenchan-tha is 13 km long and will cost ̀ 1400 crore. The phase will have 15 stops en route. The project will be extended from Meenchantha to Ramanattu-kara in the second phase and further to the airport in the third phase. The State and Central governments will contribute twenty per cent each of the total project cost.
The monorail advantageA monorail is a system in which a single rail, serves as a track on which vehicles run. The vehicles are wider than and usually straddle the guide ways that support them. They could also be suspended from the guide way. Most of the monorails are built at an elevation, but they could also be built at ground level or in under-ground tunnels.
The monorail has many advan-tages that attract cities, the most im-portant one being that they require minimal land. They can be built on the medians of the existing roads,
Kozhikode
Kochi
Thiruvanathapuram
22
capacity is small and their capacity to handle peak load traffic is doubtful. Hence many cities consider them as feeder lines to conventional rail and unless the monorail system is not properly inter-connected with other modes of transport, they are likely to fail. Another major disadvantage is that they are not compatible with conventional rail lines.
Even in Tokyo, monorails are be-ing built only for special purpose ap-plications, or where surface right of way is not available and traffic is not sufficient to justify full scale rail lines. They carry just a small fraction of the traffic carried by metro rails and act as feeder lines to the metro system. The case is similar in Kuala Lampur also where an 8.6km long monorail system was built by the turn of the century to complement the light rail systems. Moscow also has a monorail system complimenting the metro, but it offers only sight seeing tours for tourists. The city of Sydney, is considering pulling down its quarter century old monorail system as part of a restructuring program.
But the monorail enthusiasts have got a shot in the arm with more second rung cities showing an in-terest in them. The Chinese city of Chongqing has constructed a mono-rail system, considered to be the larg-est in the world today. Shanghai also has a 30.5 km long maglev monorail line that connects its business district with the airport.
Monorails haven’t been in use in India till now. But that is set to change with the commissioning of
the monorail system in Mumbai. Al-together 8 lines, with a total length of 135 kms and costing `20,296 crore, have been proposed in the city. Construction of the 19.54 km long Chembur-Jacob Circle line is currently underway, the first part of which is set to be operational in May, 2012. The line will have an overall speed of around 31 kms per hour. 4-6 coaches, each capable of carrying around 125 passengers will run on it. The monorail system is planned as a feeder system to the suburban rail system in the city. Chennai is also following suit. It is planning a system spanning 300 kms that would be the largest in the world. But concerns have been raised on its suitability in view of the metro rail system being developed in the city. Jodhpur, In-dore and Patna are also considering building monorail systems.
Delhi, which has a well devel-oped metro system is also planning a monorail system to cater to the con-gested regions where enough space is not available for building a metro line.
The Kozhikode project envisages building a
monorail from Kozhikode airport to Medical College – a distance of 35 kms – in
three phases
The most important advantage monorails
offer is that they require minimal land. They can
be built on the medians of the existing roads, even on
narrow ones, without affecting the road traffic
even on narrow ones, without af-fecting the road traffic. The guide way beams have a width of 69 – 80 cm and the overall width of the cars will be around 3 metres. Monorails also can negotiate steeper grades and sharper curves. This helps align the system to the existing road network. The reduced size of the support structures also result in lower costs. All these help construct the system fast, causing minimal disruption to life.
Safety is another advantage. Their elevated nature ensures that there is no chance of colliding with surface traffic. Straddling the guide ways also prevents derailment. The monorails are run using electricity and hence they are non-polluting and environment friendly. They are also very quiet, thanks to the rubber tyres on which they run.
Monorails have been operating in many parts of the world for some time now - Tokyo, Moscow, Sydney, Kuala Lumpur, Las Vegas all have monorails. Japan has been using it for public transport for half a cen-tury now, the Tokyo-Haneda Mono-rail system connecting the Haneda airport, one of the two main airports in Tokyo to the business district of Hamamatsucho, being commis-sioned in 1964. The country today has 10 monorail lines with a total length of 110 km, and they carry about 500,000 passengers daily.
LimitationsThe monorail systems in Tokyo have proven the practicality of the mode of transport. But they are not with-out their share of problems – the most important one being the carry-ing capacity. Compared to metro and suburban rail systems, their carrying
23
Anaswara, the most awarded printing house in South India, is looking for big growth
InDuSTRy REPORT
United colours K J Jacob
That was way back in 1985. The era of linotypes had just been born. A top Central
government functionary holding a statutory office refused to accept documents printed at then Anaswara Printing and Publishing Co, saying they looked like electronically typed documents, which were inadmissible. “He was used to seeing the old rug-ged papers with no uniform letters, and refused to accept them,” recalled Mr O Venugopal, managing director, Anaswara Offset Private Ltd. “Our
machines and processes had pro-duced such a difference in the final product that the officer refused to believe that they were printed docu-ments.” The company had to give a statement explaining the process and certify that the papers were indeed printed matter before he accepted the papers.
Mr Venugopal and his team to-day laugh off the incident, as their commitment to quality never landed them in trouble again. Instead, it made them one of the most awarded printers in south India.
Started by three youngsters – P
J Thomas, V A Mathew and Venu-gopal who quit their jobs in a news-paper in 1982 and with each one investing `10,000 – Anaswara has over the last three decades made its imprint visible on the printing in-dustry. The company which started with a letter press on the busy SRM Road in Ernakulam, today has qual-ity standards that meet the global best with customers spread all over the world.
When Anaswara was started, the printing industry was run, by and large, by people with little or no aca-demic background. They would have
(From left) P J Thomas, O Venugopal and V A Mathew at one of the latest printing machines at Anaswara
24
two-colour press. “It was a time when quality works were done at Bangalore or Chennai, while works involving huge volumes were execut-ed in Sivakasi,” said Mr Venugopal. “There was a demand pressure.”
As business improved, the com-pany bought for itself 30 cents of land at Perandoor in the city and built a new office and moved in there in 2000. “It was a big milestone. We moved out of our old office when we felt suffocated there.” KSIDC, the investment promotion arm of the government of Kerala, funded the project for the new building and machinery, Mr Venugopal said. The company also installed the first four-colour press in the new facility.
Today, Anaswara has four four-colour machines including three from Heidelberg, the benchmark brand. It has a series of pre-press and post-press machines required to meet quality in printing and dead-lines. The company recorded an an-nual turn-over of `10 crore last year and is expecting 30 per cent growth this year.
Anaswara has one of the fin-est facilities and machines for
printing in south India, but that alone does not ensure business. Its success lies in its ability to convince the customers that the quality of the final product does not depend solely
on what Anaswara does. “From the beginning, we used to be involved in the work. We did not just print; we instead looked into the quality of the matter given to us, and gave our opinion to the client. True, we have excellent standards in printing. But the final quality of the work depends on the raw material also. Some-times we even suggested changes in the matter,” said Mr Venugopal. This is an intervention printers sel-dom make. But Mr Venugopal and his friends, having the experience of working in a newspaper, are capable of doing this. “We, thus, ensure that the works that go out of our press have an identity.” They also took ex-tra care to eliminate mistakes.
“Best service, identity of the work and uncompromising quality stan-dards helped us move forward,” he said.
Changes visit the printing indus-try quite fast; technology, machines and processes become obsolete in no time. Anaswara till now has kept a measured approach towards growth, betraying the signs of a careful play-er. The company would never say no to new things but would never be the first to board a new bandwagon ei-ther. It goes for a fresh system only when it is absolutely convinced about its necessity and is sure of value addi-tions it can bring in. This strategy has worked for it all through.
At the same time, the company
Anaswara has made its mark in com-mercial printing, and is counting on packaging and publications, especially the export markets, for growth
worked in large presses for some time and then started one on their own. They printed whatever was given to them. On the other hand, the big boys with foolproof systems were so overloaded they would have a backlog for several months.
“We filled that gap,” said Mr Venugopal.
The insistence on quality worked as customers soon noticed the differ-ence. There came to be a belief that the customers don’t have to worry about the quality of the products that come out of Anaswara.
With work flowing in, Anaswara moved to a cylinder press in a year. And then to a linotype mechanical composing machine. The change was at a time when there were not many such machines in Kerala. “The move helped us eliminate errors and im-prove the quality of the final prod-uct.”
The company got its first single colour offset press in 1990 at a cost of `75 lakh. It was followed by a Anaswara has some of the best facilities for pre-and post-press work
25
has ensured that the rate of change is sufficient to meet the demands of the industry and that they stay ahead of competition. The company has a very clear understanding of its business and the turns it takes. But it never goes for quick fixes.
The partners cite the trust among them as the fulcrum on which the company revolves. “No one consid-ers money as the most important thing; Money is important, but we do not treat the organisation as a tool to merely make money,” said Mr Thomas, executive direc-tor. The complete transparency and trust work well for them. Every major decision is taken after thor-ough discussions, especially if they involve invest-ments. “We de-bate intensely among ourselves. There are instances when we fail to agree on a topic in one sitting,” Mr Thomas said. “We then sit again to thrash out the dif-ferences. We trust each other and we know that all of us have the inter-est of the organization paramount in our minds.”
The company is committed to serving its employees well. “We have been disciplined in the matter of money,” said Mr P V Mathew. “The salary and all the other perks would be paid without delay. In the last 30 years, we have never missed a repay-ment date,” he said. “We believe in the honesty in principles.”
Where does Anaswara, which has made its mark in commercial printing, go from here? “We visit the expos and use other sources of infor-mation to update ourselves about our industry thoroughly. We know the industry, its future, and the demands of society,” says a confident Venugo-pal. He counts on publications and packaging as the way forward. There is a huge potential for export in both segments. “India’s share in global
export of publications is just 1 per cent against China’s 6 per cent,” Mr Venugopal said. “If we can raise this to 5 per cent, there is big opportu-nity.” But Indian companies find it difficult to exploit this opportunity as the industry needs huge capital investments to start with if it were to cater to the export market, as volumes hold the key there. Money has to be pumped into software, ma-chinery, people and real estate.” At the same time, this is not an industry
in which anyone with money can enter and make a success of it. This demands a lot of domain knowl-edge at several levels.
Packaging is another big area with growth po-tential, which also requires huge in-vestments. “We are working on
various options. We are getting ready for the next generation to work on. We surely count on publications and exports as the future of our in-dustry and are planning for them,” Mr Venugopal said. The company is already into packaging and publica-tions. “We can cater to people who insist on quality, but only in small quantities. We are yet to enter the high volume business in both of them,” says he.
The company pins its hopes on the Vallarpadam container trans-shipment terminal becoming fully operational. “Direct export to for-eign destinations will help expand our business in those markets,” said Mr Venugopal. “Today, we are dis-advantaged as air cargo is too costly and shipping takes too much time.”
Anaswara is all set to take bold decisions and grow fast on the strong foundations it has build over the three decades. It is waiting for the next generation to come on board. “We are working on plans to grow big, really big. This is the only option before us.”
Roll of Honour61 awards—international, national and State—in 30 years SAARC awardAsian Print Award (3 times) Dubai International Print AwardAll India Federation of Master Printers AwardNational Award for Excellence in Printing Indian Printing Packaging & Allied Machinery Manufacturer’s Associa-tion (IPAMA) Print Award 2009.Kerala Master Printers Association
The first letter press at Anaswara
‘KSIDC stood by us’
KSIDC, the investment promotion arm of the government of Kerala, funded the biggest move Anaswara took in its journey. “KSIDC has been of immense help to us,” said Anaswara’s managing director Mr O Venugopal. “They funded the project to build a new office and acquire latest machineries. That was a big milestone for us. Being a government agency, KSIDC had been quite strict with documents. We first found it cumbersome, but it in fact was a boon for us. It helped us streamline our own sys-tems.”
The insistence on quality worked as customers soon
noticed the difference. There came to be a belief that the customers don’t have to worry about the quality of the products
that come out of Anaswara
26
A fisherman is casting his net at the Fort Kochi beach. The traditional fishermen are one
of the earliest inhabitants of Kochi, who are more known for their adept use of the
Chinese fishing nets. However, a large majority of them venture into the sea on
a regular basis. On the days when the sea is rough, they limit their activity to the shores.
Most fishermen can judge from the nature of the sea the points at which fish is
available. They work in the morning for about three-to four hours, and the catch
comprises mainly mullet or mystus . On a good day, they earn up to `500.
BuSInESS CALLED LIFE
27
Photo: Sivaram V.
28
COvER STORy
Taking to the water
Azhikkal ʘ
Beypore ʘ
Ponnani ʘ
Kodungallur ʘ
Kochi ʘ
Alappuzha ʘ
29
Kerala, with a 590-km coast, is waking up to the possibilities of water transport of cargo.
The government is putting in place a coastal management project which, by 2017, will
decongest the roads and give a fillip to the tourism industry
Aby Abraham G K
Long ago, the Silk Route which extended from current day Turkey to Chang’an in China
was the main trade route between Europe and Asia. But the discovery of the sea route connecting Europe and Asia around the tip of Africa changed the scene. The many advan-tages of water transport – lesser cost, speed, safety and the ability to move huge volumes of goods to name a few – made it the preferred choice for traders, and the Silk Route soon withered away.
The story has been quite the op-posite in Kerala. The State which once depended on its numerous riv-ers and backwaters for transporting goods today handles just four per cent of the coastal cargo – only Goa has a smaller share among maritime States - in the country. The advent of road transport and railways relegated them to the background and put our navigable waterways to disuse. To our own peril.
The increase in the number of ve-hicles is clogging our roads. The cost involved in building new roads or widening existing ones in the dense-ly populated State is huge. Not to mention the disruptions they cause to life. This has had the State look-ing for alternatives and waking up to the advantages of transportation through water.
“The government will shortly im-plement a coastal management proj-
ect connecting all minor ports in the State,” says Mr K. Babu, Minister for Ports. “The shipping project could take away at least 20 per cent of the freight movement from the roads.” Mr Babu says the government is also planning to dredge the major canals for making them navigable.
What is the coastal manage-ment project all about? “It’s a time-bound project to revive the six minor ports—Azhikkal, Beypore, Ponnani, Kodungalloor, Alappuzha, and Kol-lam. This, together with the Vizhin-jam Deep See Container Terminal and the International Container Transshipment Terminal(ICTT) at Kochi, will provide an alternative to road traffic by 2017,” says Dr Jacob Thomas, Director, ports, government of Kerala. Deloitte Touche Tohmat-su India Private Limited has already submitted the detailed project report and the feasibility report to the gov-ernment.
The coastal management project has definite plans for developing all the six minor ports.
Azhikkal port Even while pressing for the develop-ment of the Azhikkal port as a major port with Central government funds in the 12th Five Year plan, the State government is developing the port infrastructure. The government has recently announced that it will ac-quire more land for the development of the port, located near the estuary of the Valapattanam river. The devel-
Ponnani ʘ
Kodungallur ʘ
Kochi ʘ
Alappuzha ʘ
Kollam ʘ
Vizhinjam ʘ
30
The government is trying to get Central funding to build a full-fledged port at Azhikkal
opment project is estimated to cost `418 crore.
The government is also consid-ering locating the ship repairing fa-cility, proposed to be set up by the Cochin Shipyard, at Azhikkal. The Central government has already promised to help the Kerala gov-ernment set up a port in the State. The government expects that a full-fledged port combined with a ship repair facility would make the proj-ect feasible. The major problem fac-ing the port development project is the depth of the channel and the constant silting in the region. The sandbar at the mouth of the channel also poses a major hurdle.
The project had earlier received a jolt when Mundra Ports and SEZ Ltd, the lone bidder in the global tender floated for its development, withdrew, after its bid to set up a coal-fired power plant in Cheemeni hit a stonewall. The government is now considering retendering the project.
BeyporeThe Costal Shipping Project envis-ages developing Beypore as a hub port for Lakshadweep. The two places share cultural and emotional bonds for historical reasons, and the government expects the Lak-shadweep administration to chip in
with funds for the development of the port. At present, Lakshadweep is serviced mainly by the Cochin Port. INKEL Ltd, the infrastructure development agency of the Govern-ment, has already prepared a report on the development of the port. It is envisaged that there will be an exclusive berth for handling cargo and passenger vessels to and from the island. The development involves deepening of the draft from the ex-isting four metres to 12 metres in stages to help larger vessels of up to 20,000 DWT call on the port.
PonnaniThe government has opted for the BOT route to develop the Ponnani port. It has already awarded the 34-year contract to the Chennai Based Malabar Ports Ltd. The government, for the first time, adopted the ‘Swiss challenge model’ (see box) to find out the eligible operator of the port. Ponnani is also the first port in the State to be developed through the public-private participation (PPP) route. The project is expected to be complete within four years after the commencement of work.
The first phase of the project, for which the government has signed a concession agreement, will have a total outlay of `763 crore to develop an all-weather facility to handle ves-
Swiss Challenge Method
The Swiss challenge method is a new step in
identifying and implement-ing projects which involve a partnership between public and private sector.
In India, projects are usu-ally identified and proposed by the government. The pri-vate sector players then bid on them and the project is awarded after evaluating the bids.
The Swiss challenge method makes this process more inclusive. It allows the private sector firms also to identify projects and send the proposal to the govern-ment. The government will then call for bids on the project. The original propo-nent might be given some privileges – usually the op-portunity to match or better the winning bid, on comple-tion of the bidding process.
31
developed as a hub port for the ca-shew industry. In fact the amount of cashew and related products handled at the Kollam port alone justifies the development of the port. The gov-ernment has already completed part of the development works at the port by installing a forklift and competing construction of a wharf and making the draft 7 m.
VizhinjamThe Vizhinjam International Deep-sea Container Transshipment Termi-nal will be the second international container transshipment terminal in the State. The government is expect-ed to provide the basic infrastructure for the port - dredging, land reclama-tion and acquisition, construction of breakwaters and quay wall, establish-ing road/rail connectivity and other external infrastructure required – at a cost of `3040 crore in the first phase. The super structure will be built by on a BOT basis by a private partner.
Coastal Shipping in KeralaKerala’s is blessed with a 590-km long coastline and inland waterways that provide access to much of its interior. Seventeen intermediate and non-major ports dot the coast along with the Cochin port, which is a ma-jor port.
The Cochin port alone han-dled around 17.42 million tons of cargo in 2009-10, compared to the 115,000 tons handled together by all the other ports in the State. Beypore port alone handled 90 per cent of the cargo of the non-major ports. This shows the disuse to which the State has put most of the other ports.
Cargo meant for the coastal re-gions of the State – coastal cargo – accounted for 37 per cent of the traffic at the Cochin port. Liquid bulk made of petroleum and related products accounts for 78 per cent of the coastal cargo handled at the port with construction materials, cement, consumer goods, foods and spices accounting for the rest. But the sce-nario is different in the other ports in the State. As much as 80 per cent of the cargo handled at non-major ports in Kerala is coastal cargo with building materials accounting for the major share of the cargo. Soda ash, wheat, rubber and related products and plywood are the other major
Coastal shipping accounts for 43 per cent of cargo traffic in
Europe, while it is just around 7 per cent in India
sels of up to 50,000 DWT.The development of the Ponnani
port will help industries in the large hinterland in the Palakkad-Coim-batore industrial belt which also in-cludes Tirupur. It is also expected to speed up economic development of Malappuram, Palakkad and Thrissur districts.
KodungallurThe coastal shipping project seeks to revive the historical Kodungal-lur port and develop it as a hub port for tourism and maritime activities. The government plans to develop the port by building a wharf for tourism-related activities at a cost of ̀ 15 crore so that it becomes a hub for promot-ing cruise tourism. It would also be an attraction for yachts. The govern-ment also expects the port to anchor a maritime development centre. The project is expected get `8 crore aid from the Central government.
AlappuzhaAlappuzha, traditionally known for its backwaters, is increasingly being described as the poster boy of Kerala tourism. The costal shipping project seeks to develop the Alappuzha port as a marina cum cargo port project, which will boost the tourism sector as well. The plan seeks to make Alap-puzha, lying at about 60 km from Kochi, the gateway to Kerala, acces-sible through waterways. It will offer an alternative and attractive mode of transport for tourists commuting between Alappuzha and Kochi. De-loitte Touche Tohmatsu India Pri-vate Limited has already submitted the detailed project report and the feasibility report to the government. The report, according to sources, says the project must cash in on the tour-ism potential of Alappuzha.
KollamThe Kollam port has a good ba-sin with a draft of 7 m. This will be soon increased to 10 m so as to en-able ships with 50,000 DWT to call at the port. The length of the wharf will also be increased to 220 m from the present 116 m. Kollam will be
The government has already awarded the Ponnani port construction through the PPP route
32
Advantages of coastal shipping
1. Congestion free2. Fuel efficient - coastal shipping consumes only 15 per cent of fuel for transportation as compared to road and 54 per cent as compared to rail3. Environment friendly - Emission in gm CO2 equiv-alent / ton-km is 15 for Coastal shipping, against 28 for rail and 64 for road4. Can transport large, bulky cargo easily 5. Lower capital and recurring investments6. Lower transportation costs7. Lesser external costs – due to accidents, safety costs
products handled. Currently these are being offload-
ed at the Cochin Port and transport-ed to other regions of the State by road. Developing a coastal shipping network would enable businesses to offload their cargo at the nearest port, helping them realise savings in cost and time.
The emergence of the ICTT at Vallarppadam has opened up the possibility of loading cargo at these ports and taking them to the ICTT for transhipment through the wa-terways. Importers can also unload their cargo at these minor ports after transhipping these at the ICTT to smaller vessels.
Potential business for portsWater transport is economical com-pared to road and rail transport. Coastal shipping accounts for 43 per cent of cargo traffic in Europe, while it is just around 7 per cent in India. Also known as Short Sea Shipping (SSS), it provides a great opportunity to reduce the logistics cost, thereby increasing the competitiveness of the industries. Better fuel efficiency, lower unit transportation cost, eco-friendliness and the absence of con-gestion are the other advantages. Hence it is being considered both for movement of cargo and passengers.
Economic growth has the po-tential to boost the amount of goods produced and consumed in the State. Even today many of the major ports
in the country are facing capacity constraints. The situation is expected to worsen further in future affect-ing their ability to cater to coastal cargo. This is expected to provide a fill up to the demand for the minor ports. Traffic in coastal cargo at non-major ports in the country registered a growth rate of 6.15 per cent com-pared to just 2.33 per cent in major ports in the last decade. This makes it all the more important that we de-velop our minor ports for facilitating cargo movement.
Moreover, Kerala is a consumer State and it imports most of the commodities to meet its require-ments. Most of these commodities reach the State by road. It is esti-mated that 20000 trucks bring goods from other States to Kerala every day. There exists a possibility of shifting a part of this cargo from road and rail to the cheaper mode, water.
Deloitte & Touche, the consul-tant entrusted by the State govern-ment to study the feasibility of de-veloping coastal shipping, estimates that more than 5 million tonnes of cargo could be diverted to coastal
shipping if the required infrastruc-ture is provided – a big figure com-pared to the 0.15 million tonnes carried today. In addition, feeder operations for EXIM cargo from Vallarppadam ICTT and increase in cargo due to industrial growth in the State will add to the demand for coastal shipping.
But this is easier said than done. Road transport has the advantage of being able to deliver the goods to re-mote locations, eliminating the need for interfacing with other modes of transport. Shippers also do not have to wait till they accumulate a size-able volume of the product. To move cargo to our waterways, they have to offer advantages that exceed those given by roads. Savings in cost and time are the main factors that would enable a diversion of cargo from roads to water. Studies show that the unit transportation cost involved in moving cargo through waterways is much lesser that that by other modes – around 50 per cent lesser than rail and 60 per cent than road. Proper infrastructure facilities and regular services could ensure that the time taken is also matched.
Due to the economies of coastal shipping, some businesses have al-ready started shifting to ships for transporting cargo. Ships operate to Kerala from ports such as Kandla and Mundra, Mumbai, Mormugao, New Mangalore, Tuticorin and Chennai. Marble, granite and tiles
Ports in KeralaMajor Port
Kochi
Intermediate Ports1. Neendakara2. Alappuzha3. Kozhikkode
Minor Ports1. Vizhinjam2. Valiyathura3. Thankasserry4. Kayamkulam
5. Manakkodam6. Munambam7. Ponnani8. Beypore9. Vadakara10. Thalasserry11. Manjeswaram12. Neeleswaram13. Kannur14. Azhikkal15. Kasaragode
Studies show that coastal shipping is most
economical when inland movement is within
100 km from the port
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are transported in containers from Gujarat to Kerala. In addition sand and cement are also moved to the State from Gujarat.
Some of the factors affecting business of ports are commercial activity around the location, cost economics of coastal movement and presence of nearby ports. Studies show that coastal shipping is most economical when inland movement is within 100 kms from the port. It is in the light of this, that the State government is considering develop-ing the Azhikkal, Beypore, Ponnani, Kodungallur, Alappuzha and Kol-lam ports along with building an international container transship-ment terminal at Vizhinjam. They, together with the Cochin Port and the Vallarpadam ICTT, form part of the project.
Infrastructure neededThe required infrastructure is a pre-requisite for this shift to happen. To make inland shipping a viable alter-native for businesses, our waterways have to be developed by ensuring that they have the necessary depth and width to allow barges to ply smoothly. IWAI stipulates that wa-
Infrastructure that needs to be developed
1. Increasing the draft avail-able by dredging to allow direct berthing of vessels2. Cargo handling equipment – cranes/poclains/forklift3. Tugs4. Wharfs
5. Godowns6. Ensuring connectivity – rail/road/inland waterways7. Building new Berths/strength-ening existing ones8. Breakwaters9. Coastal Fleet
terways should have 2 m depth and a width of 32 m in closed channels and 38m in open channels. A chain is as strong as its weakest link, so is a waterway. Even if a small stretch of doesn’t have the required depth and width, the whole waterway becomes un-navigable and useless. Land ac-quisition for widening and deepen-ing of canals, and reconstruction of bridges with low height (overboard clearance) which block movement of loaded vessels are issues that have to be taken care of. But these are small issues when compared to the costs involved in developing and main-taining roads, which require the ac-quisition of much more land that too in densely populated areas, and peri-
odic resurfacing.Port-related infrastructure such
as cargo handling equipment, tugs, adequate terminal facilities such as jetties for berthing of vessels, space and equipment for loading/unload-ing cargo and storing them is also of prime importance. Connectivity to other modes of transport has to be created to ensure last mile connectiv-ity. Ancillary facilities such as CFS etc are also desirable. Regular and re-liable shipping services also have to be started connecting the ports.
Inland waterways in KeralaWhen BPCL – Kochi Refinery brought its new cracker unit from Damian in China, it preferred the
The cargo movement in Kollam justifies its early development
35
Kochi has already started attracted cruise ships. The development of Alappuzha and Kodungallur ports will add to the tourism attractions of the State
waterways in Kochi to transport the bulky unit to its premises. Inland wa-ter transportation is more efficient, environment friendly and well suited for transporting over-dimensional and hazardous cargo.
The National Waterway 3 (NW3), which covers much of Ker-ala’s coastline, is a 205 km waterway system. It consists of a 168-km long channel connecting Kollam in the South and Kottappuram in Central Kerala. In addition, 37 km of canals between Champakara and Udyoga-mandal is also a part of the water way. The waterway connects the in-teriors of the State to the Kochi port.
The Inland Waterways Au-thority of India (IWAI) is charged with developing the waterway. It has provided least available depth (LAD) of 2 meters in the 121 km long Kottapuram-Thakazi stretch of NW3. Navigational charts have been prepared for the waterway and day channel marks have been installed. Night navigation facilities have been installed along the entire stretch from Kollam to Kottappuram, mak-ing the NW3 the only one in India to have 24 hour navigational facili-ties.
These facilities will help reduce the turnaround time for vessels and the corresponding increase in the number of cycles will benefit ship-pers and industries. But the sad fact remains that FACT alone uses
the waterway, that too only the Chamapakara and Udyogmandal canals, while the remaining stretches remain unused. The 3 units of FACT lie on its bank and 99 per cent of its cargo is transported through them.
The IWAI has already developed 7 terminals on the NW3. 4 more ter-minals are being planned. The Ro-Ro / Lo-Lo terminals constructed at Bolghatty and Willingdon Islands help connect the waterway to the Vallarpadam ICTT. Bharat Petro-leum Corporation Ltd (BPCL) has also developed a bunker jetty on the waterway. Efforts are also on to link the waterway to CIAL, enabling players to provide multi-modal lo-gistic facilities. The government is also trying to connect Trivandrum Airport to the Vizhinjam sea port.
VesselsCompanies such as Kerala Shipping and Inland Navigation Corpora-tion (KSINC), Lots Shipping, and Choice Shipping provide transpor-tation services on the NW3. They operate on a charter basis catering mainly to the transportation of bulk cargo. But to take full advantage of the coastal shipping network, the State would need vessels with capa-bility to operate both in the sea and inland waterways.
State WaterwaysKerala also has two state water-
ways – the 74 km long Kovalam – Kollam waterway and the 349 km long Kottappuram (Kadungalloor) – Neeleswaram waterway. But these waterways are not contiguous on the northern part of the State and the government is planning to build ca-nals to link them. These waterways are connected to other feeder canals and navigable river systems with ag-gregate length of 1097 km.
The Inland Navigation Director-ate based in Kollam is responsible for maintaining the navigability of the state waterways. A minimum of 14 meter width, 1.5 meter depth and 5 meter overboard clearance have been prescribed by the State government for its waterways.
Integrating coastal shipping with inland waterwaysIntegrating coastal shipping with in-land waterways is essential to realise the full potential of our waterways. This would require establishing con-nectivity between the sea ports and inland waterways with vessels ca-pable of operating both in the sea and inland waterways. Regulatory changes that allow inter-modal (sea-river-waterway) flow of the vessels are also needed.
The State has made a good be-ginning by starting work on the in-frastructure required. Once that is done, it can confidently take to the water, once again.
36
CLOUD COMPUTING
Going skywards
TEChnOLOgy
The pay-for-what-you-use model resembles the way electricity, fuel or water
is consumed; it is sometimes referred to as ‘utility’ computing
Most legacy business appli-cations corporates employ are complicated in nature
and expensive to own and run. It re-quires a daunting variety of hardware and software to run the applications and a whole team of experts are re-quired to install, configure, test, op-erate, maintain, secure, and update them. In spite of all these, the scal-ability of these solutions is always a challenge. And to add to the ag-ony, there is always the threat of the technological obsolescence looming large, necessitating reinvestment at regular intervals. Mobility, too, is a challenge in this mode of computing, now called “on-premise” computing.
Here comes the cloudCloud computing is a general term
for anything that involves deliver-ing hosted services over the Internet. The readers therefore will under-stand that it is nothing new but a new jargon. We have always had ap-plications from the Net such as Ya-hoo, Google, Hotmail, Facebook and eBay. However, this methodology of hosted model of computing has now evolved into being applied to almost
all applications that an organisation runs. Thus, Cloud computing started to gain immense focus from the cor-porates over the last two years.
There are broadly three catego-ries of Cloud computing services: 1. Infrastructure-as-a-Service (IaaS)2. Platform-as-a-Service (PaaS) 3. Software-as-a-Service (SaaS)
Infrastructure-as-a-Service (IaaS)Infrastructure-as-a-Service (IaaS) provides virtual server and hardware capability over the Net and it allows accessing and configuring the virtual servers and storage. For the enter-prise, IaaS Cloud computing allows a company to pay for only as much capacity as is used, and to bring more additional services online as and when required. Because this pay-for-what-you-use model resembles the way electricity, fuel or water is con-sumed; it is sometimes referred to as ‘utility’ computing. Amazon Web Services which offers companies the server and computing utility over the Net is an example. It obviates the need to buy huge server and storage hardware to be installed on premise.
Platform-as-a-Service (PaaS) Platform-as-a-service in the Cloud is defined as a set of operating sys-tems, middleware software and prod-uct development tools hosted on the provider's infrastructure. Developers create applications on the provider’s platform over the Internet. PaaS ser-vice providers may use APIs, website portals or gateway software installed on the customer’s computer. For ex-
Mr S R Nair
37
ample, services such as GoogleApps provides the customers the software platform on the Net and thus obvi-ates the need to buy them upfront. Users can tap these platforms to con-figure their application online.
Software-as-a-Service (SaaS) In the software-as-a-service Cloud model, the vendor supplies the hard-ware infrastructure, the software platform and the software applica-tion to the users. Services can be anything from Web-based e-mail to inventory control and database processing. Because the service pro-vider hosts both the application and the data, the end user is free to avail the services sitting from anywhere. Gmail, Salesforce.com and CRM online are examples of other software applications coming under SaaS.
Be clearly aware of cloud & non-cloud computing as you may get de-ceived by unscrupulous vendors us-ing jargons and terminologies. If you have to buy and manage hardware and software, what you’re getting at isn’t really cloud computing.
Public, Private & Hybrid cloudA public cloud sells services to any-one on the Internet. Like the way Amazon Web Services does. A pri-vate Cloud is a proprietary network or a hosted data centre that supplies hosted services to a limited number of people. When a service provider uses public Cloud resources to cre-ate their private cloud, the result is called a virtual private Cloud. A hy-brid Cloud is typically offered in one of two ways, that is, a vendor who has a private Cloud and forms a partner-ship with a public Cloud provider, or vice versa.
Why Cloud computing With Cloud computing, the cor-porates eliminate the headaches involved in owning and running everything in-house. It is easy be-cause you’re not managing hardware and software. Shared infrastructure means it works like a utility: you only pay for what you need and the upgrades are automatic, and scaling
up or down is not a difficult proposi-tion. It suddenly takes away the need for capital expenses (capex) and it becomes an operating expense (opex model. Thus, it brings a paradigm shift in computing.
Cloud-based applications cost less. That had resulted in many com-panies shifting its applications such as CRM, HR, accounting, messag-ing etc to the Cloud. An example to this is the famous online ap-plication www.salesforce.com. The management of sales force of most of the companies including the In-dian companies had moved into this hosted application. salesforce.com has millions of users online today.
Cloud computing benefits mo-bility and collaboration. The latest innovations in cloud computing are making the business applications more mobile and collaborative. It is similar to popular consumer applica-tions like Facebook and Twitter. As consumers, we now expect that the information we care about will be pushed to us in real time, and most of the business applications in the Cloud are heading in that direction.
The power of Cloud computing● It is an easy and innovative business investment model (Opex Model)● It shifts the responsibility of com-puting to the provider, thereby al-lowing corporates to focus on their core competency.● It provides business agility as you can scale, reduce, add and reconfig-ure your application and platforms● It facilitates economies of scale● It accelerates the pace of innova-tion particularly on the mobility and collaboration fronts.
Concerns on Cloud computingThere are still the big questions of data protection on Cloud comput-ing model. The following questions haunt the IT manager while he prepares his organisation to shift to Cloud computing model.How is the data encrypted?What level of account access is pres-ent and how is access controlled?Is the data always contained only on
the vendor’s systems?Does the vendor use any sub-contractors or rely on partnership to process the data?Is the data backed up and if so, where are the backups stored?What happens to copies of the data if the relationship is terminated or if the provider fails?Will the vendor provide archival copies of the data to the customer?How will the vendor react to legal inquiries about a customer's data set?What types of auditing tools are available?How are the compliance needs ad-dressed?
Software licensing on Cloud computingSoftware licensing forms the other worry of the managers. It gets more complicated in Cloud computing and is presently very ambivalent. Definitions of the number of users and license required are just emerg-ing. Managing the number of licens-es one needs for a Cloud deployment of custom application is not so easy. Questions like; do you license by user or do you license by processor etc. are not yet clarified by respective software and application vendors. So, a new understanding is required on licensing and usage on cloud com-puting.
How to go the Cloud wayCloud computing is evolving and is on the way to maturity but yet to fully address an organisation’s key concerns of security, licensing, compliance and legal framework. However Cloud computing throws up immense advantages to the users specifically on the investment model. Existing cloud applications such as Google, salesforce.com, yahoo, eBay, Amazon and other social network-ing applications vouch for the reli-ability and robustness of the cloud computing model.
Organisations intending to pro-ceed the Cloud computing way could start with putting those ap-plications that are not critical to it
38
into the cloud. Applications such as CRM, messaging (e-mail), service management etc. could start first. Core applications such as Financial Accounting, billing, asset manage-ment etc. could wait for the Cloud to fully mature and be capable of addressing security, licensing and ac-cessing concerns of the companies. While looking at which applications need to be put into the Cloud, the companies can rate them on various organizational criteria such as finan-cial, business, regulatory etc. This gives clarity to what can come to the Cloud and what needs to wait. Once this is finalised, companies could ar-
rive at which cloud model to choose i.e. whether it is the IaaS, PaaS or SaaS model and if the Cloud should be public or private in nature. Cost element of these models varies ac-cordingly.
Who are offering cloud Computing?Every major IT organisation in the world is offering one or the other model of cloud computing today. IT majors such as Microsoft, IBM, Sun, HP and Intel are there in the forefront with the services and they are putting huge investment in get-ting the offers ready. Application
providers such as Salesforce.com and GoogleApps are very firmly saddled in the scene whereas infrastructure provider Amazon Web Services had made a very early entry. Tata Con-sultancy Services has come out with a Cloud model of application for the Indian SMEs. In the time to come, every company connected with IT would make available one or the oth-er cloud computing offer. One thing is sure. Cloud Computing is here to stay, the main advantages being the Opex model of investment, the agil-ity factor of scaling up and down and the true convenience of mobility and collaboration in business.
E-Mail CRM Business Criteria Service Criteria ? ? SaaSARCHIVING Business
IntelligenceOrganization Criteria
Technology Criteria
? ? PaaS
Infrastructure SERVICE Management
Security & Regulatory Criteria
Finance Criteria
? ? IaaS
APPLICATION CRITERIA PRIVATE CLOUD
PUBLIC CLOUD
Kerala rated best tourist destinationIt was for the second consecutive year that the State has been given this recognition
“Kerala topping the list is a no-brainer,” said a survey conducted by the Nielsen
Company for the Outlook Traveller magazine. The survey also rated the State as the second best State for winter destination after Goa, and the fourth best beach destination. Kochi has emerged as the sixth best city for tourists after Jaipur, Bangalore, Del-
hi, Mumbai and Hyderabad.In line with the survey results,
the number of International tour-ists visiting Kerala jumped from 6.50 lakh in 2010 to 7.3 lakh in 2011, while that of domestic tourists grew from 85 lakh to 93 lakh.
Foreign exchange earnings of the State from tourism grew by 11.18 percent to touch ` 4,221 crore,
while the total earnings from tour-ism touched ` 19,037 crore, a 9.4 per cent increase.
Reacting to the news, Kerala Tourism Secretary T.K. Manoj Ku-mar said that the Outlook Survey came as a big endorsement for Brand Kerala. “It will spur us to take it for-ward with many more new initia-tives,” he added.
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40
Indians are living longer. That is reason for cheer but it also throws up the challenge of providing old
age security. Till now, instruments for the same such as pension plans were available only to the lucky ones in the organised sector. For the people in the unorganised sector, who constituted 90 per cent of the work force, the choices were limited.
The government introduced the New Pension Scheme (NPS) to re-deem this situation and enable peo-ple, especially those in the unorgan-ised sector, to receive a pension. The NPS is a defined contribution pen-sion scheme, where the pension would depend on the amount contributed to the scheme by the person and the returns generated on it. The scheme is open to Indians aged between 18 and 60. The amount deposited in the scheme will be invested in asset class-es as per the choice of the account holder. The money can be withdrawn, when the person retires, subject to certain conditions.
The scheme is regulated by the Pension Fund Regulatory and De-velopment Authority (PFRDA). All employees of the Central govern-ment who joined after 1 January 2004 are compulsorily enrolled under the scheme. They have to make a contri-bution of 10 per cent of the basic pay,
DP and DA every month to the NPS account. The Central government will also make a matching contribution.
Who will manage the money The money in the NPS account will be managed by pension fund man-agers approved by the government. At present, six fund managers – SBI Pension Funds Private Ltd, UTI Re-tirement Solutions Ltd, ICICI Pru-dential Pension Funds Management Company Ltd, IDFC Pension Funds Management Company Ltd, Kotak Mahindra Pension Fund Ltd and Reliance Capital Pension Fund Ltd – have been selected to manage the pension fund. The account holder can choose the fund manager for his ac-count from among them. The choice is an important one as the returns generated on investment, and thereby the pension, depend to a large extent
on the performance of the fund man-ager.
Asset allocationThe chosen fund manager can in-vest the money in the NPS account in three different investment classes with varying degrees of risk.
a. Class E – equity market in-struments; a maximum of 50 per cent of the portfolio has been set for this class considering their risky nature
b. Class C – predominantly fixed income bearing instruments
c. Class G – purely fixed in-come instruments (government bonds)
The investor can specify the asset allocation in two ways – Active choice and Auto choice. If ‘Active choice’ is selected, the investor has to specify the percentage of funds that goes into each of the three classes of assets. If ‘Auto choice’ is selected, the money will be distributed among various pre-determined classes according to the age, with the portion invested in risk-ier assets decreasing as years pass by.
What are the charges?A main advantage of the NPS is that the charges associated with it are very low compared to that of pension schemes available in the market. The annual fund management charge is
NPS is a defined contribution pension
scheme, where the pension would depend on the amount contributed to the scheme by the person
and the returns generated on it
New Pension SchemeFor the autumn days
PERSOnAL FInAnCE
An idea for private companies who want to secure their employees’ old age
41
To encourage people to join the scheme the Central government
has announced that it will contribute `1000 per year to each subscriber of Unorganized sector and NPS Lite sector till 2013-14. The benefit will be available only to persons with a minimum contribution of `1,000 and maximum contribution of `12,000 per annum, and those who are not covered under employer as-sisted retirement benefit schemes or social security schemes such as the employee provident fund.
0.0009 per cent of the corpus, or `9 a year for managing a corpus of `1 lakh, which is probably the lowest in the world. There are other charges such as the annual maintenance charge (see box) but is still much lower than the `1500-2000 charged by mutual funds and ULIPs.
Tier I and Tier II accounts The NPS account has a two-tier structure. The Tier-1 account is the basic account and investors cannot withdraw funds from it prematurely. A person having a Tier-1 account can open a Tier-2 account. The money in the Tier-2 account can be withdrawn anytime before retirement, subject to a minimum balance of `2000. Funds can also be transferred from Tier-2 to a Tier-1 account, but not vice-versa. One needs to make at least one con-tribution every year to the Tier-1 and Tier-2 accounts. The minimum amount per contribution is `500 for the Tier-1 account and `250 for the Tier-2 account. In addition the min-imum contribution made to the Tier-I account in a year should be at least `6,000. A contribu-tion of at least `1000 is required to open a Tier-2 account.
The money in the Tier-1 account can be withdrawn when one reaches the retirement age, which has been set at 60. Contributions to the scheme also stop at this age. 40 per cent of the accumulated corpus has to be used to buy an annuity from IRDA, thereby ensuring a steady stream of income during retirement. The investors also have the option of selecting an annu-ity which will pay a survivor pension to the spouse. The remaining amount can be withdrawn as a lump sum or in a phased manner, before reaching age 70, when the account will be compul-sorily closed and the proceeds trans-ferred to the account holder. With-drawals before reaching the age of 60 are also permitted, but the account holder will have to use 80 per cent of the corpus to buy the annuity. In case
of the death of the account holder, the nominee will get the accumulated corpus as a lump sum.
The proceeds from the NPS ac-count are taxable at present. But the Direct Tax Code that comes into ef-fect in the next financial year proposes to make NPS tax free at the time of withdrawal. Moreover, the DTC will remove the tax exemptions on most of the current tax savings schemes such as Unit Linked Insurance Plans, Equity Linked Savings Schemes, Term deposits, National Savings cer-tificates, Long term infrastructures bonds, etc. The tax saving invest-ment of `1,00,000 can be done only in provident fund, superannuation fund, gratuity fund and the NPS. Also contributions made by the employ-ers to the NPS will be tax free for the employees. Some employers are even thinking of modifying the compensa-
tion structure by replacing taxable com-ponents with the tax-friendly NPS.
How can you joinAn individual can open an NPS account through in-
stitutions called ‘Points of Presence’ (POP). Most of the big banks are POPs. The authorised branches of these institutions act as Service Pro-viders (POP-SP) providing services to NPS subscribers. Currently there are more than 35 POPs in the coun-try, including major banks and finan-cial institutions such as LIC and they together have over 12000 POP-SPs.
People who join the scheme would be given a Permanent Retire-ment Account Number (PRAN). A central record keeping agency (CRA) will maintain all the accounts, which can be accessed by the fund manag-ers. This allows the subscribers to ac-cess the account from anywhere in the country. They can retain their ac-count when they change jobs or resi-dences. The fund manager can also be changed easily if they choose to.
The NPS also has a corporate model that enables corporate to
join the scheme through any one of the POPs. Thus employees can join the NPS within the purview of their employer–employee relationship. The scheme allows organisations to co-contribute to their employ-ees pension. From 1st Apr, 2012 the contribution made by an employer to the NPS to the extent that it does not exceed ten per cent of the salary of the employee, is allowable as a de-duction from business income under section 36.
An NPS Lite model, that caters to the lower section of the society, with lower administrative and trans-actional costs is also available.
The annual fund management charge is 0.0009 per cent of the corpus, or `9 a year for
managing a corpus of `1 lakh, which is probably the lowest in the world
Swavalamban Scheme
Corporate NPS
The scheme• OpentoIndiansagedbetween
18 and 60. • Sixfundmanagers• Investmentoptionsinclude
stock, government securities, FDs etc
• Investorcanchoosefundman-ager, investment mix
• Lowestfee
42
The average life expectancy of
a corporation on the Fortune 500 list is just
between 40 and 50 years. A third of the companies on the 1970 Fortune 500
list had vanished by 1983 - acquired, merged, broken
up or bankrupt
The buy it-keep it-forget it argument may not work in the stock market anymore
Long-term investing
It’s dead!
selection, or should I say luck, that matters more than the term of your investment.
But all is not lost. Even if 9 out of 10 companies that you invest in shut down, you could still make money on the lone survivor. And if it was an In-fosys, you end up being much richer. As speculators say, “Cut your losses, let your profits run.” Here the losses are cut by the limited liability clause, which acts as a stop-loss, on the los-ing trades, while the winning trade gets you the money.
The picture changes once the companies survive their infancy, and have attained a certain size. But only a little. Even large companies are vulnerable to the changes in the ev-er-changing environment. A compa-ny built up over decades could turn bankrupt in just a couple of years. This is true even for the best among the lot. The average life expectancy of a corporation on the Fortune 500 list is just between 40 and 50 years. According to Arie de Geus, an or-ganisational science expert and the
The steeper the rise, the harder the fall. Many of the technology stars of the past decade are sinking, while new ones take their place. Satyam Computers, once the darling of the stock market, is one such example
“Our favourite holding pe-riod is forever,” once said Mr Warren Buffet, argu-
ably the most successful investor of our times. There isn’t a better defini-tion for long-term investing. Nor can one think of a better advertisement for it.
Long-term investing always commanded a respectful position in the stock market lexicon. Such inves-tors provide the capital that funds the growth of companies. They also provide the much needed stability to the market, allowing companies to focus on their business, without worrying about their share prices. So went the argument in its favour.
The investors too gained. Rome wasn’t built in a day, so too weren’t great companies. Investing for the long term could help them ride out the eccentricities of the market and gain from the growth that the companies achieved. One just had to invest in good companies and be patient enough: the returns would come. Investors could afford to buy and forget, and were spared the chore of tracking their investments on a daily basis, and taking decisions, at each turn. They also saved on the brokerage associated with the trades and the gained from tax deferral, as the gains weren’t realised, till the stocks were sold. The governments too rewarded them with lower tax rates on capital gains.
Speculators were and are the bad
boys: the greedy ones responsible for all the ills of the market. The neces-sary evil that had to be borne only for the liquidity they provided to the markets. Only the brokers loved them, for the commissions they pro-vided.
A closer look at the companies show a different picture though. Long-term investing might not be the easy way to riches, at least in the future.
Companies have a life of their own. They are separate legal entities – going concerns – that could last forever. But they suffer from high infant mortality. Studies show that the average life expectancy of firms around the world is just around 10 years. And an investor who is stuck with the companies for the long term would definitely lose money on most of them. So here it is the stock
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author of the award winning book The Living Company, a third of the companies on the 1970 Fortune 500 list had vanished by 1983 - acquired, merged, broken up or bankrupt.
If you had invested in them during their infancy and youth and held on, you would have definitely made a for-tune, only to lose it if you held it long enough. Investors buying into them in their heydays would have spent a for-tune in doing so, and risk losing it. The timing of the purchase does have some value, after all. One shouldn’t try to time the market, but you are not buy-ing the market, you are buying individ-ual stocks, and timing matters there.
Drastic changes in business envi-ronment have the potential to uproot even the well-established companies. The IT revolution changed the busi-ness scene dramatically while the fi-nancial crises added to the pain. As a result, a number of century-old com-panies have bitten the dust. The 150+ year old Lehman Brothers, the 90+ Merryl Lynch, 132 year old Eastman Kodak, AT&T Corp, formed in 1880,
In a world where the life of companies is coming down, investing for the
long term would be a big risk. When one isn’t sure
of tomorrow, how can one even think of a day 20-30
years hence
the computer maker NCR founded in 1884, all folded up or were taken over in the past decade. Auto giants such as GM and Chrysler went bankrupt before being helped to health by the government. One wonders how much money long-term investors would have lost on them. Savvy speculators would have ditched the sinking ships much earlier, while long-term inves-tors would have waited for the storm to pass over, or even bought more to reduce their average purchase price.
If that is the case of the old com-panies, the new ones present a scar-ier picture. In the technology sector, companies rise high and fast. Change, the only constant in life, is happening at an increasingly faster pace as time passes by. In the last century, if it took a few decades for a company to reach its peak, it might happen in a few years in the current century. The mar-ket value of Facebook, the five-year-
old company, is estimated at $100 billion today, a fourth of the world’s most valuable company.
Every rise has a fall. The steeper the rise, the harder the fall. Many of the technology stars of the past decade are sinking, while new ones take their place. Netscape which pioneered the Internet revolution with the browser – Netscape Navigator – is nowhere to be seen today. Chances are slim that many of the replacements would be
around a decade later. Such is the na-ture of the technology sector. The net effect would be a reduction in the life expectancy of companies.
At the same time, the technol-ogy sector has stolen a march over the other sectors in terms of wealth creation. They are steadily increasing their share in the list of most valued companies, with the Apple leading the way. A serious investor wanting to get returns that exceed the market cannot but take an exposure to the sector, so much so that even Warren Buffet has started turning to them.
The increasing share of technol-ogy companies and their reduced life expectancy pose a serious challenge to long-term investors. The lifespan of humans might be increasing, but it isn’t necessarily so for companies. This is an unsettling thought for investors, especially the ones who have been used to investing for the long term. In a world where the life of companies is coming down, investing for the long term would be a big risk. When one isn’t sure of tomorrow, how can one even think of a day 20-30 years hence.
The pricing strategies of technol-ogy companies could be a pointer to the new age investor. When they launch a new product, they price it at a premium, with a view to recovering their costs and more before the next product comes and wipes it out of the scene. Investors also would do well to devise a similar strategy. Speculators – the nimble ones that identify the op-portunity, cash in on it and move out fast – will find it easier to adapt this strategy than the long-term investors.
The commission argument also has lost its relevance with the costs coming down for short-term traders. Today many brokerages charge a flat fee for a period and allow clients to trade as much as required, against the brokerage per trade model followed before. In short, the game is becom-ing more and more in favour of the speculators at the cost of the long-term investors.
“In the long run,” said Lord Keynes, the godfather of modern capitalism, “we are all dead.” Long-term investing might not have to wait that long.
The steeper the rise, the harder the fall. Many of the technology stars of the past decade are sinking, while new ones take their place. Satyam Computers, once the darling of the stock market, is one such example
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Domestic ForeignNo: of tourists
8595075 6,59,265
% growth over 2009
8.61 % 18.31 %
% share in India
1.16% 11.4%
Per Day Expenditure
`1800/ `3600/-
% growth over 2009
20% 12.5%
Average duration of stay
6 days 16 days
Earnings `9282.68 crores
`3797.37crore
% growth over 2009
30.33% 33.09%
% share in India
=3797.37*100/64889 = 5.85%
Total Earn-ings (Direct)
`13080.05 crores
% growth over 2009
31.12%
Total revenue generated(direct and indirect)
`17348 Crores
% growth over 2009
31.12%
Rank of Kerala among States in India in number of Foreign tourists: 7Rank of Kerala among States in India in number of Domestic tourists: 16Major Tourist Attractions in Kerala
Tourism in Kerala in 2010
KERALA STATISTICS
BeachesBackwatersHill StationsWildlife
WaterfallsAyurvedaFestivals & Artforms
Top 10 Destinations for foreign tourists in Kerala in 2010Kochi City - 116536 Kovalam - 108639 Fort Kochi - 65396 Varkala - 45545 Thiruvananthapuram - 43032 Alappuzha - 39531 Maradu - 37881 Thekkady - 27537Kumarakom - 26599 Munnar – 19690
Tourism season in Kerala
Jan 87553Feb 86747Mar 61334Apr 50910May 26783Jun 24685
Jul 36188Aug 49518Sep 37859Oct 49512Nov 66526Dec 81650
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Tourism Infrastructure in Kerala
Hotel Rooms in KeralaType No: of Hotels No: of rooms5 star deluxe 4 5125 star 14 11844 star 31 17933 star 305 74802 star 98 18881 star 8 273Apartment Hotel
1 58
Heritage 22 372Silver & Gold B &B
1 2
Total 484 13562
No: of houseboats in Kerala backwaters : 1000
No: of recognized operators in Kerala Inbound tour operators – 31Travel agencies – 8
Tourist transport operators – 26Domestic tour operators – 5
Country wise foreign tourist arrivals to Kerala UK (23.7%), USA (10.8%), France (9.8%), Germany (7.6%) Australia (5.6%).
1.2 lakh(2.0%) international tourists coming to India, enter the country through the Trivandrum Airport and 1.1 lakh (1.9%) through CIAL.
Tamil Nadu, Karnataka, and Andhra Pradesh account for most of the domestic tourists coming to Kerala
Kerala’s Share of tourism in India and the WorldInternational tourists in 2010 in the world: 939 millionInternational Tourism Receipts (US$ billion) 919.0International tourists in 2010 in India: 5.78million(0.61 per cent of world total)Share of India in International Tourism Receipts US$ 14.19 billion - 1.54%International tourists in 2010 in Kerala: 6,59,265 (11.4 per cent of India and 0.06 per cent of world)
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RNI No. KERENG02297`:50 US:$5
Enterprise and Economic Update Kerala, a venture supported by KSIDC
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