Vol.1 Issue10 November 2011
Not by refining alone RNI No. KERENG02297
Editor K J Jacob Principal Correspondents Aby Abraham G K A P Jayadevan Design and Layout Renu Arun Website Suhas K 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
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T
he curious case of crude oil does not attract the attention of many. Over the decades, it has become the single most important commodity that determines the fortunes of individuals and even nations; some even place energy security above food security. Anything to do with oil requires huge investment; however, seldom do we get to know how the oil economy works. Forget the economy, how crude is refined and made a fuel which can power our vehicles is beyond the comprehension of most people. For Kerala, BPCL Kochi Refinery, through its many avatars over the last four decades, has been in its collective consciousness. Not as an active player on the stage, but as a playmaker in the background, busy with its own affairs. The presence of one of the largest PSU refiners in our midst seldom made news, though it came up after huge monies were pumped into it. People did not bother who refined the oil or what margins they took. It was not celebrated like a FACT or a Travancore Titanium or a Keltron, for right or wrong reasons. But it will not be the case anymore. The silent operator has some killing moves up its sleeve. It is paving the way for a mind-boggling investment to the tune of `30,000 crore into Kerala. Of course, almost half the money will go into refining capacity expansion, which, like its earlier phases, is unlikely to get noticed. But the rest of it is sure to change the industrial profile of the State, which is never heard of when someone mentioned manufacturing or petro chemicals. The cover story is on the big plans Kochi Refinery has for Kerala, and the petro chemical industry it tries to usher into the State. The company is mindful of the ecological sensitiveness of the State and avers that industries that could come up as part of its projects would be environmentally friendly. The company got the courage to think of such an adventure after it implemented its previous projects eventlessly. “At times we had to manage more than 10,000 people but we never faced a problem,” says Executive Director E Nandakumar, dismissing misgivings of the ‘militant trade unionism’ Kerala has often been accused of tolerating or encouraging. Given this background, the projects KRL is planning are an opportunity presented to Kerala on a platter. It must be the endeavour of all to ensure that they go on stream as planned by the company. And help the State earn the rightful place it must have in the industrial map of India.
Contents COVER STORY
26 The many colours of crude oil BPCL Kochi Refinery is expanding its capacity to become India’s largest PSU refiner. It is also setting up a joint venture for producing a key raw material for the petro chemical industry. if everything goes as planned, Kerala will see an investment of `30,000 crore in the near future. It will also herald Kerala’s entry into the petro chemical and manufacturing industries 4
Contents 14
An eastern son rise
Navas Meeran will seek to add depth to the market the company has created across India
18 Nurturing dreams Startup Village, a telecom incubator in Kochi for campus start-ups 32 The
gateway to balance
Meditation helps to attain control over thoughts, sharpen mind 34 A twist in the tale Multiplexes redefine the fortunes of the film industry
Tech Strokes 36 Tech-enhanced business The explosion in technologies benefits not just tech companies. It helps enterprises across sectors expand and scale up 21 Nature's farming Rising prices, promotional schemes help Pokkali farms come back to life
40 Making it e-asy A demat account is a secure, convenient way to keep financial assets
The Other Side 42 Retire old,
retire rich
Kerala youth should demand an increase in the retirement age of government employees
5
Photo: V Sivaram 6
The Kochi Metro rail project is the biggest infrastructure project to happen in Kerala after the Cochin International Airport, which was commissioned in 1999. The 23-km Aluva-Petta metro is expected to free the commercial capital of Kerala from the traffic snarls which is a drag on its development. While the `5600-crore project is pending before the Central government for final clearance, the Delhi Metro Rail Corporation Ltd, which is the consultant to the project, is fully seized of the job. It has already completed demolition of the two-wheeler bays of the Ernakulam north railway over bridge (in pic), as the project envisages the construction of two single-lane overbridges for vehicles to pass. The central portion of the bridge will later be pulled down and rebuilt. The metro-rail pillars would be built above the central portion. The bridge will be rebuilt in 18 months. 7
Cover story Go to any big hospital in Kerala and you find that rooms are in short supply. The hospitals here are unable to even meet the domestic demand for healthcare. The increase in living standards and advances in medical science which lead to the discovery of newer diseases and treatments are all leading to an increase in demand for healthcare. It is heartening to know that the big hospitals in the State are planning massive capacity expansions, without which we cannot even think of serving patients from abroad. K Anil Kumar, Chalakkudy, Thrissur II The Kerala brand of Ayurveda is considered to be one of the most authentic versions of the Indian system of medicine. But we have not been able to showcase it effectively, despite our success as a tourism destination. One reason for this is that practitioners of genuine Ayurveda in the State do not show interest in marketing their trade. They have left the field open to unscrupulous operators who bring a bad name to Ayurveda as a whole. Unless the genuine players become more enterprising and occupy the space that is rightfully their's, Kerala cannot hope to reach its potential in health tourism. Mahesh Menon Thiruvananthapuram III Foreigners roaming the corridors of the big hospitals are not an unfamiliar sight in Kerala today. The facilities available here and the low 8
again reminded the Malayali about the ill-effects of chemical pesticides. But he remains as helpless as before. Farmers wanting to do organic farming are constrained by the lack of marketing facilities. Organic shops in the State are rare and consumers don’t have the option of buying organic even if they want to. The government should take the lead in developing a market for organic products in the State. Till then homestead farming will be the only option for consumers wanting pesticide free vegetables. K M Geroge, Kottayam cost of treatment have been attracting a lot of people to the State. But I don’t think they have been spending the time here for recuperating from their ailments. Our hospitals and tour operators should make use of the opportunity taking a cue from the players in Thailand. Only then can we claim to be a serious player in health tourism. George Koshy Kochi Buying Online Online buying is coming of age in the country. Reliable suppliers and the ability to make payments over the Internet thanks to credit and debit cards have made it a viable option for many, especially the young. But the game changer has been the lower costs for the products bought on the Net. People have been turning to the Net not just for insurance and other financial products, but even for electronic items like mobile phones and laptops. The trend is expected to gain strength as more and more people get hooked on to the Net. It would be interesting to know how the brick and mortar retailers react to this trend. Reshma Jose, Kochi Organic farming The Endosulphan disaster has once
IT Kerala is doing everything right to bring IT companies to the State – be it developing infrastructure or marketing the State. Nasscom’s decision to open its office in Thiruvananthapuram – the first in a non-metro city in the country is definitely a big positive for the State. It will make investors look at the State in a new light. But the State’s efforts might be thwarted by the declining fortunes of the IT industry, hit by economic recession in the US and Europe - the major markets for IT companies. The State should stay the course though. It should be well prepared when the tide turns again. Nirmal Mohan, Thiruvananthapuram Technology column Your move to start a column on technology is an apt one, especially in the light of the huge changes happening in the space. Today’s world is technology driven. Businesses cannot hope to succeed without understanding the implications of technological changes and using them to their advantage. I am sure that the column would introduce the latest trends in the space to the readers, and thereby help them leverage it. M Unnikrishnan, Kochi
I say!
Infosys contributed around `608 crore to the total IT exports from Kerala, which was around `3,200 crore... Infosys is doing well here and this reflects the changing investment climate of the State.... The Trivandrum centre is the fastest growing centre of Infosys across the country at 30 per cent annually S D Shibu Lal, CEO, Infosys, on the company’s outlook for Kerala
We cannot live beyond our means, and money does not grow on trees...allow markets to find their own level Dr Manmohan Singh, Prime Minister, commenting on the petrol price hike When London, Tokyo, Hong Kong, Singapore and Paris have become Islamic banking hubs, why can Kerala not become one and lead the country to become a developed economy in the near future? H. Abdur Raqeeb, convener, National Committee on Islamic Banking at the New Delhi-based Indian Centre for Islamic Finance, on the proposal to set up a bank on Islamic principles
I believe there is a space that is yet to by occupied by another large bank like ICICI Bank, Axis Bank or HDFC Bank. I believe we can grow over the coming years to be that bank Amitabh Chaturvedi, managing director, Dhanlaxmi Bank, when asked about the bank’s growth plans It would be a question of national pride for every Indian to rebuild the past glory and reestablish the country's economic leadership. We should never let the extraordinary momentum achieved or the global visibility we had diminish Ratan Tata, Tata group chairman, on the opposition to FDI on retail
9
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AT A GLANCE
We are 7 billion now. And growing There may be half a million claimants to a unique title, the world’s 7 billionth human being, as the population hit the mark recently. The world’s population has been on a continuous growth since AD 1350, when it stood at around 370 million. The growth rate peaked in 1963 when it reached 2.2 per cent, but has fallen steadily since then to around 1.1 per cent today. Chinese ambition docks in space China's space programme received a huge boost when Shenzhou-8, its unmanned spacecraft, docked with the Tiangong-1 laboratory module successfully in outer space. The step is considered crucial in China’s efforts to launch a space station of its own by 2020. China is only the third country in the world – after US and Russia – to have this technology. Banks to take in loss to steady Greece European leaders have succeeded in persuading banks to take a 50 per cent loss on the face value of their Greek debt, far more than the 21 per cent agreed to earlier. The measure is seen as a significant step in resolving the Euro Zone crisis. The agreement was part of the comprehensive package to protect the Euro. The move would bring down Greece’s debt to 120 per cent of its GDP, by 2020.
Sony Ericsson is now Sony Sony has acquired Ericsson’s share of Sony Ericsson. The $1.5 billion deal makes the mobile handset business a wholly-owned subsidiary of Sony. It enables Sony to integrate smart phones into the broad array of networkconnected consumer electronics devices – tablets, televisions and personal computers – that Sony already makes. Ericsson is currently focussing on the global wireless market and finds the handset operation incompatible with its business. Behave, IBSA tells Europe The 5th India-BrazilSouth Africa Summit, held in Pretoria, South Africa recently voiced concern over the global economic and political turmoil. The summit was attended by South African President Jacob Zuma, Brazilian President Dilma Rousseff and Indian Prime Minister Manmohan Singh. The leaders said that the crisis in the developed nations could affect developing nations and pressed for urgent steps by Europe and other advanced economies to prevent a “double-dip” recession. Flood in Thailand affects global economy The flood waters in Bangkok are threatening to water down global growth. The UN has warned that the loss of the rice crop
in the floods could lead to food shortages across the world. Thailand is the largest exporter of rice in the world. Industry has also taken a hit. Plants of Toyota, Canon, Pioneer and Sony Corp have suffered flood damage or supply snags. Samsung dethrones Apple in smart phones
Samsung Electronics has overtaken Apple to become the world’s largest smart phone vendor. It shipped 27.8 million smart phones compared to 17.1 million by Apple in the last quarter. Samsung has a 23.8 per cent share of the market against Apple’s 14.6 per cent and Nokia’s 14.4 per cent share. Apple held the top spot for only one quarter after beating Nokia earlier this year. Nokia maintained its lead in the wider mobile-phone market with 27.3 per cent market share, while Samsung held 22.6 per cent share, followed by LG Electronics. Apple is at fifth place behind Chinese low cost manufacturer ZTE. Student loan in US crosses $1 trillion The total student loan
outstanding in the US will exceed $1 trillion for the first time in 2011 as this year’s figure alone has crossed $100 billion. In fact, Americans now owe more on student loans than on credit cards, according to the Federal Reserve Bank of New York and the U.S. Department of Education. Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what's owed on home loans and credit cards. Japan returns to growing ways Rising from the earthquake and tsunami disasters, the Japanese economy returned to growth recording a 1.5 per cent increase in GDP, in the July-September period. But the export driven growth, is threatened by the crises in major export markets and the Japanese economy is expected to contract in the coming quarter. Even then, the IMF expects it to record the highest growth among the G7 nations - which includes the US, UK and Germany - next year. It has forecast a 2.3 per cent growth for the next year. The Japanese currency – Yen – has hit record highs against the dollar this year and is considered a safe haven in the current world. 11
AT A GLANCE
India to grow faster than China
Consultancy firm Ernst & Young says that India’s growth rate, spurred by industrialisation, will soon surpass that of China. It says India's growth rate in 2013 will be 9.5 per cent, the highest among all the rapid growth markets (RGMs). China will grow at 9 per cent in 2013. In 2014, the firm estimates India and China to grow at 9 per cent and 8.6 per cent respectively. Kenneth Cole to enter India American clothing brand Kenneth Cole has tied up with Reliance Brands to retail its collection of men and women apparel and accessories in India. Under a licencing agreement, it will open 25 stores across India in the next 5 years. RBI hikes rates, lowers forecast The Reserve Bank of India (RBI) raised the benchmark interest rates again by 25 basis points while keeping the cash reserve ratio rate unchanged at 6 per cent. The RBI has also lowered its growth 12
forecast for the year to 7.6 per cent from 8 per cent. It expects the wholesale price index inflation to ease to 7 per cent by the end of the year. The Central bank also deregulated the savings bank interest rates. India’s bribery index score improves Corruption scandals notwithstanding, anti-corruption group Transparency International’s survey ranks India 19th in a list of 28 countries. India scored 7.5 points, up 0.7 – the highest improvement for a country - since the last survey in 2008. The global average is 7.8. The Netherlands and Switzerland with 8.8 points each top the list. Exports slowdown, trade deficit zooms After logging record growth rates, India’s export growth has started sputtering, thanks to economic troubles in the US and Euro zone. From a high of 82 per cent reported in July, it hit a low of 10.8 per cent in October. As imports showed a more steady trend, growing 21.7 per cent, the trade deficit touched a four-year high of $19.6 billion in October, sparking worries that the trade deficit for the fiscal will top the $150 billion dollar mark. Cairn strikes gas in Mannar basin May be it would reignite Kerala’s hopes to strike black gold in its back-
yard. Cairn India has discovered natural gas reserves in the very first well it has drilled in the offshore Mannar basin of Sri Lanka. Cairn had spud the well in early August. The Mannar basin is the oil and gas field that is closest to Kerala. Seismic data has revealed that more than 1 billion barrels of oil is lying under the sea off Sri Lanka's northwest coast. India ranked 134th in HDI India has been ranked 134 out of 187 countries in terms of Human Development Index (HDI) in a study by UN. The report puts India’s HDI value at 0.547 placing the country in the 'medium human development category'. India’s HDI value rose from 0.344 to 0.547 in the last 2 decades. Pakistan was ranked at 145 (0.504) and Bangladesh at 146 (0.500) India has 30 lakh ‘rich’ families A global wealth study by investment banking major Credit Suisse states that the average wealth of an Indian has nearly tripled to $5,500 (nearly `2.70 lakh) today from $2,000 in 2000. The global average is $51,000; Switzerland tops the list with $5,40,010. The percentage of adults with wealth below $1,000 is 43 in India, as against 27 in the world as a whole. Meanwhile market research firm TNS states that India has around 30
lakh rich families – families that can invest more than `50 lakh. This is more than what Europe has. Bangalore joins Metro club
Bangalore added its name to the list of cities in the country with a Mass Rapid Transit System with the commissioning of the Metro Rail named ‘Namma Metro’. Trains have started running on 7 kms, out of the total 42.3km of the first phase of Bangalore Metro. The rest of the first phase is expected to be complete by 2013. Delhi, Kolkata and Chennai are other cities in the country which have MRTS. Gold imports to exceed 1000 tonnes Despite a 30 per cent rise in prices, gold imports into the country remain robust, and is expected to cross 1000 tonnes this year. Gold imports rose 68 per cent to 267 tonnes in the July-September quarter, compared to the same period last year. Indians have already imported 563 tonnes of gold in the first two quarters of 2011. The net imports were 958 tonnes in the previous year.
AT A GLANCE
3 Malayalis make it to Forbes’ list Malayalis make up about 3 per cent of Indian population; and have contributed the same percentage of men to the league of the richest Indians. Infosys co-chairman Kris Gopalakrishnan, its CEO S D Shibulal and Muthoot Finance chairman M G George Muthoot have made it to the Forbes list of 100 richest Indians. Mr Gopalakrishnan with $1.42 billion is at 36th spot, Mr Muthoot with $1.1 billion at 50 and Mr Shibulal with $890 million at 62. CM pledges support for health tourism
Chief Minister Oommen Chandy has said that developing the infrastructure to support tourism would be one of the thrust areas of the State in the 12th five-year plan. Inaugurating Kerala Health Tourism, the international expo organised by CII, he said the State has immense untapped potential in health-tourism and the government would give all support to the initiative. Dr Philip Augustine, chairman of the organising committee of KHT
2011 said the medical tourism industry in Kerala is expected to be worth $ 4 billion by 2017. Yusuffali most powerful Indian in the Gulf
EMKE Group chairman MA Yusuffali has topped the list of 100 most powerful Indians in the Gulf Cooperation Council (GCC) region published by Arabian Business. The Emke group which owns the Lulu chain of hypermarkets has an annual turnover of $3.75b and employs 27,000 people. The others on the list are GEMS Group chairman Sunny Varkey (3), Gulfar vice-chairman P Mohamed Ali (5) and Shobha Developers chairman PNC Menon (9). Kerala tops child rights index Kerala, which tops other Indian states in most human development indices, has repeated the feat in the national child rights index with respect to protecting the rights of children. This composite index, brought out by the HAQ-Centre for Child Rights, looks into all aspects of child wellbeing in all sectors and indica-
tors for realisation of child rights as a whole. Four of the five best performing States — Kerala, Karnataka, Tamil Nadu, and Andhra Pradesh — are from the southern region; Maharashtra from the west being the fifth. 13 cos in fray to study Chennai-Tvm corridor As many as 13 companies have joined the race to conduct a pre-feasibility study of the 869 km-long Chennai-Thiruvananthapuram high speed rail corridor. The contract is expected to be awarded in a month. The Railway ministry had last year announced that it will build six high speed passenger corridors to run trains at 300 km per hour speed. Nokku kooli to end in Thiruvananthapuram In its bid to end nokku kooli, the practice of charging a fee even when the labourers do not do the job for lack of skills, the State labour department has notified a rate card and set up a helpline for the aggrieved people to complain. The website of the labour commissioner contains details of the rates applicable to various loading and unloading works. Complaints can be registered on 155300, the 24-hour help line number.
Coal block in Orissa. The Central government had in July 2007 allocated 200.67 million tonnes of coal from the 602-million tonne coal block to KSEB along with Orissa Hydro Power Corporation(OHPC) and Gujarat Power Corporation Ltd (GPCL). KSEB and OHPC will jointly set up the plant to use the coal allocated to them. The proposed plant will have 3 generators of 650MW each, to be installed in 3 phases. The total cost of the project is estimated at `8000crore. Now explore Kerala, online Kerala Tourism has tied up with zapak.com and introduced an online game which take players on a journey across the State on one of the four modes of travel — a rented car, tourist bus, rented bike or traditional boat. The interactive online game has a hand-drawn map of Kerala with a trail and markings for the important tourist attractions. The stops are at important tourist destinations where one can click snaps. There are also treasure troves, hidden in a temple or church, a historic monument, beach or a national park.
Kerala, Orissa to set up 2000MW power plant Kerala and Orissa have agreed to jointly establish a 2000MW power plant in Orissa using coal from the Baitarani West 13
interview
An eastern son rise Navas Meeran will seek to add depth to the market the company has created across India
T
he Edappally-Aroor road is a reflection of Kerala as wannabe Singapore, sans its skyscrapers. It nurtured trendsetting ideas planted on its sides; one can see Kerala’s first corporate hospital, first international convention centre and first shopping mall on it. The world’s top brands now jostle for space on its sides; the latest to join the march is Jaguar Land Rover. From his corner room on the eighth floor of Eastern group’s corporate office on the road, Mr Navas Meeran can pick signals of the way Kerala wants to move ahead. But the vice-chairman and managing director of a company which is fast expanding its footprint in north India and is the largest Indian exporter of spice products has to look beyond the immediate. He has to look far beyond. Travelled widely, Mr Meeran joined Eastern group in 1993 after completing his graduation in commerce from Sacred Heart College,
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Thevara and a diploma in business management from Bharatiya Vidya Bhavan, Mumbai. He moved to Eastern Treads as its managing director in 1996. He returned to the parent company as it was making serious attempts to become a profes-
I have decided to allow people to take decisions. They are free to make mistakes and then learn from them. There will be more thinking on their part, and there will be more debates. Over a period of time, they will evolve as a team of professionals who would take independent decisions and take the company forward
sional one. People with specific skills joined the board to help it change to make the most of the opportunities the market offered. Mr Meeran, 42, was called to preside over the company after M E Meeran, the founder chairman of the `550 crore group with diversified interests in spices and curry powders, tread rubber, readymade garments, mineral water and education, passed away in September this year. The challenges do not worry Mr Meeran. “My father has put in place a policy framework so strong that that we do not have to worry taking decisions,” he told K J Jacob in an interview. He hinted at some consolidation, new areas which the company would like to examine for future forays, and new initiatives in corporate social responsibility. However, for the time being, “the focus will be on adding depth to the core business of curry powders,” he said. Excerpts: What change has visited Eastern
after the passing away of the founder-chairman? For the company, we have seen only the natural changes that one would expect in such a situation. My father has put in place so strong a policy framework that we do not worry taking decisions. The foundations are strong enough to hold us for a foreseeable future. For me personally, there are changes. I have practically moved to Adimaly, the company headquarters. Initially, I thought I would spend two days there, but it is five days now. And I have started enjoying working at the scene where the action is. You once said your father will be in office at 10 am even if he is back only in the morning after a long journey, but you would not. Has it changed? It has. Now, I will be at the office in the morning. These are intangible loads of responsibility, and I have started enjoying them, too. What about the top order at the company? The chairman was a hands-on man. Many people used to report directly to him. They would seek his approval for their decisions, even if they were not required to. I think we will change on that count. I have decided to allow people to take deci-
McCormick made a huge difference to the way we do our business. The people who represent McCormick helped us clear our vision for the future. They also helped us streamline the operations by plugging the gaps and tightening the system. They introduced a review system which objectively looked at our performance
sions. They are free to make mistakes and then learn from them. There will be more thinking on their part, and there will be more debates. Over a period of time, they will evolve as a team of professionals who would take independent decisions and take the company forward. I have always advocated that professionals need to communicate among themselves. There would be a lot of grey areas, but I would not be an arbiter among them. I will, instead, encourage ideas to be exchanged at all levels. They will travel back and forth, and we will arrive at the right conclusions. We will reinforce the feeling that an organisation is the product of a team, and not that of individual performances. How will these be reflected on the ground? There are practical decisions, and then there are corporate decisions. My father believed in taking practical decisions. I may not have that luxury, and we will strengthen the system of decision-making. The hierarchy will be respected. How do you look at the growth prospects? We are targeting to hit `650 crore this year. Condiments will continue to be the mainstay of our business, with the turnover crossing `460 crore. We have the spread. We are very strong in the South and are increasing our presence in the North. We are also simultaneously working at adding depth to these markets. Until now, we have been a Kerala company, with the lion’s share of the business coming from here. This is changing now. Our turnover from the rest of India will cross `100 crore this year, and that will be a major milestone in our growth as a national brand. What kind of competition are you expecting when you grow as a national brand? I think the MNCs are going to play a major role in the industry.
All the 120 crore Indians are consumers of spices. All that we have to do is to reach out to them. We are directing our efforts towards that All the top brands today are foreign ones. We are working on the strategies to meet the challenges. Our knowledge of the customer preferences and the changes in their tastes will be our biggest asset. At the same time, we are strengthening the system at the operational level to match the growth prospects. Entrepreneurs in Kerala are more reluctant to share seats on the board, compared with those from outside. But you diluted a part of the stake and invited New Vernon in 2006. Later, you parted with 26 per cent equity to McCormick. What prompted you to take the rather unusual step? Bringing McCormick on board was one of our strategies to take on the future challenges. We invited them more for their management inputs than the money they brought in. What are the specific ways in which Eastern benefitted from them? They made a huge difference to the way we did our business. The people who represent McCormick helped us clear our vision for the future. We now work with better understanding of the path we are pursuing. They also helped us streamline the operations by plugging the gaps and tightening the system. They introduced a review system which objectively looked at our performance. This has helped us enormously in improving our performance. How are the future markets shaping up? All the 120 crore Indians are consumers of spices. All that we have to do is to reach out to them. We are directing our efforts towards that. 15
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.
16
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
For subscription: +91 97444 17980 or subscription@economic-update.in ----------------------------------------------------------------------------------------------After all, our opinions ought to change!
17
Infrastructure
Nurturing dreams MobME Wireless and Technopark to launch Startup Village, a telecom incubator in Kochi for campus startups
I
t is a story of firsts. The first IT park in the country is joining hands with its first incubatee and National Science and Technology Entrepreneurship Development Board (NSTEDB) to set up India’s first telecom business incubator. And that too in the Public Private Partnership model – another first for an incubator. Named Startup Village, the new incubator, set to be launched in January 2012, is a fine example of the potential of the incubation system. As any other incubator would do, Startup Village will provide facilities such as furnished office space, 18
video conference rooms, computers, phone lines, internet, server space and virtual office services. Peripheral services such as legal, intellectual property and accounting will also be provided. In addition, it would be offering Smart Office Home Office units, which would enable entrepreneurs to eat, live, work and play at the same space. “Startups burn midnight oil and work at odd hours so when they need to sleep, even if it is at 12 noon, they need a place,” says Mr Sanjay Vijayakumar, CEO of MobME Wireless, the main driver of the project. MobME Wireless works in the
telecom domain and has an in-depth understanding of the telecom ecosystem. Having been a startup itself that too the first one to be incubated in Technopark Technology Business Incubator (TBI) – it has an insight into the needs of a startup and the workings of an incubator. Says Mr Vijayakumar, “We entered Technopark at a time when there was no incubator. We’ve been represented on the board of Technopark TBI for five years now and have helped fine tune policies which have now benefitted over 122 companies.” It is this experience that has motivated the firm to think of a new incubator. “Every incubator has a focus area and Technopark TBI is for IT and ITES companies. We realised that there is a need for a telecom specific incubator,” says Mr Vijayakumar. “By setting up a full-fledged incubation system, we aim to create a robust system for startups to build, break and innovate.” The incubator will, in association with leading telecom companies, bring the latest technology platforms and products to the startups before it is released commercially. “We are in talks with Qualcomm to setup a 4G network at Startup Village and with leading handset manufacturers to supply handsets before they hit the market. If startups need an edge, they need access to devices and environments like 4G before it hits the public market,” says Mr Vijayakumar.
The Village has already partnered with industry bodies such as Nasscom and Cellular Operators Association of India (COAI). KPMG has been appointed as the Knowledge Partner. Mr Rajan Mathew, director-general of COAI said that the association and its members who are leaders in the mobile communications industry, will support the initiative. The Startup Village will be aimed at students in college or who have just passed out. “Startup Village is an early stage platform and thus we are looking for great teams. At this level, it is not practical to ask for business plans but we are looking at what the DNA of the founders are, how passionate they are about the idea and whether they already have traction in the market like customers, revenue etc. We are primarily looking for product companies which can scale up,” says Mr Vijayakumar. Unlike other incubators, the Startup Village would be modelled on the technology incubators in the Silicon Valley. This means that it will admit startups only in groups and that too at specific times of the year. The first batch of 10 startups is slated to be admitted in March, 2012. The admitted groups will go through a three-month intensive
“We need many more startups to be created in new technology areas – areas that will be the drivers of economic growth and job creation in the 21st century,’ says Infosys co-chairman Kris Gopalakrishnan, who will mentor of the hub
training programme during which prototypes of the ideas generated by them would be built. These would be shown to potential investors, who will decide on the investments to be made. “There is no graduation at Startup Village. We look at success of the company as either an acquisition or a next round of investment,” says Mr Vijayakumar. The incubator also has plans to expand to other cities like Mumbai, Chennai, Gurgaon and Bangalore in the future. “Startup founders from Kerala will have to move to these
“Every incubator has a focus area and Technopark TBI is for IT and ITES companies. We realised that there is a need for a telecom specific incubator,” says Mr Sanjay Vijayakumar, CEO MobME Wireless, the main driver of the project
cities if their business is focussed on India. Expenses in these cities are high for founders, so a common platform would help them reduce cost and move around spending the least amount of capital,” reasons Mr Vijayakumar. Infosys co-chairman Kris Gopalakrishnan will mentor the incubator. “We need many more startups to be created in new technology areas – areas that will be the drivers of economic growth and job creation in the 21st century. To create successful small and medium enterprises from start-ups requires the right support ecosystem. The TBI will provide the same,” he said. The telecom industry is growing at a furious pace, aided by increasing mobile penetration, the shift in consumer preference from PCs to smartphones and tablets and in mobile usage from voice to data related services. Opportunities abound in the sector for device makers, service providers and application developers. Not surprisingly many startups are springing up in this space. But without proper guidance many of them will fall by the wayside. The establishment of a telecom incubator will provide them with the right environment for growth and will hopefully throw up the till now elusive billion dollar company from a college campus in India. 19
project tracker is proposed to be built in the sea by constructing breakwaters on western side of the LNG terminal. Even though the initial cost will be higher, the port hopes to save on the amount spent for dredging to maintain the depth of the channels. The project is estimated to cost `2,640 crore. Feasibility study on bullet train to Kerala Thirteen companies have entered the race to conduct a pre-feasibility study of the 869 km-long ChennaiThiruvananthapuram high speed rail corridor, announced by the Ministry of Railways. The contract is expected to be awarded in a month. Japan Railway Technical Service, Korea Rail Network Authority, TUC Rail and five consortiums from Spain are among the 13 bidders for the project. The Railway ministry had last year announced plans to build six high speed passenger corridors to run trains at 300 km per hour speed. The six corridors are Delhi-Agra-Lucknow-Patna (991 km), Chennai-BengaluruCoimbatore-Ernakulam, HowrahVijaywada-Chennai (664km), Pune-Mumbai-Ahmedabad (650 km), Delhi-Chandigarh-Amritsar (450 km) and Howrah-Haldia (135 km). Chief Minister Oommen Chandy recently announced that the ministry had acceded to Kerala’s demand to extend the line to Thiruvananthapuram, which made the route the second largest among the six corridors. CPT to invite foreign investment for outer harbour Cochin Port Trust (CPT) has initiated the re-tendering process to conduct a feasibility study on its outer harbour project with the aim of bringing in foreign investment. The CPT had invited global tenders in January for conducting the feasibility study, which has now been modified to study the feasibility of utilising foreign investment also. The harbour 20
Kochi metro to follow Chennai model: Nath Union Urban Development Minister Mr Kamal Nath has said the Kochi metro rail project would follow the Chennai model in which the government is the major investor. The minister also said the Union Cabinet will give its final approval; for the project in two weeks. The Minister’s clarification came after the Union Planning Commission reportedly objected to the government taking a major financial exposure and instead suggesting private participation. Meanwhile, the Kochi Metro Rail Limited (KMRL) has made it clear that the company is open to the proposal to extend the reach to the Kochi international airport. “The world over, metro-rails are linked to airports,” KMRL managing director Tom Jose said, responding the observation by the High Court of Kerala about the possibility of a link from Aluva up to the airport, while hearing a writ petition filed by an NGO about the project.
High speed rail corridor to cost `1.61 lakh crore
The Kerala government’s move to build a high speed rail corridor connecting Thiruvananthapuram with Mangalore has gathered momentum with the State government deciding to call an-all party meeting on the project. The decision follows a presentation on the feasibility report of the project by E Sreedharan, chairman, Delhi Metro Rail Corporation (DMRC). The report said the project would entail an investment of `1,61,304 crore, in two phases. The first phase, connecting Thiruvananthapuram to Kochi, has an outlay of `43,254 crore. The KochiMangalore second phase would be built at a cost of `1.18 lakh crore. Green nod for doubling LNG terminal capacity The Union Ministry of Environment and Forests (MoEF) has given its final nod to Petronet LNG Ltd for expanding the capacity of the LNG terminal at Kochi from 2.5MMTPA to 5 MMTPA. With this the company has got all the required clearances for the expansion proposal. Mr AK Balyan, managing director and CEO, Petronet LNG said that since the initial design the project was for 5 million tonnes, only a few additions will be required for expanding the capacity. The Expert Appraisal Committee of MoEF stipulated that at least 5 per cent of the cost of the project be set aside for corporate social responsibility schemes. The project is estimated to cost an additional `4000 crore.
AGRICULTURE
Nature’s farming Pokkali farms are back to life thanks to the rising price of rice and governmental schemes. But it requires sustained efforts to make it profitable in the long run
P
Aby Abraham G K
okkali rice cultivation, the unique, organic way of rice farming practised in the water-logged coastal regions of Ernakulam, Alappuzha and Thrissur districts of Kerala and with a rare GI (Geographic Indication) status, is returning to life after a long lull. Ernakulam district, which has the largest share in Pokkali cultivation, has seen a remarkable increase in the area under the Pokkali crop. In Chellanam panchayath it has nearly doubled to 178 hectares this year from less than 100 hectares in the previous year. Kumbalanghi panchayath has seen a much higher increase with acreage under Pokkali going up to around 100 hectares from about 20 hectares last year, while Kadamakkudy panchayath, saw cultivation expand from 180 to
The farming method has once again found favour with the farmer community, after the area under cultivation had dropped drastically from 25,000 hectares a few decades ago to 5500 hectares
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The bio-control agents were found to be very effective against leaf roller and stem borer, pests that often infest the paddy crop were not conducive for farming. The government, however, intervened in the nick of time with a series of schemes facilitating rice farming again. One of the schemes was the Sustainable Rice Development Scheme, aimed at promoting organic farming in the State. This is the first time that a scheme for organic farming of rice has been implemented in the State. “The department spent `135000 (`1500 per hectare) to improve the farming infrastructure in the Chembakassery region,” says Ms Meena K, Director, Department of Agriculture, Alappuzha. In addition, the government also gave `1000/acre subsidy for tilling the land and `400/ acre subsidy for harvesting. The department also provided organic manures and pesticides, free of cost to the farmers. “We took 220 soil samples from
various parts of the field and tested them. On finding that the soil was acidic in nature, Dolomite was prescribed to neutralise it. It has magnesium and calcium, that also helps the plants absorb the nutrients more easily,” says Ms Suja Eapen, Agricultural Officer, Pattanakkad. In addition, neem cake and organic manures such as greenmed, cellrich and super organic were applied. Cow dung was also applied to the fields. The farmers were encouraged to use bio-control agents to fight pests. “We were apprehensive about the effectiveness of the biological pest control methods,” said Ms Meena. “We even gave the farmers the option of using chemical insecticides as the last resort. But they didn’t have to use it. The bio-control agents were very effective in dealing with pests. The bio-control agent – Trichocards which release pests that tackle other pests – was found to be very effective against leaf roller and stem borer, pests that often infest the paddy crop. “This year’s yield was double than what is usually got,” says Mr P Ravindran, a former agricultural officer and convenor of the Chempakassery Society. “Usually we get a yield of
Photo courtesy: www.questfeatures.org
200 hectares. And the best part of it was that fields which remained fallow for more than a decade came back to life with active cultivation. The Pokkali fields in Alappuzha district are also once again alive with the bustle of the farmers. As many as 226 of the 240 acres in the Chempakasseri padasekharam (rice field) has been brought under organic cultivation this year, compared to just 161 acres in the previous year. The farming method has once again found favour with the farmer community, after the area under cultivation had dropped drastically from 25,000 hectares a few decades ago to 5500 hectares. The increasing price of rice and the whole-hearted support from the government has been behind this turnaround. The rise in prices has incentivised the farmers’ return to the field. From `10-12 a kg a few years ago, rice is priced upwards `30 now, making farming a remunerative vocation. The procurement mechanism also improved, avoiding inordinate delays for the farmers to realise their returns. But prices alone could not make it happen as the fields, which witnessed no activity, fell fallow and
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750kgs/acre, but this year the yield has doubled.” The government procures the grain from the farmers at `15/kg. Even after the subsidies given by the government and the free manure, the farmers incur expenses to the tune of `15,000 per acre. That leaves a meagre `7500/acre as profit to the farmer. It has provided the farmers a lifeline though. Mr Devarajan Jayabhavan, who has cultivated 2.63 acres, is happy with the 3.5 tonne yield that he has got. But the effort involved is huge, says he. “We had to carry the produce on head from the field to the road, wading through knee deep water. The absence of farm roads and navigable canals, makes farming difficult in remote fields.” “Infrastructure is a priority,” says Mr Ravindran. “The optimum level of water has to be maintained for getting a good crop. Draining away the water from the fields is a major activity in Pokkali farming. There are nine sub regions within the 240 acre field, each lying at different levels. So with the common outer bund, it is not possible to maintain the optimum water level in all the fields. Low lying areas will have excess water, while higher ones will face water shortage. So we are planning to build separate bunds for each region.” Plans are also being made to make farms accessible by road and water. The different levels pose another problem too. Farmers in each of these regions plant the crop during different times. Hence the harvest also does not take place uniformly. This poses difficulties in bringing harvesting machines, as the re-
quired scale will not be available. The marshy nature of the Pokkali fields poses another problem. “Last year we tried to use combine harvesters, but the machines sank,” says Mr Ravindran. “We have plans to bring lighter machines next year.” But for now, harvesting the crop manually is the only option: a difficult one in these times of labour shortages and high wages, compounded by the Rural Employment Guarantee Scheme (MGNREGS). The MGNREGS has been both a bane and a boon for paddy cultivation: that labour can be arranged under the scheme helped expand the area as preparation of land comes under the scheme. However, the opening up of new avenues of labour has resulted in creating an acute shortage in the availability of farm hands. That harvesting does not come under it results in shortage of hands. There are other problems too. “We are yet to find a way to deal with ‘Kuthiravalan’ a weed that is found profusely in the fields here. Mechanical removal that is practised now is a costly and laborious process,” says Mr Ravindran.
“This year’s yield was double than what is usually got,” says Mr P Ravindran, convenor of the Chempakassery Society. “Usually we get a yield of 750kgs/ acre, but this year the yield has doubled.”
The farmers also complain of ‘Nelkozhi’, a migratory bird that visits the region during the season. Says Mr Prasennan Njandumuri, a farmer, “The birds cut the paddy and use it make their nests on the fields. The government should take steps to control the bird menace.” Lack of processing and marketing facilities is also a problem area. “We don’t have a dedicated processing facility. If we give the grain to rice mills, there is no guarantee that we will get the rice from the grain we provide. This prevents us from branding the produce and selling it at a premium, even though a demand exists for it,” says Mr Ravindran. Opportunities There is a glimmer of hope though. The society has given an undertaking to the government to carry forward the scheme for three years. “After three years, we hope to get organic certification for the produce from the fields. Once the certification is received, the farmers can sell it at a premium,” says Ms Eapen. Plans are also afoot to get a dedicated processing centre for the grain. Pokkali rice is known for its taste and quality and is different from the conventional varieties of rice. With the GI status and organic certification, Pokkali rice is expected to be a hit with the market. Studies have found that organic certification alone can fetch 60 per cent higher prices in the market. The increasing awareness among the customers and their willingness to pay a premium price could make this unique farming method profitable once again. 23
BUSINESS CALLED LIFE
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Anandan, 56, pushes a part of a coconut tree after cutting it along a main road in Kochi. Anandan, whose profession is to cut coconut trees, has been doing the job for the last 32 years and charges between `1200 to `6000 for cutting a coconut tree depending on its size, location and the risk involved.
Photo: Sivaram V.
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cover story
Refining prosp 26
perity
It’s not for services alone that Kerala would be known for, if the BPCL Kochi Refinery's plan for the future went ahead as planned. The sleepy oil refiner that minded its own business till now is taking the lead in ushering the State into manufacturing in a big way. In a way that only it can
B
Aby Abraham G K
PCL Kochi Refinery (KRL) has attracted little popular attention in Kerala, except when its officials met the Chief Minister with a pay cheque of the annual dividend, or when it offered a substantial amount for relief work in case a natural disaster struck the State. Even the recent completion of the second phase of the Capacity Expansion and Modernisation Project (CEMP- II), which involved an investment of `5,000 crore, was mostly a silent affair. On a 1200-acre plot with greenery and water bodies interspersed with huge and complex installations in Ambalamughal, off Kochi, it refined crude, sold oil, and remained happy. But the script is changing now. In one of the path-breaking events in Kerala’s industrial history, the company is now launching a twin project: the Integrated Refinery Expansion Project (IREP) and a joint venture ( JV) for the production of propylene and its derivatives. The IREP will increase its refining capacity from 9.5mmtpa to 15.5mmtpa in three years, making it the largest public sector refinery in the country. The project to enhance capacity would cost `12000-13000 27
The IREP will increase its refining capacity from 9.5mmtpa to 15.5mmtpa in three years, making it the largest public sector refinery in the country, at an estimated cost of `12,000 crore
Union petroleum Minister Jaipal Reddy commissions the Capacity Expansion and Modernisation Project (CEMP- II), which involved an investment of `5,000 crore
Collateral Benefits
T
he expansion of KRL has some huge collateral benefits for the industries in the State. As a result of the expansion, sulphur production from KRL will grow
crore and would come up on 200 acres of land. KRL has already identified land for the project. “Land acquisition is a major bottleneck for setting up projects in the State,” says Mr E Nandakumar, executive director, BPCL Kochi Refinery. “But we already have land available with us for the project.” The company has 100 acres of free land and is demolishing the unused staff quarters, spread across another 100 acres to house the plant. Joint Venture While the capacity expansion project will have little sway over the industrial environment in the State, the joint venture will herald Kerala’s entry into the petrochemical industry in a big way. The JV, being set up at a cost of `7,000 crore spread over three to four years, will produce 5 lakh tonnes of propylene per an28
2-3 times and will be enough to meet all of FACT’s requirement. Pet coke – a by product of propylene plant – is imported currently by many companies like KMML. num and its derivatives. Propylene is a critical raw material for the petrochemical industry, and KRL is sure attract the attention of India Inc as a major link in the burgeoning petrochemical industry in the country. A petrochemical complex that can absorb the raw material the JV produces completes the vision the refinery has created for Kerala. The complex would host eco-friendly industries in about 17 sectors and entail an investment close to `10,000 crore. Together, the sleepy oil refiner is preparing the ground for Kerala to absorb an investment of `30,000 crore. And witness industrialisation at an unprecedented level. Although propylene is produced by many other refineries in the country, most of it is being used to produce polypropylene. But KRL plans to take a different route. It plans to
make niche products using the propylene. “The technology for the same is not available in the country today,” says Mr Nandakumar. “The JV partner will bring in the technology.” The real boost to the State though will come from the ancillary industries that could be set up using the products from the JV. “We have studied the prospects of the project by analysing similar ones elsewhere in the world. We have found that that derivatives produced from propylene can be used as a feedstock in 21 different industries. They can be used to make a range of products from paints to sanitary napkins and diapers,” says Mr Nandakumar. The refinery has a solution for every problem that could come up in the way of the project. “We have suggested to the State government and KSIDC to set up a petrochemical hub that makes use of the derivatives, most of which are currently imported to the country. FACT has already earmarked 450 acres of land for a petrochemical complex, and this is available for hosting the units. The 220 KV substation that is being built could ensure availability of quality power to the hub. Water could also be made available. Gas pipelines from the LNG terminal also pass through the region. Our studies show that it could bring in an additional investment of `10000 crore to the State, and provide direct employment to 2000 persons.” But won’t a petrochemical complex pollute the environment? “No” pat comes the response. “Environment is a very sensitive issue in Kerala. We will be in trouble if we
do not take care of it. We will ensure that only the non-polluting ones out of the 21 industries are set up here,” says Mr Nandakumar. The migratory birds that have started visiting the eco-park at the KRL campus should vouch for that claim. The JV, planned on 70 acres, will need extra land. “We will need to acquire 30-40 acres of land for the project,” says Mr Nandakumar. Rarely do such opportunities come knocking to the doors of the State, which has remained an industrial backwater. But there is no room for complacency. Warns Mr Nandakumar, “Other States will also be very much interested in the products that the JV is slated to produce.” Kerala has to grab this one with both hands before it is too late. For opportunities rarely knock twice.
T
he success of two major expansion projects taken up by the company has given it the confidence to ask for more, and the government to give in. The affable Mr Nandakumar is quite vocal that the completion of the projects with no major hitch has changed the profile of the company, and that of the State. “The Single Point Mooring (SPM) project cost `620 crore and CEMP – II `4,000 crore,” he said. “We completed the SPM project in record time - the shortest in the world. And a ship berthed there within an hour of its completion. Pipelines were laid through the heart of the city without much of a fuss.” CEMP-II was a greater chal-
CEMP – II The CEMP – II project helped KRL expand its refining capacity to 9.5mmtpa and enabled it to produce Euro III/IV grade fuels. The main additions in the project were ● Crude Distillation Unit – II (CDU –II) was revamped and capacity enhanced by 2 mmtpa. ● Vacuum Gas Oil HydroDesuphurisation Unit(VGO HDS) – The 1.7 mmtpa unit treats the VGO from CDUs to remove sulphur in the form of hydrogen sulphide. The VGO is then sent to the FCCU, or converted into diesel/ naphtha components. ● FCC CCN Splitter Unit of 0.58mmtpa capacity splits the middle cut portion of the full boiling range gasoline coming from the FCCU, to reduce the olefin content and improve the octane number of the overall pool, as per Euro III/IV norms. The cut portion is then sent to the NHT and CCR units to improve its octane number. ● Naphtha splitter unit of 0.58mmtpa capacity. This unit helps obtain the desired cut of the naphtha coming from the CDU, which is then desulphurised in the NHT
unit and fed to the CCR unit. ● Naphtha Hydrotreatment Unit(NHT) – This 0.85mmtpa unit eliminates impurities – Sulphur and Nitrogen – which could affect the life of the CCR Unit. ● Continuous Catalyst Regeneration Reformer (CCR) Unit of 0.85mmtpa capacity produces high-octane MS blend stocks to meet higher specifications. It also makes raw materials for producing benzene and toluene. ● Sour Water Stripper Unit with a capacity of 17.2 m3/hr to treat sour water from VGOHDS and CCR units. ● Amine Regeneration Unit with a capacity to treat 130 TPH of rich Amine from DHDS and VGOHDS units. ● Sulphur Recovery unit (SRU) – The new SRU train can produce 80tpd of elemental sulphur. It converts hydrogen sulphide from VGOHDS and NHT units to Sulphur. ● Power requirement for CEMPII is being met by a new Frame 6 GTG having an ISO rating of 36MW.
With an estimated investment exceeding `7,000 crore spread over three to four years, the project plans to manufacture 5 lakh tonnes of propylene, a critical raw material for the petrochemical industry The first plant of the refinery commissioned in 1966 29
KRL milestones September, 1966 - First unit started operations 1973 – Capacity expanded to 3.3mmtpa, starts production of LPG and Aviation turbine fuel (ATF) 1984 - Capacity expanded to 4.5mmtpa, a fluidised catalytic cracking unit (FCCU) of 1mmtpa was added 1989 – Enters petrochemical sector by starting production of benzene and toluene 1991 – Commissions first captive power plant of 26.3MW capacity, becomes self sufficient in power 1994 - Capacity expanded to 7.5mmtpa, FCCU revamped to increase capacity to 1.4mmtpa. Installed a fuel gas desulphurisation unit (SRU) to minimise sulphur dioxide emissions 1998 – Commissions second captive power plant of 17.8MW capacity 2000 – The 2mmtpa Diesel Hydro Desulphurisation plant (DHDS) to reduce sulphur content in diesel commissioned 2001 – Merged with BPCL 2003 – 44000tpa LPG bottling plant commissioned 2004 – 10000tpa Bitumen Emulsion plant 2005 – Capacity Expansion and Modernisation Project, Phase 1(CEMP-1) - DHDS plant expanded to 2.5mmtpa capacity and modernised to meet Euro II specifications - FCCU upgraded to 1.5mmtpa - SRU capacity raised to 144tpd 2007 – Single Point Mooring (SPM) facility and associated tank farms to receive crude in Very Large Crude Carriers commissioned 2011 - Capacity Expansion and Modernisation Project, Phase 2(CEMP-2) Refining capacity expanded to 9.5mmtpa Plant modernised to produce Euro III and Euro IV compliant fuels 30
Mr E Nandakumar, Executive Director, BPCL Kochi Refineries thinks the new projects would help Kerala make its presence felt in the manufacturing industry. “We cannot depend on the services sector alone,” says he. “The multiplier effect of the manufacturing sector at 1:10 is much higher than that of the services sector.” lenge that the company met in style, to become a 9.5mmtpa Euro III/ IV producing refinery. It came with multifaceted challenges – design, sourcing of material, manpower, logistics – to name a few. Materials had to be procured from around the world. The massive Mild Hydro Cracker reactor was one of the heaviest machineries being transported in a single piece in India, all the way from Damian, China. It weighed 750 tonnes, was 40 meters long and had a diameter of 5.3 metres. KRL
A `10,000 crore petrochemical complex that can absorb the raw material the JV produces would host eco-friendly industries in about 17 sectors. Together, the sleepy oil refiner is preparing the ground for Kerala to absorb an investment of `30,000 crore
made use of the waterways in the vicinity to transport the reactor to the project site. “The manpower required was huge. In addition to the team effort required from employees cutting across departments, at times the company had to assemble more than 10,000 people with diverse skill sets from all over the country to execute the project,” says Mr Nandakumar. He now talks with the confidence of a man who has been there and done that. “The cooperation that we got from the government, the public and the trade unions in the effort was commendable. People in the State want things to happen. That gave us the confidence to take up a bigger role,” says Mr Nandakumar. Mr Nandakumar is convinced that the State has no option but to industrialise. “We cannot depend on the services sector alone. The multiplier effect of the manufacturing sector at 1:10 is much higher than that of the services sector,” says he. “It would also protect us from the vagaries of the global economy.” That is easier said than done. But the refiner is preparing itself for the bigger stuff. And wants the State to be ready for it.
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Meditation
The gateway to balance It helps to attain control over thoughts, sharpen mind
M
A P Jayadevan
editation is a tool that can transform lives. It helps a regular practitioner learn the art of balancing. For such a person, life will be beautiful even in the most undesirable of situations. Life treats each person differently in its unique ways. Some have it all; some others face scarcity of all. Some, even
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though they are rich, die for a good night’s sleep or a happy moment. But some others are blessed with perfect contentment irrespective of their circumstances. What makes the life a hell, the situation or our approach? Buddha says our inability to behave properly (ignorance is the wider term he used) is the root cause of all sorrows. Meditation helps one to move away from ignorance, and to
balance one’s own thoughts and actions. It is important to know that meditation never generates happiness on its own; rather, it helps ravel out the bliss from within. Blissfulness is said to be the soul’s basic character. Upanishads call the soul as anandamaya (full of happiness). The source of happiness is within and external disturbances cannot affect it if one connects oneself
to that centre. Seeing the mind and its patterns It is interesting to know how meditation works over the mind. Sage Patanjali’s Yoga sutras define the process as ‘stilling the mind’ (chitta vritti nirodhah). This is because mind is of a wandering nature. What we call as mind is a thinking faculty and it is active only when one thinks. The continuous bubbling of thoughts in various forms is called mind. Sages say that there is a state where one can exercise complete control over the mind — to focus it on a single object or even to stop its functioning — which one can attain through meditation. Such a man, who has total control over his mind and senses, is the king of all kings, according to Buddha. Yoga says mind is just a tool of the soul. How would you understand your soul, or your thoughts in practical life? There is a simple way to do this: watch your thoughts carefully, and pen them down one day. Go through it later and you will realise that the real character of your thinking process is that it is irregular, random in nature and sometimes sheer stupid. Once you are able to come to the grips of the nature of your mind, then you can control it the way you want. You can decide whether to carry or throw away the tensions from past experiences. You can direct your mind away from worrying about future. You can be right in the moment and act perfectly. Be the master of your mind, says the science of Yoga. Swami Sivananda says: “Every impulse of the mind, every thought, is
Those who are working in responsible positions should have a perfect balance of mind. They should develop the ability to control and re-channelize their emotional upsurges
conveyed to the cells. They are greatly influenced by the varying conditions or states of the mind. If there is confusion, depression or negative emotions or thoughts in the mind, then they are transmitted through the nerves to every cell in the body.” With some week’s regular basic meditation practice (focusing on breath etc.), one can enhance the power of concentration considerably. Once this is done, then one can start watching one's own thoughts without being distracted by them. In this exercise, one should be a witness only, not the thinker. This helps to understand the mind as it is now and this understanding is the beginning of the real transformation. Method ■ Sit in any meditative position. Take some deep breaths. ■ Focus on breath for some time. ■ Go through your body using mind and ensure that whole body is totally relaxed (this method was described in the last issue). ■ Now start watching your thoughts, with a passive mood. It is just like sitting by the roadside and watching the vehicles passing by. Just see the thoughts bubbling out one by one and leave them. Be careful in each moment, not to be dragged by emotions. ■ In the beginning, you may be dragged down by the flow of thoughts. Slowly, after some practice, you will see the volume of thoughts subsiding and you will have more control over the mind. ■ In the beginning sit for 15-20 minutes and gradually increase the time. (If possible, do meditation for at least an hour, daily.) ■ Finish the practice with positive self affirmations. ■ Finally, you may experience the perfect stillness of mind, which is known as ‘samadhi’, which is the culmination of meditation. Regular practice of meditation, or watching the thoughts, makes one more and more centred. You can bring more pure thoughts in to your mind. You will have a deeper understand-
In the beginning, you may be dragged by the flow of thoughts. Slowly, after some practice, you will see that the volume of thoughts subsiding and you will have more control over mind ing of your emotional health. You will start sensing emotions before they burst out. This will help you to control emotions and to channelise that energy positively. In most cases, people recognise their emotional volcanoes only after the total damage. Do regular meditation and give it prime priority. It is the best tool towards real success in life. By working hard, one can achieve anything. But if he doesn’t have a calm mind, how can he enjoy his success? In fact, to a normal man achievement of something is followed by the fear of losing it. This indicates the lack of balance of mind. Those who are working in responsible positions should have a perfect balance of mind. They should develop the ability to control and rechannelise their emotional upsurges. Strong, uncontrolled emotions cause high loss. Krishna explains about the self-destruction of mind in Gita thus: “Sangat samjayate kama kamat krodhobhijayate krodhadbhavati sammoha sammohat smriti vibhramah smriti bhramsat buddhinaso buddhinasat pranasyati” -Attachment (to things or persons etc.) causes desire for them. If not satisfied, this desire or passion causes anger or grief. Anger makes one deluded, blind and that opens the gateway to loss of wisdom which spoils one totally. Emotions, if not backed up by clear, positive thought, can cause great harm to the individual as well as society in which he lives. Adolf Hitler is an example for this. 33
Entertainment
A twist in the tale Multiplexes redefine the fortunes of the film industry
T
Vijay George
hey used to be scarier than those horror movies they played on the screens. With no proper lighting, pathetic maintenance, broken chairs, frantically running rats and unclean toilets, the theatres in Kerala have long been giving a tough time for the movie buffs. Imagine watching a rather forgettable movie inside a shoddily maintained theatre! No wonder, the queues before the ticket windows have been going thinner during the past few years. But things are changing now. The theatres are getting a facelift everywhere and the whole system seems to have got an altogether different direction with the coming of the multiplexes. Right now, the two multiplexes in Kochi - Cinemax at Oberon
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Mall and Q Cinemas at Gold Souk - are rewriting the equations for the audiences. “It’s naive to expect people to go to those old styled theatres, which are in pathetic shape, these days. When we talk about having more luxuries in life in the changing environment
“The value for money is great and suddenly, watching a movie has become a tremendous entertainment option for the viewers,” said Mr Sanjay Kumar, unit head of Q Cinemas at Kochi
around us, theatres should provide a better facility for entertainment,” says director Siddique, who has recently made the Tamil version of his Malayalam film Bodyguard as Kaavalan and will soon come out with its Bollywood avatar with Salman Khan and Kareena Kapoor in the lead. Of course, as the diktat goes, all the comforts come at a higher price. While the ticket rates at the dusty theatres in the villages are still around `20-50 and their urban counterparts charge around `50-80, the multiplexes make the viewer poorer by at least `100-170 for a ticket, depending on the show timings. But no one seems to be complaining. On the contrary, the viewers have accepted the multiplexes with great interest. In fact there are reports of more multiplexes coming up in various
Q
More in the offing
Cinemas in Gold Souk Grande and Cinemax Multiplex in Oberon Mall, both in Kochi have been operational for close to a year. Two more are in the pipeline: the Cherian Varkey Group is setting up a multiplex at MG Road while the LULU Shopping Mall at Edapally will
parts of the State. Kozhikode, Kottayam and Alappuzha will soon have a few multiplex screens at certain prime locations. More multiplexes are coming in Kochi as well, including the one at M G Road and at Lulu Shopping Mall at Edappally. The advantages of multiplexes range from spectacular ambience with state-of-the-art projection equipment and digital surround sound systems, impressive acoustics, clarity of visual graphics, plush carpeting, remote controlled electronic recliner seats, adequate lighting, leg space, spacious aisles, clean atmosphere to superb food and amazing service. And forget the ever-engaged tone of the old-fashioned theatre; you can book a ticket through a variety of channels which include the internet, phone (IVR), SMS and self-vending kiosks. To make the experience of a family outing complete, some multiplexes even come with a special package for infants and kids. Q Cinemas, in fact, has a designated play area for kids, special rooms for infant feeding and nappy changing. Multiplexes are not just about films, though. As they are part of large shopping centres and malls, it is part of a wholesome entertainment that people crave for. “Of course, the multiplex culture is developing in a big way in Kochi,” says Mr Sanjay Kumar, unit head of Q Cinemas at Kochi. “The value for money is great and suddenly, watching a movie has become a tremendous
The multiplex experience • Spectacular ambience • State-of-the-art projection equipment • Digital surround sound systems • Plush carpeting • Recliner seats • Adequate leg space • Superb food • Kids area • A number of booking options entertainment option for the viewers. We have been receiving an amazing response from the crowds here.” Q Cinemas has around 950 seats in four screens. The film fraternity has more options to reach out to the viewers now and everyone is singing paeans for this development. Consider this: according to reports, a recent multistarrer had nearly 40 shows in various screens in Kochi alone on the opening day of its release. There are four screens at Cinemax and both the multiplexes have been mixing Bollywood and Hollywood films along with the regional language movies. “Of course the regional language films have bigger crowds followed by Hollywood and then Bollywood, as of now,” ex-
Reports say a recent multi-starrer had nearly 40 shows in various screens in Kochi alone on the opening day of its release
house a 12-screen multiplex. Kozhikode will have a couple of them, too. Noted industrialist and film producer Mr P V Gangadharan is setting up a twoscreen multiplex, each of 140 seat capacity at the RP Mall while another multiplex is under construction at the Blue Diamond Mall. plains Sanjay. “Multiplexes have brought in a highly welcome change to the viewers in Kochi. I sincerely believe that there should be many more here and new screens should come in various parts of the State,” says Mr Rajesh Pillai, the director of Traffic, which got released early this year and became an instant sensation. “Multiplexes are really beneficial for small and good films. It’s a safe and enjoyable option for the families. The facilities are great there and that is the reason why people are ready to pay more for the tickets. The multiplex culture has helped Bollywood in such a huge way that there are so many good films happening there, targeted at the segment of audience, who are ready to pay more to watch good cinema. On a personal note, the two multiplexes in Kochi have been invaluable for Traffic and I believe that it has been one of the biggest success stories among regional language films for them as well. I hope that a new culture has evolved and it’s a heartening one for sure,” says Mr Pillai. The theatres in the cities have taken up the challenge posed by the arrival of the multiplexes and have equipped themselves well to match the standards. The result is that most of the new options available at the multiplexes are now being provided at the other theatres as well. Or at least, the process has started. With more multiplexes soon to come at several places, which of course include Kochi, a trip to a theatre is perhaps all set to become as exciting as watching a great movie. In true filmi parlance, the excitement has only begun now… and the best is still to come. Enjoy! 35
Technology
Tech-enhanced business Mr S R Nair
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n the last edition, I had ventured into giving the readers an idea about what ERP is and how it helps businesses and corporates, particularly in the SME sector, to grow and be better profitable. Well-implemented ERP solutions have been a great boon to the organisations: on the one hand it brings order, systems & processes in to the business, and on the other, it allows the business to scale. Using the graphics below, let me explain the evolution of ERP: In the sixties of the last century, what started as the MRP application (manufacturing resource planning) which incorporated purchasing, inventory and production scheduling into automation, grew into MRP-II with the addition of finance and labour functions to it. In the eighties, MRPII became ERP with services of all the internal resources being brought within it. By adding the suppliers and the internal customers, it grew into an ERP with supply chain management efficiencies in the nineties. By the end of the last century, ERP incorporated ‘customers’ also as part of the application and had reached a sort of fullness with purchase, production, finance, sales, customer, logistics and supply 36
The explosion in technologies benefits not just tech companies. It helps enterprises across sectors expand and scale up chain functions completely automated in an integrated manner. Global networking and the advent of Internet brought in a paradigm shift in the way businesses are conducted. Not only had it allowed companies to reach out to global customers and buyers but also it created new, cost
effective service delivery alternatives. Doing business through the Internet started evolving and seeing it reaching out far and wide with minimal incurring of cost, corporates lapped up the model. Companies could do business through public network or private network, depending on the security
aspect of the business that they indulged in. Thus e-commerce became the fastest integrated utility in business and enormous opportunities got opened up for the corporates. Many companies used the high technology of computers, networking and Internet to become global entities. Many technology-enabled companies such as Amazon, eBay, Yahoo and Google became multi-billion dollar businesses through the e-commerce route. Thus in the beginning of the 21st century, there evolved ERP applications wherein e-commerce was deeply ingrained into them. Technology thus gave greater impetus to business. To give you an example, Dell Computers Inc. brought in the power of Internet to manage its supply chain and to bring in enormous business efficiencies. When legacy organisations such as IBM had inventories kept for months for managing its manufacturing, Dell could bring down its inventory to a few hours and this cut down the cost by more than 15 per cent. In an extremely competitive world such as computer hardware business where margins are wafer thin, Dell could pass on this cost advantage to customers in the form of reduced prizes and thereby grow to become the largest PC manufacturer. Let us analyse how companies take advantage of technology to flourish their business and reach. The graphic above very aptly represents
When legacy organisations such as IBM had inventories kept for months for managing its manufacturing, Dell brought it down to a few hours, cutting down the cost by more than 15 per cent
the process. Within the enterprise, technology is used as an Intranet. An Intranet is a closed network within the enterprise that uses Internet technologies to communicate among its people and functions and also to manage the business process. The enterprise would also connect with its external stakeholders such as suppliers, logistics providers, warehousing partners and customers through Internet technology in a closed loop. And this loop is called Extranet. Using Extranet, the suppliers would automatically get the supply alert (through inventory re-order levels) and customers would get touched proactively as well as reactively with data of the company, its products and services and the customer incentive programmes. Whereas the warehousing will know well in advance about the requirement of space for incoming materials, the logistics guys would have been alerted to move the items, all done automatically with the assistance of the Extranet connectivity loop. As things evolved, Internet would allow the collaboration. It has elec-
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In the manufacturing sector, automobile giants are using concurrent engineering and collaborative designs to shrink the time for ‘product to market’, saving millions of dollars. Pharma companies have used the Internet technologies to manage knowledge so effectively to cut the product development cycle which included lower R&D expenses
tronic market places that aggregate the company’s business, manpower houses that allow the company to e-recruit the resources, the payment gateways that move cash and payment, partner design and manufacturing organisation that get through with the company on collaborative, concurrent engineering; all these taking advantage of the marvellous world of Internet to bring in enhanced business efficiencies enabling enterprises to reap the rich harvest of business, very cost effectively. While I had brought in the examples of Amazon, Dell, Google etc. that had taken advantage of the technologies, perhaps the reader would think that these are technology organisations and thus they would find technology easy to operate upon. Are there brick and mortar companies, and those in other sectors that had taken advantage of these technologies to grow and be profitable? Yes, there are plenty. The first is the banking system. Today a bank would find it impossible to exist without Internet and its associated technologies. In the manufacturing sector, automobile giants are using concurrent engineering and collaborative designs to shrink the time for ‘product to market’, saving millions of dollars. Pharma companies have used the Internet technologies to manage knowledge so effectively to cut the product development cycle which included lower R&D expenses. Readers may recollect biologists located across the globe completing the book of life exercise to understand human genome well before the scheduled end time of Year 2005 through Internet technologies. Many SME organisations, particularly those in the service sector such as financial services, HR consulting, graphic design, billing services, back office processing are very effectively tapping the Internet and its technologies to reach out to customers on a global scale. New additional technology utilities such as social media are adding more teeth to such companies in its customer contact programs. Most of them use ERP technologies internally to manage the business thereby making the organisation very technology savvy. ERP and its associated higher technologies that combine ecommerce and Internet bring about not only cost reduction but also achieve high profitability by delivering products and services ahead of time to the delight the customers. With so much of examples to cite, need we say more? 38
GKSF V5.0 starts
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he fifth edition of the Grand Kerala Shopping Festival, aiming to make the State that is already a prominent tourist destination a global shopping destination too, has got off to a colourful start. Held in the peak holiday season, the festival offers a unique shopping experience to the visitors who throng the State during the period: the tourists and the non-resident Keralites on their annual sojourn to their roots. It aims to promote trade in the State using the brand value of Kerala Tourism. Traditional products of the State will be showcased during the event, in addition to the regular products. Gifts and discounts await the customers making their purchases during the festival. 101 kg of gold will be given away as prizes during the festival. The first prize will be 1 kilo gold. Three persons will be given half a kilo gold as second prize. In addition there are daily and weekly lots. The weekly lots have a first prize of 10 sovereigns for 15 persons and a second prize of 5 sovereigns for 20 persons. The daily draws offer one sovereign of gold to 1360 winners during the 46 days of the event. In addition there will be a guaranteed prize for each and every single purchase in the form of scratch’n’win coupons and gift vouchers. Consumers from outside Kerala also benefit from the 100 per cent VAT refund offer. The festival is organised by the State Tourism department in association with the Industries, Finance and Revenue departments. South Indian Bank is the title sponsor for this edition of the festival, and Malabar Gold the associate sponsor.
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Personal finance
Making it e-asy A demat account is a secure and convenient place for keeping your financial assets
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nvesting in financial securities is an easy process. Go to an agent, fill the form, pay the cheque and you are done. But that is just the beginning, not the end of the story. Keeping track of the paper securities that you accumulate over a period of time is a cumbersome process. If you lose the certificates after a period of time, you might not even be aware of the securities that you own. And if the shareholder dies, the heirs may not even have a clue. The loss of a share certificate, inability to change the ad40
dress with the companies when you shift, non-receipt of shares after corporate actions such as mergers – all these could stand in the way between you and what is rightfully yours.
Dematerialisation helps avoid problems associated with physical securities, such as mutilation and loss of certificates or theft
The Investor Education and Protection Fund (IEPF), the body that gets the unclaimed dividends and deposits from companies and mutual funds after seven years from the date they became due for payment, has accumulated around `1000 crore today. And the kitty is increasing by `2530 crore every year. If this is the case of dividends, one can assume what would be the value of the shares that generate these dividends. A demat account offers a solution to the problem. It helps you consolidate all your financial assets at one place. Physical certificates can be dematerialised – converted to an equivalent number of securities in electronic form – and credited in the investor's demat account. Dematerialisation helps avoid problems associated with physical securities, such as mutilation and loss of certificates or theft. It eliminates fake certificates, and hence investors do not have to worry about the genuineness of the shares certificates they buy. Issues such as bad delivery have now become a thing of the past. It has also made transacting in shares much easier. Share certificates can now be immediately transferred to the buyer. The buyer does not have to send the securities to the company for registration in his name. Corporate transactions like bonuses, splits and mergers/demergers automatically get reflected in the demat account. Sale of shares through stock exchanges can be done in the demat form only.
What is a depository
A
The investor can get the right price of the security as the price information is readily available from the exchanges and he does not have to search for buyers. The cost of transactions has also come down drastically. Investors do not have to pay stamp duty on transfer of dematerialised securities. The paperwork involved in transfer of securities is also eliminated along with the costs such as postage associated with paper certificates. The demat account also acts as a single interface to all the companies whose shares you own. If the investor’s address changes, just changing it in the demat account will suffice and one does not have to intimate all the companies separately. The same goes with bank accounts also. A change in the bank account asso-
The demat account acts as a single interface to all the companies whose shares you own. If the investor’s address changes, just changing it in the demat account will suffice and one does not have to intimate all the companies separately
A demat account makes transmission of securities on the death of the shareholder easy. The process becomes much easier if the nominee has been specified in the demat account ciated with your demat account will be reflected in all the companies, and dividend cheques will be sent to the new bank account. A demat account makes transmission of securities on the death of the shareholder easy. The inheritors have to deal with just the depository participant and claim the shares, instead of dealing with all the companies in which the person has invested and going through the legal procedures. The process becomes much easier if the nominee has been specified in the demat account. The companies also benefit from a reduction in the cost of new issues due to lower printing and distribution costs. It enables the registrars and transfer agents and the secretarial department of a company to service the shareholders in a more effective manner.
depository is an institution akin to a bank that holds financial securities – shares, debentures, bonds, mutual fund units and government securities – in electronic form. Currently there are two depositories – National Securities Depository Limited (NSDL) and Central Securities Depository Limited (CSDL) in the country. The two depositories together have two crore demat accounts. To open a demat account with any of these depositories, one has to approach a depository participant – an agent of the depository. Banks, financial institutions and stock brokers registered with SEBI can become DPs. Selecting a DP Opening a demat account is similar to opening your bank account. The main factors to be considered while selecting the depository participant to open the demat account is the cost associated and convenience. Depository participants usually charge an account opening fee and annual maintenance fee for the account. Some of them also charge a fee for each transaction happening in the demat account and a custodian fee depending on the number of securities held in the account. The location, facilities offered, service levels, reputation etc could be other factors to be considered. Advantages of a Demat account ■ Eliminates problems with physical securities – loss, mutilation, theft, frauds ■ Lesser transaction costs ■ Ease of transaction ■ Faster settlement of trades ■ Corporate actions like splits/bonuses/mergers get automatically credited ■ Single point interface ■ Easier transmission of shares ■ Enables sale of even one share, eliminating the odd lot problem ■ Can hold a variety of assets – bonds, shares, mutual fund units, warehouse receipts 41
Retire old, retire rich Kerala youth should demand an increase in the retirement age of government employees
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uman beings work to provide for leisure, so said Aristotle a long time back. It must have been true then, when society took care of the old. But times have changed. These days even governments back out of that responsibility. And for good reason. Rising life expectancies have inflated their pension bill and forced them to change tack. Today people work to provide for old age, too. Populations have been ageing in many parts of the world, aided by increasing life expectancies, thanks to improved health care and falling birth rates. The increase in life expectancy has led to an increase in
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the retirement years that have to be funded by pensions. With the retirement age fixed at 55, a 10-year rise in life expectancy from 65 to 75 doubles the pension bill for the government. Funding retirement years has been a challenge for both individuals and governments. Earlier, governments used to fully fund the same, but increasing life expectancies have put a strain on government finances. Governments have responded to this situation in two ways – shifting to a defined contribution pension scheme from a defined benefits one and by increasing the retirement age. In a defined benefit plan, the pen-
sion that a person gets is fixed, based on the tenure of service and salary earned, while in a defined contribution plan, only the contribution is fixed, and the pension depends on the amount contributed and the returns generated by the accumulated funds. In the US, governments are shifting more employees from traditional pension plans with defined benefits to 401(k) plans in which only the contribution is defined. The case has not been different in India, too, with the government introducing the new pension scheme in place of the old. Central government employees, who joined service after January 1, 2004,
Kerala has often been compared with developed nations in social parameters. The State’s life expectancy has increased to 75 years. But the increase in life expectancy has not had a corresponding increase in the retirement age in the State. It has remained constant at 55 for the past many years have to make a defined contribution to the pension fund every year, which will be accumulated and given back to the employees on retirement. 40 per cent of it has to be used to buy lifelong annuities, which serve as a pension. This approach may save the government finances, but in effect it only shifts the burden from the one leg to another, and the question remains whether the accumulated sum will be able to provide for retirement, especially in the background of the rise in the number of retirement years. And the retirees run the risk of exhausting their income by the time they are most vulnerable – really old, pinned down by old age infirmities and unable to work. Even if they have a perpetual annuity, inflation eats into it, and that what remains might not be enough. Consider a person who starts working at 25, retires at 55 and goes on to live till 75. His 30 working years should provide for the 20 retirement years. Assuming that the returns on his savings would take care of inflation, he would have to save a proportion of earnings equal to the proportion of his retirement period – 40 per cent in this case – to maintain his standard of living. Even this might not be enough. Economic progress tends to increase incomes. The higher incomes create new needs that increase the cost of living. So one cannot live on the same income one received years back, even after you adjust for inflation.
The equation becomes more tenuous as the life expectancy increases. One has to save an ever higher percentage of income or earn more on the returns to maintain the balance. This is particularly difficult for people in the lower strata of society, who spend most of their income on basic necessities and it is quite probable that the amount they save will fall short, especially if they live longer. The second approach – increasing the retirement age in line with the increase in life expectancy – is a much more desirable option. It increases the productive years and reduces the retirement years that have to be provided for. The elderly will also get an opportunity to bolster their savings by investing the pay they get at a time when they would have fulfilled most of their familial obligations. People can build a bigger corpus that will have to fund a smaller number of re-
tirement years, and provides a cushion to meet increasing life expectancies. Kerala has often been compared with developed nations in social parameters. The State’s life expectancy has increased to 75 years. But the increase in life expectancy has not had a corresponding increase in the retirement age in the State. It has remained constant at 55 for the past many years. The number of retirement years of a Keralite has doubled during those years. And the effects are showing. The pension bill of the State government will exceed the salary bill next year – an unsustainable way of life that would affect the ability of the government to finance the development of the State. India as a whole has a life expectancy of 64 years, but the retirement age in the central government service is 60 years and it has already made the shift to the defined contribution pension scheme. The retirement age in US is 67 now and plans are
on to raise it still further. European nations also have a similar figure. It is time that Kerala, with a similar demographic profile, followed suit. The increase in retirement age can help shore up the State’s finances. It will give a one time bonanza to the government as it can defer the huge outgo on retirement and does not have to pay the pensions to the ‘would be retirees’ during the period. There are other benefits too. Society gains from the expertise and the experience of the elder lot. This is especially true in knowledge intensive areas, where people are in short supply. The States engineering colleges are struggling to find qualified people. Doctors also are in short supply in the State service. The opposition to raising the retirement age comes from the youth organisations in the State. The census reports show that the number of people in the age group 0-30 is declining in Kerala. Labour shortages are felt in all areas and opportunities for the young are increasing. The retired persons also can find work, but opportunities are lesser and most of them are often employed in jobs below their skill level. Again, where does the money for the pensions come? The State government uses the tax revenue to finance pensions and in effect it is the young who fund it. A civilised society has to take care of its old. We owe much of our current standard of living and progress to the effort put in by the generation that went before. We have a moral duty to pay for their well being. Giving them the option to take care of themselves by providing opportunities to work, is good for the old and the young too. It is the least we can do.
The pension bill of the State government will exceed the salary bill next year – an unsustainable way of life that would affect the ability of the government to finance the development of the State
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Kerala statistics
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Information Technology Kerala has been developing IT infrastructure in the hub and spoke model. The Major IT parks in the State are: 1.Technopark Thiruvananthapuram Technopark Phase II & III Technopark Kollam Technocity 2. InfoPark Kochi Infopark Phase II Infopark Koratty Infopark Cherthala Infopark Ambalappuzha 3. CyberPark Kozhikode Cyberpark Kannur Cyberpark Kasaragod 4. ITeS Habitat Centre 5. Rural IT parks/Technolodges Private IT Parks: 1.Smart City 2.L &T Park 3.Muthoot Technopolis 4.Leela Park 5.Brigade Park 6.UL CyberPark 7. HDIL Cyberpark •
Techno Park and Info Park (Direct employment: 40,000, Indirect: 2,00,000)
Techno Park • nearly 300 acres with 4 million sq ft of built-up space • over 225 IT and ITES companies • over 28,000 IT professionals • five PCMM level 5 companies • 6 CMMI level 5 companies • four CMM Level 3 companies • 20 ISO 9001 certified companies. Technopark is currently on an expansion mode by adding another 92 acres as Technopark-Phase III expansion and 450 acres as Technocity -- an integrated IT township and nearly 40 acres of land is developed for setting up
Technopark - Kollam at Kundara. Info Park
2008-09: `2,192.26 crores 2007-08: `1,387.80 crores 2000-01: `141 crores • • •
Phase I on 100 acres of land will have 4.5 million sq ft built up space when completed. Infopark has started the second phase expansion on 160 acres of land. Infopark Koratty is located on 30 acres of land. It has a 40000 sq ft building. A second building of 30000 sq ft area is under construction. Infopark Cherthala has come up on 60 acres of land, which has been declared as a SEZ. An IT building of 2.4lakh sq ft area is nearing completion. Infopark Ambalappuzha is coming up on 100 acres of land. Cyber Park
Cyber Park Kozhikode is coming up on 28 hectares of land. It will have an IT building of 4 lakh sq ft Cyber Park Kannur is located on 10.375 hectares of land. An 1.5 sq ft building is being built for IT companies there. Cyberpark Kasargod is located on 100 acres of land and will house a 1.5 sq ft building IT Exports IT Exports from Kerala in the year 2009-10: `2,412 crores
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Total IT Exports from India in 2009-10: `2,38,000 crores Kerala accounts for only 1.01 per cent of total exports from India. Export from Technopark: `1,385 crore(2009-10) Export from Infopark: `601 crore (2009-10) Cochin Special Economic Zone and other IT parks: `426 crore. (2009-10)
Major companies operating from the State • TCS • Infosys • Wipro • CTS • Oracle • IBS • US Software The IT organisations working in the State are:• Kerala State Information Technology Infrastructure Ltd (KSITL) • Indian Institute of Information Technology & Management, Kerala (IIITM-K) • Centre for Advanced Training in Free and Open Source Software (CATFOSS) • Model Finishing Schools • Akshaya • Standardizing, Testing and Quality Certification (STQC) • Centre for Development of Imaging Technology (C-DIT) • KELTRON • Information Kerala Mission (IKM) • National Informatics Centre (NIC) • Centre For Development of Advanced Computing (CDAC) 45
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`:50 US:$5 RNI No. KERENG02297 Enterprise and Economic Update Kerala, a venture supported by KSIDC