Passline Business Magazine August -September 2011 by Passline Business Magazine

From the Editor Editor & Publisher

VARGHESE PAUL Kochi

JINESH M.D. Ph: 9037435272 Chennai

AUGUSTINE JOSEPH Ph: 09381000534 Bangalore

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Penny-wise, pound-foolish N

ever, ever has a malleable and ductile metal attracted so such world attention as has the yellow metal. The price of gold has become not just too high but too heavy for the average person. I see, going through data available, that India has the biggest appetite for gold in the world. According to World Gold Council, the global demand for gold in the second quarter of 2011 was 919.8 tonnes, and in value terms, it comes to about $44.5 billion. India bought 540 tonnes of gold during this period. One-third of the total global requirement was from India. Estimates say that the demand for the metal is surging at a tremendous pace. When we assess the state-wise demand for the precious metal in India, Kerala is at the top despite the skyrocketing price. Kerala also stands first in the number of jewellery shops and in the largest household stock of the yellow metal. Should one assess the macro-economic scenario of the country, it is clear that India is one of the high-inflation-rated and high-interest-rated nations among the Asian countries. At this point of time, we should take a look at whether the huge stock of the metal has been kept idle or has been used in intelligent and pragmatic way. Recently, I had a conversation with a person who is the director of one of Keralaâ&#x20AC;&#x2122;s leading NBFCs dealing in gold loan as a thrust area. According to him, Keralites have a weakness regarding gold and gold jewellery when compared with North Indians. While North Indians wisely and intelligently use gold by liquidating it when the prices go up and use the proceeds commercially, Keralites, especially women, keep it as a treasure in their homes and pay high rates of interest for their home loans, vehicle loans or personal loans. He agreed that there is a change in this mindset among the new generation, citing that there are people coming to NBFCs and pawning their ornaments and depositing the money in the firmâ&#x20AC;&#x2122;s own high-yielding schemes. This is because they know that the difference between the interest rate of gold loan and the yield from the deposit is so wide, which would fetch them good profits. However, the number of people thinking in this line is very few, he added. What are the reasons for this? Most people in Kerala, even in the 21st century, seem to think that pawning or liquidating an asset, in whatever form, is a matter of shame or humiliation. We must change that attitude towards our investments. It is not wise to pay high costs for your loans when you have assets like gold kept idle with you. It is high time we cultivated such an attitude towards our valuable assets and liabilities.

Varghese Paul

NATURAL FIBRE

Passline News Service

oyya , the small hamlet near Kodungallur in Thrissur district , has carved a special niche in the global map ever since the Union Minister of State for Textiles, Ms Lakshmi Panambaka, dedicated India’s first Resource Centre for Natural Fibres to the nation. India abounds with natural fibres, some of them well known and others less known. Banana, khus, sisal, korai grass, talipot, palm leaf, coconut and pineapple are a few of the well-known natural fibres. It is rural artisans who convert these into value-added products such as bags, table mats, cushion covers and floor covers. These activities provide large employment opportunities for the rural people, especially women and the underprivileged. The cost of fibre extraction and processing of natural fibres is very high compared with imported raw materials since these activities and methods are being done manually and traditionally as technology is yet to reach this segment significantly. The finished products are not able to face competition in quality and price. Moreover, production for both national and international markets fails to meet demand in spite of the fact that the products have tremendous potential. The volume of production remains at a pathetic Rs 10 crore! In order to give a fillip to the sector the National Institute of Design some time ago made a survey in the southern states and identified the enormous potential the country has in this untapped area. The resources have not been fully tapped by the handicraft or any other sectors so far. Only a few NGOs are working in this field and making products and earning good foreign exchange. Kottappuram Integrated Development Society (KIDS) in Thrissur district is the largest NGO working in the field of natural fibres in India. The objective of KIDS, formed in 1988 under the aegis of Kottappuram diocese, is to render social service among the lowest strata of society to uplift them economically and socially and provide them with security in life with a permanent developmental activity. KIDS had formulated a 10-year development plan for the successful implementation of its agenda even in 2000 and commenced its voyage in natural fibres by organizing around 3,000 employees through its Self-help Groups to resurrect Kerala’s oldest industry, the manufacture of thazhappaya. This industry is almost an endangered one, the majority engaged in it being women. KIDS formed clusters for select employees and brought designers from renowned institutes like

A Centre of Excellence for Artisans the Indian Institute of Crafts and Design and National Institute of Designing to impart training. Because of this, the products made of natural fibres found a place in the range of items being used for daily life rather than being mere handicrafts placed in showcases. Considering the contributions of KIDS the Union Ministry of Textiles sanctioned a cluster project under the Ambedkar Hastha Silpa Vikas Yojana for Thrissur. During the 11th Plan period, when the idea of an integrated resource centre for natural fibres came, the Ministry was not hesitant to award it to KIDS.

Why are natural fibres inevitable? Abuse of plastic and its allied products is rampant the world over, particularly in developing and underdeveloped countries. Environmental imbalance and global warming are the stark realities that humankind faces in this century thanks to advanced nations’ indiscriminate industrialization. In olden days people were knowingly or unknowingly concerned about nature, and lots of utensils made of natural fibres were in use. But in this mechanized age people are concerned only with convenience and appearance in their life. Naturally the environment and related issues have less importance. Considering this grave situation, UNESCO in 2003 initiated a movement called ‘going back to the tradition’ by utilizing the intangible cultural heritage. According to the agency, human treasures are the vehicles for transfer of the craft of heritage from one generation to another. The United Nations (UN) observed 2009 as year for natural fibre. Aimed at creating international awareness and global marketing of goods made by natural fibres and addressing the problems and grievances of the people engaged in this industry the UN invited the attention of respective governments. A conducive labour policy for the employees, creation of an international association of the producers of natural fibres and permanent and efficient development of the areas under natural fibres are other long-time visions of the agency.

PASSLINE

August 31-September 30, 2011

The Textile Ministry’s allotted Resource Centre for KIDS will certainly play a pivotal role in it. There are a lot of other cascading factors in favour of industries based on natural fibres. The raw material, natural fibre, is largely and locally available and people are considering it as an obstacle to transport or fishing since it is growing in the water bodies. This industry needs less infrastructure, not heavy machinery or large factories. Naturally the investment is miniscule, it is non-polluting and is an alternative to plastic. Getting engaged in these types of industries will be a going back to the tradition and our cultural heritage. The goods made of natural fibres have tremendous demand in foreign countries which will enable us to fetch foreign exchange. Above all the people engaged in this industry are poor artisans, mostly women from the villages, and the initiative will pave the way for the uplift of neglected and downtrodden classes.

Objectives of the centre The resource centre will be a single-window troubleshooter for more than five lakh craft men who are engaged in the natural fibre industry. The Resource Centre can be useful for essential information like availability of raw material, credit facilities and cluster development. It also provides opportunities to buy right from raw material to finished goods which will be readily available with the centre. This dream project by the Union Ministry can address the lacunae in the systematic operation of the natural fibre industry by providing professional guidance and training to the artisans. The minor mechanization will ease the drudgery of the artisans and improve the quality and finish of the products along with time-saving. Conducting surveys for undertaking the uninterrupted raw material supply for the craft and also granting of funds for developing plantations of various natural fibres having the most desirable quality for the craft are possible. Tissue culture technology is ideal for this propagation. The blending of natural fibres is another vital area where the Resource Centre

could play a great role by organizing design development workshops exclusively for exploring the potential of blending various r Johnson Panketh, the ardent crusader for the poor natural fibres used for and needy, is the visionary behind KIDS. As Director of the craft. In humid cliKIDS he is always in touch with the villagers living in an mate natural fibres are around Kottappuram diocese. The neglected, poor and vulnerable to fungal needy consider him as a good friend, well-wisher and growth. Research is guide. He is always accessible. In 1988 when KIDS was needed to develop some formed, Fr Panketh and members of his team took it as a organic anti-fungal soluchallenge to provide maximum help to the poor and needy tions. Also the natural dye by providing them with sustainable incomes for their liveliFr Johnson Panketh will not stick on natural fibres, hood and bring them to the mainstream of society. so developing a catalyst for Recalling those early days, Fr Panketh tells PASSLINE, “ It was the purpose is the need of the not possible without the support of my team mates and the confidence and hour. International expertise trust showered on me by the bishops who were here in my diocese from time to time. on design development gives We started the venture with just 10 members. Now it has attracted global attention. This thrust to the development of is not the end; it is only the first phase. T he centre will become an internationally general utensils and interior renowned knowledge spot for natural fibres and if God permits will turn out to be the decoration items, so that natufirst Deemed University for natural fibres and allied products.” ral fibres can be established as “We are not only focusing on overseas markets. Now that India has become a dependable alternatives to plastic. developed nation with a high GDP and great purchase power, our people can Since the purchasing power of the also buy these products if we give proper value addition and more integration people has escalated, general utility by adding less known fibres. We can also increase production. If the items in households and stationery items supply increases naturally the cost will come down and it will be acin offices will be in great demand. Surveys cessible even to the common man. The centre is has all the potential can be conducted on the modern trends of to become a large women empowerment project. This is going to the everchanging global market, so that our be one of the greatest achievements of the centre. Another imporartisans can finetune their products accordingly. tant aspect is this will be a going back to our tradition for proThe Office of the Development Commissioner, tecting the environment,” he says. Handicrafts, may take the initiative for this and also convince the respective Government officials of the usefulness and importance of natural fibre products at least in Government sectors. If the Government comes out with a fiat of that kind our artisans may get livelihood security as well as the country will be having enormous Central Government will mark it as a tourism spot very soon. A lot of dignitaries and experts have already visvarieties of eco-friendly natural fibre products. ited the centre. A team from Michigan State University, Available services US, and a French group of scientists and experts were onstrations of manufacturalso among the visitors from overseas. Professors ing of articles. Materials and The resource centre is a three-storeyed from the renowned IIMs, Central and State Min- furnishings used inside the centre are sprawling building with all the isters and political and cultural leaders being made out of natural fibres. Apart from that reports modern amenities. It is situhave also come here. It provides a and details of design prototypes and design developated at the soul of all vilreception lounge, exhibition ment workshops, documents on tools, technology availlage beauty. The place centre, conference hall, ability, processes involved in production of craft pracis calm, serene and processing centre tised throughout the country, data base of local and enchanting. The and live dem- international market demand, list of exporters and buyers (local and overseas), a full-pledged library, list of consultants for guidance on technology, production, marketing, raw materials and their availability, proportion etc are also available. The centre will also provide a business centre inside the building with all modern communication facilities.

Dreams for Deemed varsity F

-Response Feature

Resource Centre

PASSLINE

August 31-September 30, 2011

Rev Dr Jose Aikara

ev Dr Jose Aikara asked for nothing in return from the Heavenly Father for his warmth and wisdom, his caring and cautions, his advice to humanity and assistance to the poor and needy, but only His grace from above and he has received it abundantly even before he asked. When Fr Aikara (so has he been called by his nearest and dearest) came to Mysore in the summer of 2001 he had taken along with him the greatest of weapons of a social reformer, his morale, which had been gifted by the Almighty and sharpened and used by him for not less than three decades. Born in an ancient and aristocratic family (Aikara) in 1947 to A S Abraham and Mariamma Abraham, Fr Aikara was called to join His Royal Priesthood in 1967. In 1977 he was ordained a priest of the Congregation of Mission (CM). In 1976 he obtained his BD (Bachelor of Divinity) and in 1980 became a BSc in Botany from Loyola College, Chennai. After taking his master’s degree from Madras Christian College in 1982 he went to the North. He was destined to be the founder Principal of De Paul School, Berhampur, Orissa, in 1987. In 1988 he took his BEd from the University of Berhampur. The soft-spoken and sweet-smiling priest became a Doctor when the University of Berhampur awarded him a PhD in Botany (Photo Periodism) in 1994.

Treasurer, ASISC. He received another national award for his contribution to the field of education from Union Human Resource Minister Kapil Sibal in 2009. Rev Dr Aikara is currently a member of the ICSE Board, the ICSE Examination Committee and ICSE Finance Committee. He has been given a third term as ASISC National Secretary-Treasurer till 2012. It was in the summer of 2002 that Rev Dr Jose Aikara came to the tranquil ambience of the Brindavans of Mysore in search of a piece of land to pioneer a school which would be named after St Vincent De Paul. Fr Aikara knows that history beckons DPIRS as his school prepares to break new grounds by entering into a tie-up with GCSE (General Certificate of Secondary Education, Cambridge University) and thus to house hundreds of young aspirants for whom education in India and abroad has become a passion as well as an obsession. However, Mysore witnessed a mysterious slumber in the field of education during the last decades of the 20thcentury. It necessitated an educational resurge and the advent of the 21st century saw the birth of a different school of thought: DPIRS, Mysore. Paying a visit to this centre of learning itself is a unique experience.

If you drive out of the City of Mysore and leisurely make your headway towards the Brindavan Gardens along the pucca road flanked by the arid paddy fields—harvested and to be gleaned—you will unwittingly be heading through some of the most picturesque landscapes of the city outskirts, spotted with the large manorial mansions Rev Dr Jose Aikara with Kiran Bedi, Rev Dr Jose Aikara with Dr A P J Abdul Kalam, and solitary farm the supercop former President of India houses with the Certificate (ASISC), Orissa, and in 1996 he success- winding country approach roads. All will baffle your alacfully completed his LLB from Berhampur University. In ritous senses as to whether you have lost your way to 1997, he got his name enrolled in the Orissa High Court, DPIRS, but do not get mystified. You haven’t. At the Paand the same year witnessed great accreditations be- per Mill Circle you will turn your wheels to your left on ing conferred on him. In 1997 he received a national the Srirangapatna-Hunsur Road and suddenly start adaward in the field of education, was elected to the ICSE miring the huge gateway of DPIRS where you will be Board, Delhi, and also to the Standing Committee of cordially stopped for a few queries which are customthe ISC and ICSE Examinations. Rev Dr Aikara became ary at any such centre of learning. You will soon be the Vice-President of ASISC National in 1998 and the invited by a world of diverse fauna and flora: from the same year became its National President. In 2000 he lippy lizards to the sparring sparrows and from the redgot a transfer from De Paul School, Berhampur, to red roses to chic-choc cherries. Visakhapatnam and in 2001 was appointed Provincial As you are on a stroll, touring the campus (a testing Superior of the South Indian Province of the Congrega- time for your fitness and stamina to tour the 50 acres, of tion of Mission, a congregation of priests founded by St which playgrounds alone occupy 18 acres), you will Vincent De Paul in the 17thcentury. In 2003 he founded presently be captivated by the scenic beauty of girdling De Paul International Residential School (DPIRS), gardens with bowers and fountains, the Aquatic Centre Mysore, and in 2004 obtained his MBA from Pune Uni- (10-lane and half-Olympic size), the most modern stateversity. In 2005 Rev Dr Aikara went to Tanzania and of-the-art auditorium (the best in the city) and so on. started two English-medium schools. In the same year The interactive classrooms (Smart Class he was elected to the office of the National Secretary- Programme) of DPIRS have emerged as lively and acIn 1995 Rev Dr Aikara was elected Secretary-Treasurer of the Association of Schools for Indian School

PASSLINE

August 31-September 30, 2011

tive processing units. It marked the advent of an era where the students are not merely mute spectators but self-discovered power-houses ready to be commissioned. “DPIRS is a different school of thought: an international school with a sheer Indian perspective and perhaps the only school with a teacher-student ratio of 1:5, says Rev Dr Aikara. De Paul is the alma mater of students hailing from more than 13 countries. The school monitors each of its students very closely in pursuit of their self-discovery: to be the “Lighted Ones to Lead the World”. Some of the academic and co-curricular features at DPIRS are: classes from KG to +2; ICSE and IGCSE up to Std X; ISC, GCE and PU for Std XI and XII; GCE ‘O’ and ‘A’ level; TCL (Trinity College, London) Music; synthetic tennis courts; 400m track stadium; 4 concrete basketball courts; half-Olympic-size 10-lane swimming pool etc. The most important point in DPIRS is the space. There is a space for everyone and everything: a space to grow and to bloom; a space to forget and forgive; a space to cut the uncut and a space to break and make. The same space can be felt in the large classrooms, the sportive playgrounds, the aromatic refectory, the chirpy orchards, the homey dorms, the inviting library, the soothing nursing-room and the nostalgic corridors. This is a school where each of its students identifies that he/she is destined to occupy his/her space and to lead the world one day. Thus, DPIRS is a place which does always provide its children with a space to learn, unlearn and relearn. This is what that makes the school “A School of Different Thought”. The great visionary in Rev Dr Aikara fully exploits the gravity of the situation in whatever he does. It’s a delight to work with him and observe him work: a rare combination of experience, maturity and authenticity. His voice has become the most trusted and powerful voice in the field of education in the recent years. “Say what you can do and do what you say” is his slogan. He doesn’t have any false pride as far as what he is going to do. One will love to admire his simple, unassuming way of functioning well supported by his high EQ and soaring IQ. So extraordinary, in fact, that Fr Aikara’s list of accomplishments in bringing a paradigm shift to the lives of the poor and the needy and to the dispossessed and the unwanted—particularly in the notoriously dilapidated and crime-infested suburbs of Orissa—would warrant our immediate appreciation and approval. He knows that he is playing the good Samaritan when he wipes the tears from the pain-ridden ruts of the hapless cheeks. Contact: De Paul International Residential School, Belagola P O, Srirangapatna Taluk, Mandya District, Karnataka, INDIA Pin: 571 606 Ph: 0821 3290401, 3290402 E-mail: dpirs@yahoo.co.in, aikarajose@yahoo.com -Response Feature

TREND SETTERS

Readers' views Note may not get vote, but vote fetches note Your editorial (July 31-August 31, 2011) discusses the ‘Lord Padmanabha Swamy Temple treasure’ which has been doing the rounds among Malayalis all over the world. As you mentioned, a part of the treasure, if spent on some developmental projects, the credit squeeze slapped on the poor could have been averted and a few projects could be completed on time. On the practical front, politics and votes sometimes impede the way to progress. There was a time when note got vote. Now, note gets no vote. In Kerala, where the literacy rate is high, voters usually have their own strong opinion as to whom to vote for. There was a common concept among the Malayalis that a majority of the Christian communities and the minority upper-caste Hindus, as a rule, vote for the ‘Khadi’ parties and the other Hindus vote for the ‘Red’ parties. That trend has weakened, but the caste factor still remains strong. -Suresh Mathew, Chandigarh.

Kerala Planning Board gets well-known experts K

erala State Planning Board has brought expertise to its executive body with the induction of E Sreedharan, chairman of Delhi Metro Rail Corporation; Tharun Das, former chief mentor of Confederation of Indian Industry; G Vijayaraghavan, former CEO of Techno Park; and C P John, CMP leader and former member of Planning Board (as non-official member).

E Sreedharan became well-known after the successful completion of the Konkan Railway project and the metro rails in Delhi and Kolkata. Starting his career as a polytechnic teacher in Kozhikkode, Sreedharan later joined the Indian Railways in the wing of engineers. His reputation spread worldwide after his first major venture, the Kolkata Metro Rail project, became a thumbing success. Cochin Shipyard launched Rani Padmini, the first ship it built, when E Sreedharan was its chairman and managing director. He retired from Indian Railways as Member, Engineering, in 1990. Sreedharan was honoured with several prestigious awards, including Padma Vibhushan (2008), Padma Shri (2001), Railway Minister’s Award (1963), Man of the Year (given away by The Times of India in 2002) for his outstanding contributions.

Tarun Das is former chief mentor of Confederation of Indian Industry (CII), which is a national organisation servicing and representing industry in the country. He also served as non-executive chairman of Associated Cement Companies Limited (ACC) and Haldia Petrochemicals Limited (HPL). He is a member of the Coca-Cola Company International Advisory Board and non-executive director of John Keells Holdings Limited, Sri Lanka.

G Vijayaraghavan is a well-known technocrat, founder CEO of Techno Park and director of Trivandrum International School, Thiruvananthapuram. He has been occupying various positions and also honoured with prestigious awards. Mr. Vijayaraghavan has been the advisor and director to various companies. He is a well known management consultant and educationalist. As the first CEO of Techno Park, he has contributed in a large to the growth of kerala’s first I T Endeavour.

The Malayali mindset The general Malayali mindset appears to be to cheat, beat or forfeit and eat (Passline, July 31-August 31, 2011). While the bureaucrats do it ‘legally’, businessmen and such people do it illegally. Malayalis are getting more greedy for fast buck and food. Even people with high level of intelligence and calibre tend to be creative at first then become destructive. While the money-chain and money-doubling rackets thrive in the upper strata of society, there is a section of people earning their livelihood honestly. -Lester D’Cunha, Nungambakkam Railway Colony, Chennai.

C P John, a prominent socio-economic analyst, has been inducted to Kerala State Planning Board for the second time. Earlier, he had served as a member from 2001 to 2006. C P John has held prestigious positions as chairman of Kerala Labour Welfare Board, vicepresident of Kerala State Agricultural and Rural Development Bank, director of Kerala State Consumer Cooperative Federation, and director of Kudumbasree Mission (Poverty Eradication Mission).

Woman entrepreneurs M eritocracy to the Fore (Passline, July 31-August 31, 2011) is an eye-opener for the woman entrepreneurs. Kudos to A V Joseph, who introduced own spouse to the world of business. A man needs guts and wits to identify and make use of hidden talents in women. I have a similar experience with my spouse running a mobile-phone shop in Dubai. -Prince Charles, Dubai PASSLINE

August 31-September 30, 2011

By Jinesh M D

s Kerala a happening state? This question has become more relevant after the state started witnessing an array of developmental activities in its nook and cranny, thanks to the initiatives taken up by the new United Democratic Front (UDF) Government under the visionary leadership of Chief Minister Oommen Chandy. After having won by a wafer-thin majority, the new government initiated the much-publicised 100-day programme to expedite developmental activities in the entire state. The 100-day programme has obviously covered all sectors by starting new projects, reviving and reopening many firms, strengthening the social system and announcing various welfare schemes. Even though it is premature to evaluate the five-year tenure of a government at this juncture, it is a fact that the state has shown much enthusiasm to developmental activities. Despite the arguments by the Opposition parties that the government did not keep its word, it is clear that the government has shown a lot of sincerity and done hard work to carry out developmental activities across the state. It does not mean that the State Government has fulfilled all its promises in the list of the 100-day programme as it is impractical for any government. ‘Development and care’ was the slogan of the UDF when it faced voters before the election. By beginning its rule in a transparent manner, the government has initiated social schemes, in a ‘fast forward’ way, such as aid to the endosulfan victims and distribution of the Moolampilly package, besides announcing a slew of new endeavours in differ-

ent sectors. The government has raised expectations of the people for a ‘happening state’ by focusing on new ventures. Of these, the Metro Rail is the most notable one. It indeed augurs well for the state’s development that the new government was ready to abide by the Smart City project pact, which its predecessor had signed with Tecom. Along with the Smart City, much-hyped Metro Rail project is likely to become a reality, with the fresh efforts made by the State Government under the 100-day programme. The Metro Rail project is now awaiting technical approval from various ministries of the Central Government as it has already got the nod from Planning Board to start the venture. Construction works of the project has started in Kochi and its suburbs. The proposed coach factory at Kanjikode in Palakkad district is another project of the government’s initiative. ‘Development’ has been a term broadly discussed since the inception of the political party-ruled system in Kerala. But, unfortunately, apart from discussions, Kerala has benefited little from developmental activities. Kerala has always been carrying a bad boy’s image because of frequent hartals, unnecessary strikes and the like while developmental initiatives suffered. The state has done well in sectors like education and health. However, the state has been blamed for negative approach to investment. Kerala badly needs infrastructure, but the state has been witnessing little more than promises by politicians.

Now there is new hope for the development aspirants and well-wishers of the state with the announcement of a number of projects, which they hope will make the state investment-friendly. The government has reiterated that it will give priority to making Kerala an investmentfriendly state, All the same, one is compelled to ask: Is Kerala a happening state? Though the state government has not been able to keep its word completely regarding its 100-day programme, it could speed up development through various welfare schemes and new ventures, apart from revitalising earlier projects. People have begun to feel that something is happening here, contrary to the stagnation that existed earlier. Now, many see hope in several sectors after the UDF Government took over. The state government kicked off its 100-day programme by declaring the details of the wealth and assets of the ministers and of their families, senior officers, officers of the all-India service, department heads, the members of the ministers’ personal staff, the AdvocateGeneral, and government law officers and their families. Resumption of the eviction drive against the encroachers on government land in various places in the state under the Revenue Minister has been highly appreciated. Social security schemes and measures were taken up at the initial stage of the government such as rehabilitation package and increase of pension from Rs 300 to Rs 1,000 to unmarried tribal women, in addition to one acre land for each.

By beginning its rule in a transparent manner, the government has initiated social schemes, in a ‘fast forward’ way, such as aid to the endosulfan victims and distribution of the Moolampilly package, besides announcing a slew of new endeavours in different sectors. The government has raised expectations of the people for a ‘happening state’ by focusing on new ventures. Of these, the Metro Rail is the most notable one.

PASSLINE

August 31-September 30, 2011

It is learnt that the government has taken steps to give rice at Re 1 a kg starting with Onam. The request to the Public Service Commission (PSC) to extend its time limit of rank lists by six months, the implementation of Malayalam as the first language from this academic year, and the announcement of unified identity card with the details of an individual are a few notable developmental moves by the state government. Some experts say the previous LDF government had carried out many developmental activities across the state. It includes civil servants, politicians, social activists. According the them the former LDF government had implemented various developmental activities and welfare schemes. To give emphasize to their views, they highlight the achievements of industrial sector under former Minister Elamaram Kareem. PASSLINE had contacted a spectrum of people to get a first hand opinion regarding the hundred days of UDF led government rule in Kerala. Following are the opinions of some prominent persons about it:

D Babu Paul, IAS Former Additional Chief Secretary, writer

I am optimistic that the new UDF government under Oommen Chandy will be

able to carry out developmental activities in the coming years. Chandy has already proved his capabilities whenever he got a chance. Also, his Cabinet consists of efficient and experienced ministers. These factors will obviously help the UDF government to fulfill its promises announced prior to the Assembly election. The state government’s good relationship with the Centre will help fetch many schemes to Kerala. After the completion of the Kochi Metro Rail project, the state is likely to benefit from mono rail in Thiruvananthapuram during the rule of this government.

all means. I can say confidently that the UDF government has discharged its promises exceptionally well. For Kochiites, Metro Rail and Smart City are the two dream ventures, and I am happy to know that the government is carrying out the initial works of these two speedily. The LDF government had nothing to do with the rejuvenation of the Smart City project as it had been already initiated by the earlier UDF government under the leadership of Oommen Chandy. The new UDF government has carried out its promises regarding the 100day programme by keeping the slogan ‘development and care’. Along with developmental activities, the new government has given compensation to the Moolampilly evictees and the endosulfan victims. I am very optimistic that all

the projects announced by the UDF government will be completed on time.

Dr P K Abraham Managing Editor, Veekshanam Daily

While the previous LDF government was known as ‘talk-oriented,’ the present UDF government can be described as ‘action-oriented.’ The UDF government is carrying out various developmental activities and welfare schemes whereas its predecessor was engaged only in verbal exercise. The most vexing problem for the Kochiites is the traffic congestion. The Metro Rail project is expected to be a boon for the commuters in and around Kochi city.

Hibi Eden. MLA Oommen Chandy

is a person who can keep up his slogan ‘fast forward’ by

Leela Menon Senior Journalist and Social Activist

The UDF government started its 100-day programme in a transparent way as it had an-

nounced earlier. It is good that, on many issues, there has been agreement between the government and the Opposition. It is learnt that the government had sought assistance and cooperation from the Opposition parties, which is something good for the state’s development. Even though the government has a strong will to start the Metro Railway project, I think land acquisition and rehabilitation problems will place obstacles in the way of carrying out the project. However, I appreciate the government’s initiative and give it 50% marks.

Vellappally Natesan General Secretary, SNDP Yogam

The UDF government’s various developmental initiatives and their implementation in a fast manner are highly laudable despite several needs yet to be met. The 100-day programme has had a good beginning and I congratulate Oommen Chandy on his bold decision to allow more Plus-Two schools. By doing this in a transparent way, Oommen Chandy has shown an ‘A K Antony touch.’ Though the Smart City project is still vague, the people living in Kochi and nearby are happy with the Metro Rail project, which is expected to be completed in stipulated time. Compensation packages for the endosulfan victims and the Moolampilly evictees have been appreciated by the people. However, it is unfortunate that the government has not set up a board for the development of the backward communities in the state.

Jose Dominic Chairman, CII

I am very optimistic about the new government regarding development of all the sectors, particularly industry. The appointment of K M Chandrasekhar as Planning Board Vice-Chairman will help the state government speed up its developmental initiatives. Development, I think, is possible only through the public-private partnership. It is impractical for a government to fulfill all its promises in just 100 days. The state has not been witnessing any development of the industrial sector for the last two decades. There is no instant solution to any developmental issues, and all ventures will take time to complete. PASSLINE

August 31-September 30, 2011

PASSLINE

August 31-September 30, 2011

TIPS TO MSMEs

By G Rama Mohanan Nair

he word ‘business’ is used here to mean mainly micro, small and medium enterprises (MSMEs). Once you have set up your enterprise, how you can run it successfully by avoiding pitfalls is the subject matter of this article. Managing small businesses is more complex and difficult than large ones. A large industry can afford to appoint people to man each and every function like production, inventory, accounts and finance, marketing, personnel and others. But, a small entrepreneur has to manage all these functions himself, probably with the help of two or three assistants. Presented below are a few guidelines briefly to manage your business successfully. These are only indicative and not exhaustive: Have a dynamic business plan: Whether you have gone for institutional finance or private finance, you would need a business plan. It is an X-ray picture of what you have in mind and much more. It contains all information as to what exactly you are going to make, what are the quality standards of such products / services, what are the added strengths of

your products over existing similar products in the market, where and how you plan to sell them, source of the knowhow / technologies, cost of the project, sources of finance, and financial projections of income and expenditure for the next 8-10 years. You would have already prepared one with the help of some consultants. Primarily, this is a document needed by you to know where you stand and where you are heading to. This is your Bible. It is not something you have to throw away once you have received your finance from banks or elsewhere. You have to prepare a budget based on this and go accordingly. Make changes whenever situations change. There are software available for this now, and you can procure them through the internet. Making changes and keeping it up-todate may not be a problem then. (This is

How to succeed in your business rarely practiced by entrepreneurs, but if you can do it, the benefits are enormous). Do not compromise on quality: Go for some quality standard like ISI / Agmark for the product. Though expensive to start with, it gives a tremendous mileage for your marketing. But, remember, cost is proportional to quality. Always have your target audience in mind while deciding on quality. The core business must be one you know best: An advocate friend of mine started an IT business after leaving his profession. There was a friend of his who was an IT man. The entire money was raised by the advocate who did not have any idea of IT. Both of them joined in partnership and started the business. It went on well for a year or so. One day, the IT man said he got a good job in a Gulf country and would like to leave. The advocate was left in the lurch as he did not know how to go about with the business. Finally, the advocate lost the business, his residence and all his assets

in the process of paying off his liabilities. So, if you have already started the business in the above pattern, take adequate precautions right now. Keep accounts correctly. That will help in the long run: I know the limitations of the business community these days in keeping correct accounts. Many suppliers of goods insist on a part of the payment in cash. Also, buyers may insist on an inflated bill for goods purchased. Such practices make proper accounting difficult. At a time when you want to expand your business and want finance from banks / financial institutions, correct audited statements of accounts have to be submitted. I know some of my small clients, mainly shop owners, who are not able to grow because they just do not have a proper accounting system. Innovate for sustenance and PASSLINE

growth: Changes continue to occur. You have to keep a close watch on them. We can foresee what is likely to come up in near future. Unless and until you too keep pace with the latest developments in technology and management, you will soon become back numbers and get knocked out of the arena. Innovation is application of creative ideas into business. It has to be a continuing process and cannot stop. You need it not only for growth but also for sustenance. Expansion and diversification are needed, but stabilise first and then expand: Expansion means opening more braches elsewhere. This is different from diversification. Diversification is venturing into new products and services. Diversification is a must as you cannot pull on with the same product forever. In India, the average life of a small-scale unit is 5-6 years, but when you diversify, you get a new lease of life. Look at what happened to Varkey’s supermarket? If reports in the media are to be believed, it was

overambitious expansions that killed the extremely successful supermarket. All its 4 or 5 outlets in Kochi metropolis were doing very well. This phenomenal success prompted them to decide to open 100-odd branches in other places. Probably funds were diverted to those places, but the financing banks did not come up to the promoters’ expectations. This resulted in a total collapse. Perhaps, franchising could have been a better idea. Treat your employees as ‘human assets’: Your employees should feel that they are also very much a part of the business. They should be treated with respect and their suggestions should be given due consideration. Some of the best suggestions in industries have come from the bottom of the pyramid. Good suggestions for improvement of the performance of the company should be suitably re-

August 31-September 30, 2011

warded. The employees’ skill should be upgraded periodically by training sessions. Allow them to go for a tour or picnic once in a year or so for rejuvenation. Remember the adage ‘Customer is the boss’: The customer is the backbone of your business. Without him there is no business. ‘The customer is always right.’ No arguments with him. Try to sell ‘value’ and not ‘products’. Suppose you are running a yoga centre for children. Highlight the values the children gain by attending the yoga classes, like improving performance in studies, enhancing memory power, and developing immunity to diseases. This strategy will attract more clients for you. Delegate, but have an eye on them: Develop a second line and delegate duties and responsibilities. That will release your load quite a bit. You will be able to concentrate on higher-level functions rather than getting tied up with jobs requiring less expertise / skill. But, even when you delegate, do not take your hands off totally. The employees should always have a feeling that you are watching everything minutely and that they are liable to be penalised for wrongdoings. Be careful in appointing employees on considerations other than merit. Generally, it happens that you may have to appoint friends or close relatives on social considerations. There have been several instances of such people turning out to be destroyers of the business. I know a few entrepreneurs who do not allow any of their relatives to get recruited in the factory except by virtue of merit. Many top businessmen did not allow even their sons to enter the factory as an employee unless and until they got highly qualified in Harvard or Cambridge and trained in the factory under able managers. Do not mix business and relationship. Do not borrow at cutthroat interest rates from moneylenders: In times of crisis, you may be under compulsion to borrow from unscrupulous moneylenders at huge rates of interest or use several credit cards to draw cash. Such acts are liable to lead you to more serious situations later on. Those given above are some of the points that came to my mind. These are some of the lessons that new businessmen have to learn to run their business successfully. Owing to limitations of space, more elaboration of the points or inclusion of case studies could not be done. Hope this will go a long way in showing the right path to the new entrepreneur. (The author is retired general manager of Kerala SIDCO; chief consultant, Industrial Consultancy Services, and a social activist. email: ramamohanan@gmail.com)

COMMODITY

Dr N Ajith Kumar

Fantasies and fallacies about gold G

old is now the centre of attraction in more than one sense. What began as a ‘fashion’ soon became a ‘passion’ and is now an ‘obsession.’ Yes, the world is now obsessed with the yellow metal. Gold prices have broken all records and are poised to break more records. Those who were once ridiculed for their passion for gold are now being regarded as prudent investors! No other investment has over the past one year got a better return than gold. If one traces the one-year period from August 2010, one can find that an investor in gold has gained nearly 50% during this period. The returns from all other sources put together will not even reach a fourth of this. In this exposition, an attempt is being made to trace the immediate as well as the long-term reasons for this gold price hike and also to evaluate the future of this metal. At the outset, let us have a look at the increasing price pattern of gold over the past few years. It was in October 2008 that gold crossed the magic

For the first time in its history, the World Gold Council increased the price of gold twice on the same day. This record was repeated thrice within a period of three weeks. Some sort of panic seems to have gripped the users of gold. To make matters worse, unscrupulous traders are spreading canards that the price of gold would cross Rs 25,000 soon.

five-figure mark of Rs 10,000 a sovereign. It took gold another two years to reach 15,000 – a figure which it achieved in November 2010. In fact, at the end of the last calendar year, we saw gold stabilising around the 15,000-mark. It was only in April 2011 that the upsurge was again noticed when gold crossed 16,000 – only to stabilise again around this figure for another three months. It is in the last one month that gold prices started increasing exponentially. From 17,000 on July 15, 2011, to the third week of August, gold prices increased by Rs 4,200 – breaking not only all records but also many hearts of those who were planning to buy gold. There is no doubt that the immediate provocation for this unbelievable increase in the price of gold was the downgrading in the credit rating of the United States. The PASSLINE

US dollar suddenly lost its sheen, and the investors in dollars suddenly found themselves holding on to a currency from a country whose economy was sagging. The apprehension over the capacity of the US treasury to meet its debt obligations suddenly brought investment in this very attractive debt instrument to a halt. It was natural that these investors turned their investments to other channels. The information that the German economy registered only a growth rate of 0.2% in the April-July quarter had an adverse impact on investments in the euro, forcing the investors to look at other pastures for investment. To add to the already numerous woes, the stock markets reacted negatively. In the first week of August, the losses made by the investors in India were to the tune of Rs 5 lakh crore. The sagging stock markets further provided an impetus to the gold market. Future trading in the gold market also were at high prices and so retail purchases were preferred. Investors in the gold exchange had a field day. For the first time in its history, the World Gold Council increased the price of gold twice on the same day. This record was repeated thrice within a period of three weeks. Some sort of panic seems to have gripped the users of gold. To make matters worse, unscrupulous traders are spreading canards that the price of gold would cross Rs 25,000 soon. Well, what about the future? One of the biggest problems being faced is the inadequate supply of gold. For the past three years, the supply of gold has been more or less stable, at about 2,400 tonnes a year. The gold mines are being subject to excessive exploitation, and production is on the decline. China and Russia are the largest producers of gold, and both these countries are finding it very difficult to meet the rising demand. It has now become imperative to find new sources of gold. The Chinese experiment of trying to prospect gold in the sea is receiving considerable support. The logic is simple: if oil can be successfully mined from the sea, why not gold? A concerted effort to make use of water bodies to find gold would help the economies raise sufficient quantities of this metal. More importantly, this writer feels that the governments of the day could sell a portion of their gold reserves in the common market at subsided prices. India has a gold reserve of over 600 tonnes in its cofAugust 31-September 30, 2011

The Chinese experiment of trying to prospect gold in the sea is receiving considerable support. The logic is simple: if oil can be successfully mined from the sea, why not gold? A concerted effort to make use of water bodies to find gold would help the economies raise sufficient quantities of this metal.

fers, and, by any stretch of the imagination, this is very high. As and when prices of gold go beyond control, the government should have a mechanism to release few tonnes of gold at subsided prices, which would greatly help the prices to come down. Further, a shift to other metals more precious than gold can also mitigate the situation to a great extent. Consumers can seriously think of investments in platinum, which is also a very good alternative to gold. It is true that platinum is not mined in India, but it is heartening to note that the world community has started thinking seriously about using platinum. Over the years, the production of platinum has increased to about 100 tonnes a year. Besides, its use for industrial purposes, this ‘white gold’ is quite attractive as a jewellery option. Compared to gold, the rise in the price of platinum is much more controlled. In fact, a gram of platinum costs hardly Rs 300 more than that of gold. A proper marketing of precious metals like platinum would make the investors aware of better and more attractive investment opportunities and lure them away from gold. The need of the hour is to realise that this craze for gold would head us nowhere, and effective consumer resistance has to be generated. Otherwise, gold would not only carry the day but also would carry the world away.

POLICY

13 Many of the earlier policies were not able to achieve the extent of stated objectives the major reasons being the absence of an institutional mechanism in the Government to monitor, liaison and evaluate the progress achieved on an ongoing basis

By Job K T

and suggest remedial measures. The 2011 policy should institute a mechanism to resolve this issue.

Make Industrial Policy 2011 a success T

he Government of Kerala has placed the draft Industrial and Commercial Policy 2011 in the public domain for eliciting valuable comments and suggestions to make it much more vibrant and dynamic. At the outset, the policy tries to capture many areas of industrial development of the state and has a tall aim of achieving a position among the top three states in the country in terms of per capita income. Successive governments in Kerala have successfully brought out industrial and commercial policies with a view to wooing investments. However, after their grand release, no effective steps have been initiated by the Government and its departments to get the stated objectives materialized. This has practically made the policies mere rituals.

The policy should instil confidence in investorsâ&#x20AC;&#x2122; minds to ensure that they get a guarantee of return on their investment. To make the policy much more meaningful and real, the Government should focus on the following points. Prioritize the focus: The draft policy states a variety of objectives. It will be desirable to have a focus on priorities so that the Government can mobilize the resources to achieve them. Measurable targets: Whatever may be the stated objectives, these should be quantitatively measurable targets achieved towards each year and finally at the termination of the policy period. This will enable the Government to understand the shortfalls and take timely corrective action.

governmental agencies to attract entrepreneurs. Though the state has a variety of advantages, it is unable to utilize its full potential. A one-stop shop for the dissemination of investment opportunities, support facilities and institutional networking is important to attract entrepreneurs. Hence investor information centres will be a solution to woo investments. The Kerala State Industrial Development Corporation (KSIDC), Kerala Industrial Promotion Bureau and the Directorate of Industries and Commerce are to be strengthened in line with the model of Udyog Mitra in Karnataka. Strengthening of Kerala Venture Capital Fund: The Kerala Venture Capital Fund (KVCF) is a Rs 20-crore capital fund conceptualized by KSIDC, Kerala Financial Corporation (KFC) and Small Industries Development Bank of India (SIDBI). The fund is useful to enterprises in high-technology sectors like information technology, biotechnology and tourism. The functioning of the fund is to be strengthened and that should be included in the policy. Exit policy: Nonviable enterprises should be allowed to close down by a suitable exit programme of one-time settlement (OTS) of Government dues such as sales tax, electricity charges etc. The Industrial and Commercial Policy 2011 thus requires tremendous effort from all stakeholders. The mere announcement may not achieve the objectives. The opinions of the public are also to be incorporated to make the state one of the three in terms of per capita â&#x20AC;&#x201D;income.

Monitoring and evaluation: Many of the earlier policies were not able to achieve the extent of stated objectives the major reasons being the absence of an institutional mechanism in the Government to monitor, liaison and evaluate the progress achieved on an ongoing basis and suggest remedial measures. This policy should institute a mechanism to resolve this issue. Validity of the policy: The earlier policies were found to be valid during the tenure of the Government. Normally, any investor will require about ten years to receive the investment by way of return. Hence the pressing demand of the industry is to have a minimum validity of the policy to be ten years, whichever Government is in power to have a constancy of purpose. Skill development programme: The state is experiencing the major problem of providing employment to around 43 lakh jobseekers registered with employment exchanges. Among these, around 33.30 lakh are having qualifications of SSLC and below. Without possessing any particular skill, employability of such jobseekers is difficult. At the same time, the employment market is fast expanding, demanding specific skill sets. The Government can evolve a strategy in the policy to tackle the situation by developing/strengthening the existing network of industrial training institutes (ITIs) or establishing skill development centres in line with the National Skill Development Corporation of the Union Government. Investor information centres: The draft policy 2011 envisions the transformation of the state into a vibrant entrepreneurial society. This will require tremendous efforts by the Government and PASSLINE

August 31-September 30, 2011

INDUSTRY ARM

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By K Vijayachandran

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KSIDC After the golden jubilee, what?

he golden jubilee celebrations of the Kerala State Industrial Development Corporation (KSIDC) was inaugurated by Chief Minister Oommen Chandy on July 30, 2011, at Le Meridian Convention Centre, Kochi. Industries Minister P K Kunjalikkutty presided over the function. In all, 50 outstanding entrepreneurs promoted by KSIDC were presented with excellence awards. Besides, 50 girl students from BPL families, selected from

crore. Most of the major industrial units that make up the industrial landscape of Kerala today were promoted by the KSIDC. These industries have helped in modernising and diversifying the regional economy. At present, these industrial units employ around 500,000 people. The performance of the KSIDC was reported as excellent in the fiscal 201011. Industrial projects, with investments

dustrial promotional arm of the state government. It appears that the present UDF government has decided to recognise KSIDC as the premier agency for the promotion of medium-scale and large-scale industries as well as of infrastructure projects in the public-private participation (PPP) mode. The keen interest taken by the Chief Minister and the Industries Minister in KSIDC’s golden jubilee celebrations was possibly indicative of this welcome policy shift: both of them recalled the experience of the Global Investment Meet (GIM-2004), held during the last UDF government, and suggested the possibility of repeating similar campaigns. KSIDC, when set up in 1961, was conceived mainly as an industrial financing organisation, and its development role was mostly limited to term-lending and equity participation in joint ventures. I remember the late G Sundaram IAS (from the Haryana Cadre), in his capacity as CMD of KSIDC, playing a pioneering role in redefining its terms of reference and objectives by taking up, at its own cost, sectoral studies, feasibility reports and project profiles, using external consultants. Such pioneering efforts during the early eighties had led to the practice of allocating Plan funds for KSIDC in order to finance its industrial promotional efforts during the Eighth Five-Year Plan.

totaling around Rs 700 crore, were sanctioned during the period, and Rs 205 crore was disbursed as financial assistance. Earnings during the year were a record Rs 53 crore. Mr Alkesh Sharma, managing director of KSIDC, said he was confident of continuing this positive trend and also developing Kerala as an investor-friendly state in the near future.

During the Eighth and Ninth Plan periods, several feasibility studies were taken up by KSIDC, such as industrial water supply for Kochi, medium-capacity power plants, fish processing industry, growth centre projects, a petrochemical complex at Kasargod, animal slaughtering and meat processing industry, etc. Some of these were taken up during my tenure as chairman (1997-2000), when KSIDC entered into the business of rehabilitating sick industrial companies in the public as well as private sector.

KSIDC has been competing not only with its counterparts in other states but also with other promotional agencies of the Kerala Government and there is a tendency to look at KSIDC merely as one among the several competing government agencies and not as the chief in-

This sort of role diversification, naturally, led to conflicts in an organisation, which was traditionally managed by IAS or IA&AS bureaucracy. In my capacity as non-executive chairman, I tried to formalise the systems and procedures in KSIDC through the ISO certification

Kerala Chief Minister Oommen Chandy inaugurating the golden jubilee celebrations of KSIDC, in Kochi.

the 14 districts of Kerala, were awarded scholarships as a part of the corporation’s Corporate Social Responsibility, a scheme introduced as an annual feature to mark the golden jubilee. Former chairmen and managing directors, including this writer, were draped with ponnaada by the Chief Minister. A musical tribute by Kerala Symphony (P) Ltd, a music company promoted by KSIDC, was an added attraction of the function. KSIDC had promoted over 600 medium-scale and large-industrial units in the state in the past 50 years, with an aggregate investment of over Rs 25,000

PASSLINE

August 31-September 30, 2011

route. Organisational development and skill development were a part of this perspective. There was no visible opposition to my initiatives, but the project was moving miserably slow for no apparent reasons, even though a consulting firm was positioned and a facilitating officer nominated, promptly and on time. In my capacity as chairman, I took a detailed review, in which the ISO consultant presented a half-yearly progress report. According to him, diverse views existed among KSIDC officers regarding organisational goals, which were blocking progress. The issue to be settled was: ‘Is KSIDC a financing institution responding to markets, or an industrial promotion arm of the government?’ We had a lengthy discussion in the assembly of some 20 KSIDC executives. It was agreed that both could be taken as basic organisational goals, for they were not contradictory. For the developmental and rehabilitation role, KSIDC may depend on public funds and directly report to the government. On term-lending and industrial financing operations, it may respond to the appropriate finance markets for benchmarking, and report to the BOD on performance. I was happy to have resolved the vexing problem that was blocking the progress of ISO 9000 project, and that was my last-ever review meeting in my capacity as KSIDC chairman. After serving for 29 months, I left the position in November 1999, as decided by the top leadership of the political party in power. However, I was extremely lucky to have a celebrated and illustrious successor in Mr T K A Nair, IAS, Principal Secretary to the Prime Minister. He continues to hold both positions even today, and has survived 12 long years of political turmoil. Being a highly respected senior bureaucrat strategically positioned in Delhi, Mr T K A Nair is looked upon as a valuable resource person, not only for the industrial development but also Kerala’s development in general. On leaving KSIDC, I had sent him a formal note, giving my impressions on the strengths and weaknesses of the organisation, and stressing the urgent need for capacity-building, with special reference to the ISO 9000 initiative on hand. My feedback was promptly acknowledged, and possibly also transmitted to the managing director. Several managing directors have served T K A Nair during his 12-year tenure as chairman, and, as IAS officers, they had their own perceptions, programmes and priorities assigned by the political leadership. While taking part in the jubilee celebrations, I made a quick reality check on the progress toward capacity-building in general, during the intervening 12 years. The ISO 9000 project was delayed for several years, but would be implemented in the very near future. Most of the old officers have either retired or are on deputation. There was very little of new recruitment and virtually no induction of fresh blood and new skills. The youngest person around was, possibly, the managing director: His enthusiasm was the chief motivating factor for the jubilee celebrations, which, indeed, was a grand success. The new CEO reportedly takes keen interest in completing the

GLOBAL ECONOMY

Globalization a near-panacea By Dr C T George

cross the world today, interdependence between nations has become a concrete reality and an indispensable necessity when compared to the high dose of pride and panache carried in individual national independence. It is also undeniable that for some countries dependence is crucial for survival. Developing nations must internalize that interdependence is more in their favour than that is applicable to the developed countries because globalization is integration of national economies, small, medium and big, into one single global economy through free trade, commerce, communication and free capital mobility. It is a paradigm shift to use the absolute advantage, away from the age-old concept of comparative advantage. India offers an open gesture in making the new economic global structure as a way of life rather than being a mere venture or adventure. We intend that our entire population should be able to enjoy life in the present times, so our efforts are in this particular direction. Globalization is an ongoing process of updating, benchmarking and regulating economic activities of countries in sync with global markets. It is economicsdominant and politics-subservient, it is survival of the efficient and the proficient, it is technology that takes the lead to improve productivity, quality and profitability, it is the race where smart entrepreneurs win and it is where commitISO 9000 project, which could take KSIDC to a new trajectory of growth, organisational development and capacity-building. Kerala deserves a much more competent and professionally managed industrial development corporation. For this, the corporation has to expand and strengthen its manpower base and has to move away from the philosophy of remaining slim. There was plenty of reservation with regard to the opening up of the new office in Kochi, but it has turned out to be a sound business decision. Now it is time to open up a new window for the North, in Kozhikode or Kannur. With a lean corporate office in Kochi and three autonomous divisions operating from three regional centres, KSIDC will be comfortably placed to serve regional aspirations. KSIDC should regularly induct about a dozen MBA trainees and establish a good rapport with the community of business schools in the state that have come up in recent years. Sabbatical positions in KSIDC could be offered to faculties of these business schools and engineering colleges as well as to the managers of leading large and medium industries in the state. Such practices are not yet a part of the prevailing management culture in Kerala, but promoting such a cul-

ment and integrity matter most. In the context of globalization, amidst many factors when we speak about culture customs we try to compare the nations of the West and the East but when we deal with economics the distinction is between nations of the North and South. The world in which we live has only two divisions, ‘strong’ and ‘weak’, wherever they are on this only earth we are fortunate to occupy. Globalization is advantageous and encourages the nations of the southern hemisphere to export more and earn more foreign exchange which resource can be used for investment in advanced capital goods, machineries and technology. Globalization is offering opportunities to each nation to do its best far beyond its capacity and capability. Trade between two nations can improve their economic growth on a pro rata basis. From ancient times, trade between nations has brought prosperity to all participating nations. Precisely, that is the reason even the natural blow of winds was called trade wind. Trade wind can be summed up as an extremely consistent system of winds occupying most of the tropics, constituting the major component of the general circulation of the atmosphere, blowing northeasterly in the northern hemisphere and southeasterly in the southern hemisphere. Similarly, there are many terms related to trade such as trade cycle which means a regular fluctuation in the trade or economic condition of most capitalist countries consisting of a movement from a state of high activity, ie prosperity or boom, to a state of low activity, ie depression. Back again, trade gap means an excess of a country’s visible imports over its visible ture through appropriate initiatives could be seen as Corporate Social Responsibility, far more relevant than offering scholarships to school children. Opening up such live professional contacts with the existing large and medium industries and academic institutions will help KSIDC develop into a dynamic industrial development arm of the state government. For some years now, the industrial development strategy of KSIDC has been driven by the belief that manufacturing industries are unsuited to Kerala – information technology, tourism and ayurveda have become the new priorities. Neglect of the manufacturing sector is now accepted as a main policy weakness even at the national level, and large-scale plans are in the pipeline for correcting this mistake. Navaratna companies and other Central public sector undertakings (CPSUs), which have served as technology generators for the nation in the past, are now being asked to expand and diversify their manufacturing base. The success of the TELKNTPC cooperation should be an eyeopener, and there is plenty of scope for duplicating this experience. It is time KSIDC improved its liaison with such CPSUs, as a matter of policy, with the PASSLINE

exports and a trade route means a sea lane used by trading ships. In the same vein, service between nations benefits each one of them. Therefore, if trade and service are considered as basic needs for prosperity, then rich and poor countries together must derive empirical benefits over a period of time. In the growth profile of every country, there is a golden time and the time of India had started in 1991. We are steadily but at a reasonable speed ris-

boundaries. India has demonstrated to the world that interdependence is more meaningful in the present scenario. Globalization is interaction in all possible disciplines whether we like it or not. For the success of globalization it requires a strong democratic institution with relevant national policies supported by a helpful international environment. Globalization has made the world an inter-connected network of people on a ‘click’ that ticks events into

ing and shining in growth and development. Hopeful days are ahead for us to be optimistic and opulent as we are on the threshold of scripting a magnum opus in the glossary of economic performance. Globalization also means global liaisoning of all activities. It is a function of the e-world. In visual media too we have made tremendous progress. For instance, we remember to have had only Doordarshan, but now the arena of television channels is filled with hundreds of doors of darshans around the clock. Globalization has opened up the closed globe. It liberated

action. Globalization implies the merger of global and local participation of people, Hence the term ‘glocal’ is in use that coins the expression ‘glocalization’. India is an aspiring mega-power among the 193 nations, the latest in the list being South Sudan, of the world.

support of the Kerala Government, and scout for such opportunities.

Air India, Airport Authority, and Inland Waterways Authority. The star performance of Cochin International Airport is the outcome of excellent cooperation between the Kerala Government and the Airport Authority of India and not because of any PPP as generally believed. The recent KSIDC-GAIL tie-up for gas pipeline is another example. However, the importance and relevance of such initiatives, in terms of policy, are not adequately recognised.

More than a dozen CPSUs operate from Kerala. Neither the government nor KSIDC looks at or interact with them as potential resources that could be easily harnessed for the industrial development of the state. However, none of their representatives was present at the golden jubilee event and that is proof enough for policy failure in this regard, which needs to be corrected. CPSU units are generally resourcerich and many of them are even cashrich. Many others are poor performers, mainly because of neglect or lack of interest on the part of the Central bureaucracy. HMT, Instrumentation Limited and Indian Telephone Industries at Palakkad, Cochin Shipyard, FACT, etc, are minor enterprises of very low priority for the Central Government, but they are of immense value and relevance for the industrial development of Kerala. Unfortunately, the Kerala Government hardly takes any interest in their management, and KSIDC does not look at them as potential resources. This is true even with regard to infrastructure development and organisations like Cochin Port, Railways,

August 31-September 30, 2011

India is the largest democracy and in a world of deregulated dynamic economy we must make earnest endeavours to ensure that globalization behaves better for us since it is a nearpanacea available in the pharmacy of economic medicines.

Such joint initiatives with Central Government organisations have to be promoted as a matter of state policy, and KSIDC should be entrusted with the responsibility of implementing them. Global Investors Meet (GIM) in Kochi, held under the auspices of KSIDC, was a major event under the earlier UDF government. Road shows were also held at that time in several cities as follow-up. Possibilities of repeating these exercises were mentioned by the Industries Minister and the Chief Minister during the golden jubilee meet. However, if such programmes are to be productive, KSIDC has to improve substantially its organisational efficacy through capacitybuilding and also its linkages with the already existing industrial infrastructure.

POVERTY ERADICATION

The advent and success of the Self-Help Groups (SHGs) movement in the 1990’s prompted the Union Government to think of a different strategy – group approach instead of an By P D Johnny (pdjohnny@yahoo.in)

individualistic one, based on experimenting with the former on a pilot basis.

The BPL conundrum T

he survey to identify the families living ‘below poverty line’ (BPL) in the country was launched in the tribal-dominated Tripura on June 29, 2011. A firstever survey to collect data on caste-wise population in the country is also being conducted simultaneously. The twin exercise is intended to have authentic data on the socio-economic status of the country’s population. After the great head-count (Census 2011), which concluded early this year, the second exercise, equally massive in volume and dimension, is expected to serve the twin objectives of (1) identifying the sections of population which deserved various sops/freebies and concessional treatment out of various poverty alleviation programmes of the Central and state governments and (2) ascertaining the share of various religions/castes in the country’s population, which information could later be used for allocating proportionate shares in government jobs, etc. The BPL status gained importance in the late 1980’s when the country’s major poverty alleviation-cum-self-employment programme, Integrated Rural

At that time, those families with an income of less than Rs 10,000 a year were considered to be poor and eligible to become beneficiaries of IRDP.

Development Programme (IRDP), was launched, aimed at uplifting those below the poverty line (BPL) to ‘above poverty line’ (APL). The programme was intended to target exclusively the poorestof-the-poor in society to be provided sustainable livelihood through self-employment schemes. At that time, those families with an income of less than Rs 10,000 a year were considered to be poor and eligible to become beneficiaries of IRDP. A mix of bank loan and subsidy components was packaged – the subsidy to take care of the beneficiaries’ own capital contribution and also to make the schemes viable with least liability of repayment of the bank loan.

group basis and thereby to contribute/ supplement the family income, enabling them to raise their standard of living. Till this stage, income criterion was adopted for identifying the BPL families and distinct ration cards were issued to them to facilitate utilisation of the benefits available. Many concessions were offered to the BPL families, including provision for food grain at concessional rates

in the list. These parameters included not only economic yardsticks (income of the family, etc.) but also some social factors (alcoholism, drug addiction, widowhood, caste, etc.) formed the basis for being identified as BPL. The Union Government and the Planning Commission did not fully accept these parameters and laid down more scientific and realistic methods for the purpose. In 2006, the Planning Commission, based on studies conducted, had recommended adoption of consumptionbased parameters. It said that those families (with an average size of five members), which do not earn adequate income for providing food for 550-600 (rural-urban) calories of energy per member, can be included in the BPL list. The state governments could not agree to these standards, which would have placed them at a disadvantaged position in terms of allocations from the Union Government, which, on the contrary, was alarmed at the massive burden of funds to be earmarked for subsidies, etc., and wanted to restrict the number of beneficiaries for concessional treatment.

As the name suggested, this programme was meant for the rural poor who were left without any decent means of livelihood and employment opportunities. One member each from such identified poor families was selected for providing assistance, adopting an individualistic approach. The evaluation of the programme, however, indicated that it could not, by and large, achieve the intended objective of lifting the poor from their poverty-stricken existence. Subsequently, the advent and success of the Self-Help Groups (SHGs) movement in the 1990’s prompted the Union Government to think of a different strategy – group approach instead of an individualistic one, based on experimenting with the former on a pilot basis.

from the public distribution system (PDS), free medical treatment in government hospitals (including comprehensive health insurance cover), free power supply, etc. The state governments were keen on larger BPL lists, which entitled them to draw more food grain under the PDS and more funds from the Centre for furthering their populist motives. Many affluent families, in order to share these benefits, also managed to get themselves included in the BPL list, unduly abetted by the officials and people’s representatives.

The Kerala government, based on its own survey (conducted by the Kudumbasree volunteers), had found about 70% of the nearly 70 lakh families to be living below the poverty line. This was not acceptable to the Planning Commission and Union Government which considered only about 10 lakh families to be below the poverty line and eligible for benefits under the poverty alleviation programmes. The state government too, realising that its assessment does not conform to the ground realities and noting the resentment among the really poor people who apprehended that their due share is being grabbed by the affluent sections, ordered another survey – this time using the teachers. This was proved to be more realistic and concluded that about 20 lakh families (30% of the total) fall under the BPL category.

From April 1999, a more streamlined programme called Swarnajayanti Gram Swarozgar Yojana (SGSY) was launched in place of IRDP which was proved to be not effective in achieving the objective of poverty-alleviation. Groups, instead of individual beneficiaries, were targeted, and a training component was added to The successive BPL surveys conequip the participant groups to achieve the objective. Non-governmental agen- ducted by the state governments were cies (NGOs) were enlisted for formation, observed to be based on unrealistic and nurturing, training and guidance to the unscientific assessments, with the sole beneficiary groups’ members. This new intention of exaggerating the poverty level strategy met with reasonable success in their respective states. For instance, and mostly women from poor families Kerala had adopted a nine-point formula Meanwhile, the Planning Commiswere motivated and empowered to take to identify the below-the-poverty line famiup income-generating, self-employment lies – those families satisfying four out sion constituted two advisory committees ventures by pooling their capabilities on of these parameters would get included – headed by two of its members, PASSLINE August 31-September 30, 2011

Arms spare farms in Israel By Joseph Alapatt

ears ago an Israeli agriculturist-technocrat paid an official visit to Kerala. David Baron is his name. David Bengurion, former Prime Minister and one of the greatest figures in Israeli politics, used to call David Baron Mr Agriculturist of the land. Though very old now, his vision still holds good. When the author met him during a visit to Israel some time ago, David Baron said, “We have money and wisdom but no fertile land. Whatever land we have is mostly desert, like Sinai. If I get cultivable land I could create wonders.” He did create a wonder, but not on fertile soil but in a desert. He converted the place Aravali into the first world-famous Kibutz, a cooperative organization of Israeli farmers. State-of-the-art technology is used here for farming. The method of drip irrigation was adopted but only in the morning because water is precious. At night evaporation makes the farm cool. So the crops are wet N C Saxena and Tendulkar, to study the problem and arrive at a consensus on the methodology to assess poverty during the Twelfth Five-Year Plan (2012-13 to 2016-17). The committees recommended a two-pronged methodology for the purpose – one, an improved income and calorie-based assessment; another, adopting an exclusion method whereby families possessing certain assets would get excluded from the BPL list. The income-calorie based method envisages the income required for minimum subsistence which would take into account the expenditure per member of a family –a total of Rs 20 a day – for items like Rs 5 for 500 gm of cereals, Re 1 for 82 gm of pulses, Rs 2.5 for 125 ml of milk, Rs 5 for 100 gm of edible oil, Rs 2 for 250 gm of vegetables, Rs. 0.5 for banana, and Rs 3.75 for fuel (kerosene). It is anybody’s imagination where these items are available at the stated rates in our country in the present days of price-rise and inflationary conditions. These recommendations incurred scathing criticism from both the economists and politicians. It was apprehended that

in the night. That is the essence of greenhouse technology. At the same time it reduces the sun’s excessive heat during daytime. Quick destruction and quick production are their doctrine in farming. I was shocked to see huge beautiful capsicum everywhere and trailers removing it to manure pits because its price in Europe had come down. Profitability lies in production of tomato, carrot and cauliflower. Israel is called Europe’s vegetable basket. Even Arab markets are full of Israeli fruits through their good neighbours Jordan and Egypt. Hybrid apples and dates are all around. Israelis import workers from all over the globe, even from Vietnam, for helping them on the farms. They are well-fed, well-looked-after and well-paid. The Kubutz cooperatives run even restaurants, supermarkets and hospitals. Farmers share the profits and losses. There are free agricultural clinics for foreigners for training. The Kibutz has a dream to grow orange and coconut in the desert. The efforts are on. They are trying to

even families with the meager annual income of Rs 27,000 might be excluded from the list. The exclusion method is intended to eliminate the socalled affluent sections of society, by assessing their assets, from the BPL list. Accordingly, the families possessing the following assets will be excluded: Owners of motorised two/three/ four-wheelers and fishing boats (requiring registration). Owners of mechanised three/ four-wheeler farm equipment (tractors, harvesters). Those with Kisan Credit Cards (KCC) with credit limit of Rs 50,000 and above. Those with any member as gazetted/non-gazetted employees of Central, state public sector undertaking, autonomous bodies, etc. Those with non-agricultural enterprises registered with the government. With any member earning over Rs 10,000 a month. Households paying income/ professional tax. Those with three or more rooms with pucca walls or pucca roof. Those owning refrigerator.

Author with farm workers in Israel

get soil from Salalah in Oman-—the only Arab country where coconuts are grown. The Israeli recalled his visit to Kerala. Apart from its greenery, its palmfringed fields of coconuts; fertility, attitude of the farmers and an ideal crop combination suddenly came to his mind. He remembered that he had talks with people right from the Agriculture Minister to the last-level krishi officers in villages. He had told them, “You teach many agricultural doctrines to credulous students eager to earn a degree. They write the exam and get the degree in agriculture —for what? Could you see the real farmer? Did you ever sit with them?” His suggested to them, Come out of your campus and laboratories, go to the fields and be one among the farmers, share what they know. That is modern farming. Israel called it the training

Those owning landline phones. Those owning 2.5 acres or more of irrigated land with irrigation equipment. Owners of 5 acres of non-irrigated land.

and visit programme, popularly known as the T&V programme. “Our Government had made it a part of the curriculum. Now it has been abandoned for no reason.” Qatar seeks more coconut products “Give Gulf Malayalees their favourite coconut products’’, says Mrs Deepa Gopalan Wadhwa, Indian Ambassador to Qatar. Mrs Deepa told the author (he visited her too) that in all the supermarkets and malls coconut products from Sri Lanka and the Philippines were reigning over. “With all our expertise, tradition and diversification we are nowhere. Why?” she lamented. She urged the Coconut Development Board to exploit the situation, thereby helping the ailing coconut farmers in Kerala. As a Malayalee hailing from Palakkad she promised everything possible to boost our exports to Qatar.

adoption of the exclusion method will automatically eliminate from the list the affluent sections of society some of whom, by any means, would have undeservingly grabbed the benefits from the really poor, deserv-

The Ministry of Rural Development has asked all state governments to complete the survey by the end of December 2011 and to finalise the list by March 31, 2012. Instead of printed questionnaires, tablet personal computers will be used to facilitate post-survey processing and to ensure accuracy of the data. It is expected that, in states like Kerala, where the general standard of living is higher, not many families are likely to get included in the list. There are also arguments that the identification method runs counter to the spirit of the proposed Food Security Act. This will also adversely affect the ambitious plans of the state governments to implement populist, votecatching measures in their states. Some of them introduced schemes to provide food grain at free or nominal prices. It is, however, sure that the PASSLINE August 31-September 30, 2011

ing sections of society. On the contrary, the Centre can save crores of rupees by way of subsidies, etc., and utilise gainfully these funds for developmental purposes, preferably creation of infrastructure in rural areas.

MAVELI STATE

By Andrew Pappachen

A ndrew Pappachen is a well-known figure among the Malayalee, Indian, Asian and American communities in the US because of his long record of social, political and community activities for the last 35 years. As a pioneer, he played key roles in the formation of various cultural, social, political and religious organizations and was at the helm of these. Among them are the Kerala Association of New Jersey, Kerala Center New York, Coalition of Indian Organizations New Jersey, Asian American Political Coalition, Asian American Heritage Council of New Jersey, Mar Thoma Church of New Jersey, Federation of Kerala Associations and the World Malayalee Council. He also served as the President of Newark Festival of People, a multicultural organization, in New Jersey and Governor’s Arts Advisory Council and as a member of the County Democratic Committee. He is currently the President of Asian American Heritage Council of New Jersey and was the Grand Marshal of the Asian American parade held on June 1, 2009 along with the Governor of New Jersey. Andrew has a master’s degree in Chemistry from Kerala and another in Environmental Engineering from the Stevens Institute of Technology, New Jersey. He became a Certified Public Manager in New Jersey and has been an employee of the City of Newark, New Jersey since 1974. Currently he is the Director of Operations of Newark Watershed Conservation and Development Corporation. He also teaches in a college as an Adjunct Professor. Andrew has authored three English books under the pen name Andreos published by the Author House, US: Journey through Generations– an Autobiography, and Secrets of Passion and Love with the Ghost (novels). He has also written two Malayalam novels, Thalamurakalethedi and Theerthatanathinte Katha. He lives in Montville, New Jersey. Somini is his wife. They have two children, Simmy and Kevin. Simmy is an entrepreneur. Kevin works in the financial field.

Kerala can bring the rule of Maveli back I

was born in independent India at a time when it was a baby that had just started walking. India was an underdeveloped country. When I left it in 1973 at the age of 24 to the US, India was a developing country and the US was a developed one. I probably came during one of the worst times of America following the Watergate scandal which resulted in the resignation of Richard Nixon, a Republican President. Gerard Ford became the interim President. Jimmy Carter, a Democrat, was elected President in 1976. The Shah of Iran was overthrown, Iranians captured everybody in the US embassy as hostage and there was a failed attempt to rescue them. The interest rate on bank loans in the US reached 18% and unemployment was above 12%. Jimmy Carter was a one-term President and Ronald Reagan, a Republican, was elected in 1980. Slowly the economy started getting better and Reagan was reelected. In 1988 Reagan’s Vice-President George Bush was elected President. He was not reelected. Bill Clinton, a Democrat, followed him. The economy boomed under Clinton and he was reelected in 1996. In 2000, George Bush’s son George W Bush was elected. AlQaeda attacked America threatening the security of the country. America reacted by declaring war against AlQaeda and attacked Afghanistan, which was ruled by the Taliban, a big supporter of Al Qaeda. Later America declared war against Iraq and Saddam Hussein. Even though war is not completely over both Afghanistan and Iraq have democratically elected governments. After two turbulent terms of Bush, the first black American President was elected, who inherited the worst economic recession of the US since the Great Depression in 1930. Barrack Obama took over the presidency in January 2009 and after two and a half years the US economy is still in bad shape. There is a slight improvement, but unemployment remains high at 9.2%, while the normal unemployment rate in the country is below 5%. During my 38 years, I have seen it all. America is still a rich developed country. I enjoyed the golden age of America, which I consider was from 1985 till 2000. The US is still the richest nation in the world considering its vast infrastructure, technological leadership, strongest military and great natural resources. PASSLINE

The India I left behind started its growth in the 1990s when it opened its market and became a free economy. India’s vast human resources which include thousands of engineers, doctors, nurses, scientists, technicians and skilled workers helped its progress. Many migrated to foreign countries and remitted foreign exchange. They also helped improve India’s technological development and manufacturing base in a new consumer market. Since India became a freemarket economy it attracted a lot of foreign investment. The Government invested in agriculture, rural development, power production and infrastructure. India’s status changed from an underde-

veloped country to a developing and a developed one. Twenty-five percent of India’s population still live in poverty and 30% are still illiterate. But it has a strong middle class, about 40% of its population, and about 5% are considered rich. Being Malayalees, we must be proud of the growth of Kerala even though we always complain about our government, which changes party every five years. Kerala has developed tremendously during the same period the Indian economy became better. When 25% of the people live in poverty all over India, only 10% of the people in Kerala live in poverty. Kerala has almost 100% literacy when in all of India the literacy rate is only 70%. Most of the villages in Kerala have electric supply. What is the reason for this unparalleled growth in Kerala? It still does not have an industrial base compared to the neighbouring Tamil Nadu, Karnataka and Andhra Pradesh. Well-planned tourism development is one reason for Kerala’s growth. A vast population working in other countries and transmitting foreign funds to the state is another reason. Building August 31-September 30, 2011

The people admire the great emperor Maveli and remember him every year during Onam because we want his golden rule to come back. Can we achieve this? Yes, we can. If the government and people can change, if we show more love and respect to each other and if we are willing to help those in need, we can be a great state where everybody lives happily like during the time of Maveli.

more than 700 CBSE schools improved its already strong educational base. In my opinion while Kerala had more progressive socialistic governments, a private capitalistic investment base cropped up in Kerala with the support and knowledge of the government. Contrary to the story of crabs from Kerala being exported without caps for the containers since each crab will pull other crabs’ leg without letting them go out, I say, the people of Kerala help each other, concerned about others and are very friendly. They display the biggest tolerance for religious views and do not mix religion with personal friendship and relationships. The people admire the great emperor Maveli and remember him every year during Onam because we want his golden rule to come back. Can we achieve this? Yes, we can. If the government and people can change, if we show more love and respect to each other and if we are willing to help those in need, we can be a great state where everybody lives happily like during the time of Maveli. I wish all a Happy Onam!

19 Passline News Service

Anna Properties, the realty wing of the famed Anna Group, is building a highprofile superluxury villas complex near Lakeshore Hospital at Panangad, near Kochi. The Rs 22-crore project named Eden Garden is akin to the Western style of living in posh villas and costs Rs 60 lakh to Rs 1.8 crore each.

Western-style villas from

Anna Properties

When the economy of the country was going through a difficult period following the recession, the realty sector too had a harrowing time. Unable to cope with the situation, some left the scene in search of greener pastures. Some others abandoned the field in the name of diversification and a few existing ones put a break to their projects and are languishing. It was during these trying times that Anna Properties ventured into the field announcing a novel method of changing the lifestyle of Malayalis. Many were sceptical about the sector achieving any growth. But this did not deter Mr Dileep Jose, Chief Executive Officer (CEO) of the firm, from going ahead with his project. Customers warmly welcomed the ‘limited-edition’ project with most of the 28 villas in it having already been booked. By year-end the villas will be handed over. The young and energetic entrepreneur Dileep Jose’s guts and confidence that enabled him to climb the steps of success entered the real estate sector by a strange quirk of fate. Initially it was property development that he focused on. Then he moved into construction. Till now four projects, all budget ones, have been completed. It was the desire to do something different that made him think of building high-end villas. After months of planning he prepared the blueprint of Eden Garden, which is spread on a 2.5-acre site.

Sitting inside, residents can watch each movement outside the villas through special cameras. It is possible to watch the outside activities of children and their talks with people through these cameras. From the main entrance, everything is under the control of the camera. There is provision for seeing guests from inside the house and giving the necessary instructions to let them in. If guests are not to be invited inside, arrangements can be made to have talks with them in the lounges. There are also strict arrangements for preventing strangers from getting inside the complex. Eden Garden will be active till late at night. Kids and the aged can assemble, talk or play during the time. As the bulbs are arranged in such a way as to flash the light to the floors there is no disturbance caused to those in other villas during parties etc. The swimming pool is built in such a way as the whole family can use it conveniently. There are separate tim-

Eden Garden is a world of wonders, a dream world. It offers those who wish to enjoy every minute of their life everything—yes, almost: indoor swimming pool, clubhouse, gymnasium, playgrounds for children and adults, shuttle court, video game room, CCTV camera, high-end video system room, door camera, intercom… For those who crave Western-style living, Eden Garden is the place. There are strict security and vigilance measures adopted here. “We are selecting a negative-model marketing system for the project. It is its drawbacks that are projected to customers first. Initially customers may be reluctant. Later, thinking of the proud status living in such villas may bring them, they will become eager to own one. This has been the experience we have had”, says Mr Dileep Jose. As the occupants of the villas are people who follow the same living styles and status, the company is able to fulfil the main purpose of the project. For five years, occupants are not allowed to undertake any repair work or alterations either inside the villas or on the frontage. Landscaping is fully done by the company. No fresh plants and also pets will be allowed in. There is a special area meant for clothes lines. To those clients who complain that if there is no freedom to plant even a hibiscus on their own yards after spending crores of rupees what freedom they enjoy, the CEO has a clear answer: “If one plants a jasmine on one’s yard the neighbour may plant a jackfruit sapling on his/hers. Later when the branches of these plants/trees stretch out to or fall on other villas, quarrels may occur, leading to the project losing its charm. But alterations can be effected if the residents’ association comes to a consensus.”

ings for men and women and shallow spaces for children.

Dileep Jose

There won’t be walls around and gates for villas. Instead, it will be dwarf iron fencing that will decide the boundaries. In cases where occupants go abroad after buying their villas, a special team of workers will be deployed to maintain them and nurse the gardens. It will be underground cabling for electrical work. Facilities like 24-hour security, guest car parking, utility bill payment, driver’s rest room, caretaker, LPG supply through pipes, power transformer, solar water heater etc will be available in the villas. “Another project of Anna Properties is Queenslands, coming up near Amrita Hospital at Edappally. As a builder my aspiration is to build a few quality housing projects, projects with a rural touch and background having pocket roads, ponds, wells etc’’, reveals Mr Dileep Jose. -Response Feature

The villas are so designed as to suit the tastes of kids, the youth and the aged. From the entrance the conveniences offered are strikingly different from those available in other such projects. Either side of the 300-foot road is lined with majestic paving tiles. And Cuban palms are used as ornamental trees. The 28-foot-high Royal and Cuban farms are imported. PASSLINE

August 31-September 30, 2011

Passline News Service

through managing the factory, to the present generation.

reek mythology has influenced tremendously Indian as well as Kerala culture, history religion, philosophy, literature and even business. Orion is a stubborn warrior of energy in Greek mythology. This may be the reason why astronomers gave that name – Orion – to a constellation of stars discovered by them.

The city of Kozhikode, even while upholding its history and heritage, keeps pace with modernity. Through his Orion battery enterprise, Babu is contributing his mite not only to the industrial development of Kozhikode but also to the industrial growth of Kerala in general.

Attracted by the name of that mythological icon, here, in Kerala, an entrepreneur is competing with the monopoly of the international businesses with his hard work, ability and experience. That entrepreneur is Poovattuparamba Manaparambil Babu, also known as M P Babu, the founder-mentor of Orion, the company that manufactures automotive and tubular batteries. The facility is located at Poovattuparamba in Kozhikode. Having started in 2002 on a shoestring budget, Babu has proved his mettle through his establishment, Orion, that we can manufacture automotive batteries in Kerala. He succeeded in putting together a dedicated and hardworking team of youth to achieve his goal. He has also proved that the inner power of humans can be converted into energy by training and hard work. This is a message he conveys,

The vision and mission of Babu, the son of a small trader, to manufacture automotive battery has elevated him to the present status. Today, Orion manufactures and markets a whole gamut of automotive and tubular batteries – right from small-car batteries to heavy-duty storage batteries. Orion claims to manufacture the best in SLI and tubular power solutions – no power breaks, no heartbreaks. The Orion EL tubular battery, available in 100, 150 and 200 capacities, is a true blessing when it comes to providing non-stop power. A 48-month replacement guarantee is one of the features of Orion EL. The applications of Orion EL tubular battery include power backup solutions for EPABXs, elevators, hospitals, hotels, laboratories, alarms, UPS, and wind and solar power systems. Leaving his work at the feet of God, shedding stale notions and practices, Babu believes that sheer ability and effort can bring fortune to life. In fact, his life is a message to the posterity. Sitting in his factory at Poovattuparamba in Kozhikode, Babu tells Passline the paths he has traversed, which could be an example for others.

Excerpts from the conversation with Babu: “I am a B Sc degree holder in chemistry. After graduation, I worked in a few fields. During that time, I applied to an entrepreneurship development programme, responding to an advertisement in the newspapers, published by the Department of Industries. I was selected for the programme, conducted by the Kerala Industrial Technical Consultancy Organisation (KITCO) and was given one-week training as part of the programme. “At that time, my uncle (mother’s brother), my elder brother and younger brother were engaged in the work of battery refitting. The key part for the battery, the electrode, was then brought from Mumbai. Sometimes I used to accompany them on electrical goods shopping. A pertinent question rose in me: “Why can’t we make the product in Kerala itself? Those trips and the questions I asked them enlightened me regarding product identification. “Product identification cleared the way for its manufacturing in Kerala. I searched for possibilities of manufacturing battery, or plate. Meanwhile, I tried to gain the technological know-how at the national-level. I contacted the District Industrial Centre (DIC) and the Central Technical Consultancy Organisation, which asked me to contact the National Research Development Corporation (NRDC) to get the details. I wrote to the NRDC asking for the know-how to manufacture battery plate. The NRDC invited me to a face-to-face meeting. The Central Electro-Research Technical Institute develops and transfers the battery technology. With the remittance of a lump-sum premium, I received the technical know-how to manufacture battery. “My plan was to make battery plate at the initial stage. When I approached the Kerala Financial Corporation the organisation told me about a defunct unit in the mini-industrial estate in Kozhikode, which had been started with the KFC loan and closed as a result of mismanagement. At the instance of the KFC officials, I met the owner of the closed unit and

PASSLINE

August 31-September 30, 2011

21 he consented to start the unit without demanding any return.I arranged some bank loan, too. Then I strted the battery grid making by merely igniting coconut shells. This was the first step in launching of the factory.” So, it was the vision of this entrepreneur that culminated in the manufacturing of automotive battery, by starting out with burning coconut shells. Babu got the manpower for his factory from an underdeveloped area like Poovattuparamba. Some who were qualified below the 10th standard were trained and encouraged to do the job, thus enabling Babu to fulfill his dream. The focus was mainly on technical knowhow and not just on production. The team was trained and made aware of the developments and innovations in the particular field, to be used then as well as in future. Even some working hours were utilised to train the team. It is a team consisting of seven leaders, and their knowledge, skill and experience catapulted the company to its present status. Now, the company has an investment of about Rs 2 crore and a workforce of over 50 people who are employed directly. This is how Babu is making high-quality batteries of global standard. Babu avers that there is only one technology for lead-acid battery in the world – that is the technology of merging lead oxide and sulphuric acid. Whether it is multinational or domestic company, the technology is the same. However, in order to make the battery maintenance-free and of high business volume, multinational companies make slight variations in their lead alloy by using automatic machinery. Apart from this, there is no difference in quality and processing.

M P Babu – saga of sheer grit and hard work T

he Orion battery enterprise is captained by M P Babu, one of the few trained and certified people at the helm of battery manufacturing business in the country. Babu is one of the five children of a trader in Kozhikode. After graduating from Government Arts and Science College, under Calicut University, Babu joined the Central Electro-Chemical Research Institute (CECRI), a wing of the National Research Development Corporation (NRDC), New Delhi, and gained professional expertise in battery manufacturing. He has a composite experience of 20 years in lead-acid battery manufacturing. Babu won the Best Entrepreneur Award of Kozhikode district for 2006-07 and was the only participant from Kerala at the 13th Asian Battery Conference held in Macau, China, in 2009. He was also the lone invitee from Kerala to the 12th European Battery Conference held in Turkey in 2010. Babu is an avid participant in entrepreneurial development programmes conducted by KITCO, STED, NIT, SIDBI, and DIC. A keen follower of the emerging trends and breakthroughs in the industry, Babu is regarded as an expert in the field. Despite his hectic schedule in battery production and marketing, Babu finds time to spend with his family. His wife, Mini, is an Inspector in Central Excise. They have two school-going sons. The elder son, Akash, is studying in the 10th standard, and the younger one, Souhred, is in the 4th standard. Babu says it was Mini who suggested the name Orion for the company.

Battery making is the process that requires constant vigil, attention and security. Orion is always alert in providing security gadgets like jackets, masks, gloves, etc, for the workers, apart from security in the workplace. Measures have also been adopted to take care of the workers’ health. The workers are given opportunities for rest and entertainment.

vested in the project, which will have the capacity to make 25,000 batteries of various kinds a month.

Review meetings of the workers and administrative staff are held once in a week to assess the performance of the company and the teams.

In its persistent pursuit for perfection, recognition is just a natural result for Team Orion.

Steps have also been taken to provide a clean environment – with facilities for air purification and recycling of wastewater and other wastes. The high-quality Orion products are popular in Kerala and Tamil Nadu. Babu says that he plans to spread the products’ popularity to other states. Within the next two years, he aims to set up a modern plant that would make products for all of South India. Orion has acquired a plot in the SIDCO estate for a fully automatic manufacturing plant at Moodadi to meet the growing demand in the market. When the plant starts functioning there, the present factory-office will become Orion’s corporate office. With the opening of the new plant, batteries for heavy vehicles also will be manufactured. Nearly Rs 15 crore will be in-

Orion is perhaps the only company among battery manufacturers in Kerala that remits Central Excise duty. Moreover, Orion is the only unit in the MSME sector that has largest share in the battery market.

Ever since its inception, many awards and recognitions have come in Orion’s way. The company was awarded the ISO 9001-2008 certification for adopting excellent administrative practices within three years of its inception. The company also won the best entrepreneur award, instituted by the Ministry of Industries, Government of Kerala, in 2007. The Kerala State Pollution Control Board has lauded Orion’s efforts to curb pollution. A public-interest campaign is in the pipeline to educate users on the need for proper recycling of scrap batteries. Also, there is plan to set up an academic establishment to impart knowledge in automotive battery technology, where world-famous experts in battery technology and alternative energy will lead classes. Team Orion’s motto is to set newer, higher standards in every department of battery making. -Response Feature

PASSLINE

August 31-September 30, 2011

22 M

r V George Antony, Country Head–India, the UAE Exchange Group, was instrumental in setting up and growing the UAE Exchange Centre Liaison Office, UAE Exchange & Financial Services Ltd, UAE Exchange & Finance Ltd and XM Software Solutions Pvt Ltd.

Mr V George Antony Country Head–India, UAE Exchange

Mr Antony’s 30 years’ career in management began in 1981 with Catholic Syrian Bank. In 1982, he joined UAE Exchange Centre at Abu Dhabi in its second year of operations. From then on, there was no looking back. This humble beginning brought him laurels all through his career while working in various capacities within the company. His straightforward and practical solutions to issues have always been an inspiration for budding managers. His simple nature, his array of experience and acumen of managing things have been rightly rewarded. He is presently the Country Head of the Indian operations of the company. A member of the Managing Committee of the Kerala Management Association, he is the Chairman of the Committee for Management Students Forum of the KMA for 2011-2012. In his fifties, Mr Antony is very active and regular in his morning walks which keep his mind young and energetic. At home, his pillar of strength is his wife Shirly George. They are blessed with three children—Paul George, Anto George and Minnu George. In his talk with PASSLINE he shares his views and thoughts on several issues:

Your first job? What did you learn from it? My 30 years’ career in management began with a year’s experience at Catholic Syrian Bank, India, in 1981. Basics of banking which I learned during the period helped me with knowledge when I went abroad and joined UAE Exchange in 1982.

How did you prepare yourself to become a CEO? It has to evolve on its own by working and experience.

PASSLINE

Your area of focus and ethics in the business? As a businessman, my main area of focus is on profits. Along with it, I focus on HR, IT and network. Ethics to me means discipline and perfection in all that we do, integrity, self-discipline and delivery of the best-quality service.

How do you act as a team leader? I don’t do anything special for it; it has evolved from the style of functioning.

Memorable moments in your life? Charity. When I help the poor and the needy.

Things you love to do in your leisure? In my leisure I like to go for walking or driving which keeps my mind young and energetic. I love reading also.

Your family? My family consists of six members: my mother, wife, three children and myself. Two children are engineering students in Bangalore and one is going to school.

The gadgets in your possession and those you would like to add? A mobile is the only gadget which is in my possession presently. I don’t wish to add any more for the time being.

The car which you own now and the next one you love to buy? Mercedez Benz.

The best holiday spot in your life? Your dreams and aspirations? The best holiday spot in my life is my own outhouse at Aluva. My dream is farming as I find a passion in it.

Tips to the up-and-coming entrepreneurs? Be focused and committed and work confidently in whatever you have decided to do.

August 31-September 30, 2011

TAX TOOLS

Survey, search and seizure under Income Tax Act F

By Bobby John Pulickaparambil

iscal statute always provides for mechanisms to unearth tax evasions. The provisions for survey, search and seizure under the Income Tax Act are said to belong to this category. These are not a punishment in itself as popularly understood, but only tools to find out tax evasion. The recent income tax searches on the premises of certain well-known persons have evoked a general interest in the subject. Section 133A of the Income Tax Act deals with powers of survey. It says that an income tax authority may enter any place within his jurisdiction or place at which a business or profession is carried on by a person within his jurisdiction and ask the person in charge to facilitate the inspection of books of account and to furnish any relevant information. He can also verify the cash, stock or other valuable article or thing that may found therein. However, the Income tax authority may enter any place of business or profession only during the hours at which such place is open for the conduct of the business or profession, and, in the case of any other place, only after sunrise and before sunset.

The power of search seizure allows a serious invasion upon the rights of privacy of a taxpayer. Therefore, the said power should be exercised strictly in accordance with law and only for the purpose for which the law authorise it to be exercised.

Though there is a restriction in the provision that the authority may enter the premises during business hours only, there is no bar to continue the survey even after the business hours. The income tax authority can impound and retain books of account or other documents. But, retention of books or documents for more than 10 days requires the approval of the Chief Commissioner or Director-General. The authority can make an inventory of any cash, stock or other valuable article or thing checked or verified by them. He may also record the statement of any person that may be relevant to any proceeding under the Income Tax Act. But, the statement recorded during survey does not carry much evidentiary value unlike the statement recorded during search. Further, the tax authority can seek relevant information regarding the expenditure incurred by an assessee in connection with any function, ceremony or event. The purpose of the survey is to gather information useful for checking tax evasion. Hence no prior notice to the affected person is required for conducting survey. Information gathered from the survey can be used for making addition in assessment. Search is another mechanism for unearthing tax evasion. Search means a through inspection of the place. Section 132 of the Income Tax Act says that an authorised officer can enter any building, place vessel, vehicle or aircraft if he has reason to suspect that such books of account, document, money, valuable article, etc, are kept there. He can also break open the lock if key is not available. He can also search any person. PASSLINE

Further, the officer can require the person in possession of the same to facilitate the inspection of the same. The officer can seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search. But, the articles found as the stock in trade of the business cannot be seized. Search should be completed within a reasonable time. Statement recorded during search can be used as evidence in further proceedings. However, no attempt should be made to obtain confession about the undisclosed income. The assistance of police may be availed of for the search. Any person, including a non-resident Indian, can be searched. The search warrant should be in the prescribed form, duly filled,

search is mala fide is on the person challenging it. However, the issuing authority must satisfy the court that there was prima facie reason to believe that the required conditions for search are satisfied. Search and seizure are more stringent measures than survey. Seizure means taking possession of things under the authority of law. Search need not precede seizure. In other words, seizure without search would be legal in appropriate cases. There is a presumption that materials recovered from the possession of a person shall be owned by him. However, this presumption can be rebutted by adducing sufficient evidence. The CBDT has issued guidelines for seizure of ornaments in the course of search. Accordingly, there shall be no seizure of gold ornaments to the extent of 500 gm per married woman, 250 gm per unmarried, woman and 100 gm per male member of the family. Sometimes the provisions for survey, search and seizure may be misused for harassing persons. The Supreme Court has time and again deprecated such practices. The court has laid down certain principles to examine the validity of any warrant of search and seizure. The court has held that, if the action is maliciously taken or power is exercised for a collateral purpose, it is liable to be struck down. The power of search seizure allows a serious invasion upon the rights of privacy of a taxpayer. Therefore, the said power should be exercised strictly in accordance with law and only for the purpose for which the law authorise it to be exercised.

signed and stamped by the competent authority. The warrant of authorisation should mention the name of the person in respect of whom it is being issued and cannot be left blank for the searching authority to fill it. There are instances where blank warrant of authorisation has been issued. Signing such blank warrants makes the search illegal. Moreover, it is against the very purpose of procedural safeguards guaranteed in the Act. The validity of search warrant can be challenged in a competent court of law. The burden to prove that the authorisation of August 31-September 30, 2011

No doubt, the Income tax Act gives vast powers to the tax authority to survey, search and seizure. This may be criticised as draconian powers, interfering with personal right, privacy, etc, of a person. But, at the same time, it should be remembered that such powers are necessary for checking tax evasion. India is regarded as one of the countries in which tax evasion is very high and there is a huge inflow of black money. In fact, the existence of parallel economy due to this black money and large-scale tax evasion is a serious threat to our economic growth. Therefore, the stringent powers to unearth and check tax evasion are essential. At the same time, the government should ensure that the officers exercising such vast powers are acting within the purview of law and complying with the procedural safeguards.

STOCK

Passline News Service

owadays, the premises of plush broking houses are almost deserted. A month or two ago, they were crowded with jubilant retail investors who were calculating their earnings and discussing the future of their favourite shares as well as the Indian and global economy.

“

Global and domestic happenings will influence the market to some extend, but the main cause for the latest downfall of market is immaturity of the investors. Retail investors totally rely on the tips instead of looking at the fundamentals of the companies. The media is playing a major role in this by giving tips to the investors, and most of these tips are incorrect. Most retail investors, who are in a majority, go by these tips and eventually lose their money.

”

retail investors, who are in a majority, go by these tips and eventually lose their money.”

uct for daily use, the value of which will never diminish because the market for the toothpaste will “A good investor,” never come down. SBI asserts Bhuvanendran, is the third largest “should focus on the core areas of the invest- Bhuvanendran bank in the world, with thousands of ing company and not on branches and billions of rupees the scrips of that company. The stock will be volatile always for as net worth. Indian companies

fundamentally stronger than foreign companies to invest. There are Kerala-based companies like Muthoot, Manappuram, VGuard and SIB – which are growing fast and these are opportunities at our doorstep.”

According to Bhuvanendran, an investment of Rs 10,000 in Wipro shares 30 years ago should have fetched Rs 485 crore now; (see box) same Now the trading is the case of Infosyis and Rs 10,000 invested in 100 shares of Wipro in 1980 undergone volume of most of the other Indian blue chip comthe following process broking houses have panies. Our people should plummeted and their reduce spending, particuYear Process Shares Year Process Shares margins are at stake. larly for luxury items, and 1981 Bonus 1:1 200 1985 Bonus 1:1 400 What are the reasons cultivate the investment for this? Are the crises 1986 Split to FV 10 4000 1987 Bonus 1:1 8000 habit. There are a lot of in the United States, malls and big hotels com1989 Bonus 1:1 16000 1992 Bonus 1:1 32000 Europe and West Asia ing up that can empty the 1995 Bonus 1:1 64000 1997 Bonus 1:2 192000 to blame? Or, are the pockets of the middle-class domestic, economic, 1999 Split to FV 2 960000 2004 Bonus 1:2 2880000 and the disposable-inpolitical or social iscome group. We must be 2005 Bonus 1:1 5760000 2010 Bonus 3:2 9600000 sues the culprits? careful about it, otherwise, and grown to Rs 435 Crores ( 96,00,000 shares x Price of one share) within a short time, India These issues may also will be caught in the make a scar on the skin of the reasons other than the like Maruti and Mahindra, or the debt trap like the developed Indian economy, but will not pen- company’s strength. If a person blue chip IT companies all are countries in the West. etrate into the flesh and cause is ready for a long-time investfatal injuries. ment, he will never burn his finWho are responsible for the gers. Only the long-term and recent plight of our stock mar- systematic investors stand to ket? In fact, we are to blame: the gain. You take any available inmajority of retail investors who vestment opportunities, or operalways depend on tips, specu- ate a business venture of your lations and easy money. own – all have risk factors. But, How can one become a in stock investment, you will have smart, intelligent investor? some hidden advantages: you Bhuvanendran, CEO of Hedge can invest in different companies Equities, says: “No expertise or depending on the strength of the help is needed to assess the company as well as your capacsituation. A person having mini- ity. This need not require expermum intelligence and ability for tise on your part to look after your observation of surroundings can investment in a company since easily become a good investor there are experts and professionwithout draining his/her assets.” als in that particular company to make sure that your investment According to Bhuvanendran, grows. On the contrary, in own “global and domestic happenventure, one must work hard to ings will influence the market to get profit and should appoint exsome extend, but the main perts. If an investor is a good cause for the latest downfall of observer of the surroundings, he market is immaturity of the inwill certainly survive.” vestors. Retail investors totally Bhuvanendran believes that rely on the tips instead of lookthere are opportunities for us in ing at the fundamentals of the the US imbroglio. He continues: companies. The media is play“We need not invest in foreign ing a major role in this by giving companies. Take the case of tips to the investors, and most Colgate – toothpaste is a prodof these tips are incorrect. Most PASSLINE

August 31-September 30, 2011

BONDS

Akshay Agarwal

Companies are increasingly looking at the NCD route – a market that had not seen much action for many years, but was quite popular in the 80’s and 90’s. Some of the other prominent companies that raised funds through this route or through FDs in the not-so-distance past are Tata Motors, L&T Finance, Sriram group, and India Infoline.

are making a comeback

fter a long time, investors are seeing the return of non-convertible debentures (NCDs). The good thing is that two Keralabased companies are among the larger issuers of NCDs and they are both from the same industry: Gold loan – the Manappuram and the Muthoot groups. Thanks to the downturn in the markets in 2008 and now in 2011, companies are increasingly looking at the NCD route – a market that had not seen much action for many years, but was

We have often noticed that when markets are down, promoters prefer to issue bonds, and not shares. The reason is quite often that when markets are down, investors typically prefer to avoid investing in shares and opt for the low risk (and low returns)

quite popular in the 80’s and 90’s. Some of the other prominent companies that raised funds through this route or through FDs in the not-so-distance past are Tata Motors, L&T Finance, Sriram group, and India Infoline.

Let’s look at the features of NCDs: When companies want to raise money, they can do so using two different ways – by selling shares of the company at prices related to their market prices or by raising capital through debt instruments like bonds or NCDs. While both these routes result in the company raising the required capital, they have their own advantages and disadvantages. While the issue of shares ends up increasing the paid-up capital of the company, and, thus, increasing the cost of serving the equity capital, the issue of NCDs ends up putting a debt burden on the company. Generally, servicing debt is considered cheaper than serving equity since interest, being an expense in the hands of the company, is deducted from the profits, and the company has to pay taxes on the net profit after interest. In the case of dividend, it is paid on post-tax profits, after the company has already paid a 33% tax. To add to it, while it is free in the hands of the receiver, the company also pays a 15% dividend tax – thus making dividends expensive.

service the debt, as the cost of debt is less than the returns it expects to make from its investments. 2. When the company requires short-term funds for expanding the business (instead of using the money raised to fund long-term assets.) 3. When promoters feel that the current prices do not really justify the true value of the company, they prefer to go for debt rather than issue shares at low prices.

Let’s apply the above situation to both Muthoot and Manappuram: 1. Both the companies are wellcapitalised. They generate returns well in excess of 22%, so it makes sense for them to borrow at 12%-13% and lend at 21%-24% – an arbitrage of over 10% a year!

generally secured with the assets of the company. 3. No TDS on interest of NCDs, unlike that from FD. 4. Depending on the movement of interest rates, there could be scope for capital gains. As a general trend, we have often noticed that when markets are down, promoters prefer to issue bonds, and not shares. The reason is quite often that when markets are down, investors typically prefer to avoid investing in shares and opt for the low risk (and low returns) that debt instruments give. Similarly, when markets are high, investors are attracted by the high return on equities and prefer to invest there rather than in debt.

2. Both companies are in a race to increase the total book size of their loan book and to expand the business. Since they are in the service sector, there is no investment in long-term assets like plant and machinery or land, and gold loans are typically shortterm. 3. With markets down for a sustained period of time, investors are averse to investing in shares and open to the safety of debt – and both the issues have been rated high by the rating agencies.

Some of the key reasons for

that debt instruments NCDs are generally preferred investing in NCDs over FD by companies in 2-3 key are: give. 1. Greater liquidity, since they are circumstances: 1. When the company is adequately capitalized and thinks that it can comfortably

listed on the stock exchanges. 2. Greater safety, since they are PASSLINE

August 31-September 30, 2011

This is a cycle seen not only in our country but also in the rest of the world. India is now going through a regime where the stock markets are down, but debt is offering excellent returns. When the interest rates in advanced countries are at sub-3% levels, India, relatively safer and growing faster, is offering a hugely higher 10%-12%. For the moment, one cannot really blame investors for preferring to invest in debt. And if that is what they want, that is what they are getting. And, no one is complaining! (The author is MD of Acumen Capital Markets India Limited, Kochi, and can be contacted at akshay@acmlmail.com.)

LIQUID FUNDS

Gold ETFs, liquid funds shining By A Special Correspondent

he skyrocketing price of gold has dug holes in the bourses, and the stock markets are crumbling. Investors searching for greener pastures are finding gold and gold ETF as an alternative source of investment. Giving an attractive annual return of 42%43% to the investors, gold ETFs turn out to be the saviour in the mutual fund industry. And, along with this, liquid funds too play a major role. Now, liquid funds give 8%-9 % returns, while Savings Bank account, a similar product, gives only 3.5%-4 % returns. According to AMFI data during June and July 2011, ETFs and liquid funds saved the weak mutual fund industry from a total crash, by showing an annual growth of 210 % and 71%, respectively. At the same time, the equity funds show a negative growth of 6.5%.

As the Indian share market is going through a heavy crash, most of the equity funds give single-digit returns. Since the number of loss-making funds is increasing, the investors keep off different types of equity funds, and this affects the industry as a whole. At the same time, the good returns offered by gold ETFs and liquid funds attract the investors. In the current scenario, gold ETFs are considered as one of the most profitable investments since the price of gold is increasing drastically. All funds give annualized returns of 40% and above. The number of gold ETFs present in India has almost doubled in the last one year. There are a total of 11 gold ETFs currently in India, and 4 out of them were launched a year ago. The major change in this sector has been the reduction in the expenses that the fund managers charge from their customers, and now you can see that almost all of them are on the same footing.

It is the same as the trading in the stock market. You will be trading the gold using the demat account online. Instead of buying physical gold, you will be buying gold in paper form. To trade gold ETF, you must have a demat account. You can buy gold in units in the same way you buy the shares. Usually, one unit means the price of one gram or half a gram of gold. So, you can start investing in gold ETF even with Rs 1400-2700.

bank Fixed Deposit (FD). A recent study conducted by Crisil Fund Services found liquid funds to be an attractive alternative to the retail investors for parking funds lying idle in their Savings Bank accounts. Liquid funds offer higher post-tax returns and provide a reasonable degree of safety in terms of the principal invested.

For example, if you are investing Rs 20,000, gold will be allotted in multiple units for Rs 20,000. It will be allowed at the prevailing market value of gold. A number of people have shown interest in setting up an SIP in gold ETFs. See the return given by gold ETF companies

Over the last 5 years, liquid funds have given annualized post-tax returns of 5.78% as compared to 2.5% given by Savings Bank account. Despite this disparity in returns, a majority of Indians continue to park a large amount of funds in Savings Bank accounts. As of March 31, 2010, money in such accounts in scheduled commercial banks stood at Rs 11.36 trillion.

during the last one year. (See Table gold ETF).

Beyond returns, liquid funds also have advantages in terms of liquidity,

Gold ETFs Fund name

1 yr return(%)

Mutual funds asset base grows by 3.3%

Reliance Gold Exchange Traded Fund - Dividend

43.6453

UTI Gold Exchange Traded Fund

43.5645

Kotak Gold ETF

43.5582

After experiencing negative growth in the average Assets Under Management (AUM) in June and July 2011, in August it was finally good news for the mutual fund industry with the AUM growing by 3.30%.

Quantum Gold Exchange Traded Fund - Growth

43.5408

SBI Gold Exchange Traded Scheme

43.4995

Religare Gold Exchange Traded Fund

43.4862

The average Assets Under Management of the industry increased to Rs 6.87 lakh crore in August 2011 from Rs 6.65 lakh crore in July 2011. The Reliance Mutual Fund house continues to be the biggest fund house in the country, with Assets Under Management of Rs 1.04 lakh crore. HDFC is the second biggest, with an AUM of Rs 90,178 crore. Of the 43 fund houses, about 10 have seen a drop in their AUM.

HDFC Gold Exchange Traded Fund

43.1065

GS Gold BeES

42.8936

ICICI Prudential Gold Exchange Traded Fund

42.6789

Better than bank FD Liquid fund attracted investors with high liquidity and returns. The liquid fund is a debt fund similar to a Savings Bank (SB) account, and whenever you want, you can withdraw money. As the interest rate has increased, many funds give 8%9% returns. Considering the income tax benefits too, it is more attractive than a Company

Of the top 5 fund houses, HDFC has recorded the highest growth at 6.5%, followed by Birla Sun Life at 4.36%, UTI at 3.16%, Reliance at 2.28%, and ICICI Prudential asset base moving up by 0.08%. PASSLINE

AUM

Reliance

10453121

HDFC

9017674

ICICI

6876863

Birla Sunlife

6421751

UTI

6417280

August 31-September 30, 2011

safety and portability. They can be redeemed within 24 hours and have no exit load. Most liquid fund schemes are also

highly rated funds. Within liquid funds, the dividend option is more tax-efficient. This option would be more suitable for investors who fall within the 20% and 30% tax bracket, as it attracts a lower dividend distribution tax of 12.5%. Post-tax deducGrowth % tions, liquid funds yield bet2.28 ter returns as compared to 6.56 Savings Bank account and fixed deposits, wherein the 0.08 interest earned is taxed 4.36 based on an individualâ&#x20AC;&#x2122;s tax 3.16 slab.

INSURANCE

By A Special Correspondent

nsurance companies and policies are dime a dozen these days. Among the companies, both domestic and foreign ones are vying with each other to do brisk business. In the race to lure more investors in the segment, new types of policies are in the pipeline, which tend to confuse the aspirants in deciding as to which or what are suitable for them. Apart from the traditional policies like the life endowment and money-back polices, there are a number of insurance policies that contain low premium and high returns for the family or the dependants. This write-up is a peep into a couple of such policies. Can you spend Rs 6,000 yearly (Rs 500 monthly)? Then you can ensure Rs 50 lakh life coverage for next 20 to 25 years. It is the rate of private companies. If you want a policy from the most trusted Life Insurance Company of India (LIC), then pay Rs 14,600 yearly and get 50-lakh coverage. (See the table).

Just Rs 500 monthly premium for life coverage of Rs 50 lakh Term plans are pure insurance policies and they are the cheapest one. But, there is one thing to remember: The benefit is provided only on the demise of the insured. If the insurer survives the term of coverage, he has to forego the premium paid all along, unlike endowment policies, where a lump sum is paid back to the insured on policy maturity. Term Insurance is the pure form of life insurance, which provides a stipulated cover for a certain period under contractual agreement. Term plan is simply the financial cover in case the insured dies; death claim is given to the beneficiary. With a nominal premium, you can get excellent coverage. Term plan is certainly the best means to shield your family financially. A person should get Term insurance if he has any dependants, who could be children, wife, or parents. Term plan also protects your dependants against any loan payments or liabilities you might have. The Indian insurance market has at present 23 insurance companies, each offering different benefits in their Term plans.

Term policies get more popular The term insurance segment is again seeing a renewed interest rate now, according to industry members. Term insurance policies usually account for just about 5%-10% of the total policies sold by the companies. But, there has been an increase in awareness and signs of growth in term insurance business of late, industry members say. Companies like Aegon Religare gives Rs 1 crore coverage for a monthly premium of just Rs 666. It is the rate of the online product for a 29-year-old non-smoker. It is surprising to see such low premium for such a big coverage! This is the real insurance product, which is known as Term policy. Usually, we buy policies known as endowment policy or money-back policy, which contain insurance coverage as well as investment element. Hence we opt to pay more for them.

There has been an increase in Term policy sales, especially through the internet. Companies that used to sell less than 100 Term policies a month are now selling 1,000 policies. Many companies such as Aviva, Kotak Mahindra Old Mutual Life Insurance, and Aegon Religare are launching Term policies that can be bought online. Apart from online sales, an increase in group Term plans, availed of by banks to provide cover for their consumer loans and savings bank accounts,

PASSLINE

August 31-September 30, 2011

are also reasons for the enhanced activity in the segment. When unit-linked insurance plans (ULIPs) became more popular and remunerative, the Term policy segment saw a fall in consumer interest, but now the situation is changing â&#x20AC;&#x201C; people are avoiding ULIPs. And, more and more people are opting for Term policies. After September 2010, when IRDA brought about sweeping changes in the rate structure of ULIPs, the products with lower commission became less attractive for agents to push. So ULIPs, which earlier accounted for over 80% of the sales for many insurers, comprise only 50%-60% of the sales for many players now. Hence, apart from other money-back policies, Term policies have also benefited from the ULIP crisis.

Online is the cheapest Do you want a policy? Buy it online. You can save 10 % of premium. If you buy online, you get coverage of Rs 1 crore for a premium of just Rs 666 monthly. To cover yourself from unforeseen risks in future, buy Term plans or pure insurance plans online as against those sold through paper format. Term plans sold online are cheaper as insurers pass on the cost saved on distribution (agentâ&#x20AC;&#x2122;s commission) and are loaded with features. Term plans sold online are 8%-10% cheaper than those sold through an insurance agent. Most life insurance companies have begun offering Term plans specially designed to be sold online. To push online sales, insurance companies are offering more benefits to make their online Term plans more attractive. Term plan or pure insurance policies are increasingly becoming popular with heightened awareness about the need for life insurance. Term plans do not have any investment components or maturity benefits.

PUBLIC DEBT

By K P Joseph

India and the global financial crisis T he 50

birthday of US President Barack Obama on August 4, 2011, seems to have brought bad luck not only to him but also to his country as well as the rest of the world, when the credit rating agency Standard & Poor’s lowered the rating of the United States government. The credit rating, which has stood at AAA for over 70 years, fell to AA+ on the day after the President’s birthday. The possibility of another recession, like that in 2008, from which the world was slowly recovering, brought consternation and misery across the world and played havoc with share prices. The reason for S&P lowering the credit rating was the failure of the United States government, especially Congress, to resolve the problem of raising the debt ceiling of the federal government of

$14.3 trillion effectively and speedily. The public debt of the US government is nearly the same as the entire GDP. China’s public debt is $5.7 trillion, which is 19.1% of the GDP. China has invested over a trillion dollars in US government bonds. It is not surprising that S&P lowered the credit rating. The president of S&P is Deven Sharma, an Indian, from Jharkhand. Under a US law in force since 1917, the approval of Congress is necessary to increase the amount which the government can borrow. Since the law came into force over 90 years ago, the debt ceiling has been increased no less than 102 times and serves hardly any purpose. Except on a few occasions, the debt limit used to be increased by Congress routinely and without any fuss. However, this year, the Republican Party did all it can to block the increase by August 2, when it was due, which shook the confidence of other countries in the health of the American economy. Many experts believe that the time has come for the abolition of the debt ceiling. As long ago as 1961, The New York Times wrote in an editorial, “the debt limit does not limit the debt.” It can be said that Washington, DC, should be known as Washington Debt Ceiling, instead of Washington, District of Columbia. In a recent poll, 82 % of the people found the working of US Congress not satisfactory as a result of the recent debt discussions. As there is still no improvement in employment, consumer spending, manufacturing and house and share prices in the United States, the lowering of the rating is probably justified.

ties. The governments of Greece, Ireland, Spain and Portugal are on the verge of bankruptcy. Only external aid is keeping them from going bankrupt. In Japan, the public debt is double its GDP. The austerity measures that many European countries have taken to deal with the crisis are causing frequent demonstrations and protests. Like the famous ship Titanic, the global economy seems to be going to the bottom of the sea after hitting recession. Not many people seem to be aware of how well the government in India is doing as the world is passing through the crisis. Let us compare the performance of the Indian state governments with that of the American state governments. There are laws in every state government in the United States, except in the state of Vermont, for balanced budgets. But, most of the 50 state governments are in such financial distress that they are laying off workers, freezing salaries, selling government properties – even cars – and doing all they can to cut spending. A state government has mortgaged even the legislative building for want of money. Compare this with what is happening in India. All states, except a very few, have shown revenue surplus this financial year. In spite of all the lamentations over the bad state of the Kerala government’s finances by Finance Minister K M Mani and former Finance Minister Thomas Isaac, still neither of them has found it necessary to sell the Secretariat building or the Assembly Complex. The dark economic clouds, which have been gathering over the developed countries of the Western world for some years, have a silver lining provided by the BRIC countries (Brazil, Russia, India and China), which have

Like the United States, most countries of the developed world are in serious financial difficulPASSLINE August 31-September 30, 2011

been showing astonishing rates of growth in recent years. The major reforms introduced by Deng Xiaoping in China between 1976 and 1997; the economic reforms in India in 1991 during Narasimha Rao’s rule as Prime Minister; the fall of Communism in Russia in 1991; and the major reforms in Brazil starting in 2003 by President Lula da Silva transformed the world economic scene. China has invested over a trillion dollars in US government bonds. The economic growth in India has been fantastic in recent years, though it has slowed a bit now. It should be possible for India to keep abreast of China in growth with a little more planning and effort. India will overtake China in the size of the population very soon. China’s population is aging owing to strict population control. If the Indian politicians and bureaucrats can try to promote growth like what our private sector is doing, India would do very well and catch up with China. Unfortunately, our politicians are working round the clock to give our country a bad name by ceaseless talk about corruption in government. They are succeeding very well in their campaign to depict India as one of the most corrupt countries in the world. The recent agitations over the Lokpal Bill are receiving international attention and driving away those interested in investing in India. This is, indeed, unfortunate. It is naïve, if not childish, for anyone to imagine that corruption will vanish overnight if the Lokpal Bill is made into law soon. There are several easy, practical and quick ways of dealing with corruption in government, which can be taken up simultaneously with the Lokpal legislation.

DIRECT SALE

By John T

oney chain, pyramid concept, Ponzi scheme, etc, are the various malicious names associated with network marketing. But, is network marketing really a hoax? The simple answer is: no. Network marketing is not as complex as many people think. While there are many companies which simply rip off consumers promising great results and easy money, there are also networking companies that have stood the test of time, and stand tall today because of superior products and an excellent marketing plan. What exactly is network marketing? How can you avoid getting cheated? How do you choose the right company? How can one succeed in networking? Find the answers below: Network marketing, or direct marketing, basically functions as a direct bridge between the product (via the producer)

If the business plan is so good, why do we hear reports of people getting cheated by various network marketing companies?

It is not lack of rules and regulations to control corruption but the failure to enforce them that increases corruption. A British journalist who spent many years in India said at the time of his leaving the country that, unlike what many people thought, India is not a difficult country to govern. If there is somebody to say, “Do this, it will be done.” It is a pity that now we do not have a statesman of the calibre of Sardar Patel to clean up the government. Government employees worked very hard during the time of Emergency. It is easier now to win a prize in lottery than to get a reply from any government office. Delays increase corruption. Our government employees are bright, but there is no leadership to encourage them. Good work is seldom recognised or rewarded. Bad work is not punished. The old saying ‘spare the rod and spoil the child, is very true in government. There is no space here to deal with the measures government can take im-

The misunderstood business and the consumer. It eliminates the middle parties, and thus the costs incurred because of them. A conventional product reaches the consumer through multiple levels of distribution such as producer -> wholesale distributor -> local distributor (shop owners) -> consumer, wherein various costs are added into the consumer such as marketing costs, distributor surcharge, and transportation costs. A network marketing company directly deals with the consumer, thereby not adding overheads to the cost of the product. So if the business plan is so good, why do we hear reports of people getting cheated by various network marketing companies? ‘Bad products/bad marketing plan’ sums up the answer. Phony networking companies boast of easy and fast income to their distributors without focusing on their product or marketing plan. The bottom line is that bad products don’t sell, and there is no easy

money in this world. In network marketing, just like in any other business model, one has to work hard and climb his/her way up to succeed. Success here depends on many factors such as relationship building, good quality products, and an excellent marketing plan. One should make a point to do a background check before joining any company. The right company is one that is financially stable, has a long-standing relation with its consumers, has good-quality products (as testified by actual users), and an easily understandable marketing plan (which clearly explains how you earn your income). A company that has good patented products accredited by international/Indian rating agencies makes the choice simpler. A good networking business helps one to stand on one’s own. It is a relationship business, it is a business system where each one is one’s own boss and can work out one’s own business

mediately to reduce corruption simultaneously with the promotion of the Lokpal Bill. I will give a few: Q

Timely disciplinary action is not taken in thousands of cases of corruption all over the country. As in the case of the Right to Information Act, time limits should be given for completion of disciplinary action by disciplinary authorities. If they are exceeded, suitable penal measures should be prescribed. There used to be a government rule to review the working of government employees when they attain 50 years of age or complete 30 years of service. Those whose performance is not satisfactory should be retired from service. This rule is not made use of now. It can easily be revived, with dramatic results. The last NDA government had passed a law increasing the number of Cabinet ministers in the Central and state governments from 10% of the Lok PASSLINE

Sabha or the state Assembly to 15%, mainly to help the Uttar Pradesh government that had too many ministers. So many ministers with their personal staff whose antecedents are not checked before appointment is a sure recipe to increase corruption. The Act has to be amended as early as possible and the number of ministers reduced. Q

There is much cost and time overruns in completing major projects in the Central and state governments and in the public sector. An early review will help speed up essential work and thus save large amounts. The Chinese are very good in completing projects ahead of time and within estimate. There is extensive fraud in the payment of pensions and Provident Fund in the state governments, through which thousands of crores of rupees are lost annually. This needs early attention. The MPLAD fund at the disposal of the Members of Parliament was in-

August 31-September 30, 2011

strategy. The person who introduces you to the business is called your ‘upline’. One should never join a company where the upline gets an income by just introducing you. Your upline’s income should be directly proportional to the business you generate (that is, your income); this ensures that you and your upline work as a team to meet each other’s goal. Similarly, when you introduce someone as your ‘downline’, make sure he/she is a team person, and can contribute to the success of your entire team and thus your business. The network marketing business basically involves team-building, where you seek help from others to achieve your own goal and offer your help to others to do so. Being with a good motivating team helps your business grow to new levels. Success is never guaranteed in any business, but your company and your team, including you, are the factors that make or break your networking business. creased from Rs 2 crore to Rs 5 crore recently. Many state governments also increased the MLA fund. The fund is unique to India and there are frequent allegations of financial irregularities. The Central and state governments can consider cancelling the recent increases. It will be a great day for our country when the politicians forget their petty differences and start working together to improve the image of India. Our country used to be known as the jewel in the crown during the days of the British Empire. We can easily rival China in the days to come when the developing countries go into decline. United we stand, divided we fall. Q

There is scandalous proliferation of posts at the senior levels both in the Central and state governments. The numbers will have to be reduced gradually by not appointing replacements when the present incumbents retire.

PETROLEUM PRODUCTS

By Dr M P Sukumaran Nair

Fuels: is regular price increase the only option ?

ost unexpected price increases happen every time in the case of petroleum fuels. On June 24, 2011, the Government raised the price of diesel by Rs 3 a litre, kerosene by Rs 2 a litre, and cooking gas by a steep Rs 50 a cylinder. This followed the increase of over Rs 5 a litre on petrol announced by oil marketing companies in mid-May. Again, a few days later, the Centre effected an increase of Rs 3 a litre for diesel and Rs 2 a litre for kerosene, while making LPG cylinders dearer by Rs 50. Oil marketing firms say that they are losing Rs 15.44 a litre on diesel, Rs 27.47 a litre on kerosene and Rs 381.14 on the sale of every 14.2-kg domestic LPG cylinder. In fact, the UPA Government has been trying for some time to decontrol oil prices despite the global volatility in these prices and the lack of convincing arguments in favour of such deregulation. The

.....................................

sel. The pricing structure of petroleum products (like petrol, diesel, kerosene and LPG) is such that it is the sum of the price of crude oil; refining cost plus profit; marketing and storage cost plus profit; distribution cost plus dealer profit and taxes and duties. Every time when there is a demand for an increase in the fuel prices from the public sector oil and gas companies arguing that they, in the wake of the increase in the international crude prices, are losing heavily on the income side and hence suffering decrease in profits on account of under-recovery while subsidizing mass-consumption fuels and kerosene to the underprivileged sections of society, instead of probing into realities the Minister concerned simply echoes the sentiments expressed by them. In the six months from December 2010 to June 2011, crude oil price which hovered around $92/bbl dropped to $84/bbl and then climbed to $112/bbl and thereafter declined and now remains at $92/bbl, the average price during the period being $96/bbl. The current year’s average price of the Indian basket of crude, composed of Oman-Dubai soar-grade of crude and Brent-dated sweet crude in 57:42 ratio, is around $82.07 a barrel, which is 17% more than last financial year’s average of $69.76. In the wake of the increase of over a dozen times in the fuel price ever

In the six months from December 2010 to June 2011, crude oil price which hovered around $92/bbl dropped to $84/bbl and then climbed to $112/bbl and thereafter declined and now remains at $92/ bbl, the average price during the period being $96/bbl. The current year’s average price of the Indian basket of crude, composed of Oman-Dubai soargrade of crude and Brent-dated sweet crude in 57:42 ratio, is around $82.07 a barrel, which is 17% more than last financial year’s average of $69.76. In the wake of the increase of over a dozen times in the fuel price ever since UPA II came to power, the present increase cannot be justified. Maybe the Government is cashing in on the opportunity, especially when there are no signs of elections in the near future! ..................................... ............................................ Rangarajan Committee on the pricing and taxation of petroleum products was set up in the hope that it would recommend such a move. But, the committee’s report did not really point to this conclusion; so the Government, not to be thwarted in its desire, set up yet another committee. This time it was an expert group chaired by former Planning Commission member Kirit Parikh, with the more or less explicit mandate to recommend wholeMTOE

million tonnes of oil equivalent

Bbl/d

barrels per day

metric tonne

cubic metro

BOE

barrel oil equivalent

sale liberalization of the pricing of petroleum products. The expert group duly did just that, and the Government has been quick to accept its recommendations. Based on the recommendations of the Kirit Parikh Committee, the Government of India, on June 25, 2010, announced the full deregulation of the prices of two crucial petroleum products—petrol and die-

since UPA II came to power, the present increase cannot be justified. Maybe the Government is cashing in on the opportunity, especially when there are no signs of elections in the near future! An immediate impact of the increase would be that commodity prices will tend to soar again at a time when food price inflation is already ruling high. The constituents of India’s Wholesale Price Index (WPI) are primary articles (22.02%); fuel, power, light and lubricants 14.23% (of which mineral oil 6.99%) and manufactured products 63.75%. Therefore, any major increase of the fuel price will certainly push the Consumer Price Index (CPI) upward with a largescale economic impact on all sectors and affecting almost all people. Refining profits: Whenever the price of petroleum fuel is raised, the Government says that the refining and OMCs suffer huge under-recoveries. We all know that all Indian refineries operate with substantial profits and pay rich dividends to the Government every year. None of their expansion and diversification programmes is stalled for want of required finances. Instead, the Government very often is not keen that the PSU oil companies undertake expansion and diversification programmes regularly. There PASSLINE

August 31-September 30, 2011

are occasions when these companies are advised to either pay interim additional dividend to the Government or invest the surplus in mutual funds. During the financial year 2010-11, despite increases in crude prices, refinery profits continued to rise. Usually, profit margins depend on throughput, ie volumes handled over a year and the efficiency of operations—specific consumption figures for raw materials, energy, other utilities and inputs, labour etc, and product market prices. In the case of IOC, the country’s largest refiner, during 2010-11, the net profit fell to Rs 7,445 crore from Rs 10,221 crore in the previous year. The company crossed the Rs 3-lakh-crore mark by clocking Rs 3.29-lakh crore turnover in 2010-11. The board has recommended a dividend of Rs 9.50 per share of Rs 10 each, against Rs 13 per share previously. During the 2010-11 fiscal, BPCL’s profit inched to Rs 1,546.88 crore from Rs 1,537.62 crore in the previous year. The board of directors of the company recommended dividend of Rs 14 a share of Rs 10 each for 2010-11. During 2010-11, HPCL’s net profit increased by 18% to Rs 1,539 crore from Rs 1,301 crore last year. The refiner registered a turnover of Rs 1,32,670 crore during 2010-11, against Rs 108,599 crore a year ago. The company has announced a dividend of Rs 14 per share on the face value of Rs 10. The net profit of Oil India for FY 2010-11 was Rs 2,887.73 crore as compared to Rs 2,610.52 crore during FY 2009-10, a jump of 10.62%. This was mainly due to higher realization of crude oil and natural gas price and increase in reverse pumping transportation tariff. The board of directors of Oil India Limited has recommended a final dividend of 195% for 2010-11 for approval of shareholders during the AGM. This is in addition to an interim dividend of 180% paid during the year. The total dividend of 375% is the highest declared so far by the company. The case of under-recovery is an interesting story in itself. It is the difference between import parity price and market-realized price. Here product selling price is controlled by the Government. Thus, if imported and sold in the open market, the OMCs are likely to suffer a loss. Here the situation is different. Refineries import crude and process and sell it to OMCs. In such a situation, how can they claim import parity price where there are no imports of products at all? Thus import parity price—which uses the import price of petroleum products instead of crude oil—is only a notional cost that they pay for the products they sell to the consumers and hence does not figure in their balance sheets.

India: Primary energy consumption 2010 Oil

155.5 MTOE

Natural gas

55.7 MTOE

Coal

277.6 MTOE

Nuclear

5.2 MTOE

Hydro-power

25.2 MTOE

Renewable

5.0 MTOE

Total

524.2 MTOE

This precise question was examined in 2006 by the Rangarajan Committee on pricing and taxation of petroleum fuels. It was found that there is indeed an adequate buffer to shield domestic consumers

31 from the effects of increases in international prices so long as segments that can afford to take a cut in petroleum-related revenues because they have alternative sources of resource mobilization are willing to accept such a reduction. In fact, it is precisely shared by upstream oil companies like ONGC, OIC and GAIL, as well as by the Central Government, which get customs duties and excise duties from petroleum products, and by the state governments which benefit from sales taxes. This necessitates that the oil refineries should offer discounts when selling products to the oil marketing companies (OMCs), and the Government should

reduce the taxes it levies on oil products to ease the burden on the people. However, the Government at all times opts to put the entire burden of irrational shifts in the international prices of oil on the consumer. The truth is that in India the Government extracts a net positive tax revenue from petroleum products. The oft-repeated assertion that petroleum products are subsidized in India is simply not true. The world over, refining margins –a term indicating the profits earned out of refining one barrel of crude oil into products and often calculated (in India) as the difference between the international price of Indian basket of crude and global prices of petrol –have stayed around $4-6 per barrel. In the past year, the Indian refining industry earned refining margins in the range of $7-8 per barrel as product prices increased higher than the concomitant rise in crude oil prices. On the whole, during 2009-2010, public sector petroleum companies had a turnover of Rs 6,29,817 crore, earned a net profit of Rs 18,143 crore and paid Rs 5,520 crore as dividend and Rs 7,766 crore as various taxes. Regarding RIL, a private player in the oil industry, its consolidated net profit for the fiscal ended March 2011 grew by over 27% to Rs 20,211 crore. The company had recorded a profit of Rs 15,898 crore in the previous fiscal 2009-2010, making it the second most profitable company after ONGC. It has been well admitted by many of the industry operators that the increase in price of energy products is what multiplied the refining profits. The bulk consumer segments such as fertilizer and power suffered the brunt of the price rise and their financial performances were badly affected by the price rise of primary energy resources. Though the APM in the petroleum sector has been withdrawn, the Government holds a major say, and, along with the oil companies, the Government is taxing the consumer segments badly. Energy cost is a fundamental component of the price of every product and service in our economy. Given no allowance for technological or living standard changes in an economy or other stimuli for price changes, a percentage change in price of basic fuel such as oil will ultimately lead to an equal percentage change in the price of all other products and services. The Left parties have demanded a rollback of the increased road cess (collected since 1989 under the Oil Industry (Development) Act as a duty on indig-

enously produced crude oil and natural gas), abolition of incentives for petroleum product exports and creation of a price stabilization fund to take care of future oil price shocks. Such a price stabilization fund will help to stabilize the domestic prices of one of the most important industrial raw materials like petroleum so that the ordinary public and industries would be protected from the storms in the international petroleum market. The Government is yet to consider seriously these options. To reduce the impact of the increase in fuel prices and ease the burden on the people, the Central Government should lower the import duty of crude oil and excise duty on products, equitably distribute the burden of under-recoveries among all refiners and the state governments should reduce the entry tax and sales tax components added on to petroleum fuels. These steps, together with concerted efforts by the refinery operators to increase their efficiencies and thus optimize expenditure, will help reduce the impact of soaring fuel costs to industry and the people. Good economics but bad politics: The Central Government’s decision to raise diesel prices by Rs 3, kerosene prices by Rs 2 and LPG prices by as much as Rs 50 has been in the eye of a storm for the past few days. While it was looked upon by the Opposition parties as an event which gave them an opportunity to demonstrate their muscle power against the Government, the latter, on its part, was adamant on rolling back the increase under any circumstances and conveniently passed the buck on to the states by asking them to sacrifice a portion of their increased revenues. The most amusing feature is that the controversy died down as fast as it emerged, and, as this goes to press, the Opposition seems to have forgotten about the price increase. Fortunately, we in Kerala were spared another ‘hartal’ which we were all worried about. For a student of economics, this increase may appear to be inevitable in the prevailing circumstances. The Government’s decision to release petrol from the list of ‘administered prices’ in June 2010 did evoke a lot of discussion. However, petrol users India: Energy facts 2010 Item

Proved resources

Production

Consumption

Oil 9

billion barrels

38.9 MTOE

155.5 MTOE

Refining

3.703 million

Capacity

bbls/d

45.8 ,,

55.7 ,,

216.1 ,,

277.6 ,,

Refining

3.903 million

Throughput

bbls/d

Crude import

162 million MT

Product import

16.5 million MT

Natural gas

1.5 trillion CM

LNG Import

12.5 billion CM

Coal

60600 million MT

Import

61.5 ,,

Biofuels

151000 BOE

comprise hardly 15%, and despite the petrol prices rising by nearly 23% in the past one year, its overall impact on the inflation rate is only 0.02%. At the same time, despite all these increases over the past one year, consumption of petrol has not come down one bit. The last increase in diesel was in June 2010, exactly a year ago, and, despite all the pressures from different corners for an increase, the Government somehow managed to resist all temptations to increase the diesel price purely because of political compulsions. Let us now analyse the increase in the Government’s perspective and its relevance to the economic front. Before this increase, the subsidy that was being paid to the oil marketing and distributing companies was not quite high. For every litre of diesel, the subsidy was Rs 13.72, for kerosene Rs 26.16 and for LPG a whopping Rs 381 per unit of PASSLINE

August 31-September 30, 2011

size 14.5 kg. At the current market rate of crude oil, which had been hedged for the period April-June at $108 a barrel, the oil distributors were incurring a loss of Rs 456 crore a day. During this quarter, the loss under this head is estimated at Rs 45,000 crore. Had this situation continued in the same vein, the total estimated loss for the year would be a mammoth Rs 1,66,440 crore, which any institution could ill afford. Here comes the economics aspect of the increase. Too much subsidy would now have to be provided and money set apart for development would have to be used. First, by no stretch of the imagination can we look upon subsidy as development expenditure. Second, public sector concerns which are running at a profit are compelled to bear losses in their cash flows and this would adversely affect their overall performance. One just cannot understand the vitriol that is being spewed against the public sector oil companies for trying to minimize their cash loss. All revenues from the PSUs are ploughed back into the Government. A developing country like India, which aspires to control the world by 2050, still depends on tax revenues as its most important source of revenue. In fact, the latest estimates show that nearly a quarter of our GDP is from taxes, and this is by no means a fact about which we should be proud. So the tendency to introduce taxes in one way or another is inevitable to raise revenues. Making the PAN Card compulsory for all transactions above Rs 50,000 and making the rules related to TDS more stringent are all indirect ways of maximizing tax revenues. The state governments, on their part, are evolving new types of taxes to augment their resources. What one just does not understand is that when sources of non-tax revenues shrink, the burden on the people and the corporates is only going to rise in the form of taxes. Hence, by denying the oil companies a price increase, we are, instead of paying a little more for these commodities, being overburdened with direct taxes in one form or another. What has given the courage for a price increase in these days of running inflation? The country is all set to enter the era of double-digit inflation. The May inflation rates were provisionally fixed at 9.06% though we know that the actual inflation is likely to be much more than that. Economists have worked out the cascading effect of the oil price increase on the inflation rate to be in the range of 0.2% to 0.3%. The repo and the reverse repo have been raised 10 times in the past 15 months, and this has had very little impact on the inflation rate. In the midterm assessment made in June, the RBI seems to express helplessness in its monetary instruments to control the inflation rate. Only if supplies are effectively augmented can this situation be eased. The Government has taken a cue from the frequent petrol price increases and the total lack of concern of the users of the fuel who have not reduced their consumption one bit. Now, what is the solution? This writer feels that the need of the hour is strong resistance from the consumers. The Government is confident that, despite the increase in LPG prices, the consumption of cooking gas is not going to come down at all. Already, we know people seem to have forgotten about the diesel price increase. Except for the fact that the busmen are making some weak sounds asking for an increase in fares, there does not seem to be any strong protest. The reason why this writer feels that consumers should come forward is that the people of India in general are not that much affected. The lower-income groups are assured of subsidized food grain, and it is estimated that nearly 40% of the population is economically well off. This works out to about 45 crore people. It should be remembered that, with a per capita income of Rs 54,527, the people of India are not what they were five decades ago. So a diesel price increase tends to be a more political issue than an economic one.

NEWS

32 Coir Board focuses on global market The Coir Board exported 3,21,016 tonnes of coir and coir products worth Rs 807.07 crore in the last fiscal despite severe shortage of raw materials and migration of labour besides invasion of cheap fibre products from China and several other parts of the country. The board sold coir products worth Rs 8 crore in the domestic market and received purchase orders for coir geotextiles around Rs 5 crore last fiscal. The board has been extensively carrying out various programmes to expedite export of its products under the visionary chairmanship of Mr V S Vijayaraghavan.

coir products last year without the tender process. It is also expecting an additional sale of Rs.500 crore every year through this collaboration. The board had earlier kicked off a ‘remote programme’ to help labourers in this sector by granting up to 40% as subsidy through banks to set up sophisticated factories. Under this scheme, 1,200 units all over the country received financial assistance last year. In the wake of the plane crash at Mangalapuram airport some time ago, the Coir Board has approved a Rs.115lakh project for the construction of the surface near the runway at Kozhikode’s Karippoor airport by using coir fibre. The Chairman said the project “is a great success.”

“Ther board has extended its support to small- and medium-scale exporters to get orders from foreign countries by participating along with Nod from the Central minthem in various trade confer- V S Vijayaraghavan istry for using coir geo textile ences held in foreign counin the construction of village roads is tries. Besides these, it has been grantanother achievement of the board, Mr ing a subsidy of up to 85% of the air Vijayaraghavan said.. The Ministry of ticket and other expenses through its Rural Development has included external market development scheme Kerala among the beneficiaries of the to these exporters,” Mr Vijayaraghavan scheme after constant efforts made by told PASSLINE. The board, he said, had the board and he himself. Under the assured its presence in 14 trade conPrime Minister’s ‘Grameen Sadak ferences held in eight foreign countries Yojana’ scheme, 50 km each of every last year and submitted the outcome village road will be constructed by usto the Central ministry for further foling coir geo textiles to expedite devellow-up. opment of the coir sector, the ChairOperating 31 showrooms besides man said. two sales outlets, which are under the The coir industry in the state, which banner of Hindustan Coir Factory at was reeling under acute shortage of Kalavoor to develop the domestic marlabourers and coir fibre and yarn, has ket in the country, the board has signed got revived after revolutionary changes a contract with DGS&D (Directorateoccurring under the leadership of Mr. General of Supplies and Disposals) Vijayaraghavan. which helped it to get some orders for

Sree Sakthi Q1 profit up 16% Despite a sharp rise in raw material prices, the Kochi-based Sree Sakthi Paper Mills Ltd has netted higher profits in the first quarter of fiscal 2011 as compared to the corresponding period of last year. Whereas production increased by 2% to 19619 MT during the quarter, with better realization, the company’s top line grew 13%, from Rs 43.88 crore in Q1-FY10 to Rs 49.65 crore in Q1-FY11. Cost of raw material went up by 22%, yet through various cost control measures, the company managed to post a creditable growth rate of 16.5% in its bottom line. The expansion-cummodernization of the company’s Edayar plant without any addition to equity capital is progressing according to schedule. The Krima Disperser installation is likely soon, while the Boiler-cumCogen plant is scheduled to be commissioned by October 2011. The modernization is expected to boost the company’s profitability further.

IBMC Group, Stamford Raffles College join hands IBMC Group, the international financial services conglomerate, spread across the Middle East, Asia, Europe and the UK and with its flagship financial institution JRG International Brokerage DMCC, is spreading its wings to the international business education in association with Stamford Raffles College, Singapore, to offer international MBA programme in the UAE, India, Oman and Singapore. Sajith Kumar, director and CEO of IBMC Business School, and Colin Pereira, chairman of Stamford Raffles College, Singapore, signed an MOU at a function held in Singapore in the presence of Dr George V Antony, academic advisor, IBMC Business School, Arumugam, Principal, Stamford Raffles College, and other dignitaries. IBMC Group is the first of its kind to start a business school in the Middle East and India. The international financial institutions under IBMC Group enjoy global reputation in contributing a wide range of innovative implementations and best practices to the fi-

nancial services industry. IBMC Business School, yet another remarkable initiative by IBMC Group, will be a perfect blend of industry expertise from IBMC group and the educational excellence of Stamford Raffles College, Singapore, and University of Derby, the UK – truly benefiting the young generation in business. According to Hazza Mohammed Al Dhaheri, chairman and manag-

ing director of IBMC Business, “IBMC Business School will start functioning from India, the UAE and Oman immediately, and we are happy to be in the forefront to develop quality professionals who can meet the challenges of the dynamic global business. The authentic industry presence and professional expertise held by the

Group company IBMC and the flagship financial institution JRG International Brokerage DMCC will add more value to this new venture.” Colin Felix Pereira, chairman of Stamford Raffles College, says: “We look forward to working with IBMC Group in developing Stamford Raffles College Postgraduate Management Programmes in India, Oman and the UAE. I am glad to acknowledge that IBMC shares the same passion in developing human capital that shall leave its footprint in industry and commerce.” In the words of Sajithkumar P K, director and CEO of JRG International Brokerage DMCC, “IBMC Group, being an international financial services conglomerate offering a wide range of highly advanced services through its internationally recognised financial institutions, is very committed to the investors. We have strong Corporate Social Responsibility (CSR) and are committed to empowering the younger generation with relevant knowledge and decisionmaking capabilities.”

PASSLINE

August 31-September 30, 2011

Microsoft honour for Team Frontline M icrosoft has nominated the Kochi-based Team Frontline Limited to its President’s Club, a group representing only top 5% of its enterprise solution partners worldwide. S R Nair Team Frontline is the only Kerala-based company to receive the Microsoft recognition for its “proactive efforts to catalyse enterprise solutions growth in the state by supplying and implementing Microsoft ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) solutions in many leading corporates in Kerala,” according to S R Nair, MD of Team Frontline. The announcement came from Doug Kennedy, vice-president, Microsoft Dynamics Partners, in the wake of the 2011 Microsoft Worldwide Partner Conference (WPC), the company’s annual premier partner event held in Los Angeles, the United States. “Microsoft had,” says S R Nair, “carried out performance assessment among over 250 of its enterprise solution partners in India for conferring the much-coveted President’s Club membership. The other companies to receive the top honour this year, along with Team Frontline, are Infosys, TCS and Godrej Infotech, and that makes us much more proud.” Team Frontline has a full-fledged team of Microsoft-certified ERP and CRM consultants on its rolls, including software developers for customising software solutions to suit user requirements. Many leading corporates in Kerala – including Geojit BNP Paribas Financial Services Limited, Kottakkal Arya Vaidya Sala, Nitta Gelatine Limited, KM International, Bodygear International, and Priyom Masala – are the customers of Team Frontline for these solutions.

Bright Communications gets bigger Bright Communications is set to make its presence more wide and visible to the TV and advertising fraternity with the opening of its corporate office in KSHB Building, near Malayala Manorama, at Panampilly Nagar, Kochi. For two decades, Bright Communications has been performing as a leading TV programme production company in South India. With the production and presentation of multiple TV programmes, the company has proved its acumen in the print and visual media and the advertising field. Along with the inception of Transmedia Broadcasting Studio, Business Kerala Financial Magazine, and Miniscreen, the company is all set to launch Bright Web TV and the news channel CTV. The company has made its presence conspicuous not only in the TV, newspaper, radio and advertising sectors but also in the fields of outdoor advertising and event coordination. Coir Board chairman V S Vijayaraghavan presided over the function at which Benny Behnnan inaugurated the studio.

33 Geojit Comtrade launches mobile trading platform Geojit Comtrade Limited, a leading commodity broking firm, has launched ‘FLIP ME’ – a revolutionary mobile trading platform in the Indian commodities Market to enable its clients to perform more competently in the market. Mr K V Thomas, Union Minister of State for Consumer Affairs, Food and Public Distribution, inaugurated ‘FLIP ME’ at a function held at Taj Gateway Hotel Kochi. Sheela Thomas, IAS, chairperson, Rubber Board, executed the first order. P C Cyriac, Chairman, Federal Bank, presided over the function. By launching this service, Geojit provides its customers a user-friendly method of future trading of commodities through their mobile phones. According to a company official, Geojit Comtrade is the first commodities broking firm to receive permission from NCDEX and NMCE to start mobile trading platform. This system has all the features of a normal trading platform such as market data dissemination, transactions (placement of orders) in NCDEX and NMCE for all listed derivative contracts, and market depth. Registered customers can download the application from the website www.getl.in The ‘FLIP ME’ system was developed using robust technology to provide comprehensive features for a variety of mobile users and also assures security of transaction, complying with the stipulated norms and guidelines. This service will be available on over 2,000 varieties of handsets ranging from simple Java phones to advanced Smartphones with GPRS, EDGE, Wifi or 3G as connectivity. The application is even compatible with Java phones costing as low as Rs 2,500. Advanced features are embedded for smartphone users. (for example, Touchphones). Vijayakumar Venkataraman, CBO, NCDEX, Dinesh Shukla, Senior VP, NMCE, C J George, Managing Director, Geojit BNP Paribas, C P Krishnan, Director, Geojit Comtrade Limited, and A Balakrishnan, Managing Director, Geojit Technologies Private limited, were present on the occasion.

New, stylish Swift from Maruti Customers long for new variants of cars to go with the change in lifestyle. So, Maruti Suzuki India Limited has launched the much-awaited sportier and stylish car, the all-new Swift with longer and wider platform, more fuel efficiency, improved acceleration and plush interiors. The new Swift offers best-in-class acceleration, high powerto-weight ratio and much-improved fuel efficiency. With over 140 new features, many for the first time ever in an entry-level variant, the new Swift is set to redefine once again the ‘premium compact’ car segment, a segment that Swift itself had created. Built on an all-new platform, the new Swift is longer and wider than its predecessor. The new Swift offers more kilometres to every drop of fuel: 6 % more in the diesel version, and 4% more in the petrol version. Maruti Suzuki and its suppliers have invested over Rs 550 crore to make the new Swift more vibrant and sportier. The newgeneration Swift comes with a localisation level of over 95%. The Swift is iconic and special in many ways. It entered the Indian car market and became a segment reference point, a blockbuster, by selling over 600,000 units in 6 years – thus making it by far the highestselling car in the premium compact segment. The new Swift comes at a time when there is significant demand for the existing model. The company has introduced the VVT engine technology in all petrol variants of the new Swift. The highly acclaimed DDiS engine powers the diesel variant of the new Swift. The petrol model has fuel efficiency up by 4% with 18.6 kmpl, and the diesel variant has 6% more fuel efficiency at 22.9 kmpl. Swift can attain a speed rate of 100 kmph in 12.6 seconds in the petrol version, and 100 kmph in 14.8 seconds in the diesel version. The company plans to sell, on an average, 17,000 newmodel cars a month, according to Manohar Bhat, general manager and commercial business head (south), and Mr Thomas Cheriyan, regional manager (Kerala), who attended the launching ceremony.

Melam Charities celebrates silver jubilee T he silver jubilee celebrations of Melam Charities, a charitable organisation run by the Melam Group of companies, was inaugurated by Chief Minister Oommen Chandy at a function held at the Dr Alexander Marthoma Auditorium at Thiruvalla on August 10, 2011. KPCC president Ramesh Chennithala release a souvenir in connection with the silver jubilee celebrations and SNDP Yogam general secretary Vellappally Natesan inaugurated a website. Padmasree Dr Krishnan Nair and Reflexologist Ansar were facilitated at the function by Prof. P J Kurian MP and M A Baby MLA, respectively.

The meeting was presided over by His Holiness Baselios Mar Thoma Paulose II. Anto Antony MP, Mathew T Thomas MLA, George Joseph, film director Blessy, Melam Group managing director Dr Kurian John and director Divya Ratheesh Mathew spoke. Melam Charities (Melamparambil Vargheese John Memorial Charities) has spent over Rs 25 crore so for needy patients since it started functioning in 1986. Melam Charities currently spends 50% of its profits for charity.

Chaithanya Paints – A colourful success story Chaithanya Paints, the leading paint company situated at Kureekad, near Kochi, has created an indelible market in the paint manufacturing industry in a short span of period with an array of products comprising Indoor Duke Interior Plastic Emulsion, Royal Duke Pride Exterior Emulsion, Duromax Distemper, and 24 other paint products.

competition at the initial stage. Since the paint industry has been dominated by multinational brands for many decades, the going was tough for a medium-sized company like Chaithanya Paints. However, the architects of the company focused on meeting the growing demand through quality and economy rather than focusing on growing in size and name.

Now, the highly acclaimed products The company, founded in 1986, has of Chaithanya Paints remain in the foremade great strides under the visionary L R Potti front of quality and economy. The comleadership of L R Potti, whose motto is pany has gained the ISO 9001-2001 certification. ‘products with quality only can exist.’ L R Potti, a former employee of TVS, turned to the world of It was through maintaining quality and valpaints after having gained know-how from his ues in business that Chaithanya Paints attained brother who ran a paint manufacturing unit. the position that it now occupies, in the midst of Chaithanya succeeded in finding a place in the paint industry even though it had to face stiff

Ravi Pillai to buy Leela Resorts Kovalam To ease its high debt burden, the Leela Group is all set to sell one of its marquee properties at Kovalam in Thiruvananthapuram as a part of an ongoing exercise. The property, Leela Resorts Kovalam, is being sold for Rs 500 crore to non-resident Indian (NRI) Ravi Pillai. Captain C P Krishnan Nair is the Chairman of Leela Group. However, the deal will not result in Leela exiting the property entirely. It will enter into a management contract agreement with Ravi Pillai to manage the property. Leela Resorts Kovalam, which offers a commanding view of the Arabian Sea, was originally developed by the state- run ITDC and was in need of reducing the overhang of debt. Leela Venture had accumulated a debt of Rs 3,830 crore at FY 11-end owing to the large projects it had in its kitty, including the Rs 700-crore Udaipur project. It has a project in Delhi which cost Rs 2,500 crore, and the proposed property in Chennai, with an investment of Rs 1,200 crore, is scheduled to open in December this year. PASSLINE

August 31-September 30, 2011

multinational paint companies, in its rather short span of existence.

Oberoi, RIL to float residential projects In a major boost to the partnership they forged last year, EIH Limited – which manages and owns the Oberoi and Trident chain of hotels – and Mukesh Ambani’s Reliance Industries (RIL) are looking to develop at least two properties jointly. The hospitality major will also make a foray into the luxury residential apartment segment. A new brand, Oberoi Residences, is to be floated to develop such residences. This will be under Oberoi Residences. The ‘friendly shareholder’ – as Oberoi described RIL –may be roped in for the projects in Bangalore and Goa. EIH owns 8.2 acres in Bangalore and 55 acres in Goa. The plan is for one hotel each in Bangalore and Goa and a set of luxury apartments in Bangalore. The hotels will have 250 rooms each, at a combined cost of Rs 700 crore. The apartments, of about 6,000 square feet each, would number around 60 in all. The cost of this has not been revealed. The arrangement is that RIL invest in real estate and EIH manage the property. However, Oberoi ruled out creating a separate brand for the joint properties. The promoters hold 35.4% in the company, and RIL has 14.8%.

BANKING

34 ‘Corp Bank can help Kerala augment revenue collections’ “We shall try some of the tech offerings of Corporation Bank on a pilot basis which are quite attractive for faster liquidity management of the State Government and to bring in efficiency. The bank has done a good job in technology upgradation for the benefit of customers”, said Mr V S Sivakumar, Transport and Devaswom Minister, while inaugurating the new premises of the Thiruvananthapuram Zonal Office of the bank recently. Bank General Manager B R Bhat, who presided over the function, had briefed the Minister on the bank’s various tech initiatives presently used by various state governments and Central Government institutions like CBDT and CBEC and urged him to make use of these on a pilot basis in the larger interest of efficient funds management. The Minister urged the public to make use of different deposit and loan schemes of the bank to improve their economic level and contribute to the growth of the state. He appreciated the bank’s efforts in reaching out to the ‘unreached’, a large segment of the population, which is a

major project of both the Central and state governments. Corporation Bank has 79 branches in Kerala. For reaching out to larger segments with more focus on the developmental activities of the state the bank has another Zonal Office at Kochi. The Thiruvananthapuram Zonal Office has 37 branches from six districts and Kochi 42 branches from eight. “We have increased the number of our Zonal Offices

to 31 from the earlier 19, and Thiruvananthapuram is one of them. This is in tune with the bank’s corporate plan 2011-12", said Mr Bhat. Mr K P Mohanan, CEO, Jaihind TV, Thiruvananthapuram, spoke. Mr Thomas George, Deputy Zonal Manager and Zonal Head, Thiruvananthapuram, welcomed the gathering and Mr Titus Mathew, Assistant General Manager, proposed a vote of thanks.

Kerala Transport and Devaswom Minister V S Sivakumar inaugurating the new Zonal Office premises of Corporation Bank at Thiruvananthapuram in the presence of Mr B R Bhat, General Manager of the bank, and Mr K P Mohanan, CEO, Jaihind TV, Thiruvananthapuram. Also seen is Mr Thomas George, Deputy Zonal Manager and Zonal Head, Thiruvananthapuram.

New MD for SBT Mr

P Nanda Kumaran has assumed office as the managing director of State Bank of Travancore (SBT). He was the chief general manager of SBI, Ahmedabad Circle, prior to the promotion. Nanda Kumaran, a native of Irinjalakuda in Thrissur district, started his career as a probationary officer in State Bank of India in 1975. He has held several key positions in the bank.

The decline in profit has been attributed to provision on non-performing assets (NPA) to the extent of Rs 285 crore as per RBI guidelines issued in May. The bank’s NPA rose to 1.67 per cent this quarter from 1.46 per cent in the corresponding quarter last year.

net down 17% Central Bank of India has reported a 17

taken charge as Director (Technical) of Cochin Shipyard Ltd (CSL) from Mr V Radhakrishnan, who has retired on superannuation. Mr Vinayakumar was General Manager (SSD,FP & TI) in CSL.

Indian Bank pegged the net profit at Rs 406.93 crore from Rs 368.15 crore in the first quarter of 2011 fiscal. Total business posted a growth of 21.3 per cent at Rs 1.93 lakh crore in the first quarter of 2011 against Rs 1.59 lakh crore in the corresponding quarter of last fiscal. Total income increased by 22.3 per cent by 22.3 per cent to Rs 3,030.70 crore from Rs 2,477.24 crore. The asset quality of the bank remained healthy with the gross NPA to gross advances ratio declining to below one per cent (0.98 per cent) from 1.45 per cent as at June 30,2010. The net NPA to net advances ratio also declined to 0.51 per cent from 0.76 per cent.

Q1 profit soars 21%

per cent fall in its net profit for the first quarter ending June 30,2011 to Rs 281 crore on the back of higher provisioning requirements on assets prompted by revised rules, treasury operations and pension liabilities. The net profit stood at Rs 337 crore in the year-ago period even with the adoption of stringent provisioning norms.

Dena Bank posted a 21 per cent jump in net profit to Rs 168 crore for the first quarter ended June 30,2011. The bank had a net profit of Rs 138.7 crore for the corresponding quarter last fiscal. Total income of the bank increased by 35 per cent during the period to Rs 1,652.5 crore from Rs 1,221.7 crore in the corresponding period of the previous fiscal.

The bank’s net NPA were up 10 basis points to 0.87 per cent while it was targeting to keep the ratio under one per cent for 2011-12.

The bank’s gross NPA declined to 1.86 per cent during the quarter ended June 30 from 2.11 per cent in the same quarter an year ago.

net up 29%

Mr P Vinayakumar has

Syndicate Bank has posted a higher net profit at Rs 342.91 crore from Rs 265.36 crore marking a 29 % growth.Net interest income has risen to Rs 1,111 crore from Rs 963 crore, a rise of 15 per cent. Operating profit is Rs 742.55 crore in the first quarter ended June 30,2011 against Rs 587.22 crore in the year ago period, an increase of 26.45 per cent. Net NPA, however, declined to 0.93 per cent from 1.06 per cent in the period under reference. PASSLINE

Dr Duvvuri Subbarao, Governor of Reserve Bank of India (RBI), has been given a twoyear extension with effect from September 5, 2011, to September 4, 2013. Dr Subbarao was appointed the 22nd Governor of the apex bank in September 2008 for a three-year term. He is credited with having taken a tough monetary policy stance to rein in inflation. The RBI, under his governorship, recently doubled the frequency of monetary review meetings from each quarter to eight times a year, with a view to decreasing the need for off-cycle rate moves.

profit up in Q1

total income rises Canara Bank registered a net profit of Rs 725.80 crore in the first quarter of 2011-12 on a total income of Rs 7,707.50 crore. Although the net profit showed a decline of 28 per cent over the corresponding period last year, total income has increased by 31 per cent.

RBI Governor gets two-year extension

August 31-September 30, 2011

total income high City Union Bank has reported a 32 per cent rise in its net profit at Rs 58.51 crore in the first quarter ended June 30,2011 against Rs 44.37 crore in the corresponding quarter of the previous fiscal. Operating profit has risen by 35.31 per cent to Rs 106.36 crore from Rs 78.60 crore and net interest income by 30.23 per cent to Rs 120.04 crore from Rs 92.17 crore. Gross NPA level was reduced to 1.22 per cent from 1.30 per cent and net NPA to 0.51 per cent from 0.54 per cent. Total income has improved by 39.3 per cent to Rs 417.02 crore from Rs 299.34 crore. The bank has opened 11 branches and 49 ATMs so far in this fiscal. It would open another 41 branches and 170 ATMs before March 2012, taking the total to 300 branches and 450 ATMs.

BANKING

FBL—NRIs’ preferred bank Federal Bank Ltd (FBL) is a prominent player in NR franchise and is considered to be the preferred bank by NRIs especially in Kerala. Presently the bank is positioned as the second largest bank in the state and fourth largest private sector bank in India. FBL has crossed a business level of Rs 75,000 crore with a pan-Indian presence consisting of almost 750 branches and 800+ ATMs. It is transforming itself into a global banking brand and has been achieving a yearly steady growth rate of 20% to 25% consistently, according to Mr A Surendran, DGM & Head- International Banking. “Out of Rs 75,000 crore of total business, nearly 25% of the deposits are ,from NRIs. We also have a substantial loan book of NRIs. FBL has a strong NRI customer base of 7.5 lakh. It has an ambitious target of adding one

A Surendran

lakh customers every year, with our own representative office in Abu Dhabi and 21 offices across GCC.” said Mr Surendran. Right now the bank enjoys a position of routing 7% of the total NRI remittance to India. “This will only go up since we have ambitious expansion plans in countries like Malaysia, Singapore, Ireland, the UK, Hong Kong, Australia, New Zealand and Canada.” Mr Surendran added. FBL has a number of products specially tuned for NRIs. Fed-

eral Rupee Plus, Fed Flash, Visa Money Transfer etc are the mostsought-after ones by NRIs. Federal Rupee Plus is a special product with tax-free, repatriable and high-yielding benefits maintaining NRI status. The bank offers 7%-9% assured yield for this product. Fed Flash is a product for instant money transfer. The customer or their nominee can draw money within seconds after the remittance. The uniqueness of remittance through FBL is that the remitter and the beneficiary will get an alert through their mobile phones. FBL is having rupee drawing arrangement with 53 exchange houses and five banks to facilitate remittance for their NRI patrons in addition to correspondent banking relationships with leading banks in the world like Standard Chartered, Dieutche Bank, HSBC etc, to name a few.

The Federal Bank Managing Director and Chief Executive Officer, Mr Shyam Srinivasan, addressing the shareholders at the 80th Annual General Meeting of the Bank, held at Municipal Town Hall, Aluva. Chairman of the Board Mr P C Cyriac, Bank’s Directors and Executive Directors are also seen.

Dividend of Rs 8.50 per share The 80th Annual General Meeting(AGM) of the Federal Bank adopted the audited financial results of the Bank for the financial year 2010-11 along with the Directors’ Report. The shareholders also approved a dividend payment of Rs 8.50 per share and also all the other resolutions included in the notice for the AGM. The Chairman of the Board, Mr P C Cyriac, presided over the meeting. The Bank’s Managing Director and Chief Executive Officer(MD&CEO), Mr Shyam Srinivasan, Directors Mr Suresh Kumar, Mr Abraham Koshy, Mr T C Nair and Executive Directors Mr P C John and Mr Abraham Chacko participated in the proceedings. Shareholders in large numbers attended the meeting. Mr Suresh Kumar has been reelected to the Board. A proposal moved by a member to appoint Mr Nilesh S Vikamsey in the vacancy of Mr P H Ravikumar has been approved. Mr Nilesh S Vikamsey is a Chartered Accountant with over 16 years of experience, and is a partner of Khimji Kunverji & Co., Chartered Accountants. At present he is a member of many committees of ICAI. While addressing the shareholders, Mr Srinivasan briefly highlighted the reporting year’s performance and its future plans. Mr P C Cyriac also addressed the gathering.

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PASSLINE

August 31-September 30, 2011

CIAL MD Mr V J Kurian inaugurating FBL 822nd ATM at CIAL International Terminal. Bank's Ernakulam Zonal Head Mr Oommen Benjamin, Aluva Regional Head Mr T P Mathai, Asst. GM Mr A Madhavan, Chief Manager Mr Noby V D, Sr Manager Mr Antony Sebastian are also seen.

Federal Bank insurance cover for customers Federal Bank has announced a unique insurance package named Federal Assurance Scheme for its resident savings customers, in association with New India Assurance Company Limited. This is yet another innovative initiative from Federal Bank aimed at enhancing the value of its savings customers, according to a press release. Through this insurance package, the account holders of Federal Bank will have a personal accident cover, along with add-on benefits such as cover against unforeseen eventualities like natural calamities, fire, theft of household contents and loss of baggage, depending on the criteria decided by the bank. According to the press release, Federal Bank has always been in the forefront in offering value-added services to its customers.

NRI BUSINESS TYCOON Cheril Krishna Menon, popularly known as C K Menon, is a remarkable man who, perhaps, owns the largest chain of companies among Keralite entrepreneurs and who has steered Kerala towards global prominence. Everybody thinks that his best days are yet to come. He says he had never imagined such a huge success as a young man. “I grew up with no TVs, no mobile phones, no computers. I did not know much of what was outside, though I was blessed with almost all conveniences in life available then. When I fell on evil days I had even thought of committing suicide. But something in my life suggested to me that I was destined for something else. So I am here now. I am happy and contented. God has given me something which I can share with other people.”

C K MENON Passline News Service

o critics, Indian businessmen and industrialists abroad, especially in the Gulf, are a class of people who pay their workers lousy wages and benefits and provide them with poor working conditions. They fail to see what these people who run their enterprises are doing and how they have reached the positions they occupy now. But here is a man who has found better ways to serve the economy of Kerala by helping hundreds of its people. The experience makes us squarely with those who admire the men who have moved overseas to find rich rewards in the fertile lands they migrate to. We are talking about C K Menon, the Managing Director and Chief Executive Officer of the Behzad Group of Companies with headquarters in Doha, Qatar. As with any megafortune, Menon’s wealth was built from a few simple but revolutionary ideas, much sweat and a generous glossing of luck. The details of his experience are singular in the extreme. Menon reached Doha in early 1978 in search of a job. Yes, the man, who, by his own confession, “was born rich”, had to leave his native town of Thrissur as the business he was running, a bus service, had suffered a setback three years earlier. Born to Sree Ramajayam Transport Company owner Puliyamkott Narayanan Nair and Cheril Karthyayani Amma, Menon had to take over the bus service operating on the Thrissur-Irinjalakuda-Kodungallur route upon the sudden death of his father. He was a preuniversity student then, barely 16 years of age. Things went smoothly for some years, by which time Menon had mastered—almost—the intricacies of the passenger transport system. But, as it turned out, trade unions started playing tricks, strikes becoming frequent occurrences. The year was 1975. Menon had, in the meantime, earned his BA and LL B degrees. Enrolling as an advocate, He practised in the Thrissur Court and the Kerala High Court in Kochi for two years. Before practising as a lawyer, Menon, however, handed over his buses—a dozen and a half—to the workers and made them owners of the business. “I was perhaps the first employer in Kerala to do such a thing,” he says. He did not want to stick to the legal profession mainly because he found it not attractive in terms of income. Unable to sustain himself at home, he badly wanted to go somewhere

He combines business with charity

else, possibly outside the country. In 1978 he was able to arrange a visa for Doha, Qatar. For Menon, it was no walk in the park in the strange place. He had neither friends nor acquaintances there. He however managed to get accommodation with some people, most of them Malayalees, all staying at a ‘house’ together. After a few days, Menon landed a ‘job’, “nothing better than that of a labourer” with a Pakistani transport company. The job involved travelling with lorries transporting goods and helping unload them at destinations. He was later promoted to supervisor there. What turned out to be the precursor to his great success later in life came when he joined Behzad Transports which owned a fleet of 450 lorries. When Menon joined the company, 200 of the 450, along with their drivers, were remaining idle because, he soon found, they needed minor repairs. It was here that he put to good effect his knowledge of vehicles and also his intelligence by suggesting that either the company sell all the 200 unused ones or at least demolish 50 of them and use their parts to repair the other 150. The owner chose the latter suggestion and, to his great

Menon with wife Jayasree Menon

PASSLINE

August 31-September 30, 2011

surprise and satisfaction, the 150 vehicles which were repaired were soon back on the road and the company back on profit. After a few years with the company, its owner, Ali Hussein Behzad, wanted to sell it and asked Menon if he was interested in buying it. He was of course interested but had no money to pay. The owner consented to being paid in instalments as he had by now cultivated great trust in Menon. Retaining the name Behzad (meaning ‘money’) Menon began to build the company. Although he seemingly found his niche, it took a keen marketing sense to expand it so successfully as Menon did. With many areas covered, he methodically started adding to his fleet, the company’s focus being on fuel transportation by land and sea. Recently he has also entered the steel manufacturing sector. Today he has built his group into a Rs 4,000-crore-a-year conglomerate, his commercial involvement stretching from Qatar to the UAE, Kuwait, Saudi Arabia, Sudan, South America, the US and the UK. The group employs 2,000 people, almost 95% of them Keralites, and the rest mainly Sri Lankans and Nepalese. Menon thinks highly of Malayalees and their honesty. “They may be lazy at home, that is in Kerala, but they are very good, efficient and trustworthy outside,” he says. His keen marketing sense, business acumen and ingenuity were evident in his 1994 takeover of a loss-making bakery, Oriental, in Doha. It was of 40 years’ standing. “Out of the 40 years, it was amassing losses for 41 years,” says the witty Menon. He restored it to profitability in a few months’ time. “It’s no ordinary bakery, you see, the kind that we come across here but a huge one, employing 400 people and working 24 hours a day,” he says. It is now the biggest of its kind in Qatar... With the potential for being one of the most thrilling corporate leaders of our times, Menon, given his sharpness, his vision and his commitment, has been able to develop a business model as revolutionary as anywhere. A rare corporate boss who says boldly

37 that his company will do best for its employees and take care of them and the community, Menon has a strong sense of personal identification with his enterprises and employees that drives his work. He refers to his employees as his ‘extended family’, all of them being provided with company accommodation. He is in short one who combines an industrialist’s pedigree and an idealist’s sensibility and is doing well by doing good. “A nice man with a politician’s keen instinct”—this is how a business leader describes him. Menon is also a ‘family man’ who would rather spend his nights having supper with his wife and children than eating pizza with movers and shakers. His wife Jaya (Jayasree Menon), his constant companion and support, vouches for this. Menon has three children—two daughters and a son. Anjana and Sreeranjini, the daughters, are married to doctors. The husband of the elder one now looks after the group’s steel fabricating unit getting ready in Sudan. Jayakrishnan is the son. Menon’s concern for the people, for the community, irrespective of caste or religion— these are things that you just don’t see in industrialists, those who know him say. A philanthropist who believes that charity is not being merciful to the less fortunate, but is their right, he earmarks 2.5% of the net profit of his companies for ‘sakkat’ (help or money given to poor people). His charitable and social activities are widespread and have great influence on the on the people of India. He is at the helm of several social welfare and educational activities both in his country and abroad. All this is apart from his leading role in business. He built and handed over 100 houses to the slum-dwellers of his birthplace Thrissur some time ago. He has played a major role in constructing houses in the ‘Laksham Veedu’ (onelakh houses) Colony at Puthupally and the M N ‘Laksham Veedu’ restoration project announced by the Government of Kerala. Menon is the patron of ‘Adarsh’, a model institution that epitomizes compassion and love. Children from various religions are studying at this charitable venture functioning at Thrippunithura, Kochi. ‘Adarsh’ is dedicated to the rehabilitation of children having symptoms of cerebral palsy and other motor-sensory childhood development disorders like autism, on purely charitable basis. This institution was highly commended by former President A P J Abdul Kalam who inaugurated the institution’s new wing some years ago. That he is a role model for communal harmony is evidenced by some of his deeds. The most striking of these is the masjid he has built for his Muslim brethren at Nocholi in Kozhikode district, where 400 people can offer prayers at a time. It could very well be the first time after Cheraman Perumal in the late eighth century that a Hindu believer was getting a masjid built. The masjid is being inaugurated in a few days’ time. Menon has also erected a life-size statue in memory of Sister Alfonsa, the first Catholic saint from India, at the new bypass junction in Changnassery. Besides he is deeply involved in the establishment of the School of Bhagavat Gita at Thiruvananthapuram. Numerous awards and positions have come his way

The Behzad Group of Companies The following are C K Menon’s companies: Behzad Transports, Doha; Oriental Bakery, Doha; Behzad Information Technology; Dubai; Behzad Fuels UK Ltd; United Kingdom; Sowparnika Group, Kochi; TJSV Petroleum Limited, Udumalpetta (Tamil Nadu); Ali Bin Naser Al Misnad Transport & Trdg W L L, Doha; Behzad International Transport Co, Kuwait; Behzad Petroleum Services Est, Jubail KSA; Behzad Steel & Engg Ltd, Sudan; Behzad Transport, Kochi; Ali Bin Naser Al Misnad Steel, Kochi. Positions being held: CEO , Behzad Transports, Doha; C & MD, Ali Bin Naser Al Misnad Transport & Trading; CEO, Oriental Bakery; C & MD, Sowparnika Group; C & MD, Behzad International Transport Co, Kuwait; C & MD, Behzad Petroleum Services, Saudi Arabia; C & MD, Behzad Fuels UK Ltd; C & MD, Behzad Steels & Engineering Ltd, Sudan; C & MD, Behzad Information Technology; C & MD, TJSV Petroleum Ltd, Udumalpetta; C & MD, Behzad Transport, Kochi; C & MD, Ali Bin Naser Al Misand Transport, Kochi.

for his contributions to society. In 2009 the Government of India bestowed on him the country’s highest civilian title Padma Shri in recognition of his charitable and social activities. In 2006 he had won the Pravasi Bharatiya Samman of the Union Government. He has also an Honorary Membership of Rotarian conferred on him. Menon is a Director of the Kerala Government’s expatriates’ welfare association, NORKA-ROOTS, and a Director of Infrastructure Kerala Ltd (INKEL), set up by the Kerala Government in 2007 for the development of infrastructure in the State. The Ministry of Overseas Indian Affairs has nominated Menon as a member of the Board of Trustees of the India Development Foundation on a directive from Prime Minister Manmohan Singh. The foundation is a non-profitable trust to channelize philanthropic activities by overseas Indians. He is also a Director of Jai Hind TV and Symphony TV in addition to his directorship of a number of educational institutions in Kerala and outside. The most recent recognition is his nomination as Vice-Chairman of Al Barakah Financial Services Limited, a joint-venture financial institution formed by the Kerala Government with privatesector participation. He is clear about his successor: “It is my son whom I want to groom. But he must deserve to be in the seat on his own merits”. Just 22, Jayakrishnan has had his engineering education in the UK and is already actively involved in Menon’s business. Despite being a ‘world citizen’— he holds visas for the UAE, US, UK, Kuwait and Saudi Arabia, besides Qatar—Menon is essentially an out-and-out Keralite, rooted to the State’s soil. He has never forgotten it either in respect of projects, as can be seen in the box item going with this story, or in providing employment for Keralites. Besides the existing ones, another of his projects for the State is a Rs 250-crore five-star hotel, coming up soon at Edappally bypass, Kochi. This remarkable man who, perhaps, owns the largest chain of companies among Keralite entrepreneurs, has steered Kerala towards global prominence. Everybody thinks that his best days are yet to come. We ask him, “What do you feel today?” He replies: “I had never imagined such a huge success as a young man. I grew up with no TVs, no mobile phones, no computers. I did not know much of what was outside, though I was blessed with almost all PASSLINE

conveniences in life available then. When I fell on evil days I had even thought of committing suicide. But something in my life suggested to me that I was destined for something else. So I am here now. I am happy and contented. God has given me something which I can share with other people,” he says. Perhaps his success has made him philosophical. “I need very little material possessions. I am content with whatever I have. I make money not for spending it on myself or my family alone but for the people,” he concludes.

August 31-September 30, 2011

Positions in public Member of the Board of Trustees for India Development Foundation (IDF), governed by the Ministry of Overseas Indian Affairs; Director-NORKA-ROOTS, Government of Kerala; Vice-Chairman, Al Barakah Financial Services Ltd, a Kerala Government financial institution with private-sector participation; Director of Modern Indian School (a Delhi public school), Doha; Chairman, Bhavan’s Public School, Doha; Director, Gurukul School, Thiruvananthapuram; Founder Partner, Sree Narayana Educational Trust School, Thrissur; Founder Member, Adi Sankara Charitable Trust, Thrissur; Director, Jai Hind Television Channel; Director, INKEL, Government of Kerala; Director, Symphony TV, Thiruvanantha puram. Socio-cultural activities: Patron, Thrissur Jilla Souhreda Vedi, Doha, affiliated to the Indian Embassy; Patron and Director, ‘Adarsh’ (a school for handicapped), Thrippunithura; Patron, Qatar Malayali Samajam, Doha, affiliated to the Indian Embassy; Patron, Kerala Sociocultural Association, Doha; Patron, ‘INCAS’, Doha, affiliated to the Indian Embassy; Life Member, Indian Cultural Centre, Doha (under the Indian Embassy); Life Member, Indian Community Benevolent Fund, Doha (under the Indian Embassy).

PERSONALITY

r V C Praveen, son-in-law of wellknown businessman Gokulam Gopalan, has been doing exceedingly well right from his school days up till now – in business as well as in the social spheres with which he is closely associated. He has been engaging himself in varied activities with utmost professionalism and exceptional talent. He has been showing great enthusiasm and sincerity in both business and other activities by holding various prestigious positions. He inherited values in life from his father and other family members. Mr Praveen says he was greatly influenced by the teachings of Sree Narayana Guru and Kumaranasan while he was studying at Asan Memorial School in Chennai. The teachings of these two great men played a significant role in moulding his vision of life, and he has been applying these values in the areas of his activities. This businessman now holds such high positions as Director, Operations, Gokulam Chits; Director, Sree Gokulam Hotels (India), Vice-Chairman, Sree Gokulam Educational and Medical Trust; and Global President, World Malayali Council. He says he is eager to do more.

V C PRAVEEN

Keeping the Gokulam flag flying high Gokulam Hotel (India) Limited, and as Vice-Chairman of Sree Gokulam Educational and Medical Trust, my duties and responsibilities are increasing by the day. I really enjoy getting involved in Sree Gokulam Public Schools, which have created a niche for themselves in the educational field. As Executive Producer of Sree Gokulam Movies, I was fascinated by the unfolding drama of the mega-

Who is your role model? I consider every person as a role model. Each human being has certain distinct characteristics – both plus points as well as flaws. I like to observe others and try to emulate their positive aspects. If you do this, you will find life quite useful and interesting.

Excerpts from Passline’s interview with Mr Praveen: Tell us about your childhood, education and family. Were there any memorable happenings while you were in school or college? I was born in Kannur. My father, the late Shri Padmanabhan, was running a lodge in Chennai. Our family, all along, was in Chennai. My two elder sisters are married and living in Kerala. Being the youngest, everyone in the family pampered me. At the same time, my father brought me up with care and discipline. Insistence on good behaviour and respect for the elders are some of the values that we learnt right from childhood. Now, our family is put up at Adayar. I did my schooling at Asan Memorial School, a CBSE syllabus school with Malayalam as the second language. Reading and writing Malayalam is easy for me. The lives of Shri Narayana Guru and Kumaranasan impressed and inspired me in my school days. After completing B Com at Loyola College, Chennai, I did my MBA under University of Madras. How did you come to associate with the Sree Gokulam Group of companies? My wife Lijisha is the daughter of Shri Gokulam Gopalan. Ours was a love marriage. In the first two years after the marriage, I engaged vigorously in my own business of finance. Then my father-in-law and my wife persuaded me to enter the Sree Gokulam Group of companies. What is your experience with the Gokulam Group? What are the notable achievements under your leadership? When I joined the group, Gokulam Chits was having just over 100 branches. Now, it has grown to over 240 branches. As Director, Operations, I am looking after the operations of all the chit office branches. As Director of Sree

sociation has done a lot of social service. I came into the fold of World Malayali Association (WMC) as an ordinary member, then became its secretary for the Chennai province and later president for India region. Now, as WMC‘s global president, I am involved in many social and charitable activities in which I am personally interested. I was closely involved in Hridya Ragam 2006, 2008 and 2010 – a fundraiser which helped over 300 children from financially poor families to undergo free heart surgeries.

What do you think of Kerala Business Leaders Awards? Awards are usually given to performers, mainly in the field of cinema. When ‘reel’ heroes get awards, why shouldn’t ‘real’ heroes be given awards? This line of thinking resulted in instituting the Kerala Business Leaders Awards. You can see that almost all the awardees have come up to this stage in Praveen with wife and children life from scratch, and so honouring them will be a motivation for them as well as for othmovie Pazhassi Raja and other productions. ers. Provinces of WMC across the world have come up I also look after Nandhiniee Sweets – a sweetmeatwith offers to host the KBA Awards function. This, I hope, cum-restaurant chain of establishments across will go a long way in acknowledging and encouraging Chennai. successful businessmen. What were the factors that helped you in business? Do you get sufficient time to spend with your famWhat are the salient features of the Gokulam Group? ily? My previous experience in finance business plus my educational background helped me a lot in dealing with various situations in the day-to-day operations at Gokulam. Personal attention is being paid to various areas. Contact channels are always open. This has resulted in free inflow of feedback from customers, staff and associates. The horizon of my contacts is everexpanding. At Gokulam, our policy has been to do things in the best possible manner. This philosophy has resulted in the fast and strong growth of all companies under the Gokulam brand. I derive immense satisfaction from the contribution I make towards this achievement. What are the areas with which you are actively associated? What helped you to become a good leader? In my school days, I was an active member of Leo Club. I got recognised as the Best District Secretary of Leo Club. In 2001, I became a member of Aminjikarai Malayali Association, one of the oldest Malayali associations in Chennai. Subsequently, I became its president and even today continue in that capacity. The as-

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My wife Lijisha and I give adequate love and attention to our two children, Namrata and Thejus. I try to spend as much time as possible with my children. Despite my busy official schedule, I try to be with my family and spend with them quality time. We want our children to be humble and to respect the elders. We impart values along with academic education. Your hobbies? Sports and watching movies are my favourite hobbies. When in Chennai, on Sundays, I invariably play football and volleyball. Holidays, which are real getaways for me, give me a relieving break from the grinding routine. I like to enjoy my holidays with my family. With the advent of mobile telephony, one cannot avoid the world wherever you go, but holidaying gives you a whiff of fresh air to your body and mind. Which are the countries you have visited? Which are the places you wish to visit again? I have visited the United States, Europe and many Asian counties. However, I love to be in my home country.

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