Vol.1 Issue 7 August 2011
RNI No. KERENG02297
Editor K J Jacob Copy Editor Anna Mathews Principal Correspondents Aby Abraham G K A P Jayadevan Senior Correspondent Kuruvilla Chacko Sub-Editor Asha Jacob Design and Layout Renu Arun Website Suhas K Ranju Thomas Sales and Marketing Jose Thomas Printed, published and owned by K J Jacob and published from Independent Media, XI/173 B, Mulakkampallil Buildings, Kunnumpuram-Civil Station Road,Thrikkakkara, Kochi,Kerala-682 021 Phone: 0484-2421916 and Printed at Sterling Print House Pvt.Ltd. Door No: 49/1849, Ponekkara-Cheranelloor Road, Aims Ponekkara P.O., Kochi - 682 041 Phone : +91 484 2802522, 2800406 *Editor: K J Jacob For subscription, Advertisement : sales@economic-update.in Tel: +91 99475 39023 We value your feedback. Please write to us at: letters@economic-update.in Read us at www.economic-update.in Cover design : Anoop Radhakrishnan
*Editor responsible for selection of news under the PRB Act.
Consumer’s festival
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onsumer goods manufacturers consider Kerala as their own country, even though the share Kerala contributes to their total sales is commensurate with the share of population. However, Kerala offers potential for growth as the market is spread across the State, and not concentrated in one or two major cities. As the towns grow, so will the sales, they hope. The cover story of this issue focuses on the Onam extravaganza which visits us every year without fail. Since the festival season across Indian States begins with Onam, companies look forward to the response from the State to their products. It’s a big business time for the players: up to 50 per cent of the total sales happen during the course of the season. So it’s designing offers, sales promotions, arranging logistics…every segment of society is involved in this big event. We tried to bring some of the enchanting visuals from this mela called Onam sales. The Kerala State Industrial Development Corporation (KSIDC), the prime mover of Kerala’s industry, has launched its golden jubilee celebrations in style. But it became a unique event in that it chose to tread an untrodden path by instituting a scholarship scheme for 50 girl children selected from across the State from below the poverty line families. Under the scheme, they will get a monthly scholarship until their graduation. It was natural for KSIDC to honour the big businessmen who dot Kerala’s economy; but to think of the future generation was a remarkable move from KSIDC. We hope that corporates in Kerala would lose no time in following in the footsteps of their mentor and set up similar schemes so that no deserving child in the State is forced to abandon the dream of better education. We have introduced Project Tracker, a column, with this issue. It will be an update of what is happening to the big projects which are at various stages of implementation in Kerala. Several of them hold the key to shaping our tomorrow; and hence we thought it fit to follow them up closely and report to you. Editor
Contents COVER STORY
30 The white harvest Onam is the biggest shopping season in Kerala. It also marks the beginning of the festival season in India. No wonder, manufacturers of consumer goods focus all their attention to Kerala to ensure that they have a good going in the season. Offers, promotions, bonus, bumper prizes, decorations, logistics‌it’s an economic activity in which every Keralite takes part.
Rejuvenating Ayurveda
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CARe-Keralam, ready for launch, will help Ayurveda go global
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Contents 15
Powering growth
KSIDC powered Kerala’s industrial growth in pioneering segments in the last 50 years. It kicks off golden jubilee celebrations by unveiling projects entailing an investment of `1 lakh crore
19 The Golden Smiles KSIDC launches scholarship scheme for 50 children. It hopes more companies will take the cue 22 A valuable card Tarun Das, nominated to Kerala planning Board, may get India Inc focus on Kerala
23 Ooh La La! The recently concluded Kochi International Fashion Week (KIFW) was more than just hype and entertainment. It signaled scope for good business, too
38 The next big .thing Didn’t get the favourite .com address? Don’t worry. You can get your own top level domain! 40 Beyond FDs Debentures with high yields and ratings give investors a chance to lock in interest rates as they peak 42 The future is here Derivatives are tools that help manage risks. They help discover prices too 44 All that glitters… Gold prices have many put all their eggs in one bag. What if rupee strengthens against dollar? 5
The pipeline that is set to change the way industries are run in Kerala. Work on the first phase of the GAIL pipeline—the KalamasseryUdyogamandal-Ambalamugal pipeline—is fast progressing. In the second phase, the pipelines will be extended to Bangalore via Coimbatore and to Mangalore. The work on the second phase is expected to start in October. 6
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Photo: Kuruvilla Chacko
Recently I came across a report which said economists worry that the huge foreign exchange outflow for purchase of gold could impact India’s growth prospects. This is a precarious situation: as a nation, we cannot allow our precious resources to be kept as a dead investment at a time when cost of funds for industrial and development projects is going through the roof. Perhaps we should encourage the gold loan companies to upgrade and streamline their operations in such a way that they can fund big projects, and not just small ones as they do now. S Chandrasekharan, Kochi Your cover story was an eye-opener. I have always believed that they were beyond regulatory mechanisms and were charging interest rates as they please. It is reassuring to know that the government has a system in place to monitor their operations. K N Vijayalakkshmi, Kollam Indians are incorrigible admirers of gold, and spend a fortune on it. It is sad that the money that could be used to generate employment and create wealth is kept as dead investment. In a way, the government should come forward and encourage the means to monetise this investment. Gold loans can be one among them. The government should ensure that such companies charge lesser interest rate as they have no risk in dispersing loans. George Thomas, Kochi 8
Coir is most wanted in the highly eco-conscious European countries. So, instead of making routine products, units in Kerala must turn to high-end products. If we don’t have technology and equipment, we must source it from wherever they are available. K N Nandakumar, Kochi
The story on aqua tourism made a good reading. In fact the government must promote such new initiatives so that we exploit our tourism potential to the hilt. It is sad that often we fail to understand the opportunities that lay before us and utilise them to create employment at home. Instead, we export our youth for poor wages. K Mohammber Basheer, Kozhikode Whenever I call up a tourism operator for a package for my visiting friends or relatives, the offer used to be the same. The aqua tourism projects are a refreshing change. Now that they have set up some projects, the authorities should also market them efficiently so that more people come to know about it. R Jyothilal, Kochi Your story on coir geo-textiles was timely. We often hear complaints about the difficulties the coir industry in Kerala faces. As someone who has lived and worked in Europe, I can say that the future of the industry lies in making value-added products and selling in markets which are willing to pay a premium.
I welcome your stories of corporate social responsibility. Corporates must understand that they make use of the cream of society, be it human resource or raw material or infrastructure. Of course, at a cost. They ought to take care of those who are left behind as well. It will do them good also: targeted CSR initiatives will help change the image of industrialists as exploiters. Joseph Thomas, Thiruvananthapuram I would like to congratulate you for the importance you give photographs. The big picture indeed gives readers a chance to get a close look at big projects about which we read a lot. And the Business Called Life throws light on the economic activities that take place on the margins. Together, they help us get a better idea about our economy. K Raj Krishnan, Kottayam I was pleasantly surprised to find an article on rainwater harvesting in Update. Generally economic/ business magazines deal exclusively with business matters. The article was really informative. I request you to continue including at least one article that deals with information which one can put to use in everyday life, in each issue. S Saju, Thiruvananthapuram
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I say!
The world deserves to see such a wonderful place Shah Rukh Khan, Bollywood star, after launching Raviz, a premium luxury resort in Kollam
I am a businessman, and my job is to offer good products, good prices, good service and frequent supply M A Yusuffali, managing director of Emkay group, on his foray into the lucrative Indian retail market I still nourish the hope that Kovalam will become the number one beach resort in the world and my objective is to make it the best. I think IT and Tourism can change Kerala provided appropriate facilitation and support is extended Capt Krishnan Nair, chairman, the Leela group I have tremendous respect for Indian politicians. I have said that in my book. They work very hard, they are very committed, they multi-task like anything, and they have to constantly deal with demands of people Nandan Nilekani, chairman, UID project, while commenting on the Lok Pal Bill
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You cannot have a carpet under which you can keep all these things and at the same time expect these things will remain stable Pranab Mukerjee, Finance Minister, commenting on RBI rate hikes The land acquisition policy has to factor in rehabilitation as part of the package and give potential value of land, jobs K P Singh, DLF chairman, when asked why are there so many problems around land acquisitions Because the (telecom) industry is at war with itself and because they are trying to destroy each other, the consequences are that we are destroying the hen that lays the golden eggs Kapil Sibal, Union Telecom Minister commenting on the price war
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AT A GLANCE
S&P’s Indian boss steps down after US downgrade
Weeks after Standard & Poor’s stripped the United States of its AAA credit rating, the rating agency said Deven Sharma, its president, will step down from the company. McGraw-Hill, the parent of S&P, said he will be replaced by Douglas Peterson, now the chief operating officer of Citibank, Citigroup’s chief banking arm. The August 5 downgrade sent shock waves through global financial markets and was sharply criticised by the Obama administration, which said the agency’s analysis was fundamentally flawed. Other major rating agencies have maintained their AAA ratings on the US. Mr Sharma, 55, son of former chairman of Bharat Coking Coal Ltd R N Sharma, was born in Dhanbad, Jharkhand. He holds a Bachelor’s degree from Birla Institute of Technology, Ranchi. Europe’s debt crisis spreads The bond yields of Italy hit its highest level in 14 years and Spain in 10 years, raising fears that they will be priced out of the debt markets, severely restricting their ability to raise money from the 12
markets thereby requiring bailouts. The borrowing costs are rising as investors fear that their already low growth will be threatened by an economic downturn, affecting the ability of these debt ridden countries to service their debt. Italy has the second highest debt to GDP ratio in Europe -120 per cent, next only to crisis ridden Greece which has a debt – GDP ratio of 160 per cent. Australia introduces Carbon Tax
The Australian government has announced a slew of measures to reduce carbon emissions, the carbon tax being the centre piece. Effective July 1, 2012, about 500 of Australia’s top polluters will pay a fixed price, starting at Aus$23 per tonne of carbon dioxide emissions and increasing 2.5 per cent a year for 3 years, after which the scheme will graduate into an emissions trading scheme. The government proposes to spend half the revenue from the tax to compensate households for higher prices as the companies pass on the costs, while 40 per cent will be used to help industry switch to cleaner forms of energy. It is expected that the tax will reduce emissions by
five percent over 2000 levels, and would cut 159 million tonnes of carbon pollution by 2020. Africa faces worst drought Companies around the world might be heading to Africa to buy land for agriculture, but the continent is currently facing the worst food crisis of this century. A severe drought, thought to be the worst in the last sixty years is threatening the lives of a more than 12 million people in Africa. The worst affected nations are Somalia, Ethiopia, Kenya and Uganda, with the UN formally declaring a famine in two areas of southern Somalia. The problem has been complicated by the presence of armed rebels who block access to relief organisations to areas under their control. The UN has received $1bn as aid for the region, but it expects that it will need another billion to stave off widespread starvation. South Sudan sits on oil wealth
South Sudan gained independence from Sudan on 9 July 2011, becoming the 193rd independent country in the world. The new nation faces challenges from
lack of economic development, and from rebel groups within the country. Oil is the main source of income for the country whose population depends on subsistence agriculture for survival. The bulk of Sudan’s oil wealth – 75 per cent - is in South Sudan, but being landlocked it has to depend on the oil pipelines that run through Sudan, to the Red Sea, to sell its oil. Sudan also has the bulk of the refineries, needed for processing the oil. Steve Jobs hangs up the boot
Steve Jobs, tech visionary and founder of Apple Inc, under medication for pancreatic cancer, has stepped down as the chief executive of the technology giant and handed the reins to chief operating officer Tim Cook. Jobs, credited with transforming personal computing and technology industry, will, however, function as chairman of the board. Jobs founded Apple Computer with his friends Steve Wozniak and Ron Wayne in the garage at his parents’ California home on 1 April 1976 when he was 21. Jobs oversaw the launch of first the iPod music player, then the iPhone and now the iPad.
AT A GLANCE
Toyota is doubling capacity...
Encouraged by the response to Etios, its new sedan, and Etios Liva, the hatchback, Toyota Kirloskar Motor Limited (TKML) has decided to expand its capacity by 1 lakh units a year. The expansion will require an investment of `898 crore in the two plants of TKML, the Indian JV of Japanese giant Toyota. TKM is currently expanding the capacity at the plants from 1.5 lakh units to 2.1 lakh units, and the new addition will take it to 3.1 lakh units. It has envisaged an additional investment of `750 crore by another group venture, Toyota Kirloskar Auto Parts (TKAP), to increase localisation of components by setting up aluminium casting and machining lines. ...as Indian car makers struggle Sales of Indian car makers shrunk in July, affected by increasing interest rates and rising fuel prices. The top three in the Indian market Maruti, Hyundai and Tata Motors saw a fall of 26.2, 11 and 38.3 per cent respectively in domestic sales compared to the same period last year. But the sales of global majors Toyota,
General Motors and Ford increased over the same period, powered by their entry into the small car segment. Toyota had a 98.89 per cent jump in its sales in July, while GM sales increased by 33.46 per cent and Ford’s 10.76 per cent. The global players dominate every major car market in the world, except India, where small cars rule the roost. BHEL among most innovative cos
Public sector Bharat Heavy Electrical Limited (BHEL), along with Hindustan Unilever Limited, has made it into the top 10 of the Forbes list of most innovative companies in the world. The list, compiled on the basis of ‘Innovation Premium’ – the premium that investors assigned to the companies on expectations of newer products from innovation, has US technology major salesforce.com on the top. HUL occupies the sixth position, BHEL the ninth and Infosys the 15th position on the list. Amazon is at second, Apple at fifth and Google at seventh position. Telecom policy changes The Telecom Commission has approved a set of policy changes aimed at redrawing the scam
ridden Indian telecom landscape. They include a uniform revenue share of 8.5 per cent of sales, limiting the maximum amount of spectrum a company can hold, delinking spectrum from licences in the future and reducing the validity of renewed licences from 20 years to 10 years. Mobile operators will now have to adhere with stricter roll out norms offering services in all regions with a population of 500 or more. The move is expected to raise the capital and operating expenditure of telecom companies significantly. At present they pay 6-10 per cent of sales as revenue share. Mobile phone companies will receive the contracted amount of spectrum (6.2 MHz for GSM and 5 MHz for CDMA) at the prevailing market value of spectrum, determined by the regulator. Companies like Bharti Airtel which hold excess spectrum now will receive only 6.2 MHz when they renew their permits. 11 mobile phone companies will have to renew their permits between 2014 and 2021. Exports zoom 81% in July
India’s exports jumped up by an unprecedented 81.8 per cent year-on-year to $29.3 billion in July, after registering a robust 46.45 per cent growth in June, led by engineering, petrochemical, electronics and gems & jewellery segments. Imports for the period also grew 51.5 per cent to $40.4 billion leaving the trade deficit for the month at $11.1 billion. But the exports are expected to slow down in the second half of the fiscal, due to the economic worries in US and Europe. The government has tempered the export growth expectations to 25 per cent growth this year and has set a target of $500 billion in 2013-14. GSAT 12 to boost tele-medicine
The ISRO successfully launched communications satellite GSAT-12 from its Satish Dhawan space centre as Vishakapatnam. The satellite having 12 transponders and weighing 1400 kg was launched into a geo stationary orbit at a distance of 36,000 km from the earth by a Polar Satellite Launch Vehicle. It was built at a cost of `90 crore and will help hospitals and universities launch tele-medicine and distance learning facilities. 13
AT A GLANCE
Chandrasekhar is plan panel deputy chief
The State government has reconstituted the Planning Board by inducting experts from industry. Chief Minister Oommen Chandy is the chairman of Board. Former Union cabinet secretary K M Chandrasekhar is its new vice-chairman. E Sreedharan, MD, Delhi Metro Rail Corporation, Tarun Das, former secretary-general, CII and G Vijayaraghavan, former CEO, Technopark, are the non-official members of the Board. This is the first time that the planning board is having experts from the industry as its members. Manappuram enters drug retailing biz Manappuram Healthcare Limited, the healthcare arm of gold loan major Manappuram group, is making a big foray into drug retail business with a plan to open 500 branded stores across south India in five years. Christened MaCare, the air-conditioned stores will be open 24 hours a day and will sell drugs at a 10 per cent discount. The company is also planning to invest `1,000 crore over the next couple of years to set up 400 medical and dental 14
clinics and diagnostic laboratories in different locations in south India.
was leased by Technopark last December.
Kerala Annual Plan at `12010 crore The annual plan outlay for Kerala for 2011-12 has been finalised at `12,010 crore. This is about 20 per cent higher than the `10,025 crore plan for the last fiscal. The State had proposed an outlay of `11,030 crore for 2011-12. The plan was agreed upon at a meeting between the deputy chairman, Planning Commission, Montek Singh Ahluwalia and chief minister Oommen Chandy.
ICTT hosts largest vessel to visit south Maersk Sembawang, the largest container vessel to visit South India, berthed at the Vallarppadam ICTT, on 21st July 2011. The Singapore flagged vessel is 319 metres long and has a capacity of 6,478 twenty feet equivalent units (TEUs). The vessel came to Kochi from Europe and left for China after a brief stop here. The ICTT handled 1698 TEUs for the vessel with the productivity level exceeding 30 moves per hour. The vessel’s visit to Kochi is seen as recognition of the ICTT’s strategic location and its capability to handle large mainline container vessels with the highest productivity standards. The previous largest container ship to call on South Indian ports was the Maersk Kalamata, which had a length of 303.83 metres and capacity of 6,416 TEUs.
`1000-crore TCS global academy at Technocity
Tata Consultancy Services (TCS) and the State government have signed a memorandum of understanding (MoU) to set up a global training academy on the Technocity campus in Thiruvananthapuram. The MoU was signed by Mr T Balakrishnan, additional chief secretary (Industries and Commerce), on behalf of the State government and Mr N Chandrashekharan, CEO & MD, TCS. The agreement also provides for establishing SEZs for software development at Technopark Thiruvananthapuram and Infopark Kochi. TCS will invest `1,000 crore towards the construction of centre for which 82 acres of land
Oceanarium project gathers momentum
KSIDC has extended the date for the submission of request for qualification (RFQ) applications for the `350 crore oceanarium project to September 24, 2011. The
RFQs will be used to shortlist applicants for the public-private partnership project which would be set up under the Design, Built, Finance, Operate and Transfer (DBFOT) model. The project, slated to come up on 40 acres of land at Puthuvypeen, Kochi, will be awarded through a competitive bidding process. The proposed fourth generation oceanarium is expected to turn into a major tourist attraction, offering a unique underwater experience. It will have an aquarium alley, deep sea tunnel, polar pavilion, shark tank, touch tank and other entertainment facilities. The detailed feasibility report for the project has been completed by a consortium of Mahindra Consulting Engineers and Jacques Rougerie Architecte, France. The conceptual design for the project is now underway. UAE to open consulate in Kerala soon The United Arab Emirates (UAE) will set up its second consulate within a year in Kerala, the first one being in Mumbai. UAE has signifiant business interests in the State – the ICTT at Kochi is run by DPWorld and SmartCity, Kochi is promoted by Dubai’s Tecom Investments. UAE’s Ambassador Mohammed Sultan Abdalla Al-Owais gave the official letter for facilitating the consulate to the Chief Minister Mr Oommen Chandy recently.
KSIDC golden jubilee
Chief Minister Oommen Chandy lights the lamp, marking the launch of the year-long golden jubilee celebrations of KSIDC. On the dais are (from left) KSIDC Managing Director Alkesh Sharma, Planning Board Vice-Chairman K M Chandrasekhar, KSIDC Chairman and Prime Minister’s Principal Secretary T K A Nair, CII Kerala region Chairman Jose Dominic, Industries Minister P K Kunhalikkutty and former Chief Secretary V Ramachandran
Powering growth KSIDC powered Kerala’s industrial growth in pioneering segments in the last 50 years. It kicks off golden jubilee celebrations by unveiling projects entailing an investment of `1 lakh crore
K
erala State Industrial Development Corporation (KSIDC) has entered a mission mode. After successfully identifying areas of growth and handholding enterprises for the last 50 years, the State govern-
ment’s premier industrial promotion arm now seeks to change the State’s industrial landscape with a slew of projects as it kicks off its golden jubilee celebrations. In style, as well as in content. At
a high profile meet attended by the who’s who of Kerala’s political and industrial arena, KSIDC honoured 50 entrepreneurs who helped make the State’s industry and economy what it is today. It also went one step ahead 15
KSIDC honoured 50 entrepreneurs with ‘Excellence in entrepreneurship’ awards. (In pic) Geojit BNP Paribas managing director C J George receives the memento from Chief Minister Oommen Chandy
The who’s who of Kerala Inc attended the event
as a corporate citizen and instituted a scholarship scheme for 50 girl children from families below the poverty line. The scheme will take them through their studies till graduation. But the content of the celebration it unveiled on the occasion showed the seriousness with which KSIDC pursues Kerala’s industrialisation. It has lined up projects spread across sectors such as infrastructure, manufacturing and knowledge-based industries, which together entail an investment of `1 lakh crore. Most prominent among them is the highspeed rail corridor connecting the north and the south of the State. The landmark project which would fundamentally alter the State’s industrial and social infrastructure will mobilise an investment of `60,000 crore. Among the other projects that are expected to lay the foundations for the State’s growth as a leader in knowledge-based industries are the life sciences park in Thiruvananthapuram, electronic hub in Ernakulam, a financial service hub at Angamaly and an oceanarium in Kochi. The projects in the manufacturing sector include a petro-chemical complex and a trade and convention centre in Kochi, convention centre at Kozhikode, titanium sponge project at Kollam, the city gas
State seeks equitable growth: CM Industries Minister unveils special incentives for investors
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he year-long golden jubilee celebrations of KSIDC took off to a promising start on June 30, 2011 with Chief Minister Mr Oommen Chandy calling for targeted efforts for the faster industrialisation of the State. The Chief Minister said the ‘Emerging Kerala’ investor meet, scheduled for April, will fast-forward the efforts to this end. Inaugurating the event, the
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Chief Minister said efforts will be made to project the image of Kerala as an investor friendly as well as an environment friendly State. The Chief Minister said the government will adopt a transparent approach by accommodating the views of all sections of society and implement the Emerging Kerala 2012 programme. “Kerala could not miss any more opportunities in its developmental stride,” he said.
Mr Chandy said the government will take Opposition parties into confidence and implement development projects. “Politics and factions have no role in the development of a State,” he added. The Chief Minister complimented the labour force in the State saying they are skilled and responsible. The only controversy in this regard is on ‘nokku koolie’ which is being opposed by every political party, he pointed out.
distribution project, industrial corridors and Industrial Growth Centres. And in recognition of its ability to connect with the entrepreneurial class and capacity to attract investors, the government has named KSIDC as the nodal agency for 'Emerging Kerala', a mega investor meet scheduled for April 2012. Started off in 1961 with an authorised capital of `5 crore, KSIDC has till now assisted over 700 projects with an investment outlay of `26,300 crore. They have together generated employment for nearly five lakh people during the last five decades.
Most of the posterboys of Kerala Inc such as KELTRON, Hindustan Latex Ltd, Kerala Minerals & Metals Ltd, Tata Tea Ltd, Harrisons Malayalam Ltd, Kerala Hitech Industries (present BrahMos Aerospace Trivandrum), Regional Cancer Centre, Malabar Cements Ltd, Kerala State Drugs & Pharmaceuticals Ltd, Excel Glasses Ltd, Kerala Automobiles Ltd, Cochin Stock Exchange Ltd, Cochin International Airport Ltd, BSES Kerala Power Ltd, Kerala Ayurveda Pharmacy Ltd, Lakeshore Hospital & Research Centre, Geojit BNP Paribas, V Guard Industries Ltd, CGH Earth,
Galfar Group, Terumo Penpol, NeST Group, Koyenco, CMRL, OEN India Ltd, Patspin and GTN Textiles Ltd, had a helping hand from the agency. The services included project consultancy, project lending, bridge loans, single window clearance system and equipment purchase loans. “KSIDC has evolved with the times to take up wider roles and greater tasks, says KSIDC Managing Director Alkesh Sharma. “We are committed to bringing in more investment, more industrial growth and more prosperity with a renewed vigour.”
Industries Minister P K Kunhalikkutty, KSIDC Chairman T K A Nair and Additional Chief Secretary (Industries and Commerce) T Balakrishnan speak at the function. Industries Minister Mr P K Kunhalikutty who presided over the function said that the contribution of KSIDC for the development of industrial sector in the State was phenomenal. He said the government would design a “Kerala specific” model of development by protecting its ecology and environment. KSIDC Chairman Mr T K A Nair, who is also the Principal Secretary to the Prime Minister, said Kerala must emulate the development pattern of countries such as Singapore, Korea and Japan which overcame deficiencies akin to Kerala in land scarcity, high population growth, mounting labour cost and raw material shortages. He suggested that the State promote industries
that consume a high share of raw material produced in the State such as rubber, coconut, spices and fisheries. Mr Nair also called for efforts to set right the wrong image of the State being investment-unfriendly. He said the State must initiate reforms in the power sector and also look at alternative energy resources. Mr Nair said Petronet LNG project will go a long way in meeting the State's energy requirements. Tata Consultancy Services, India’s largest software exporter, signed an MoU for setting up a `1,000-crore global training academy at Technocity, Thiruvananthapuram at the function. State Planning Board Vice-
Chairman Shri K M Chandrasekhar released the book ‘50 Industrious Years: The Kerala Difference.’ CII Kerala region Chairman Mr Jose Dominic also spoke at the function, attended by more than 700 industrialists and top officials of the government. Golden bonanza Industries Minister Mr P K Kunhalikutty unveiled several special incentives to entrepreneurs at the launch of the golden jubilee. They include waiving of the processing fee of `75,000 hitherto charged by the KSIDC for term loan finances. He also announced a special two per cent rebate for NRI and domestic investors on loans.
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CSR
The Golden Smiles
Aleesha is one among the 50 girl children who are set to benefit from KSIDC’s golden jubilee initiative. Countless other underprivileged children like her see their dreams become a reality, thanks to corporate support
By leading Kerala’s public sector companies into charitable initiatives, KSIDC hopes to see more corporate houses engaging in noble causes
T
Kuruvilla Chacko
he smile says it all. Relief, joy and a sense of belonging being written all over it. Just a few months ago, that smile would have seemed a distant possibility. Aleesha Sebastian, a girl all of eight, lived a life that threatened to snuff out her dreams any day. A 4th standard student, she had come close to dropping out of school as her widowed mother, recuperating from cancer, found it difficult to make ends meet. They lived on borrowed money, and the question lingered in their minds: how long? Their story mirrors the problems countless others across the country face. Today though, both mother and daughter are filled with renewed hope
and relief. Aleesha is the recipient of a sponsorship programme that the Kerala State Industrial Development Corporation (KSIDC) launched to mark its golden jubilee. Under the scheme, 50 girl children like her will get sponsorship for their education till
“A contribution of just one per cent of corporate profits in the State towards CSR can light up a thousand dreams,” says Mr T P Thomaskutty, Executive Director of KSIDC
graduation. As her mother, Metilda, struggles to hold back tears of joy, it’s hard not to feel a sense of gratitude for the corporate houses that give wings to such dreams. And the timely lifeline they offer the underprivileged. Welcome to the world of corporate social responsibility (CSR) initiatives. Once considered an extension of the public relations exercises, CSR today has become an integral part of the corporate plans of many companies globally. The examples of Warren Buffet and Bill Gates who have earmarked the lion’s share of their earnings may be rare, but many firms think it part of their job to give back to society a part of what they earn from it. In Kerala, however, the trend has 19
The children selected for the scheme with Industries Minister P K Kunhalikutty and KSIDC Managing Director Alkesh Sharma
The KSIDC way In a unique move, KSIDC, the premier investment promotion arm of the State government, has become the first government organisation in Kerala to take corporate social responsibility in a big way. The KSIDC scheme envisages supporting 50 girl students from BPL families with no earning male member. KSIDC selected three girls from each district based on the recommendations of the respective Collectors, and an additional eight children from the socially backward districts of Wayanad, Idukki and Kasargod. “Education is a foremost requirement for a child, and KSIDC is happy to have extended its helping hand to this segment,” says Mr T P Thomaskutty, Executive Director of KSIDC. Each student will get `1500 a month at the primary level; `3000 in High School; and `24,000 per semester at the college level. The amount will be deposited into their accounts until they attain their degree or reach the age of 21, whichever is earlier. The students are required to present a letter of continuance of education signed by the head of the educational institution before the start of each new term/semester. 20
The basic difference is that CSR is a continuous programme, involving active employee participation, says Jithin C Nedumala, managing director of MAD not gained the necessary momentum. And the KSIDC move is expected to be a trend setter. By initiating it in front of the representatives of Kerala Inc at the launch of its Golden jubilee celebrations, KSIDC hopes it can inspire more corporate houses to follow the path of social upliftment. CSR in Kerala What really ails the CSR projects in the State? Most corporates in Kerala do have a list of genuine initiatives lined up, though the results do not always justify the amount spent. The answer lies in a number of reasons; the primary one being that CSR in Kerala has
not been implemented in its truest form yet. Mr Jithin C Nedumala, founder of Make a Difference (MAD), an NGO for children, pinpoints the cause: “Corporates in Kerala engage in commendable charitable acts, and not exactly CSR. The basic difference is that CSR is a continuous programme, involving active employee participation.” And this is where the change needs to come in. “Many private organisations in the State have in-house foundations undertaking charity work on a very good scale. But this needs to be organised. And one way to do that is by involving employees right from planning to execution.” His words ring true when one considers the rising number of young executives opting to volunteer with NGOs across the State. “Working class youngsters love the image of themselves as a support for underprivileged people,” said Mr Nedumala. “This helps build self confidence and a sense of belonging to society among them. And as personal mentoring is con-
sidered a major boost to the holistic growth of a child, individuals would only love to play godfather to an underprivileged child.” As is with any new idea, the basic question then is how to go about the same. The State Bank of Travancore has formed social groups as part of its CSR initiatives. This is a powerful tool that works best: making individuals of a company accountable for their actions and finance. Synthite Industries Limited, one of the leading corporate in Kerala, is one of the few such companies to have a separate wing for talking up CSR schemes. The CVJ Foundation, named after its founderchairman Mr C V Jacob, has an institutional mechanism which collects donations from employees as well as the company to launch schemes in healthcare, education and housing sectors. CSR, though is not donations and involvement alone; it also means a professional approach to use the resources meaningfully. Corporates must look deeper into the problem, rather than just solving the symptoms, if they want results, says Mr Nedumala. Agrees Ms Sangeetha Menon,
Bangalore-based CSR consultant. “Corporates in Kerala are generally more generous compared with those in other States,” says Ms Menon. “However, a proper channelising of resources has not yet been initiated.” She doesn’t blame the industry though. “The entire positive effect radiated by CSR activities has been well-understood by western companies. Here in India, we are yet to wake up to it. More awareness is the need of the hour.” Mr Nedumala who compliments KSIDC for the initiative, however, points out, “The scheme looks professional, but it shouldn’t just end up as an incentive-giver. This enterprising initiative should look to go beyond that.” The best way to take it forward is to provide each child with a godfather in the form of an employee of the organisation, he says. With this, there would be a sense of belonging for the child, as well as a sense of responsibility for the adult involved, he adds. In a nutshell, the scheme if implemented through a personal monitoring process would help generate better individuals out of each of these kids. There is a growing interest among various corporate houses in Kerala to enlist professional help for education and healthcare activities, says Ms Menon. “Our role begins once the corporates realise a need for professionalism in their CSR initiatives. They choose their area of interest—be
it education, health or life skills, as well as the preferred geographic area in which the initiatives will be implemented.” Ms Menon suggests that companies set aside a pre-determined amount for CSR schemes, instead of allocating resources towards the end of the financial year based on profits, as is the practice currently. Once they finalise the budget, they can rope in an NGO that can implement the schemes aligning with the company’s policies. “It is also important to ensure that every willing employee gets a chance to experience the joy of social responsibility,” says Ms Menon. Many companies find working with an NGO, rather than pursuing an independent line of activity, more purposeful. “They can handle the resources in an organised manner while we can carry on with our daily professional activities,” said the CEO of a Kochi-based company. “However, we track their activities as well.” CSR may be at an infant stage in the State. But the age of sustainable contribution has set in, which will only help accelerate it. As Mr Thomaskutty of KSIDC points out, “Just 1 per cent of the profits of each corporate in the State is sufficient to light up a thousand dreams.” And this money when put into the right cause, the right way, could soon see a refreshing trend emerge in God’s Own Country.
“Corporates in Kerala are generally more generous compared with their counterparts elsewhere, though a proper channelising of resources needs to be initiated,” says Ms Sangeetha Menon, CSR consultant
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Profile
A valuable card
Tarun Das may get India Inc focus on Kerala
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Jose Thomas
he appointment of not many people to a State Planning Board would have attracted as much attention as that of Mr Tarun Das to the Kerala Board recently. One of the most prominent faces of India Inc. for the last four decades, Mr Das, 70, is a dyed-in-the-wool industry propagandist. An alumnus of Calcutta University, and Manchester University, UK, he started his career with the Bengal Chamber of Commerce and Industry in 1963. When the organisation merged with Association of Indian Engineering Industry (AIEI), Mr Das became its chief executive. AIEI later became Confederation of Engineering Industry (CEI) and finally the Confederation of Indian Industry (CII) in 1992. Das remained the chief executive of the body through all its transformations until he demitted office in 2004. He continued to associate himself with CII as its chief mentor till 2009. During the period when he was at the helm, CII transformed itself from a small lobbying association of engineering industry to a powerful industrial organisation with an annual budget of `200 crore. It was during the same period that the Indian economy underwent a metamorphosis - from a command economy to a market economy - and his able leadership helped the industry make the most of the change. Mr Das’s success lay in his ability to identify opportunities for the industry he represents and then making the most of them. One of his earliest initiatives as chief of AIEI was to conduct an expo of Indian engineering industry in 1974 to showcase its prowess and convince people about what it was capable of.
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In the mid-80s when the Rajiv Gandhi government initiated steps to dismantle the licence-permit raj, he sniffed an opportunity and prodded the industry into upgrading its skills to meet the challenges ahead. And
Like any lobbyist, Mr Das is known for his formidable network of friends and contacts he built across political parties, governments and industries across the globe this helped when the Narasimha Rao government unleashed a slew of economic reforms in the nineties. All through this transformation, Mr Das remained one of the most recognisable faces on the corridors of power in Lutyen’s Delhi, championing the cause of corporate India. “It will be hard to separate Tarun Das from CII,” says Mr Sunil Mittal, Bharti Airtel chairman and former president, CII. “He has been instrumental in making CII a world class institution. What struck me was his strong grasp of both international and domestic affairs.” CII has long shed its image as a lobbyist; governments these days
look forward to its opinions. It has handheld industries into newer and refreshing areas such as total quality management, environment, sustainable development, trade fairs, and clean technology. CII today is represented in Washington, London, and Singapore. For a body which has top industry honchos with their plates full as elected office-bearers, Mr Das kept the wheel rolling at CII. And what an efficient machine it has been! Mr Das is known for the formidable network of friends and contacts he built across political parties, governments and industries across the globe. A recipient of Padma Bhushan, Mr Das is one of the most awarded faces of India Inc for strengthening business relationships with foreign countries. The tags in his kitty read ‘The Blackwill Award’ by the US India Business Council, the Singapore National Award by the Singapore Government, CBE by the government of UK. Mr Das recently courted controversy when his conversation with corporate lobbyist Nira Radia and his uncharacteristic remarks about a minister in the UPA government leaked out. Even though some political parties opposed his naming to the Planning Board, the fact remains that it is not the first governmental assignment for Mr Das. He has served as the chairman of Haldia Petrochemicals Ltd, the largest petrochemical company in east India, from 2000 until recently. At a time when Kerala government has lined up a slew of projects which needs larger participation from India and abroad, Mr Das’s would be the best visiting card the State can use to enter the boardrooms of corporates with deep pockets.
Fashion
Ooh La La!
The recently concluded Kochi International Fashion Week (KIFW) was more than just hype and entertainment, writes fashion blogger Tanusha Chawla, as she takes us through the three days of fun and business
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ochi finally got a taste of the high flying metro life. Even if it lasted only for three days. The Kochi International Fashion Week (KIFW) made it happen; bringing the much hyped Page 3 life of a metro into the midst of the city’s fashion enthusiasts. As the official blogger for the event, the envious life of a socialite
was for my taking, though again, with time limits attached-just three days. I had my share of perks: front row seats and unlimited food and beverages of my choice, not to mention unrestricted access to the back stage and the green rooms—places where the fun actually begins. And I made sure I made the most of it all. Which is why, it becomes easier to offer you
uncut, exclusive insights into KIFW just how I saw it. It would come as a surprise to many that the toned models you see on ramps actually gorge on rich food (I saw them hogging on desserts after every meal!). As for the designers, ‘Captain Cool’ would describe them aptly, for not a hint of stress lay on their faces before an elite crowd dis23
It would come as a surprise to many that the toned models you see on ramps actually gorge on rich food. I saw them hogging on desserts after every meal! sected their presentations. The backstage, surely, earned my respect! Pre-event launch Hotel CGH Earth at Wellingdon Island was the place to be on 4 August. As the venue for the fashion week, it was in a world of its own, providing experiential tourism on a different level. Bright and colourful halogens, LEDs and other party settings shone 24x7; all set to light up Kochi’s entry into the national fashion scene. No more would Kochi be called a virgin market for fashion among pundits of the same. Flashing cameras, stilettos and the choicest of evening wear—the Kochi International Fashion Week had it all. Eleven national level designers, 50 stunning models as well as a number of fashion divas and the who’s who of the city literally transformed the venue into an international 24
party destination. Day 1: The curtains rose on the event with a show by the doyen of Indian fashion—James Ferreira. His men’s collection titled James Men was in sync with Kochi’s weather and culture. This was followed by a show by Hari Anand, Kochi’s own fashion designer. His collection, inspired by the theme Earth, had prints of flora and fauna which was well received for its articulate styling. The day ended with a glitzy show by Archana Kochhar; her array of wedding collection sarees in red and gold doing justice to the glamour of KIFW. Day2: The second day had a more casual approach to it, and the designers, it seemed, had gauged the mood much in advance. Chennai-based designer Jules Idi Amin presented the first show for the evening with a collection of casual wear based on the theme Apple Pie and Soda Pop. And much like the name, the collections included green
Serious business did happen at KIFW. Not on a large scale, but yes, the beginnings were made, atleast among the people who mattered. The buyers included women, men and even children apple and hot pink shades. Cute and sweet! The show was followed with a trendy collection of evening wear and cocktail dresses by famous Bollywood designer Jattin Kochhar, who focussed on the gothic look through his theme Black Magic. The models for his show adapted well to the theme, wearing bright red lipstick and braided hair. Other shows for the day included a Resort Wear presentation by Vivek Karunakaran; and an intricately designed collection of wedding trousseau by Riyaz Gangji of Libas fame. Day 3: The final day was a day of masti and photo ops! A flood of celebrities from North to South India took over the venue. Bombay based designer Megha Grover kick-started the evening with a show on ethnic wear, which was followed with an exclusive show by Lawman Page3, for whom popular Bollywood actress Kangana Ranaut walked the ramp (boy, she looked nothing short of a diva). Internationally acclaimed designer Sanjana Jon drew the curtains on the event with a show which saw a whopping 20 show stoppers from the Malayalam movie industry, and the KIFW brand ambassador Mamta Mohandas, walk for her. Reflecting on the three days that passed, each show may have been just 15-20 minutes duration, but the evenings were a constant picture of buzz and excitement. The fun element undoubtedly was the after-parties, which continued till the wee hours of the following day. Exclusive lounges by Bacardi, Lavazaa and Kingfisher created a slice of upwardly urban India, right here in Kochi.
Mr Gaurav Sharma, CEO of Storm Fashion Company, which organised the event revealed his plans to launch an exclusive multi-designer store in the city by the end of this year As someone who has been following the Kochi fashion circuit for quite some time now, it came as a surprise to me that not only were the city’s socialite women dressed to their nines; but they carried international labels with a refined elegance, something usually reserved for cosmopolitan women. Kochi it seems was waiting for the right moment to reveal its secrets to the outside world. But KIFW was not just about making style statements. Serious business did happen. Not on a large scale, but yes, the beginnings were made, atleast among the people who mattered. Its proof lay with the over-
flowing crowds, as well as the packed designer stalls where the displayed collections went up for sale every day of the event. The buyers included women, men and even children! Mr Gaurav Sharma, CEO of Storm Fashion Company, which organised the event, was ecstatic about the response and revealed his plans to launch an exclusive multi-designer store in the city by the end of this year. Not to forget the company’s interest in hosting KIFW ‘12 as well. As for me, those three days at KIFW were a blessing in disguise, in more ways than one. I became organised and lost a couple of inches. And yes, now I’m more than eager for the next season: to get further organised, in shape and on my toes; all of which does wonders for me and myself ! Now who says excess of fashion is bad for the body, mind and soul? (Tanusha Chawla is a retail banker with HSBC, Kochi. She writes on fashion and related topics, and can be followed at www.fashionsurplus.blogspot.com) 25
BUSINESS CALLED LIFE
Merchant of luck One of the more nostalgic memories tucked away in a conscious part of the Malayalee memory remains the monotonous voice of a lottery man announcing infinite offers. Or better still of a muter version of the same, from behind a table dedicated to the same— the lottery shop. With its largely empty room and glass case in front, it is the holy abode from where these tickets, each with a unique serial number printed on it, entices the passing Mallu with a promise of easy rewards. PP Rajan (in pic), couldn’t agree more. Hailing from Pathanamthitta district, he migrated to Ernakulam in 1994, with the sole intention to make a living out of the sale of lottery tickets. From plying his trade on the cycle initially, he is today the proud owner of three lottery shops in
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the busy Ernakulam North area. It’s always the seasonal festivities that bring in maximum business for him; the just concluded Onam season included. The Onam Bumper lottery ticket which sells for `200 is in hot demand, and he gets a cool 30 per cent commission on it. On an average he sells 10 such tickets daily. And this is apart from the WinWin Scheme and other lottery tickets on offer. His earnings on an average range between `400-500 per day. However, despite being in the business for so long, he lives a life of daily sustenance since the tickets are usually sold only when the date of draw nears. And at the end of the draw, if the tickets remain unsold, the loss is entirely his. Will all the tickets be sold, or not? It’s a draw of lots for him, too.
Text, photo: Kuruvilla Chacko
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Infrastructure
Rejuvenating Ayurveda CARe-Keralam, ready for launch, will help Ayurveda go global
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A P Jayadevan
he Ayurveda industry in Kerala is in for a huge overhaul now, thanks to the facilities the CARe-Keralam project has readied for it. CARe-Keralam Ltd, a special purpose vehicle formed by Kerala Industrial Infrastructure Development Corporation (Kinfra) and a consortium of Ayurvedic product manufacturers in Kerala, is mandated to create infrastructure facilities for standardisation of ayurvedic medicines and services and help the sector take advantage of its growth potential through a cluster-based approach. The first phase of the project, conceived to host common facilities for standardisation, is all set for commissioning now. Facilities for raw material supply, quality control and research and development have already been completed at a cost of `16 crore, according to Dr Joy Varghese, chief executive officer, CARe-Keralam. Sponsored by Department of Ayush, Government of India, the facilities are set up on a two-hectare land in Kinfra Park, Koratty in Thrissur district. The project had its genesis in the realisation that despite its status as the cradle of Ayurveda having nurtured one of the most authentic versions, Kerala’s share in
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the industry is less than 2 per cent in India. Given the fact that Kerala has more than 200 GMP- certified Ayurvedic product manufacturers, Kerala should have been able to exploit the increasing demand for holistic medicine such as Ayurveda the world over. The single most important factor that has come in the way of Ayurveda’s advent across the globe has been the lack of organised efforts in standardisation in all areas of operation such as formulations, treatment protocols, research and development, marketing, cultivation of raw material and documentation. It may be remembered that the Chinese traditional medicine has been well accepted and is recording tremendous growth across markets, even in India! CARe-Keralam seeks to reverse this trend and handhold en-
The project had its genesis in the realisation that despite its status as the cradle of Ayurveda having nurtured one of the most authentic versions, Kerala’s share in the industry is less than 2 per cent in India
trepreneurs in the Ayurveda sector through a targeted and combined effort. It has set out certain specific targets for itself which include upgradation of the process technology of Ayurvedic drugs so as to make them acceptable in the international market, development of a Centre for Excellence for Research, establishing a Kerala brand of Ayurvedic products, training manufactures on safety, quality and efficacy, protection of IPR of Ayurvedic manufacturers and the enrichment of the resource base by encouraging farmers to take up plantations of medicinal plants. The full-fledged analytical lab with all modern facilities for analytical testing, method development and contract research will provide reliable, dependable, economical and timely analytical results for the samples given by the entrepreneurs, according to Dr Joy Varghese. The Toxicology Study Centre will undertake evaluation of the toxicity and adverse drug reaction of the herbal preparations. It will also undertake
the long-term toxicity, mutagenicity and genotoxicity of the formulations. The studies will be on direct toxic effects, allergic reactions and other side-effects, effects from contaminants and/or interactions with drugs and other herbs. The risk-benefit ratio of the herbal drugs will also be examined. An animal house is also part of the Centre. The Process Validation Lab, another key component of the project, will provide laboratory facilities for research and development to small and medium enterprises. Facilities are also available for scaling up of various processes developed through process validation. The mini lab will be used for ascertaining the quality of the materials procured. When the raw materials are brought, the samples of raw material will be drawn and brought to the mini lab for quality testing. Only those raw materials which pass the quality test in the lab will be forwarded to the raw material store. The raw material store and mini lab will
help reduce exploitation of small and medium scale manufacturers by the middlemen engaged in the supply of raw materials, said Dr Varghese. The Common Facility Center for Production and Packaging is equipped with state-of-the-art equipment to carry out testing and certification, measurement, quality and safety certification and certain key processes, which small manufacturers cannot afford individually. The Common Facility Centre can be used by the entrepreneurs to produce high quality products to meet international standards with respect to hygiene, product specification and quality. The establishment of the facili-
CARe-Keralam seeks to handhold entrepreneurs in the Ayurveda sector through a targeted and combined effort
ties would ensure the standardisation of raw material input, manufacturing process and end products. This would help in upgrading the of quality of products manufactured by these companies, which in turn, shall be brought under the umbrella of a common label, while retaining the brand name of the individual manufacturers. It is expected that the products that meet the quality standards would gradually gain acceptance in the market as ‘quality products’ in Ayurveda. CARe-Keralam has at present a representation of 83 manufacturers which include large, medium and small scale manufacturers. “We hope that once operational, the facilities will demonstrate its advantages, thereby attracting more entrepreneurs,” said Dr Varghese. “Going forward, we will also set up an information technology and marketing infrastructure.” The plan is to make use of technology for documentation which will help the product reach international markets, he said. 29
cover story
Families make their annual visits to the white goods shops during Onam
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The white harvest Onam is traditionally the harvest festival of Kerala, the legends and all. It is a nostalgia for every Malayalee, young or old, in Kerala or outside, poor or rich. However, of late, the consumer market has bloomed during Onam like never before. Aided by the advertisement blitzkrieg that is unleashed during the season, Onam has taken a definite consumerist tint. Aby Abraham G K takes a look at what Onam promises for the consumer and companies 31
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egend has it that the asura king Mahabali visits his subjects on the day of Onam, every year. But in reality, it is the CEOs of white goods majors that roam around the State during the period. And with good reason too. The harvest festival of Kerala also marks the beginning of the festival season in the country. The Kerala market, which is about four per cent of the Indian market, offers a test case for marketers all over the country. Many of them use the season to experiment with their promotional programmes, too. In short, the Onam trend is considered as the base and the planning for the year for the whole country is done on the basis of this trend. The Kerala market for white goods is estimated to be over `5000 crore. Marketers estimate 40 per cent of this sales to take place during the Onam season. Even though the share of the Onam market has come down from above 50 per cent in the recent past – thanks to the efforts of the government to develop other shopping seasons – it still accounts for the bulk of the sales happening in the State.
Extended Onam season The quirks of the Malayalam calendar have also helped the trade during this Onam. Onam falls on the 10th day after the atham day of Chingam, the first month in Malayalam calendar. And people start preparations for Onam only after Chingam starts, since the preceding month Karakidakom is considered inauspicious. This year atham falls on the 11th day of Chingam, thereby providing a 21day window for Onam shopping, compared to the 10 day period last year, when atham fell on the first day of Chingam. Not surprisingly, marketers are hoping for a bumper harvest this time. Be it gold, vehicles, household appliances, clothing – you name it – companies have geared up for the season. “The home appliances market is expected to register a growth of 25-30 per cent during the Onam season this year,” says Mr George 32
Jacob, head of Kerala operations of Toshiba. “The peak of the sales during Onam happens in the days after the government pays out the Onam bonus to its employees.” The government is the largest employer in the State and it has been a tradition in the State to pay salaries in advance for the season. This year the State government has raised `1000 crore from the market to meet the additional expenditure during the Onam season. (But it is not all expenses for the government. Much of this comes back to the government coffers in the form of taxes!) Ravindra Zutshi, deputy managing director of Samsung India, is eagerly awaiting the
The Kerala market for white goods is estimated to be over `5000 crore. Marketers estimate 40 per cent of this sales to take place during the Onam season
outcome of Onam sales. “If Onam ends well, we will be upbeat about the rest of the festive season, ”says he. Mr Eric Braganza, president, Haier India said, the company is eyeing a sales growth of 100 percent as compared to the corresponding period in 2010 from Kerala. According to Mr Masaru Tamagawa, managing director, Sony India, every year 40 per cent of the company’s total sales in Kerala is achieved during the festival period. This year the company is targeting `285 crore from the Kerala market, a 35 per cent growth compared to the previous fiscal, he said. Mr Vipul Sabahrwal, vice-president - sales, service and brand, Whirlpool, said the annual sales being targeted this year from Kerala is `240 crore against last year’s `220 crore. Reiterating that Kerala has been a priority State for the company, LG chief operating officer Mr Y V Verma said LG was eyeing sales of `850 crore from the State during the year and about `350 crore during Onam. Products LED TVs hog the limelight when it
It’s a time for hardsell as companies clock between 40 to 60 per cent of their annual sales during Onam
Logistics is a tough call during the festive seasons. Vehicles packed with goods ply the roads non-stop comes to sales growth for the season. “LED TVs provide more clarity than LCDs and consume lesser power. So people are willing to accept this product even if it costs a little more,” says Mr Hemant S, manager-marketing at Green Consumer Appliances. It also shows the affinity of the Malayalee mind to newer technologies. LCD TVs are also expected to register good growth. Sony, the market leader in LCD TVs in the State, has set a sale target of 35000 units for the season. It is expected that Keralites will buy over 1lakh LCD TVs this season, registering a growth of 120 per cent. But the sale of conventional TV sets is set to show a stagnant or declining trend. Mr Manoj N G, regional manager, south, Panasonic India, said the company introduced 10 new models of LCD/LED/PDP televisions with Internet facility along with a new range of semi-automatic washing machines, refrigerators, microwave ovens and home theatres in Kerala. Other white goods such as refrigerators and washing machines are expected to clock growth rates of 25 per cent. The share of frost-free refrigerators is coming down in the market, which is being dominated by Whirlpool. The star rating which indicates energy efficiency of consumer goods has become a major factor that tilts purchase decisions. “Sales of air-conditioners are growing at 40 per cent a year in the
Some companies spend up to 60 per cent of their annual advertising budget during the Onam season; some even exhaust the entire amount in the season, stopping all advertising activities after that
State,” says Mr Jacob. Both split and window air-conditioners show growth. While owners of independent houses invariably go for split ACs, flat-owners prefer window air-conditioners as they are easier to install and maintain in high rise buildings. Voltas is the market leader in air-conditioners in Kerala. Premium brands are doing brisk business in the current Onam season. Says Mr Vinod Nair, Branch Manager-Kerala, Siemens, “We are getting a good response from the market this time. We are hopeful of doubling our sales this season.” But it is not just the premium brands that are doing good business. “There are a lot of takers for the base models of appliances of low cost brands,” says Mr Hemant. Small appliances like induction cookers, mixers, grinders, etc are also showing a huge demand. “The sales of small appliances shot up in the days immediately after the government paid the bonuses,” says Mr Hemant. “We had to place extra orders to meet the demand.” Around 15,000 cars are expected to be sold in the State during the season, even though the market has
It is raining gifts and promotion schemes during Onam 33
Companies vie with one another in introducing new range of products and technologies
The advertising spends during the current Onam season will exceed `300 crore, says Mr Joseph Chavara, chief patron, Kerala Advertising Agencies Association been dampened by rising fuel prices and interest rates, pegging the market size at around `600 crore. Advertisements The season is also the major advertising season in the State. Some companies spend up to 60 per cent of their annual advertising budget during the Onam season; some even exhaust the entire amount in the season, stopping all advertising activities after that. “Initial reports show that the advertising spends during the current Onam season will exceed `300 34
crore,” says Mr Joseph Chavara, chief patron, Kerala Advertising Agencies Association (K3A). The print media accounts for bulk of these spends followed by television. Radio channels have also started getting a fair share of the ad spends. Promotions Onam is also the time when the major brands come out with promotional offers. They take the form of cash back programs, scratch-andwin offers, gifts, extended service offers, etc. It is expected that companies would spend around `100 crore this season on promotional efforts. `50-crore worth of gifts are expected to be given away this season, a 100 per cent increase over last year. Panasonic and LG offer a scratch-card offer on purchase of every product. Haier introduced a ‘Click Upload Win’ contest that offers customers an opportunity to meet John Abraham, actor and their brand ambassador. Taking a cue from the compa-
nies, major retailers are also coming out with their own promotional offers. Prizes from gold coins to cars and even flats are being used to lure customers. Retailers It is estimated that there are around 600 active dealers of white goods in the State. “The sector is being dominated by the large retailers who have cornered 80 per cent of the market,” says Mr Jacob of Toshiba. In addition, there are many small retailers who dominate the smaller towns in the State. Some of the major retailers in the State are Bismi Home Appliances, Nandilath G-Mart,
The consumer goods sector is being dominated by the large retailers who have cornered 80 per cent of the market
Fridgehouse, QRS, WhitePlanet, Next and Lanmark. Most of these retailers have multiple outlets in the State – even in the same city. Green Consumer Appliances with 12 counters in the State is the latest entrant into the space. “We hope to achieve a turnover of `20-25 crore during the Onam season, and around `75crore for the whole year,” says Mr Hemant of Green. The dominance of the large groups is often a problem for the companies as it makes them dependent on a few retailers who enjoy immense bargaining power. So companies are deliberately trying to broad-base their retail network, by including more small retailers. Some of them also have policies that aim at protecting the small retailer. Sony, for example, has a system that tracks the minimum operating price (MOPs) in the market. They use it to prevent undercutting of prices by the large players. Another visible trend is the setting up of single brand showrooms. These showrooms display the whole range of products of a company and are often run by one of the major retailers. Sony, Panasonic, Haier, Samsung, LG, Philips, all have their exclusive outlets in the State today. While launching its second brand shop in the State at Kochi recently,
“We start studying the market months before the Onam season,” says Mr George Jacob of Toshiba. “The projections are frozen three months before the start of the season.” Mr Daizo Ito, president, Panasonic India, said the store will help the company penetrate further into the State. Finance Many customers are also opting for finance schemes to fund their Onam purchases. The trend is to go for higher end models with the help of easy finance available. “Even the upper middle class customers opt for finance schemes even though they have cash on hand,” says Mr Hemant. Background efforts dvertisements, promotions and sales might be the visible signs of the Onam market, but they are the culmination of a huge effort that starts six months before. Marketers travel all over the State collecting
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feedback from the retailers and make projections about the market size and preferences for the coming season. “We start studying the market months before the Onam season,” says Mr Jacob. “The projections are frozen three months before the start of the season.” The companies schedule their production based on these projections. The retail network is also finalised and fine-tuned during this period. Companies come up with targets and design incentive plans with the aim of driving volumes. They may also push the products by offering credit facilities to the retailers. Extra godowns are required to stock the huge inventory of appliances that will be sold during the season. It is estimated that three times the usual space will be needed for the purpose. Temporary godowns are rented to stock the items during the period. Manpower The huge sales effort also requires a manpower that matches it. Most of the companies have their own sales persons in the major retail outlets. They recruit and train staff on a temporary basis to man the counters, something that companies are finding it increasingly difficult. Most people prefer office work to a sales job that involves a lot of travelling and field work. So don’t be surprised if you find your salesman unable to speak to you in Malayalam. The end of the season is also a busy period for the marketers. The unsold inventory is moved to other markets. Diwali is the major festive season in most other States in India, while the new year sale which coincides with the Pongal festival is the major season in neighbouring Tamil Nadu. Kerala is often dubbed as a consumerist State. Onam gives another reason for its people and trade to celebrate the status. Armed with the insights that the season has provided them, the CEOs move ahead to other markets. For them, the show has just begun. 35
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.
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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.
Of the 978 Panchayats in Kerala, 99% have broadband connectivity.
Information changes
Be updated
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Technology
The next big .thing Didn’t get the favourite .com address? Don’t worry. You can get your own top level domain!
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t was not long ago that the .com boom hit businesses across the world, changing forever the way business was done. Companies responded by building websites that served as their face on the cyberspace and built applications on them that helped them do more business. It spawned many new business models and helped companies become more efficient and connect better to their customers. Those who could adapt fast to the new medium thrived, while those who could not, suffered. The recent decision of the Internet Corporation for Assigned Names and Numbers (ICANN) to free up generic top level domains (TLD) is being viewed as the next big change in the ever changing cyber world. Domain names are the addresses in the virtual world (see box) and ICANN is the organisation that coordinates the process of issuing and managing 38
the domain names across the world. The right most part of a web address – ‘com’, ‘org’ and the like – is called the top level domain. At present there are only 22 generic TLDs available for the public in which websites can be registered. What will change? ICANN is now proposing to allow organisations to create and operate TLDs as they please. It will allow you to create any top level domain as you choose, from now on. So instead of creating a ‘.com’ website, companies could create their own ‘.<brand>’
Instead of creating a .com website, companies could own their '.<brand>' TLD and administer it
TLD and administer it. On top of it ICANN will allow internationalisation of TLDs, allowing them to create TLDs in different scripts such as Chinese, Arabic or Hindi, throwing open the Internet to hordes of new users. ICANN expects the change to make the Internet more competitive and inclusive. As was the case with the .com boom, the move has the potential to change the Internet in unimaginable ways. It is sure to change the way people look for information on the web. Businesses will have to change their online presence to take advantage of the fact that Internet addresses could end in any word in any language, creating new opportunities for targeting market segments in a better manner. The change creates a new avenue for businesses offering domain name registration and hosting services. They could now create their own TLD and
The new TLDs will change the way in which search engines operate, thereby necessitating a relook at SEO strategies offer secondary domains to clients at the price they choose. They could set their own rules for the TLD, provide special security for the sites in the TLD or specify special uses: all .malayalam sites could use malayalam alphabets. Cities could register their names as top level domains and sell secondary domains (ex: www.hotels. kochi) creating a new stream of revenue. Communities could also create their own TLDs catering to the requirements of their members. The race for TLDs with generic names is expected to be tough, with many players likely to bid for them. During the dot com boom, shrewd operators squatted on the web space of well-known brands owned by companies who were not alert to the changes happening in the cyber world. Many firms had to negotiate with the squatters and buy the domains from them, often at a heavy price. Wiser from this experience, ICANN has prescribed high fees - $1,85,000 application fees - and a six stage process expected to take up to one year, for evaluating and accepting the applications for operating a TLD, to deter and weed out unscrupulous elements. ICANN has specified January 12 to April 12, 2012 as the window for applying for the new TLDs. Trademark owners could set up their own TLDs to protect their brand and improve their business. In these days of phishing scams, when fake web pages and e-mails try to dupe customers, the 'brand' TLD could provide the much needed assurance to customers that they are on the right site and prove to be a rallying point for all the stakeholders in the business. But operating a TLD is very different from running your own website. It involves operating and maintaining a registry, and a responsibility towards
all the web sites running on the domain. It calls for specialised technical, legal, financial and marketing skills. Lack of these skills along with the high cost involved may preclude its use by many small and mid-sized companies. But it is important that the companies keep a watch on the TLD applications to protect their brand. Says Mr Vizzy George, Advocate & Trademark Attorney, Marks & Rights, " ICANN allows companies to raise objections to TLD applications that are similar to their brands. Companies should make use of the opportunity to safeguard their interests."
The new TLDs will change the way in which search engines operate, thereby necessitating a relook at SEO strategies. Players on the web who have already optimised their web sites for search engines may have to incur extra cost for the same. The change is indeed a big one on the cyber space and that too a costly one. ICANN expects around 1000 new gTLDs to be operational in the first round. But the question remains whether the income generated from it will be sufficient to cover the costs for the companies. That should determine the rate of adoption of the new TLDs.
Types of TLDs
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here are different types of TLDs in the DNS. The TLDs with three or more characters are called generic TLDs (gTLD). There are 22 gTLDs today, which are again divided into sponsored and unsponsored ones. An unsponsored gTLD (.com, .org, .net, .biz, etc) operates under the ICANN and domain names may be registered in them without restrictions. Sponsored gTLDs (.edu, .mil, .gov, .aero, .travel etc) are governed by a sponsor representing the narrower community that is most affected by the TLD. In addition to these, there are country code TLDs (ccTLD) with two letters for more than 250 countries and external territories (.in, .cc, .jp etc) and the special TLD .arpa used for technical infrastructure purposes by ICANN.
What is your domain name?
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ach computer on the Internet is assigned a unique numeric address, the internet protocol (ip) address (ex: 192.168.23.12), which helps it to be identified. But having a number instead of a name as an ad suggested might not be a good idea, and so people came up with the domain naming system (DNS) with each domain name (ex: www.google.com) corresponding to a numeric IP address. When the user types the domain name, the computer converts it into the corresponding IP address and the computer hosting the website is identified. A domain name is made up of a series of character strings called labels, separated by dots, forming a tree structure. The right most label is called the top level domain (TLD) and the label preceding that the second level domain, which can include a number of third-level domains. At present there are only 22 generic top level domains, while there are millions of second level domains. ICANN has delegated the responsibility of operating each TLD and maintaining the registry of second level domains in the TLD to registry operators. When you register a domain name you are in fact creating a unique combination of the top and second level domains. The registry operator checks if the second level name is available in the TLD and then assigns it to you if it is available and updates the registries so that it can be found by users on the Internet.
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Personal finance
Beyond fixed deposits Debentures with high yields and ratings give investors a chance to lock in interest rates as they peak
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Convertibility Some debentures can be converted into the equity shares of the company that issues them. Based on the degree of convertibility, debentures are divided into three: convertible, partially convertible and non-convertible. A convertible debenture gives you an option to convert the debentures into shares of the company at a predetermined date and price. The conversion ratio – the number of shares that would be available for a given number of debentures – would also be specified in the prospectus brought out when the debentures are issued. At the specified time, if the market price of the shares is higher than the conversion price, the debenture holder can exercise the option and get the shares. Thus a convertible debenture gives the investor an avenue to profit from the growth of the company. In partially convertible debentures, only a part of the debentures held has the option of be-
ing converted into shares of the company, while the rest has to be redeemed compulsorily. Non-convertible debentures(NCDs) have to be redeemed compulsorily and hence the interest paid on them is generally higher than that paid on a convertible debenture. Security The NCDs may be secured or unsecured. Secured debentures have a charge against the specified assets of the company. In case the company defaults on its payment obligations, these assets will be liquidated and the money returned to the debentureholders. Hence a secure debenture is much safer than a company fixed
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What is a debenture In its simplest form, a debenture is a debt instrument issued by a company, similar to a fixed deposit. The company pays you a fixed rate of interest, for the term of the debenture, which can vary from 90 days to a few years. The interest is usually paid annually or semi-annually. At the end of the period, the principal is returned to the individual. But the similarity ends there. Debentures have many features that distinguish them from fixed deposits. They usually have a lot of features which provide investors with options regarding convertibility, liquidity and security.
It is expected that about `20,000 crore will be raised through debentures from the market in the coming months
e r mo
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he rising interest rates have once again aroused the interest of investors in fixed deposits. The subdued performance of the stock market has only added to this shift. Companies too, are coming out with bonds to raise capital, instead of raising funds through IPOs which may not do well in current market conditions, and bank loans which are becoming costlier. Recently, Shriram Transport Finance and India Infoline Investment Services Ltd raised `1,000 crore and `750 crore, respectively, through debentures. Kerala-based gold loan companies – Muthoot and Manappuram – have also followed suit. They offer higher returns than fixed deposits to entice investors. It is expected that about `20,000 crore will be raised through debentures from the market in the coming months.
The interest from debentures that are issued by a company and listed on a stock exchange is exempt from TDS, if it is held in dematerialised form
Debentures vs FDs Returns
Security
Liquidity deposit, as the debenture holders will be paid before the FD holders. Even bank FDs are unsecured instruments, but they are insured up to an amount of `1 lakh by Deposit Insurance and Credit Guarantee Corporation of India. An unsecured debenture, on the other hand, will be paid only after the other secured creditors are paid, but before the shareholders. Returns They offer higher interest rates than the bank FDs. The NCDs brought out by NBFCs like Muthoot Finance and Manappuram offer interest rates
Convertibility Taxation
Debenture
Bank FDs
Secured against assets
Insured up to 1 lakh by Deposit Insurance and Credit Guarantee Corporation of India
Higher
Lower
Tradable on stock exchanges. May have a put option for early redemption Convertible debentures can be exchanged for shares
Interest is taxable. Capital gains tax apply if sold before maturity
of around 12 per cent per annum for a term of two years, compared to the 9-10 per cent offered by bank FDs of a similar term. Liquidity Debentures are often listed on the stock exchanges, providing an exit avenue for the investors. Some debentures also come with other options. A debenture with a ‘Put’ option allows the investor to redeem it before its term is over. A ‘Call’ option on the other hand gives the issuing company the right to prematurely close the debenture and return the capital to the investors. Ratings Regulations state that debentures should be rated by rating agencies registered with SEBI. The ratings for debt instruments with maturity exceeding one year range from AAA (highest degree of safety) to D (in default or expected to be in default on maturity). Tax treatment The debentures are treated like debt instruments for tax purposes. The in-
Loan against FD, can be broken at a cost Cannot be converted into shares Interest is taxable
terest earned from it is treated on par with the interest earned from a bank fixed deposit. The interest from debentures that are issued by a company and listed on a stock exchange is exempt from TDS, if it is held in dematerialised form. If the debentures are sold before maturity, they would be subject to capital gains tax. What to look for Even though you are investing in secured debentures, it would be prudent to check out the financials of the issuing company before investing in them. After all, one would like to avoid the hassle of running around to get back the money invested. • • •
Invest in debentures of profitmaking companies with a good dividend record. Look for issues with good rating – AAA, the highest safety rating or AA high safety. Avoid companies with exposure to volatile sectors like real estate and capital markets Advantages of debentures 1. 2. 3. 4.
High returns High safety High liquidity Tax benefits
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Personal finance
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ouldn’t it be nice if you could insulate yourself from the frequent petrol price hikes, or for that matter price increases in gold? You would have to own oil fields or mines, or stock up on the commodities, if you were to do that the conventional way. But man’s ingenuity has allowed him to do lock prices at least for the short term without the hassles attached with stocking up or running an oil field. There are financial instruments called derivatives that help lock down the price of a commodity in future. A derivative is a financial instrument that derives its value from that of an underlying asset, which could be equity, commodity, foreign exchange, interest rates, real estate or such assets. Four types of derivative instruments are commonly used in the world today – forwards, futures, options and swaps. The concept of derivatives is not alien to India. Long before the organised exchanges began trading in futures, farmers in the country used to sell their produce to traders before harvesting. For example, a farmer might sell the pepper from his farm to a trader a couple of months before the crop is harvested. The price is arrived
How it started
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he world’s first organised futures exchange was the Dojima Rice Exchange in Osaka, Japan which was formed in 1697, and continued trading till World War II. Rice was often used as a currency in Japan at that time and a fall in price of rice prompted traders to press for the introduction of futures by 1730. But its legal status remained under question with the governments opposed to futures as they feared the use of rice for gambling. Chicago Board of Trade, formed in 1848, was the first commodity exchange in the US. During those times, Chicago was the main city in America and farmers from the
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The future is here Derivatives are tools that help manage risks and discover prices at based on negotiations and depends on the estimate of the yield, the expenses for harvesting and the market price of the produce. If the market price of the product increases during American heartland took their produce to Chicago to sell it. But once they brought the produce to the city, they were at the mercy of the traders, as they could not afford to take it back or store it for long till they found a buyer willing to pay a reasonable price. They were often forced to sell it at a huge discount. So the enterprising ones among them started visiting the city in advance to meet buyers and fix up contracts before transporting the grain to the city. This practice eventually led to the formation of the CBOT, where grain futures where traded. Futures trading in India too started around the same time, with the formation of the Bombay Cotton Trade Association in 1875. But after independence, scarcity of food
the period or the yield from the farm exceeds the estimates, the buyer will enjoy the profit. A decline in price or the yield might put the buyer in a loss. But in either case the farmer is grains led the government to impose price controls and futures trading was restricted and suspended in several commodities. Later the ban was relaxed for certain commodities and localised commodity exchanges specialising in certain commodities like in Indian Pepper & Spice Trading Association in Kochi started functioning. With liberalisation, national level commodity exchanges – MCX, NCDEX and NMCE – were formed in the early 2000’s. Home grown derivative products were traded in the stock exchanges also from the early 1900s before they were banned after independence. They made a comeback in the stock exchanges with futures trading in stock indexes in 2000 followed by futures trading in select individual stocks.
A derivative is a financial instrument that derives its value from that of an underlying asset, which could be equity, commodity, foreign exchange, interest rates, real estate or such assets assured of his money. In effect, the farmer and the trader are entering into an unwritten contract that will be fulfilled at some time in future. This is a derivative contract in essence and is called a forward contract. A forward contract has some limitations though. The main one being that the contract does not have a standard form and is customised based on the negotiations of the counter parties entering into the contract. So it is not possible for a person to exit from the contract easily in case the odds turn against him. Nor can the contract be transferred to another person as it is difficult to find a person willing to take it up. Also there is not much that can be done if one of the parties to the contract reneges on his pledge. To overcome these difficulties, the futures contract was designed. A futures contract is a forward contract that has been standardised so that it can be traded on the exchanges. It is an agreement between two parties to trade an asset of a specified and standardised quantity and quality at a future date for a price agreed upon while entering into the contract on the futures exchange. A futures contract is usually
Types of future contracts • • • • • •
Commodity futures Equity futures Index futures Currency futures Interest rate futures Carbon futures
Futures mechanism
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here are many standardised contracts available in the exchange for trading. A trader can place the order for a particular contract – for example gold on the exchange. If there is a seller who is willing to sell the contract at the specified price in future, the trade will happen. After the contract has been entered into, the price of the commodity may vary in the market. If the price goes down, the buyer will be at a loss as he could buy the commodity at a lower price now. So there is always a possibility that party at a loss will refuse to honour his commitment. To ensure that both the parties honour their commitments as part of the contract, the exchange collects a margin from them. The margin depends on the volatility of the asset that is being traded – the more volatile the asset, the higher the margin. As an additional measure, the margin is marked-to-market on a daily basis. That is the profit or loss on the contract is calculated
introduced by the exchange where it can be traded. The terms that define a futures contract are the quantity of the asset, quality of the asset, delivery date and place and the strike price. The person who agrees to buy the asset – the buyer – hopes that the price of the asset will increase during the period, while the seller is afraid that the price is about to come down and so may want to lock in the price. Advantages A futures exchange helps the market discover the price of a commodity and enables the participants to manage the risk associated with price variations. The participants on the exchange quote prices based on their assessment of market conditions such as demand and supply, government
every day when the market closes and the party at a loss is asked to make a deposit so as to cover the loss. The person who is in profit can withdraw the mark to market gain made on the day. This process continues till the contract is closed by squaring off or delivery. As the end date of the contract approaches, the parties can either close the contract by squaring off or opt for delivery. To square off, the buyer will have to sell a contract of the same specifications at the prevailing market price and pocket the profit or take in the loss. The reverse applies for the seller. To take delivery, the buyer will have to deposit the whole amount of the asset, and take possession of the same from the delivery centre, while the seller will have to deliver the goods of the specified quality at the delivery centre specified in the contract. The delivery centre has officials who can test the quality of the goods and ask the seller to make amends if found wanting in quality.
policies and weather forecasts. Trades happen when there is an agreement between the buyer and seller on the price and the presence of a large number of market participants and trades helps one get an idea of the fair price of the commodity. This price is available on the terminal on a real time basis and can be disseminated across the country in no time. Another advantage of the futures exchange is that it allows participants to manage the risk associated with price variations – through hedging. A consumer can lock in the prices of a commodity by buying it in the futures contract thereby protecting him against price rises in the interim. Similarly a producer can sell the commodity in the exchange and escape the problems associated with a fall in price. 43
How much gold does a man need?
And what if the rupee strengthens against the dollar?
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he demand for gold in India has been rising steadily along with the rise in its price. Gold demand in the country rose 38 per cent this year in terms of tonnage and 70 per cent in terms of value as per the figures of the World Gold Council. People seem to be in a hurry to buy all the gold they can as they think the commodity would become inaccessible as prices reach stratospheric levels. Not surprising in a country where people have a sentimental attachment to gold ornaments, where people start buying gold from the time a daughter is born to provide for her marriage. I too have a baby daughter and I too bought some gold last month, as an investment. Lucky me, gold has been on a consistent rise since then, with my investment growing as much as 20 per cent in a matter of weeks - a rise that has been all the more dramatic in the backdrop of falling share prices. All was well until one thought of the reasons for the rise in price. Gold prices, we have been told, rose on the back of the deepening economic crisis the world over, especially in the US and Europe. The same crisis that shuts down businesses, throws people out of jobs and triggers riots. Gold prices are expected to con-
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tinue to rise as the economic crisis deepens. But like any other crisis, this one too will blow over one day. What will happen to gold then? I dug into some history to find that out. The last time gold had a dramatic rise was during the oil crisis in the late 1970â&#x20AC;&#x2122;s. The yearly average price of gold rose from $36.81 per ounce in 1970-71 to $584.92 per ounce in 1980-81. It touched a peak price of $850 per ounce in 1980. For the next 20 years, when
If the value of the rupee could come down from `7.5244 per dollar to `44.94 per dollar in 30 years, it could go up the same way on the back of a strengthening economy. And gold price in Indian rupees could fall to one-sixth of its value due to that rise. So the Indian growth story could just be the nemesis of the gold story, at least in India
economies were stable and prospering, gold prices fell steadily to touch a low yearly average price of $272.12 an ounce by the turn of the century. But, wait a minute. In dollar terms gold prices might have fell during the 80â&#x20AC;&#x2122;s and 90â&#x20AC;&#x2122;s, but the story was different in India. The yearly average price of gold after rising from `184.96 per 10 gram in 1970-71 to `1522.44 in 1980-81, in tandem with the global trend, continued its march in the next two decades also. When gold prices fell by half in international markets, prices in India almost tripled to `4473.6 per 10 gm in 2000-01. Gold returned an average annual yield of 6.9 per cent in dollar terms and 11.2 per cent in Indian rupees during the period 1970-2000. Why this difference in the rates of returns provided by gold in rupee terms and dollar terms? The answer lies in the rupee-dollar exchange rate, which changed dramatically during the period. The value of the rupee had gone down consistently from `7.5244 per dollar in 1971 to `44.94 per dollar in 2000, a fall to nearly one-sixth of its initial value. So anything that you import would be six times costlier, just due to this exchange rate variation. The price of gold is set globally in dollar terms much like that of oil and India imports almost all of the gold it requires. This has been the reason for the sustained increase in the price of gold in India, even when it stagnated or declined in markets abroad. In this century, thanks to the economic crisis, gold has again started its upward march, from $272.12 in 200001 to $1800 levels today. The rupeedollar exchange rate has been more or less steady during the period and the
return from gold have been similar in both currencies. In rupee terms, gold yielded 15 per cent during 2000-2009, against 16 per cent in dollar terms. Economists say that the value of a country’s currency will increase as its economy strengthens. The Indian economy is one of the star performers today, and is expected to grow in strength while other major economies, stricken by recession, falter. And if the value of the rupee could come down from `7.5244 per dollar to `44.94 per dollar in 30 years, it could surely go up the same way on the back of a strengthening economy. And gold price in Indian rupees could fall to one-sixth of its value due to that rise. So the Indian growth story could just be the nemesis of the gold story, at least in India. Gold prices in dollar terms might continue to rise as long as the economic crisis that shows no signs of abatement lasts. But will the crisis last forever? If it does, what use will be gold at whatever price? When the doomsday approaches, will it matter how much gold you hold or what price it fetches? You cannot eat it, nor can you put it to much productive use. And it could put you at serious risk from thugs. Who knows, governments might even confiscate it as the US government did during the depression in 1933, making it illegal to hold gold privately. If it doesn’t, we will be back to prosperity, and gold is sure to fall back to its place. In the meantime investors would do well to time their exit from gold, but that is not a skill held by many. I for one, have decided to sell my gold before things get better. After all, even after the rally in gold and the crash in the stock markets, stocks have continued to outperform gold by a decent margin in the last 30 odd years. Adjusted for inflation, gold has not touched the peak of $850 per ounce recorded in 1980 even after the current rally. The India growth story remains bankable, even though it has slowed down. And hoping for prosperity is much easier on one’s mind than worrying about the worst. As for our daughters (and sons too), let’s hope that they will be smart enough to deal with the cri-
ses that come their way. For this is not the end of the world, nor will it be the last crisis in it. Let’s hope
that they find some one who values them more than gold. After all, how much gold does a man need?
Data Source of gold prices and exchange rates - RBI
* 1 troy ounce = 31.103 grams
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Biodiversity of Kerala
Biodiversity of Kerala
Biodiversity is the degree of variation of life forms within a given eco-system. Kerala is rich in its biodiversity; in fact, it hosts a substantial part of the Western Ghats, one of the 25 biodiversity hotspots in the world. How valuable is biodiversity
Biodiversity plays an important role in air-quality, climate, water purification, pollination, recycling nutrients, providing fertile soils and prevention of erosion. It has got spir-
itual and aesthetic values, knowledge systems and the value of education. Biological sources are important as various industrial materials like fibers, dyes, rubber and oil are derived from them. Biodiversity fuels new research and findings which ultimately end in new products and wealth creation. The potential of biodiversity may be evident from the fact that the United States, the world’s leader in patents, hosts only one biodiversity hotspot; so is the case with the whole of Europe. Compare it with India, which hosts two: the Western Ghats and the Himalayas Kerala’s topography Tropical rainforests Meadows Wetland ecosystems such as lakes, ponds, reservoirs, backwaters, mangroves reserves Flora of Kerala Total of 11,840 taxa of plants 866 species of algae 4800 species of fungi 520 species of lichens 350 species of bryophytes 332 species of pteridophytes 4 species of gymnosperms 4968 species of angiosperms or flowering plants. 850 species and varieties of cultivars Fauna of Kerala Mammals - 145 Birds - 486 Reptiles - 164 Amphibians - 85 Freshwater fishes - 196 Insects - 4027
Forests: 9,400 sq km Tropical wet evergreen, semi-evergreen forests (3470 sq km) Tropical moist and dry deciduous forests (4200 sq km) Shola forests (100 sq km) Two of the world’s Ramsar Convention listed wetlands—Lake Sasthamkotta and the Vembanad-Kole wetlands—are in Kerala, as well as 1455.4 sq km of the vast Nilgiri Biosphere Reserve. There are three hotspots of endemic centres in Kerala. They are Agasthyamala, Anamalai and Silent Valley Aarogyapacha
Trichopus zeylanicus, or Aarogyapacha, a small herbaceous plant found in the Western Ghats, contains flavonoid glycosides, glycolipids and some other non-steroidal compounds in its leaves which provides immuno-enhancing properties. Its fruit has got anti-fatigue properties. The Tropical Botanical Gardens Research Institute developed a standardised herbal drug based on the tribal knowledge and was commercially produced by Arya Vaidya Pharmacy, Kottakkal, under the name ‘Jeevani’.
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project tracker cent of the shares subject to clearance of its board. The consultancy for the project had been awarded to the Authority, and it is expected to complete the project report by November. He said Kinfra would transfer 516 acres acquired for the airport shortly to the government so that it could be transferred to Kannur International Airport Limited. Vizhinjam ICTT Two bids shortlisted Vizhinjam International Seaport Ltd (VISL), a special purpose vehicle promoting the deep-water port and international container transshipment terminal, has received two bids for selection of port operator. A consortium of Welspun Infratech, Welspun Corp and Leighton Welspun Contractors, and Mundra Port and Special Economic Zone are the two successful bidders. The government has decided to develop Vizhinjam based on the â&#x20AC;&#x2DC;landlord portâ&#x20AC;&#x2122; model wherein the basic infrastructure would be developed by the VISL through an EPC (engineering, procurement and construction) contract. Infrastructure to be raised as part of this includes the breakwater, quay wall, dredging and
reclamation and external connectivity (road, rail and utilities). The private partner (port operator) would construct the superstructure for the port operations and the terminal. It would operate and maintain the facility for a period of 30 years. Kannur airport AAI to subscribe to equity The Airports Authority of India has come forward to take up equity in the Kannur airport project. Minister for Ports K Babu said the authority would subscribe for 10 to 11 per 50
Its value would be treated as equity of the State government in the project (26 per cent). In addition, Kinfra would give 730 acres on lease to the airport company after getting Cabinet clearance. SmartCity Construction to kick off soon The project monitoring committee of SmartCity Kochi, which met recently in Dubai, breathed fresh life to the project by allotting funds and setting the timelines for the year. Work on the SmartCity Pavilion, which will host the offices for the administrative and project management team, is set to start soon. The building will also showcase the technological advances of SmartCity. The Head Quarter building will be constructed next with work expected to commence on November 19. The committee also inducted Kerala Chief Minister Mr Oommen Chandy, State Ports
& Excise Minister Mr K Babu and businessman M A Yusuffali into the SmartCity board as special invitees
to ensure the smooth progress of the project. Infopark Work on second phase begins Infopark Kochi has started de-
velopment of its 153-acre second phase, which will host an IT/BPO complex, hotels, malls and recreation facilities. The first building is expected to be complete by March, 2013. Infopark is in talks with IT majors to lease the space, and is in the process of determining the lease rates. Vallarpadam ICTT More berthing facilities The berth at the Vallarpadam ICTT has been deepened to allow two
large vessels to dock simultaneously, thereby ensuring faster movement of cargo. Currently 450 metres of the berth have been provided with a depth of 11 metres, against the 350 metres which had this depth earlier. The three berths at the ICTT together have a length of 560 metres. The terminal plans to increase the depth of the berth to 15.95 metres, making it the container terminal with the largest draft in the country. However, the cabotage laws which prevent vessels not carrying Indian flag from sailing between domestic ports have affected shipping lines.
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`:50 US:$5 RNI No. KERENG02297 Enterprise and Economic Update Kerala, a venture supported by KSIDC