Passline Business Magazine December 2010 by Passline Business Magazine

From the Editor Editor & Publisher

VARGHESE PAUL Thiruvananthapuram

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Healthy people, healthy nation W

orld leaders including US President Barack Obama have of late added India to the list of their travel itinerary. In the last few weeks the country has given the red carpet treatment to a slew of them, one after another. And they are all lavish in their praise for us as a rising superpower, and compete with one another for making India a key partner in development. The reason for this is not far to seek—as everybody knows it is our large market potential and the 1.3-billion population. Despite the scams (telecom, real estate, agriculture…) running into billions of rupees our Finance Minister proudly says that we are marching to a double-digit growth rate which currently is estimated at 8.9% while most of the advanced countries are reeling under recession and depending on bailout packages. Of course this is all thrilling for ordinary citizens like you and me, who fall under the category of ‘middle class’. But before we rejoice at and feel proud of the encomiums being showered on us by world leaders as well as our own politicians we should ponder over the plight of 80% of our population who continue to be poor and who are denied shelter, food and other basic necessities including health. Hospitals today have become inaccessible to the poor or the poor are denied access to them. The reason: like any other field of activity the health sector has also been corporatized. Most of the specialized hospitals in the country belong to corporate houses and profit has become their ultimate aim. They are not to blame for this because no one can expect them to run their establishments as charity after investing millions in them. But they must feel that they are under a moral obligation to the country and society. According to law, hospitals must set apart a few beds as free for the poor and needy. But in most cases this is flouted as the owners of the hospitals carry a lot of clout with the authorities. Is there any solution to the problem? The Government allocates crores of rupees in the annual budgets for the health sector, but the funds are seldom being used for the purpose for which they are meant. The plight of our primary health centres, which are primarily meant for the poor, is miserable. There are no doctors, no life-saving medicines and even sufficient staff there. Even today there are villagers earning just Rs 2 a day in some North Indian States. They are forced to approach hi-tech hospitals for fatal diseases, which they can’t afford or where entry to them is denied. The reason for this state of affairs, according to experts in the field, revolves around the basic economic doctrine of demand and supply. There is already a dearth of sufficient hospital beds. If there are enough of them, naturally the cost will come down. They cite Delhi, the national capital, as a case in point. At present Delhi has only 50,000 beds, but the actual requirement is much above this figure. The situation in most States is not different. A way to tackle this situation is to bring all citizens within the ambit of health insurance. What the Government should do is to remit the premium of those who are below the poverty line, instead of spending budget allocations indiscriminately. Strange fatal diseases are very common now. Unless the Government takes appropriate decisions in matters concerning the health of the people, boasting that we are a fast-developing nation will turn out to be a joke because the wealth of a nation is its healthy people.

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Varghese Paul

PASSLINE PASSLINE

December December 1-31 1-31 ,, 2010 2010

INFRASTRUCTURE

Contractors a despised lot T

By K Vijayachandran

The Kerala community in general looks at PWD contractors, especially the small ones, merely as middlemen. The general perception is that the regional economy and society could benefit if they could be dispensed with or altogether eliminated. Even the knowledgeable sections among our elite classes look down on the contractors’ profession. They fail to understand and appreciate the productive role played by it.

he Kerala Government Contractors Association (KGCA) is the major body representing PWD contractors in the State. According to Mr Varghese Kannampally, its President, there are around 8,000 construction contractors in Kerala registered with the State Government and most of them are members of his association, which is affiliated to a professional body at the all-India level, the Builders Association of India (BAIwww.bai.com). However, BAI has a diverse membership base that includes also the manufacturers and suppliers of building materials and components as well. It has its own organizational set-up in Kerala as in all other States and is dominated by big business at the national level. According to Mr Kannampally, the total number of contractors, including the casual ones and petty contractors engaged by local governments, may come to some 10,000. There are also dissenters and rival associations, very typical of Kerala, inspired by sectarian perceptions and supported by petty politics. Even today, the Kerala community in general looks at PWD contractors, especially the small ones, merely as middlemen. The general perception is that the regional economy and society could benefit if they could be somehow dispensed with or altogether eliminated. Even the knowledgeable sections among our elite classes look down on the contractors’ profession. They fail to understand and appreciate the productive role played by it. Contractors’ profession had acquired this anti-social image possibly during British Raj. PWD contractors and engineers were part of an authoritarian culture, revealed through the chain of rest houses, inspection bungalows and circuit houses spread all over the country. Within a few decades after national independence, collectors have turned popular, and even police stations are branding themselves as peoplefriendly. It is strange that contractors and engineers continue to be a people-unfriendly community in Kerala, even today! During the sixties, Thoppil Bhasi had tried to differentiate between the good and the evil in Kerala’s Public Works Department (PWD) through

his legendary play Puthiya Aakaasam Puthiya Bhoomi. Unfortunately, his reform efforts had helped only to reinforce the deeply ingrained irrational attitude to the engineer-contractor community. The so-called popular science movement of Kerala Sasthra Sahithya Parishat and other NGOs has greatly contributed to this emotional distortion. Project conceptualization and implementation without the help of contractors and engineers were seen by them as great progressive steps or even as a positive move towards socialism. This totally erroneous understanding of engineering practices and theories has led to the total stagnation, technological as well as organizational, of the State PWD. Kudumba Sree, Jana Sree etc etc and other NGOs, promoted and patronized by political parties, were expected to fill the voids developed thanks to this stagnation. This policy

and labour but also local technologies and practices are used in public works. Standard data books or specifications are compiled by State PWDs after taking into account these local factors: They are then printed and published as a referral document for the public. This practice helps to minimize and optimize costs for achieving certain minimum standards of quality and aesthetic satisfaction for the public works. This rule book or bible of every PWD, intended to ensure transparency in its dealings, is to be continuously revised and updated, taking into account the changes in market and technological practices. Latest editions of the Standard Data Book and rates of CPWD were al-

ent even today. This edition, originally compiled in 1965, carried the corrections and modifications made only up to December 31, 1980. Even at that time I was warned that the document was being revised with latest amendments, and the new edition was expected by the end of 1981. I was surprised to learn very recently that this revised edition has not come out even after three decades! A reprint of the 1980 edition is the latest available data book of Kerala PWD. Kerala PWD is, possibly, the most backward among State PWDs in this regard. Ministers and political parties have looked at it as a milch cow for long long years. In the good old days, the State PWD was seen as

Mr P P Thankachan, UDF Convener, inaugurating the dharna organized by the Kerala Government Contractors’ Association in front of the Secretariat in Thiruvananthapuram.

has opened the doors to big contractors from outside the State or to MNCs promoted by global financing agencies to take up contracts on a concept to commissioning or EPC basis. The PWD is seen as the backbone of civil administration in any country. It plays the crucial role of creating and maintaining basic infrastructure. The Central PWD and the State PWDs in India have their own standard designs, technical specifications and schedules of rates for ensuring their effectiveness, transparency and public accountability. Not only locally available materials

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December 1-31 , 2010

ways available in bookstores as a priced publication. Today these could be downloaded free of cost from the Internet. This is true even with regard to the Standard Data Book published by other States. However, in Kerala this publication is considered a confidential document. I have a photocopy of the 1980 edition of the Kerala PWD Data Book, printed in the Government Press, and marked confidential on the cover. I had procured the photocopy of this classified document in 1981 for my consultancy office, using high-level contacts. The situation is no differ-

technology leaders with regard to not only roads, buildings and bridges but also electricity, irrigation, water supply, sewerage and public health engineering. Several specialist organizations and departments had become necessary and Kerala PWD was possibly left with the residual subjects. This division of responsibilities was carried out without a holistic vision and serious consequences on the efficacy of public administration and maintenance of basic infrastructure. The 30-year lag in the updating of the PWD Data Book and Schedules is only symbolic of To page 6

Kerala PWD-a milch cow for politicians From page 5

the all-round failures and ineffi ciency with regard to the creation and maintenance of infrastructure. It is indicative of a massive erosion of technological capabilities in civil administration which has lost even the capacity to engage external consultants and to buy or borrow technology. All sorts of consultants land on us today and our administration hardly knows how to go about choosing one or another!

erations, but was a failure in bringing out the much-needed system of financial autonomy and accountability in the functioning of Government departments and public institutions.

Kerala is unique with its very elaborate CTE setup as part of the Finance Department. The prime responsibility of the CTE is focused on vigilance against corruption. But its perfor-

velopmental processes. They are not given the status of small-scale industries nor are they themselves conscious of such needs. The MSME Act (Medium. Small and Micro Enterprises Act-2007) of the Union Government has given construction contractors the status of an industry and they could register themselves as such with the District Industries Centers (DIC). As an MSME, the Government contractors are entitled to get the financial support of banks and other financing institutions. However, very few among Kerala Government contractors are aware of these possibilities and opportunities for getting themselves formally recognized as small business enterprises.

This basic problem has been known and well recognized by many for several years. But no serious attempts are being made to seek solutions. In the absence of credible engineering stanThe construction industry in Kerala dards and data book, anarchy prevails is facing an all-round crisis today. Shortin the management of public works in age or non-availability of local building the State. The tendering system rests materials is not seen as a serious chalon the estimation of standard costs prelenge either by contractors, the PWD or scribed by the data book. When these the Government. Some halfhearted tools are obsolete and not updated takmeasures have been taken with regard ing into account the current local situaErnakulam District Collector M Beena inaugurating the Building Day celebrations to sand. The need for planned investiof the Builders Association of India-Cochin Centre. tion and grassroots-level realities, the gations and research with regard to the entire tendering process is rendered mance in this regard has been extremely poor use of our own natural resources like rocks, Unfortunately, the reverse seems to be hapmeaningless, unrealistic and a mockery of theoso far, judging by results. Corruption goes on, sand, clay, sand or timber is not even recogries and principles. Contractors prepare and pening already if we are to believe recent newslargely unpunished and unchecked at every nized. Construction labour is nobody’s consubmit fancy quotations, which have no rel- paper reports: The Finance Minister and the PWD level. The CTE is hardly equipped to take up cern. Neither the PWD nor the contractors are evance to the principles of standard costing Minister have now jointly decided that projects concerned about the need for a HRM or HRD or ground realities. And then issues are deperspective for the construction industry. The The construction industry in Kerala is facing an all-round crisis cided with the help of tendering committees at Government has constituted a welfare fund various levels and in the most arbitrary fashtoday. Shortage or non-availability of local building materiboard for construction workers. Like most ion. A vast majority of tenders are nowadays als is not seen as a serious challenge either by contractors, other welfare fund boards for the different decided by a State-level tender committee of sections of labour in the informal sector, it secretaries and other officials, in which the the PWD or the Government. Some halfhearted measures mainly exists for its own employees and is representative of the Finance Department have been taken with regard to sand. The need for planned managed by them, with very little involvement plays the crucial role. of the State PWD, the construction workers investigations and research with regard to the use of our own Recommendations made by the State tenunions and the industry. der committee are once again subject to review by the Finance Department, by its Chief Technical Examiner (CTE) and then possibly even by the Finance Minister. Kerala, possibly, is the only State which maintains a large CTE establishment as part of the Finance Ministry. The CTE’s appointment is looked upon as a political one and this office is often misused for political harassment of contractors and engineers. With all these, the PWD Minister enjoys very little of real autonomy under the present dispensation where the Finance Ministry virtually functions as a super-Cabinet, not only with regard to public works but also other departments. The first-ever academic to takeover as Kerala Finance Minister has succeeded in streamlining the treasury op-

natural resources like rocks, sand, clay, sand or timber is not even recognized. Construction labour is nobody’s concern. Neither the PWD nor the contractors are concerned about the need for a HRM or HRD perspective for the construction industry. The Government has constituted a welfare fund board for construction workers.

for reconstruction of roads will be sanctioned only after a joint inspection by the Executive Engineer concerned and a representative of the CTE. This surely will further complicate the management and maintenance of our perennially sick highways. It is high time to critically examine the real need for this sort of fifth wheel in the management of the State PWD.

performance audit of projects or works completed and quality control (QC) functions hardly exist within the State PWD which is totally ill equipped to support or develop innovative technologies. Neither the PWD engineers nor the Government at the political level looks at the body of Government contractors as partners in de-

The construction sector, like many other sectors of the Kerala economy, is dominated by the informal sector where employee-employer relationship is mostly casual. Consequently training and skill development and use and development of modern technologies face numerous bottlenecks. Workers as well as the construction contractors have their unions and associations, whose organizational resources and creativity could be mobilized for re-building and modernizing the industry on a more rational basis. Our political classes, virtually driven by the ‘babu’ culture of a million clerks, however, lag far far behind these working people in creative visions and initiatives.

Top Malayalees in Gulf business Y

Dubai Pearl Company President and CEO Santhosh Joseph at the ninth position, Global Education Management Systems mentor Sunny Varkey and Sobha Group Founder P N C Menon, occupying the 11th and 14th spots, respectively.

usuff Ali M A, Managing Director, Emke Group and Director, Abu Dhabi Chamber of Commerce, has taken the top spot in the first-ever Arabian Business Power List featuring the most influential 100 Indians in the Gulf. The retail mogul sits atop a business empire that employs 22,000 people from over 29 countries, and which has a turnover of more than $3.5 billion globally. It is one of the largest Indian-owned conglomerates in the Gulf. Other Malayalees who hog the list include Galfar Group’s Vice-Chairman, Dr P Mohammed Ali, in the sixth place,

Yusuff Ali M A

P N C Menon

C K Menon

Dr P Mohammed Ali

Dr Azad Moopan

Sugathan Janardhanan

PASSLINE

December 1-31 , 2010

Dr Ravi Pillai

Santhosh Joseph

Dr Azad Moopan (DM Group), Mr C K Menon (Behzad Group), Mr Sugathan Janardhanan (Royal Group of Companies), Dr Ravi Pillai (Nasser Al-Hajri Corporation) and Mr Thumbay Moideen (Thumbay Group UAE) also adorn the list. Joyalukkas founder Joy Alukkas stands at the 98th spot.

Passline

wishes all a merry

Christmas and a happy New year

“Christmas cakes are a must in every home now. Some years ago Christmas used to be celebrated only in the Christian belts in Kerala. But now it is celebrated all over the State, like Onam. Because of this, Christmas cakes are gradually becoming popular and inevitable almost everywhere. Bakeries in the State have record sales during every Christmas.”

Passline News Service

ome December and everyone plunges into the festive Christmas spirit. Once again shops and bakeries in Kerala start wearing the Christmas look. No one can imagine a Christmas without delicious Christmas cakes. So, if you want to make this Christmas a memorable one, you know what to do: just buy (or bake) a delicious Christmas cake for the family and be merry! At bakeries you are spoilt for choice for each has something special for the festival. Besides the customary Christmas cake, bakeries and patisseries are whipping up cream cakes and pastries to entice the indulgent shopper. A few months ago, most hotels and bakeries in Kerala had held elaborate private ceremonies called fruit mixing ceremonies and announced to the unknowing public that they were soaking fruits for the Christmas cakes. Some of them, in fact, had held these ceremonies almost a year ago. Cake mixing marks

the countdown to Christmas. There were fruity, spicy mixings of dry fruits, spices, sweet raisins, glazed red cherries, orange peel, tutti-frutti, black currants, brown dates and dried apricots and nuts along with endless bottles of spirits and syrups and honey, weighing from 400 kg to 5,000 kg, stored until the baking sessions for cakes, “Traditional plum cakes are very common in all bakeries during Christmas, but our cakes are made by our own recipe,” says Mr Vijesh Viswanath, Managing Director of The Oven. The Oven has just one outlet in the Menaka area of Kochi. “Plum and fruit cakes and fruit-n-nut, chocolate and browny cakes—all are available at The Oven in the price range of Rs 250 to Rs 600 a kg. The fresh cream gateau is the fastestmoving cake at the bakery during Christmas. ‘Chocolate Truffle’ and Black Forest, White Forest and cappuccino flavours also have good demand. Last year sugarless cake was a sought-after variety. “This time our Christmas cake mixing

started in early November and we expect 50% growth in business”, Mr Vijesh Viswanath says. “Many companies buy our cakes as corporate gifts. In the past we used to make cakes in different shapes like fruits, Santa Claus etc. Now most of the cakes are in round, square or rectangle shapes. In our opinion, taste and quality are now more important than shapes. We also make some special-shape cakes according to customers’ specifications”, says Mr Vijesh Viswanath, who is also the Director of Best Bakers, which has 23 outlets in Kochi. Elite Foods Pvt Ltd, which manufactures the Elite brand of products, has introduced a new range of cakes for Christmas. It includes plum, chocolate plum, bar, tea, sponge, cup and slice cakes. Elite is said to be the largest-selling plum cake brand in India and the major varieties offered for Christmas are ‘Plum Delight’, ‘Plum Surprise’ and ‘Chocolate Plum’. The range is available at Rs 50 to Rs 240. Pandal, one of the popular cake shops in Kochi, has three outlets. “Our speciality for the seasonis Zero-Transfat Matured Plum Cake. It

PASSLINE

December 1-31 , 2010

is totally cholesterol-free”, says Mr Jansan K E, Manager. ‘Plum Pudding with Brandy Souse’, ‘Christmas Icing Cake’ and ‘Christmas Fruit Pie’ are the other special cakes. Prices range from Rs 400 to Rs 650 a kg. Corporate cakes with personalized company logos are another seasonal offer. Pandal has also come up with a brand new packaging idea for its cakes this season: it is packing its cakes in beautiful tin boxes and cover, which makes an interesting gift idea. “We get orders from many corporate companies both in and out of Kerala. Our matured cakes are in great demand. It is for creating a festive mood that we are changing our packing style. The packing is totally different, the carry-bag itself costing more than Rs 30. For creating an earthy feeling we have changed our colours to green and brown”, says Mr Jansan. ‘Christmas Gift Hamper’ is another popular item at Pandal. It costs Rs 4,000 and contains a cake with six to seven other items. “Christmas accounts for 50% of our total yearly sales. Last year we sold 10 tonnes of cake. Because of a favourable market we expect it to cross 12 tonnes this time”, Mr Jansan adds. Pandal is offering discounts too. A buyer of 10 kg-15 kg will get 5% discount, 16 kg-100 kg 10% and 101 kg-200 kg 15%. ‘Raisin Florida’ is the speciality among cakes at Hot Bread. Hot Bread has two outlets in Kochi, one at Panampilly Nagar and the other on M G Road. “‘Raisin Florida’, which costs Rs 300 a kg, has good demand. Our ‘Rich Plum with Royal Icing’ is also very popular”, says Mr Xavier P A, Manager, Hot Bread. Super-rich plum, dates and carrot, orange marmalade and dates and walnut cakes are also very popular. Prices start from Rs 150 to Rs 450. “Last year we sold four tonnes. We expect the sales to cross five tonnes this season”, says Mr Xavier. Mr Pearson Faber, Manager, Iris, says that their specialities are cakes

‘Expression’, costing Rs 230 for 800g, and ‘Fantasy’ priced at Rs 165 a kg. ‘Expression’ is a gift item meant for VIPs and has an attractive covering box. But ‘Bonanza Rich’ is Iris’ fastest-moving cake. “Corporates and institutions are the main buyers of this cake”, says Mr Pearson. ‘Santa Claus’ and ‘Temptation’ are also popular plum cakes from Iris. ‘Santa Claus’ is priced at Rs 148 a kg and ‘Temptation’ Rs.122 for 800g. “We improved our previous packing style this time to attract customers and we expect growth to exceed four-five times”, says Mr Pearson. Iris has a range of plum cakes in the price range of Rs 58-Rs 230. “Besides the regular plum cake, we offer some other cake varieties like ‘Tiramizu’, ‘Italian Cheese’ and ‘Cold Cheese’. Each of these is made from a different dry fruit mix”, says Mr P T Antony, Managing Director, Bread World. “Mascarpone cheese, imported from Italy, is the special ingredient in ‘Italian Cheese’. It costs very high, Rs 1,500 a kg. Fresh cream and butter are other ingredients. Ghee, butter and rich handpicked dry fruits are the main ingredients of ‘Plum Exotic’. “In gift items ‘Plum Exotic’, coming in an attractive tin, is the fastest-moving cake at Bread World. Our usual prices are Rs 200Rs 900 a kg. This time we are packing our cakes in coloured tin boxes. ‘Chocolate Triffle’ and ‘Fresh Cream’ are the other special items. Youngsters prefer ‘Chocolate Triffle’. We have five outlets in Kochi. The sixth will be launched at Vytilla soon. Of our total sales, 35% take place during the Christmas season. This season we expect a 2% increase”, says Mr Antony. “Christmas cakes are a must in every home now. Some years ago Christmas used to be celebrated only in the Christian belts in Kerala. But now it is celebrated all over the State, like Onam. Because of this, Christmas cakes are gradually becoming popular and inevitable almost everywhere. Bakeries in the State have record sales during every Christmas. The average business in the past four years had been estimated at Rs 75 crore-Rs 100 crore. This season also bakeries expect good sales”, says Mr P M Sankaran, President, Bakers’ Association, Kerala.

NEWS

Malabar Gold is GKSF associate sponsor again

ewellery firm Malabar Gold has once again become the associate sponsor of the Grand Kerala Shopping Festival (GKSF). Malabar Gold Chairman M P Ahmed and GKSF Director in Charge V Rajagopal signed the document to the effect in the presence of Industry Minister Elamaram Kareem at a function held at the Kozhikode Collectorate Conference Hall the other day. The Minister said the collaboration of Malabar Gold with GKSF “is exemplary.” “The Government is providing opportunities to jewellers like Malabar Gold and to other traders through programmes like GKSF to boost their business potential. Besides business and profit, traders should focus on the country’s growth and corporate social responsibility,” he said. “By becoming the associate sponsor of GKSF, Malabar Gold is giving an impetus to the unique efforts of the State Government to bring about prosperity,” said Mr Ahmed. “The joint efforts of the State and Malabar Gold to spread awareness about a clean environment and the efforts of GKSF for creating a strong base for variety shopping will be backed by every citizen,” Mr Ahmed hoped. Mr A Pradeep Kumar, MLA, and Mr P B Salim, Kozhikode Collector, were present on the occasion.

‘Investors eyeing India’ eveloped countries are focusing on infrastructure and R and D facilities. But the Asian countries including India to in- majority of manufacturing units, numbering about vest in all sectors especially the au- 5,000, which consume the remaining 40%, are tomobile field and consequently mar- micro, small and medium enterprises. These kets are increasingly opening up for our rub- units require further strengthening, through training and other measures, to become ber products, Mr V J Kurian, Charman, Rubber Board, has globally competitive. said. He was delivering the inauDr R Mukopadhyay, Director, gural address the other day at the Harisankar Singhania Elastomer and training session on non-tyre auTyre Research Institute, Rajasthan, tomotive rubber components, orwho presided over the inaugural ganized by the Rubber Training meeting, said that in the era of globalInstitute (RTI) of the Rubber Board ization, the two points which are of and the Indian Rubber Institute V J Kurian utmost importance are quality and (IRI), in Kochi. cost. But industries in India are losing 25% of Mr Kurian said that of the total rubber their sale owing to substandard quality. consumption in the country, 60% is by 50The training session was the first of a se60 large tyre companies having adequate

The faculty for the training programme included Dr Mukhopadhyay and Dr P Thavamani, Director, Indian Rubber Manufacturers Research Association-Research Institute, Mumbai. Dr C Kuruvilla Jacob, Director (Training), Rubber Board, welcomed the participants.

HMT watches—keeping time for India

or five decades, people have relied on HMT watches for the exact momentum of the axis of the earth because HMT watches have been the ‘timekeepers to the nation’ since 1962 and the most trusted watch company globally. HMT was the pioneer in watch manufacturing and is the only maker of mechanical watches in the country. All other brands are imported. As on date, 110 million HMT watches have been sold out globally. There are four manufacturing units in India operating at Bangalore, Tumkoor, Nainital and Srinagar with 20 branches in India, of which one is in Kerala at Kochi. Mr S Paul Raj is the Managing Director, headquartered in Bangalore.

HMT watches are really meant for the common people who generally prefer it for gifts. Hence, HMT Watches Ltd became the choice of many for institutional orders. Major organizations like Central Coal Ltd, Ranchi, ordered 61,610 units of watches valued at Rs 703 lakh and Mahanadi Coal Ltd, Sambalpur, 20,613 numbers valued at Rs 154 lakh. Similar orders came from BHEL, BSNL, Chennai, FACT, Milma, SAIL, Syndicate Bank, UCO Bank, ISRO, Keltron etc. For gents and ladies, 34 watch models

IDA Kochi Region office-bearers

are available. The variants include automatic ones with day and date, gold-plated, steel and leather, gold-cum-steel straps, round, square, rectangular and oval. Braille watches for gents and ladies are available at prices ranging from Rs 350 to Rs 3,450. Among automatic watches NASL02 with day and date in a round stainless steel case in blue, black and white colours costs Rs 3,300Rs 3,450. Kerala ladies prefer gold-plated watches. Braille watches for the blind are winding watches available at Rs 500 and Rs 550 for steel and at Rs 700 for gold-plated ones. Mr T V Mohanan is the Branch in Charge at Durbar Hall Road, Kochi.

V-Guard’s H1 net sales up by 70%, PAT by 41%

r A M Nooruddin has assumed office as President and Dr Arun Babu as Secretary of the Indian Dental Association (IDA) Kochi Region. Dr S Jayakumar is the Treasurer. Mayor Tony Chammany inaugurated the installation ceremony held in Kochi recently at which Dr P C Sunil presided. Dr Samuel K Ninan, Indian Dental Association State President, Dr Shibu Rajagopal, Secretary, and Dr Sachidananda Kamath, Indian Medical Association (IMA) Kochi President, spoke. The Mayor also handed over the reverse

ries of such programmes arranged by the RTI in collaboration with the IRI, a professional body of technocrats in the field, based on a memorandum of understanding signed by both the institutes in July 2010. The RTI, accordingly, will be arranging further training programmes in order to address problems faced by the Indian rubber industry, such as those related to technical upgradation, quality issues, market development, cost control etc.

Kochi Mayor Tony Chammany inaugurating the installation ceremony of the Indian Dental Association (IDA) Kochi Region office-bearers. Dr Shibu Rajagopal, Dr Vinod, Dr Samuel, Dr Nooruddin, Dr Arun Babu and Dr Jayakumar are also seen.

osmosis water purifying system presented to Silpa Special School by IDA to school Director Pamela and received from Dr Nooruddin the

medicines for the patients who attended the Chakkaraparambil Association-run free clinical camp.

Tvm to house State’s first architecture college

ellanadu, a Thiruvananthapuram suburb, already blessed with several engineering and medical colleges, will soon have another addition, a school for architectural studies. Named College of Architecture, Trivandrum (CAT), the centre will be the first standalone campus uniquely dedicated to higher learning in architecture coming up in the self-financing sector offering additional research facilities in green building technology, construction management and infrastructure planning, according to Mr N Mahesh, Chairman of the Narayanan and Vaidyanathan Charitable and Educational Trust, promoters of the college. The ‘bhoomipooja’ of CAT was held on November 8.

tainable architecture, energy and environmentally sensitive architecture through theoretical and practical training, says Mr Mahesh. A centre for research, development and consultancy will also be established as a centralized research and consultancy unit. The Rs 18-crore campus is designed to accommodate a population of 500, with an annual intake of 80 students and faculty and other members. CAT will provide hostel accommodation to students and residential apartments to house the faculty and researchers.

CAT, to be built on a large tract of virgin green land with international quality infrastructure, research facility and faculty conforming to All India Council for Technical Education (AICTE) norms, will be affiliated to the University of Kerala. It will run a five-year Bachelor of Architecture Degree course, to begin with.

The trust proposes to begin admissions in June 2011 for the academic year 2011-12. Prof Jayakumar J Pillai, who was till recently head of the Department of Architecture at the National Institute of Technology, Kozhikode, will be in a strategic position to take the academic activities to a higher level. The college’s Governing Council will have seven members drawn from across the globe and a 12-member Executive Committee will oversee its functioning.

In association with the Indian Green Building Council, the college will enable students to obtain professional expertise in sus-

“E-courses in Architecture, Project Management etc will be implemented in due course”, says Mr Mahesh.

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December 1-31 , 2010

lectronics and electrical major V-Guard Industries Limited has reported net sales of Rs 326.95 crore for the half year ended September 30, 2010 (H1), an increase of 70.13% from Rs 192.18 crore in the corresponding period of the previous year. The profit before tax for H1 also increased to Rs 29.13 crore (Rs 22.09 crore), a 31.87% rise. The company also recorded a 40.55% rise in the profit after tax (PAT) at Rs 19.86 crore in the current H1, against Rs 14.13 crore. The company’s net sales during the quarter ended September 30, 2010 (Q2), rose to Rs 158.74 crore, a 49.56% increase from Rs 106.14 crore in the corresponding period of the previous year. Profit before tax also increased to Rs 13.02 crore, an increase of 17.09% over Q2 figures of FY 2009-10. V-Guard also recorded a 21.27% rise in the PAT at Rs 8.78 crore (Rs 7.24 crore). Mr Mithun K Chittilappilly, Executive Director of the company, said that the increased pan-Indian marketing activities and better brand visibility in the newer markets led to the surge in the top line. “V-Guard is optimistic about growth prospects in the current fiscal and will endeavour to accelerate the growth momentum further,” he said. Dr George Sleeba, Joint Managing Director, said that the company had utilized 95% of the IPO proceeds for commissioning the various projects mentioned in the offer document and the remaining two projects, ie distribution centres in Hubli and Vijayawada, would be completed during the first quarter of next fiscal.

99 AUTOMOBILES Passline News Service

“The Micra is the right product at the right time that will offer the customers a good means of urban mobility with a complete package of performance, features, safety and comfort.”

apanese automobiles major Nissan is not generally known as a maker of successful hatchbacks. So when the company came out with a hatchback recently it drew tremendous attention from both industry circles and customers. The Nissan hatchback, Micra, has been built on the lines of the Hyundai i10, the Chevrolet Beat and Maruti Suzuki Ritz. Born out of the need to simplify the city chaos and enrich the urban driving experience, the Micra is a reliable, stylish, safe and eco-friendly car for people who enjoy everyday driving. It has been fine-tuned to meet the different tastes and needs of customers in developed markets as well as emerging markets like India. Designed and tested in Japan and manufactured locally in India, the Micra is a global car that will be sold in advanced markets such as Europe, the Middle East and Africa, among other countries.

Available in three standard variants of XE (entry), XL (mid) and XV (top) and in two interior colour schemes, black and beige (only XV), the Micra is being introduced in a range of six colours—sunlight orange, brick red, pacific blue, storm white, blade silver and onyx black. The Micra is a compact car with an affable appearance and is engineered for easy handling and sprightly performance, and is claimed to have class-competitive fuel efficiency. Positioned in the B-plus segment, it is equipped with some key technological innovations, which are designed to simplify dayto-day life for its owners. It offers a first-inits-class intelligent multi-display meter, which supplies drivers with real-time fuel economy information, cruising range and outside temperature. In addition, the driver power windows are fitted with a one-touch up/down feature along with a pinch guard. A unique design feature of the car is the double-layer integrated grille, which provides it with a stylish and sophisticated look. There is also a stylish version of the distinctive arched side window line, something that is central to the Micra’s heritage, identity and appeal.

has been achieved in numerous ways by reducing the number of components and using newer manufacturing and material processing techniques. Aiming to match the same sense of exterior style inside the car, Nissan has employed a ‘connected cocoon’ design featuring a dashboard design, which takes on a ‘twin bubble’ theme. This refers to the circular instrumentation panel and the similarly shaped glove box compartment on the passenger side. Special

The Micra being launched in Kochi by Kerala's Nissan dealer EVM Nissan in the presence of EVM Automobile Division Managing Director Sabu Johny, GM Operations Thomas Kadicheeni, Manager (Sales and Marketing) Jimshow Kurian and HAI Area Sales Manager Shivaraj.

Retaining its compact dimensions, the Micra measures 3,780mm in length, 1,665mm in width and 1,530mm in height. The longer wheelbase (2,450mm) enables a wheels-ateach-corner stance – the main reason for the car’s roomier interiors. The boomerang-shaped grooves on the roof have clearly defined purposes too. The efforts of Nissan’s global production engineering centre also make it the lightest (XE-905 kg, XL-915 kg and XV-930 kg) yet sturdy hatchback in its segment. This

attention has been paid to use of materials on the instrumental panel by using the micro-gain technology. This reduces the plasticky feeling and ensures quality and finish for visual and tactile appeal. The car is powered by an all-new HR12 DOHC 12-valve, 1.2-litre, 3-cylinder petrol engine. Power is rated at 56Kw (76p) at 6,000rpm, while the torque output is 104Nm at 4,000rpm. It comes with a 5-speed manual gearbox. The wide gear coverage enables

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the 1.2-litre engine to achieve economy and brisk acceleration. Th 3e front MacPherson strut and rear torsion beam provide excellent cushioning effect, reducing fatigue during long journeys. Particular attention has been paid to bump absorption, ensuring that the Micra will ride smoothly over challenging road surfaces, not suffer from wallow or float and cruise effortlessly at highway speeds. In contrast to its high speed capability, the car also has superb visibility and a class-topping turning radius of 4.65m. It is equipped with several new technologies that assist with minimizing CO2 emissions and mileage while at the same time making parking easier. With a top speed of 160 kmph, it provides a classcompetitive fuel efficiency of 18.06 km/litre (tested and approved by ARAI). It is also equipped with a class-competitive boot space of 251 litres that can easily carry those extra bags of shopping during travel. In the area of safety technology, Nissan purses innovation as part of its ‘safety shield’ concept, an advanced, proactive approach to safety issues based on the idea that cars should help protect people. The incorporation of the ‘V platform’ is one major factor contributing to the car’s improved impact safety. The car is designed to absorb the forces of a frontal impact, owing to the sophisticated crumple zones, while maintaining cabin integrity due to its highly reinforced body shell. All variants including the entry-level XE are equipped with driver airbag. The top variant (XV) has been fitted with standard safety equipment such as driver plus front passenger airbag, antilock braking system (ABS) with electronic brake-force distribution (EBD) and brake assist (BA). The car comes with a standard manufacturer’s warranty of two years /50,000 km (whichever is earlier). Nissan Motor India Private Ltd’s existing December 1-31 , 2010

range of products includes the X-Trial (SUV model), the Teana (luxury sedan) and 370Z (icons sports car)—all three imported from Japan as CBU (completely built units). NMIPL will commence exports in the second half of the fiscal year 2010 to more than 100 countries including Europe, the Middle East and Africa. In Kerala, the Micra is being sold at EVM Automobiles Pvt Ltd in Kochi and Kozhikode. “The Kerala customers can look forward to a long and fruitful association with our product and service. The Micra is the right product at the right time that will offer the customers a good means of urban mobility with a complete package of performance, features, safety and comfort. We expect the Micra with its latent advantage and its unique features to do well in Kerala and carve a niche of its own compared to other competitive models in this segment. In Kerala more than 500 units have been sold since the launch,” says Mr Jimshow Kurian, Manager, Sales and Marketing, EVM. “Nisan is all set to roll out the Micra’s diesel variant on Kerala roads. It is expected to go on sale before Christmas this year. The ARAI-certified car has a mileage of 23.08 km/ litre”, says Mr Thomas Kadicheeni, General Manager, Operations, EVM. EVM Automobiles is also the Kerala distributor of Volkswagen cars and Honda twowheelers. “Our strategic intent is to be the premier partner in the Indian automotive market, providing products and services that far exceed the expectations of our principals and valuable customers. Our long-term vision is being the leading company to set the benchmark in the Indian automotive market in terms of customer service, constant investments in our employees and providing the best infrastructure”, says Mr Sabu Johny, CMD, EVM. The Micra is priced at Rs 4,05,950 XE (entry), Rs 4,73,025 XL (mid) and Rs 5,36,395 XV (top), all ex-showroom Kochi and Kozhikode.

10 10 AUTOMOBILES

ating agency Ernst and Young is on record as saying that India will beat China, North America and Europe to become the fastest-growing automobile market in the world. Presently India is the second fastest-growing market globally. No wonder more and more international players in the field are setting up shop in our country. Five popular automotive companies are the latest on the list gearing up to come— Chrysler, Peugeot, Kia, Scania and Triumph. US-based Chrysler, which suffered in the recent financial downturn and subsequently filed for bankruptcy protection, is keenly interested in getting its vehicles into India. Headquartered in a Detroit suburb, Chrysler Group LLC’s 20% shares are owned by Italian auto giant Fiat, which has an industrial joint venture in India with Tata Motors. Fiat is soon to increase its shareholding in Chrysler to 35%. A Chrysler spokesperson had said that India is an important market in the industry and Fiat is working towards integrating Chrysler into itself and operate as one entity after it scales its stake in the American company.

France’s largest carmaker PSA Peugeot Citreon has reportedly held talks with some State Governments for land to set up a manufacturing plant. The company plans its entry through a 100% India subsidiary. Peugeot, which has expertise in making stylish compact cars and sedans that are mostly sold in the European market, is expected to make an announcement before the end of the year. It had held discussions with Japan’s Mitsubishi Motors for a joint manufacturing programme, which failed to materialize. Both companies have a joint plant in Russia. Mitsubishi owns a plant in Chennai where it makes SUVs and sedans. Kia Motors Corporation, the Korean affiliate company of Hyundai Motor Company, whose India subsidiary is the second largest carmaker domestically, has shown interest in launching its small car and SUV range in India. Kia is South Korea’s second largest manufacturer. Many Kia models share crucial elements with those of Hyundai.

Kia’s four-door compact car Venga, which shared the platform with Hyundai’s top-selling premium hatchback i20, could be one of the first models to be launched in India. Kia has a big portfolio of vehicles, including hatchbacks, sedans, SUVs, MUVs and seven commercial vehicles. Sweden’s heavy commercial vehicle maker Scania is planning to come with its range of heavy-duty trucks and buses. It is aiming to operate as a joint venture. Spyker cars from the Netherlands are also gearing up to run on Indian roads. Arrangements are being made with two Indian dealers to import the cars. Spyker C8 Aileron costs nearly Rs 1.6 crore in London.

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Chennai—the future auto hub of India

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hennai is emerging as the country’s largest automotive and auto components manufacturing hub in terms of investment. According to the Tamil Nadu Government, over $3 billon (around Rs 13,800 crore) will be invested in Chennai by global manufacturers by the end of 2010-2011. The proposed investment is significantly higher than that in other auto hubs like Gurgaon in Haryana. The State Government says that the total installed capacity in and around Chennai will be 1.28 million cars a year by the end of the financial year and the figure is expected to go up significantly thanks to projects by Ford, Hyundai and Mitsubishi-HM coming up in the area.

Every third car produced in India is from Chennai or from around it, says the Government. Similarly, the region will see the manufacture of around 3,50,000 commercial vehicles a year by the end of 2010-11. In 2008-09, 60,000 passenger cars were manufactured. Haryana has an installed capacity of around 4.8 million vehicles (1.2 million for Maruti Suzuki and 3.6million for Hero Honda). Harley Davidson is also setting up an assembly unit at Bawal in Haryana, which will become operational by the first half of 2011. Maruti Suzuki will produce 1.2 million cars from its facilities at Gurgaon and Manesar. Besides, it has plans to add two more plants at its Manesar unit to increase capacity by 0.5 million by 2013.The total

investment in both plants is Rs 3,625 crore. Hero Honda, which is the largest producer of motorcycles in the world, has two plants in Haryana at Gurgaon and Rewari. Each produces 6,000 units a day. The automotive industry occupies an important place in the industrial map of Tamil Nadu. The State’s innovative policy for the sector offers an attractive package of support to projects investing more than Rs 4,000 crore. As a result, since May 2006, investments attracted by Tamil Nadu in automotive and components manufacturing have been around Rs 21,900 crore, almost five times the investments attracted during the previous 15 years. The employment potential, both direct and indirect, in these new projects is roughly 1,20,000.

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December 1-31 , 2010

It is estimated that India will produce around two million passenger cars in 2010 and the number is expected to increase to around 10 million a year. Nissan Motor India, which has set up a Rs 4,500-crore manufacturing unit at Oragadam, near Chennai, along with French partner Renault, says the proactive industrial policies of the Tamil Nadu Government help expansion and setting up of technology centres in Chennai. Nissan is bullish about India’s small car segment: it is to introduce small new car models soon. Hyundai India has made Chennai its manufacturing and export hub for small cars. The i10 and i20 models are manufactured only in Chennai and exported to the world. Chennai is Hyundai’s largest base outside Korea.

Besides, more than 350 auto component suppliers, accounting for over 35% of India’s production capacity, are also located in Tamil Nadu, Some of the big names include Visteon, Delphi, Robert Bosch, Lear, Hwashin, Motherson, Unipress, Valeo and Mando. Three Chennaibased industrial groups—TVS, Rane and Amalgamations—constitute more than 25% of India’s components production. The Centre is currently implementing a National Automotive Testing and R & D Infrastructure Project in Oragadam, Chennai, at a cost of around Rs 450 crore. This project aims to facilitate the introduction of world-class automotive safety, emission and performance standards in the country and ensure seamless integration of our automotive industry with the global industry.

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COVER STORY

The inside story of disorder, disarray and uncertainty at the Thrissur-based private-sector Dhanlaxmi Bank, whose profit took a beating in the half-year period ending September 30, 2010, declining to a paltry Rs 1.62 crore from Rs 6.26 crore in the same period last year. For the year ending March 31, 2010, the profit was Rs 23.30 crore, showing a fall of almost Rs 22 crore in six months—an alarming situation. The non-performing assets (NPAs) are mounting—standing at Rs 50.41 crore as on September 30, 2010, against Rs 34.43 crore for the same period last year.

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By Varghese Paul

pend some time perusing the financial results of Dhanlaxmi Bank Ltd (DBL) for the year ended March 31, 2010, and for the half year ending September 30, 2010, and you will feel right away: this is a bank thriving on the edge of uncertainty and disorder. Dhanlaxmi, until a few months ago Dhanalakshmi, age 83, appears to be far more concerned with trying to convince the public of what the bank’s goals are for the future than to explain the reasons for its present fall in profits and the problems it faces. Since taking over as Managing Director and Chief Executive Officer in October 2008, Mr Amitabh Chaturvedi seems to have been endlessly fighting a war on several fronts, meant to set right things at the Thrissur-based bank, founded in 1927 by the Brahmin community there with the aim of helping small traders and businessmen. The first front has been uncertainty and disorder— one embarrassment

after another. DBL has been a sinner for some time, say insiders, seldom out of the news. Mismanagement is the second front. The third front is the bank’s bottom line, which shows that profit took a beating in the half-year period ending September 30, 2010, declining to a paltry Rs 1.62 crore from Rs 6.26 crore in the same period last year. During the financial year ending March 31, 2010, the profit was Rs 23.30 crore. This shows that in six months the fall was almost Rs 22 crore— an alarming situation. The non-performing assets (NPAs) are mounting and they were at Rs 50.41 crore as on September 30, 2010, against Rs 34.43 crore for the same period last year.

who insist that it is not making any profit at all. The management, they say, had been cooking books and was boosting its reported profit to Rs 23.30 crore last fiscal by deferring payments and debiting amounts to depositors’ accounts as service charges. These are shown as a profit of Rs 23.30 crore, they allege. In the early years of its existence DBL focused on customers and mid-sized businesses. It continued to grow and excelled at making money the

That the bank is making a profit is a mirage, according to employees,

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December 1-31 , 2010

old-fashioned way on the spread between deposit and lending rates. Its cost of funds was low compared with the industry average. DBL in time went for an initial public offering (IPO) in order to raise capital to grow further and fulfil Reserve Bank of India norms from time to time. The investors were ordinary people, Indian as well as foreign institutions and high net worth individuals. The bank also resorted to other routes, besides the IPO, to increase the capital base. To page 17

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KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

Passline News Service

espite the recent scam in the real estate sector and the rate increases by the Reserve Bank of India, the residential property sector is registering robust growth in South India in general and Kerala in particular. Unlike in metros in North India property price rise is not sharp in the South. Prices,according to real estate analysts, have gone up 10%-15% in recent times but will not go further up. The central bank in its latest policy revision has come out with certain guidelines to tighten lending in the real estate sector, by which the ceiling on the loan-to-value ratio has been fixed at 80%. This means that banks cannot lend more than 80% of the asset value. Another direction from the RBI is to increase the risk weight of home loans above Rs 75 lakh. Banks have been asked to increase standard asset provisioning to 2% in the case of teaser loans. Some players in the sector say, “Even before the RBI diktat, banks and financial institutions used to lend only 80% of the total amount. Certain banks, of course, used to

finance 90% or 95% after strict scrutiny, but these were in very rare cases. And they were based on the quality of the asset and the customers’ repayment capacity. Also buyers usually spend 20%-25% of their own money to buy a property. So the RBI policy revision will not have any great impact.” “Regarding increase in the weightage of loans above Rs 75 lakh, most banks are yet to pass it on to the customer, which in effect means providing loans at the old rates. This trend is expected to continue for some more time”, they say. The scam in the real estate sector and the involvement of LIC Housing Finance may lead to the Finance Ministry and the RBI further tightening measures in the sector. Since the demand in the housing sector is growing tremendously banks and financial institutions are hard-pressed to push the offtake, while other sectors are witnessing slow growth.

Crisil rating a safe bet for choosing homes

veryone dreams of owning a home of their own. Quality is the major concern while buying a home. It is important therefore that the buyer must ensure this. There are a couple of agencies in India that accord rating status to products and projects. Crisil is one that has turned its activities to the housing sector also. Its rating provides an opportunity

for home buyers to judge the quality of the homes they intend to buy. Crisil has accorded Seven-Star rating to two projects in Kerala launched by two Kerala builders. One is Skyline Builders’ upcoming project ‘Ivy League’ at Kakkanad and the other Asset Homes’ ‘Signature’ in Thruvanantha puram which has completed the first phase.

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Seven-Star is the highest rating, the lowest being One-Star. A `Non-deliverable’ rating is also in vogue. Rating is given based on yardsticks fixed for categories of cities. The motive in giving rating is to ensure the quality of the projects and transparency in the sector after factors like structural quality of the company’s previous projects, status of club

December 1-31 , 2010

house, progress in the final stages of construction, sewage, drainage facility, finishing work, feedback on the progress of the construction and steps on after-sales service to the client and time of completion. Crisil rating has become a safe bet for choosing a home.

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KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

Relcon Properties Beacon of luxury in real estate market R

elcon Properties, a subsidiary of Kerala’s real estate conglomerate Relcon Group, is known for quality construction and exceptional post-sales service. Being part of the Relcon Group, a vertical integrated real estate developer, Relcon Properties promises a commitment to using quality materials and excellence in construction at every stage of project development.

he adds. The group’s latest projects now open for sale are the following: Relcon Ashiyana: A gated community villa project, Ashiyana consists of 16 identical villas of two-storeyed construction. The land area is four cents and built-up area 2,000 sq ft. It is ready for occupation and the price is very competitive, Rs 55 lakh.

With a track record that spans decades of conAyur Heritage Villas in Nedumudi on the Alappuzhastructing prestigious real estate developments in Kerala, Changanassery Road: This project is situated on the Relcon Properties has to its credit the imposbackwaters of Kuttanad at the confluence ing corporate offices of the Indian Oil Corporaof three rivers (Manimala, Achenkovil and tion and the Kerala Management Association Pampa). The total built-up area is 75,000 sq at Panampilly Nagar, luxury hotels of the popuft, a four-star tourist resort. Each villa is 800 lar Mermaid Hotel at Villa and Hotel Yuvarani sq ft, fully furnished. The price is Rs 36 Residency on M G Road and the commercial lakh. The project is due for completion in properties on M G Road of Bhima Jewellers, June 2011. Jayalakshmi Textiles and the Chennai Silks. In Relcon Travancore Heights, Thiruvalla: addition, Relcon Properties has constructed T K Alexander This is situated next to Travancore Club and Vaidian several opulent mansions for high-end cusPuspagiri Medicity on M C Road and there tomers in Kochi and Thiruvananthapuram. Also, in proare 56 three-bedroom apartments of 2,000 sq ft each. viding a faster solution to the acute housing needs of This is a 16-storeyed building and is due for completion Kerala’s IT city, Relcon has come up with an array of in December 2011. The price is Rs 55 lakh. housing projects to suit the varying choices of customRelcon Castle, Thiruvananthapuram: This is an 11ers. storeyed building with 27 apartments vary“We at Relcon Properties believe that ing from 860 sq ft to 2,020 sq ft near the the customer has the final say over evGeneral Hospital in the heart of the city. ery aspect of a project executed by us,” The prices range from Rs 35 lakh to Rs 75 says T K Alexander Vaidian, Managing lakh. The work is in full swing and is due for completion Director of the Relcon Group. “Our completed real esin June 2012. tate properties speak volumes about the commitment The real estate market in India, especially in Kerala, of our group behind every Relcon project. Some of our is on the upswing and this is the right time to invest in it. recent projects, like Relcon Midtown, Relcon Gardens The prices are bottomed out and the bad time for the and Relcon Gardenia in Kochi and Relcon Plaza and sector is over. The Indian stock market is also looking Relcon Residency in Thiruvananthapuram are a glowup as the nation is poised for a 9% growth rate. ing testament to our real estate development acumen,”

Jewel Homes Catering for all needs of customers J

ewel Homes knows the requirements of the people more than anyone else, having been in the building industry for over a decade. Perhaps it is this knowledge that has helped it in finding a space for it in the competitive realty business. Today’s homes P A Jihas are to be built in keeping with the need for relaxation after a day’s strenuous work schedule in our hectic life. Many builders, however, consider it a bother to penetrate into such psychological factors of customers and win their hearts. Jewel Homes of Kochi is an exception. Since 1997-98, Jewel Homes has been providing sensible homes satisfying all needs of its clientele— psychological, social and aesthetic. And its Managing Director, Mr P A Jihas, is not ready to compromise on the quality of his products. Jewel Homes is a company that innovates every moment to achieve outstanding levels of excellence. It has witnessed healthy growth and has finished and handed over all its products on time. Its tremendous success and popularity is due as much to the quality of its products and its competitive prices as to its people who propel the activities with great elan and aplomb. Jewel Homes also undertakes maintenance of the flats. It is committed to bringing its clients the best housing solutions.

Skyline—the market leader S

kyline Builders of Kochi has achieved what others can only dream. Synonymous with prestige and trust, its projects are renowned for superior location, customized comforts and timely delivery. It is a proud address for homeowners. Skyline has been the market leader in Kerala since 1993-1994. Its obsession with delivering quality projects on time has paid off in a big way and it intends to uphold its policy of maintaining the fulfilment of the clients’ dreams as the first priority. Each Skyline unit is sucAbdul Azeez cessfully managed by skilled professionals who head various departments and report, in turn, to the CEO. The promoters themselves are technocrats with vast experience in the construction business. The group units function within an ambience of a cordial employeremployee relationship. Each group also gives due im-

portance to the development of human resources and to the timely completion of each and every project that it undertakes. Skyline business covers the construction of flats, independent villa projects and commercial projects as well. It has experienced a steady expansion over the years but one perennial constant which endures is the importance accorded to customer satisfaction. It refuses to compromise on quality and believes in always working within schedules. Skyline is the builder having projects in eight cities/towns in Kerala— Thiruvananthapuram, Kottayam, Kochi, Thrissur, Kozhikode, Kannur, Thalassery and Thiruvalla. Skyline has been fortunate to be on a growth gradient for over the past 20 years. It has also received the quality endorsement of ISO: 9001 certification from BVQI. Skyline CEO Abdul Azeez is also the Chairman of the Confederation of Real Estate Developers’ Association of India (CREDAI) Kerala.

WANTED PASSLINE, Kerala’s only business magazine in English, with a 16-year track record, needs professionals for the following posts: Reporters Assistant Advertisement Managers (Thiruvananthapuram, Kochi, Kozhikode) Marketing Executives (all districts) Keethara Publications Pvt Ltd, 38/125 Ist Floor, Narakathara Road, Kochi-35. Ph: 0484 4027002 Email: passline.com@gmail.com; mail@passlinebusinessmagazine.in

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December 1-31 , 2010

KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

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Elite living, office spaces from hi-lite Builders

Yasoram Builder of homes all can afford M

r A R S Vadhyar is widely known as a builder of affordable houses. But he is also a visionary who has given a highly successful and practical touch to his visions. A pioneer in Kerala’s construction industry, Mr Vadhyar has an unbeatable track record of having created quality homes in the most-sought-after locations. The Yasoram A R S Vadhyar

Group, which he launched in 1977, had the noble mission of providing quality housing solutions to the people at affordable prices. Mr Vadhyar, whose name itself reminds one of the companies he heads, made a commitment to himself long ago to contribute constructively to society. It was this mindset that enabled him to make a mark in many social activities cutting across class and creed. He is the mastermind behind concepts like Sky City and revolutionary architectural innovations that can change Kochi’s cityscape for ever. Mr Vadhyar is known for introducing the method of terrace farming and gardening and is contemplating to popularize the method.

ochi having turned the cynosure of all business houses and people, hundreds of promising projects are in the offing and the demand for quality infrastructure is going to rise. To cater to this increasing demand, hi-lite Builders has come out with hi-lite Platino, a rare and precious property for premium office space. As the city centre will be moving to Maradu after the establishment of the New Bus Terminal, this office space characterized by the synergy of different kinds of corporate environments cannot be more ideally located, standing tall among various premium projects. Backed by the experience gained from actualizing some of the biggest projects in the State including Focus Mall, Kozhikode, the first shopping mall of Kerala, and hi-lite Hills, one mammoth of a project that provides ultra-luxe living spaces and top-notch office spaces, hi-lite Platino is envisaged as a state-of-theart office complex that would bring together some of the big and better names in the current business scenario. “Needless to say, this office complex would house some of the most advanced concepts in office infrastructure, ensuring an environment that would be most

Tanzeel Maker of dream projects O

ne of the earliest construction companies of Kochi, Tanzeel Builders was started in 1978. Known for transparency, timeliness and trustworthiness, Tanzeel gives utmost importance to every detail and makes sure that all its homes have the most modern facilities, unique features and utmost security and safety. It has so far completed many commercial and residential projects. Tanzeel’s ‘Chalet’, a deluxe housing complex off Jawahar Nagar at Kadavanthra, consists

The project is spread across 1.2 acres of land, 1.3 lakh sq ft office space and 1.8 lakh sq ft built-up area, seven floors and two basement car parks, centralized air-conditioning, power backup, expansive car parking facility, excellent connectivity, cafeteria and other support services. “For once, there is a business solution that would help you cut your costs without cutting corners. What makes hi-lite Platino one of the most cost-effective business solutions is its location”, reasons its Director, Mr K P Naushad. “So close to the city, but far enough from its rushes, this is a project that can offer you a huge competitive cost advantage, both in acquiring and operating. With options of spaces ranging from 600 sq ft to 7,000 sq ft there is a space for any business, of any size”, adds another Director, Mr M A Mehaboob. The company’s ongoing projects are hi-lite Hills including hi-lite Plaza (top-notch office spaces), hi-lite Residency (ultraluxe apartments), Spring Dale (luxury villas) and hi-lite Metroma in Kozhikode.

Infra

of two-and three-BHK apartments and has all modern amenities and hitech facilities with style and status. ‘Chalet’ is a dream project, according to the company.

‘Tanzeel Park’ at Chittoor Road, Pachalam, Kochi, a prestigious earlier Ianzeel project, is a standing testimony to the company’s craftsmanship. ‘Ebony’ at Kakkanad, another deluxe apartment project with a slew of modern amenities, is a skyscraper with a difference. Many Kochi hubs like Kacherippady, Pulleppady, Basin Road, Mullassery Canal Road and Chittoor Road look elegant with Tanzeel’s works.

A A Nayeem

Mr Nayeem and Vaseem are the Directors

A A Vaseem

favourable for better business ideas to sprout,” says its Managing Director, Mr P Sulaiman.

Making future dream present reality I

nfra Housing Pvt Ltd, one of the foremost players in the construction industry for more than a decade, not only excels in delivering dreams but also John George George E George provides the best aftercare to its customers. Promoted and managed by a team of enthusiastic and industrious professionals, Infra Housing has transformed future dreams in the construction industry into present realities, a testimony to its integrity and commitment to providing quality homes, commercial spaces and investment products. Mr John George and Mr George E George are the Directors of the company.

Chakolas Habitat where past and present mingle

he Chakolas Group, a Thrissur-based business conglomerate and a frontline player in housing solutions, has a proven competitive edge in waterfront villas and apartments. It has already completed eight prestigious projects. Chakolas projects offer a lifestyle unsurpassed for work, leisure and growth and Chakolas always ensures that the homes it builds encompass every aspect of this quality lifestyle. Chakolas philosophy is simple: give people something which works, feels easy to live in and has features built in, which reflects upon and enhances the customer’s lifestyle.

says the company, is second to none. From the highly experienced sales team to the on-site construction crew, every facet of the process is overseen by experienced professionals. The finished product is a home that has been built to a very professional quality. A stable team of experienced staff, professionals, construction managers and superintendents contribute towards the success in the building industry. And because the company maintains an enduring level of experience, clients benefit from budgets and schedules that are met, quality construction, and success in their business and service endeavours.

The use of tried and tested qualified people and proven construction process combined with the overall quality of workmanship are the factors that past and present owners have come to rely on. Chakolas projects provide a service which,

“We believe buying a home is one of the biggest decisions you’ll ever make, which is why we consider it an honour every time someone chooses Chakolas Habitat,” says its Managing Director, Mr Mathew L Chakola.

Mathew L Chakola

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December 1-31 , 2010

KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

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Trios, pioneer in water management T

rios, a pioneer in water management products and services, comes under the aegis of M V Bros, Kochi, which was founded as a family-owned business group. Now managed by the second-generation entrepreneurs in the family, Trios is a well-diversified environmental engineering, trading and contracting company with its head office in Kochi and branches in Thiruvananthapuram and Kozhikode. It is amongst the leading water management companies in this region involved in design, supply, erection and commissioning of water/wastewater management systems, swimming pool re-circulation systems and accessories, hydropneumatic systems and pressure boosting systems, biological filtration and accessories, fountains and water features, sprinkler and irrigation systems, Jacuzzi and spa equipment and steam, sauna and health club equipment. Trios Pools has been acclaimed as the top-of-the-line brand in the market sector being on a par with international

standards in quality. Today, the company is considered an authority in swimming pools and fountains. It has amassed a large customer base within a span of a few years and has had repeat orders from all of its esteemed clientele. Trios has worksites in South India and also handles overseas projects. It mobilizes resources in no time, complying with all requirements at optimum levels without compromising on quality. Trios’ consultancy division offers services on a turnkey basis. These include designing of swimming pools, supply and installation of equipment and training for effective maintenance. Trios specializes in custom-built commercial fountains, manufacturing/constructing various types of outdoor fountains, waterfalls, custom-made fountains and musical fountains and landscape lighting and accessories for outdoor use. It has been working together with all major Indian and international architectural firms on projects ranging from five-star hotels and parks to shopping malls.

Crescent homes excel in design C

rescent Builders, Kozhikode, is dedicated to offering its clients the utmost in quality, choice and value. Its homes carry a signature of its longstanding commitment to excellence in design, quality construction and delivery on time that has earned the trust and respect of homeseekers year after year. A Crescent home comes with all amenities one could ask for in top-class living. One of the most successful and prominent names in the real estate and building industry, the company, with projects like Crescent Gardens, Crescent Gardens Phase II, Crescent Mansion, Crescent Victoria, Crescent Cascade, Crescent Mervue, Crescent Avenue, Crescent Court, KEVI Warehouse and Tanishq Showroom, K V Haseeb Ahamed strictly adheres to quality control, and customer satisfaction is its trademark. Crescent takes care to use only the finest materials in building homes. Crescent Builders is an offshoot of a group of successful companies promoted by Mr K V Kunhammed, a prominent personality on Kozhikode’s business map. Managing Partner of the firm Haji P I Ahammed Koya, a leading name in the export industry, Mr Kunhammed also heads companies dealing in plantation materials, foodgrains, timber, pharmaceuticals, C and F, consumer goods distribution and manufacturing etc. He plays an integral role in the promotion of social activities and education in Malabar. Mr K V Haseeb Ahamed, an MBA from PSG College of Technology, Coimbatore, a young entrepreneur, has picked up the reins of the company as the Managing Partner. Under his able leadership the company has been forging ahead rapidly. The other promoters are Mr C V Mustafa, Mr K V Mohammed Koya and Mr K V Basheer Ahamed.

Kent’s products are exclusive

ent Constructions (P) Ltd took its first step in the building sector with Kent Paradise at Thammanam, Kochi, in the 1990s. The revolutionary design of these villas made the project an instant success and it was even featured in the hit movie Niram. Headed by entrepreneurs from different walks of life, renowned in their respective fields, Kent has over the years focused on offering select projects. The company has earned a reputation for creating exclusive projects. It selects projects and successfully focuses its attention on making these homes the best in the city. Among these are Kent Nalukettu, Kent Illam and Kent Kovilakam, stellar villa projects that pay tribute to Kerala’s rich architectural traditions and cultural heritage, Kent Gopuram, an elegant apartment complex, inspired by historic design,and Kent Glasshouse, a soaring 20storeyed marvel in the heart of the city. A deep fondness for the rich heritage of Kerala motivates the founders of Kent Constructions and also each member of the close-knit organization. Many projects are designed to showcase the traditional gran-

deur of the State’s architecture. The choice of a location is done after much deliberation. The plan also is given much care. The finished product is always seen as a tribute to the customer, a tool to enhance his living experience. “To build quality projects with amenities par excellence, to deploy the best of

T P Vinayan

K C Raju

technology in construction, sophistication in ambience and catering to the customer’s satisfaction is our ultimate goal”, says its Chairman, Mr T P Vinayan. Today Kent Constructions is a name that absolutely resounds with the definition of a builder. “The triumphant years that have passed since our commencement has simultaneously resulted in our carving a niche in the real estate sector of Kerala”, says its Director, Mr K C Raju.

RDS offers a broad range of projects

DS Projects Ltd is a leading engineering and general contracting firm, offering building solutions for a broad range of construction and engineering projects. It is a company promoted by professional builders with over 40 years of experience. Its extensive experience covers building of bridges, John K Manavalan airport infrastructure, roads, marine

Sunith Goyal

structures and hydro projects. RDS’ portfolio of homes, residential projects and commercial developments is well established. “It brings into each of our projects state-of-the-art technology and innovation, which is on a par with global standards”, say its Directors, Mr Sunith Goyal and Mr John K Manavalan.

New-generation construction from Jomer

omer Properties and Investments Pvt Ltd is one of the pioneers in revolutionizing the concept of new-generation construction. Established in 1994 in Kochi, Jomer is popular for quality construction, aesthetic finish, asset value and prestigious investments.

successfully completed Jomer Symphony, the tallest building in Kerala. A splendid architectural marvel and the new prominent landmark of upcoming commercial and mobility hub of Kochi,Vyttila, Jomer Symphony is a beautiful combination of new-generation offices and living spaces topped up with recreation, entertainment and business spaces under one roof.

The saga of success at Jomer began with its first apartJomer Symphony is five-star luxury embedded ment project, Jomer Residency, in 1998, followed in the most beautiful architectural marvel, standing by yet another, Jomer Retreat, in 2000, the spectall at 28 floors in 1.2 acres of prime land, overlooktacular shopping arena in the heart of Kochi, Jomer ing Kochi city. Arcade, in 2003, a premium apartment in one of the prime locations in the city, Jomer Srinilayam, in 2005, “An investment that appreciates in value while another residential project near Vyttila, Jomer you get regular income is almost impossible to conSplendour, in 2006, a combination of luxury and ceive of. But at Jomer Symphony, that is exactly comfort, facing the backwaters and the Cochin port, what it has in store for the customer. A truly smart Jomer Haven, also in 2006, another prime resideninvestment where his/her business suite along with M M Jose tial complex near Ernakulam Junction railway stathe 100-odd units will be managed by the promottion, Jomer Avalon, again in 2006 and the multi-prospect in- ers”, says the Managing Director, Mr M M Jose. Besides vestment project near Vyttila, offering commercial space as the ever-growing, handsome monthly return (the client may well as service apartments. get his/her entire investment back in 6 to 8 years) the appreToday, Jomer Properties has acquired a prestigious iden- ciation of the capital is going to be beyond one’s wildest imagitity of having successfully completed several residential and nation. commercial projects at prime locations in the city. In its drive to become a trendsetter, on a par with global standards in living and office spaces, Jomer Properties has

PASSLINE

December 1-31 , 2010

The facilities include multi-cuisine restaurants, coffee shop, board room and even a helipad too and other modern facilities.

16 16

KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

Smart way to load and unload Racold Solare—hot A water at all times R

BI Engineering Private Limited, which has been serving Kerala industries for the last 13 years, has come up with a new revolutionary product called Loading/Unloading Conveyor. According to the company, the product is a gift to industries that face labour shortage and vast development.

directions, easy to move since the entire system is on wheel and 24-hour service back-up. It requires only four or five people to load or unload the entire container/lorry, and reduces one-third of human exertion. It needs 2 HP for operation with a hydraulic power pack.

The conveyor has twin boom-type operation The Director of the company, Mr Murali, claims Murali and can be used for loading and unloading, and that it has prominent customers like Nirapara Rice, stacks the bag (max 90 kg)/cartons from the lorry/container Kerala Feeds, KC Distilleries etc. “Some companies have directly. more than two conveyors”, he adds. The advantages of the equipment are: it can feed directly into the container/lorry from the godown, counting facility, loading and unloading height adjustment, can run on both

The system is also available with ‘telescopic type’ in which the length can be adjusted automatically. The company manufactures all types of conveyors and fabrications.

Amrutha—always in the service of customers A

mrutha Electricals, established in 1995 vice based on ethics”, says Mr at Palakkad by Mr P Ramachandran, a Ramachandran. veteran marketing manager Amrutha has now diversified of two decades’ service in major into new fields and developed new capacitor industries in the country, market areas in industrial applilater entered the field of distribuances such as switchgears, contion of HT/LT/MF capacitors and trol and digital analogue measurwater-cooled capacitor control ing instruments, motor starters panels, Harmonic filters and capaciand protection systems, automatic tor-related equipment. Today the power factor correcting equipfirm has developed into a major P Ramachandran ment, control panels, meter player in its field by dint of his dediboards, submersible pump panels cated service to customers and quick and etc. It is the authorized distributor for major reliable after-sales service. He has always brands like Indo Asian, C & S, Moeller, been keen to ensure the best quality in his Dhandapani, BCH, Shreem, Mahan, Power supplies and services. He attributes his sucKELTRON, Samrat Sycon, Himlite, Sunny etc. cess to his vast experience in the field, which Always engaged in market research, enables him to solve any applicational probAmrutha is on the lookout for new areas of lems of his customers. “Amrutha Electricals automation in the electrical field. The promoter has gained the trust of its customers and and his staff are service-minded and always earned a reputation in the market by its serensure customer satisfaction.

Solar water heaters give amazing savings on electricity. They are fully guaranteed for their perforThrivikraman Namboodiri mance. Their design makes them almost maintenance-free. A well-installed solar water heater will give you trouble-free performance for years. The Kerala Head of the Solar Division is Mr Thrivikraman Namboodiri, Senior Engineer, Sales & Service.

Almonard surging ahead W

An ISO-certified company, idely acclaimed for its fans, Almonard has two branches in Almonard Pvt Ltd had a Kerala, one in Kochi and the other humblebeginning in Mumbai 52 in Kozhikode. years ago. Its growth since has Almonard’s pollution control dibeen steady, with its industrial fans vision produces devices to solve commanding the No 1 position in the industrial dust problems. The comcountry today. The company has pany also manufactures axial flow also started its home appliances fans, air curtains and mancoolers P L Davis division with mixer grinder, water for industrial purposes. heater, pumps, irons, toasters,blenders etc, Mr P L Davis, Regional Manager in charge which have been well received by customof Kochi and Kozhikode, has raised the sales ers. within a short period.

Anu Solar Diversified product range A

tant is the faith reposed by the nu Solar Power Pvt Ltd is customers in the entire range the result of the synergy of products,” says the of innovative ideas and comcompany’s Managing Director, mitment to quality by a group Mr P J Joseph. of dedicated technocrats. Founded in 1979, it has grown During the past 28 years, rapidly over the last two dethe company has gained vast P J Joseph cades with a diversified prodexperience in designing and uct range and a clear focus on solar manufacturing of Solar Water Heating energy devices. Systems and allied products. With a Anu Solar has well-qualified and exstrong design and manufacturing backperienced professionals who are highly ground the company has developed itdedicated to providing suitably skilled and self as a leading manufacturer of solar talented manpower to clients with a clear energy systems to cater to the complete understanding of their specific requirerange of customer requirements. ments and also guiding candidates to The company has established a wide make a worthwhile choice towards a network of dealers for Anu Solar prodstable career path. ucts who take up marketing and servicThe emphasis on quality has led to ing of the products. The sole distributor the company getting the ISO 9001-2000 for Kerala is Madathil Marketing at certification of Bureau Veritas Quality InKadavanthara, Kochi, managed by Mr ternational and the BIS certification. Its Justine John. FPC solar water heating system panels Anu Solar also exports its products have the quality seal of the Bureau of to countries like the US, UAE, Uganda, Indian Standards (BIS mark) and ETCNigeria and Ghana. It has more than based solar water heating systems are 1,00,000 customers to its credit. approved by MNRE also. “More impor-

PASSLINE

acold has introduced solar water heaters with the evacuated tube technology, engineered to provide maximum heating efficiency. Each evacuated tube is made up of two concentric high-quality glass tubes of optimum length to ensure excellent solar absorption. The inner container is insulated with hidensity injected PUF to provide maximum heat retention. The heater delivers hot water at all times.

December 1-31 , 2010

17 17 COVER STORY

'Few Keralites at top-level posts' From page 11

Early signs of trouble started to surface with Bangalore-based businessman Raja Mohan Rao having diversified business interests acquiring a 36% stake in the bank, becoming its largest shareholder. It is alleged that he and his nominees on the board were interfering in the bank’s day-to-day functioning. There were also allegations of the bank siphoning off funds resulting in huge accumulation of bad debts. Mr Rao had later to dilute a major portion of his possession following the RBI stricture that no individual could hold more than 5% share in a bank. With the arrival of Mr Chaturvedi came a total restructuring of DBL’s top management. Before coming to Dhanlaxmi, Mr Chaturvedi was with Reliance Capital, heading the operations at the Anil Ambani Group’s nonbanking finance company (NBFC), and was reckoned to be the blueeyed boy of Anil. The drastic director board recast saw no Keralite except one left on it. In the shuffle of senior managers, only Mr Jayakumar P G, the lone person with any roots in the State, found a place in this Kerala bank. These developments, coupled with other factors like Reliance Capital’s bid to seek a new banking licence and the sudden change of spelling in the bank’s name to make it appear like a North Indian bank, have reinforced the people’s feeling that majority stake in it has now gone to Reliance Capital. Nobody has the authority to block a purely legal deal between Reliance Capital and DBL, and thereby restrict the free flow of capital. To try to prevent deals simply because it’s someone or some company North Indian doesn’t make any sense. Promoters usually prefer to acquire a bank that is already in existence, rather than starting one from scratch. But what confuses investors, depositors and those connected with the bank is the management’s refrain that there is no threat to it from any corner, that DBL will continue to be headquartered at Thrissur and that it will grow as a Kerala bank. It cites the construction of a new 18-storeyed head office to prove its sincerity and insists that the change of spelling is only part of the revamp measure meant to position the bank as a panIndian one. The Employees’ Union and the bank’s well-wishers beg to differ. They say it is only a ploy to distract attention from what is happening. According to them, the proposed building doesn’t have a no-objection certificate from the authorities concerned for 18 storeys and that construction remains stalled for now for reasons best known to the management. They also say there is more to the spelling change than meets the eye, but only time will tell what or what more.

The Union Finance Ministry and the RBI have asked banks in the country to spread their services to

remote unbanked villages. Tiny Kerala at one time boasted scores of banks of its own, but only 10—

Parur Central Bank, Palai Central Bank, Bank of Cochin, Nedungadi Bank, Lord Krishna Bank, Federal

Bank, South Indian Bank, Catholic Syrian Bank, Catholic Union Bank To page 29

Chaturvedi: DBL will be Kerala-based, having pan-India presence T

he following is the text of the email interview PASSLINE had with Mr Amitabh Chaturvedi:

You have of late been appearing in the media quite ofAmitabh Chaturvedi ten with announcements of DBL’s future plans and with projections for this fiscal. How realistic are these considering the fact that the bank posted only a miniscule Rs 1.62 crore as profit and its NPAs have had an alarming escalation? Moreover, achieving the targets set by you is a tall claim since it is the fag end of the year. We have a vision to be amongst the top five private sector banks in India by 2016. If you look at the numbers, our growth rates under deposits and advances are far ahead of the banking industry with both deposits and advances growing at 69% and 76% respectively for the second quarter ended September 30, 2010. The total business grew by 71.9% to Rs 16,554 crore as on September 30, 2010 from Rs 9,631 crore as on September 30, 2009. In an industry which has seen NPAs increasing, our NPAs have in fact decreased and improved on a year-on-year basis and sequentially, our gross NPA ratio declining from 1.73% as on September 30, 2009 to 1.26% as on September 30, 2010 (1.41% as on June 30, 2010). Our bottom line reflects the bank’s ongoing investment in people, products, processes, technology and infrastructure. The results reflect the investments undertaken by the bank to build the foundation for a sustainable, future growth. The bank’s total business has nearly tripled in the last 30 months to Rs 16,554 crore as on September 30, 2010 from Rs 5,710 crore as on March 31, 2008. In the last two years, we have built a capacity and infrastructure which can garner Rs 30,000 crore of business. Our incremental business will result in a substantial increase in revenues as all our costs are absorbed today. Our performance so far has been impressive and we are well on course to achieve our targets. Your employees, already a frustrated lot, are uncertain about the bank’s future. They attribute the problems to mismanagement and indiscriminate spending. At Dhanlaxmi Bank, we always believed in an open and transparent work environment. Employees are encouraged to ask questions and esca-

PASSLINE

late problems or concerns to the management through any of the possible modes of communication. If an employee brings a problem or concern to our notice, we take it as valuable feedback and ensure that the issues are addressed. We regularly update employees on performance of various businesses and achievements. Proactively, we introduced and conducted a series of Town Halls across India. Employees participated in huge numbers, to not just question but provide solutions. It was a platform to share, discuss, explore ideas and help solve problems with fellow employees. All questions raised at the Town Hall were addressed and answered. The level of expenses for FY 11 is in line with the expenses incurred by other leading banks when they were at a similar stage of growth without factoring any inflation. You have been saying that DBL will exist as a Kerala bank, and to substantiate your claim you have cited the construction of the so-called head office at Thrissur. Initially it was announced that the building would have 18 storeys but the construction remains stalled. Critics of DBL say that it is only a ploy to distract attention from the bank’s plight. Dhanlaxmi Bank will always be a Kerala-headquartered bank, having a pan-India presence. Most of our critical functions like planning, legal, administration are still operated from Kerala. The construction work at our new corporate office is on in full swing. Piling work is over, bids were called for civil structure and we have shortlisted qualified bidders. The proposed 11-storeyed tower with two basements will have a total built-up area of 1,17,000 square feet. A project of this magnitude which takes about 20 months for completion needs to be meticulously planned and well executed keeping into account fair and transparent methods. The structure, the first of its kind in Thrissur, will have multiple amenities such as multipurpose auditorium, gymnasium and library, training centre and cafeteria for the employees. If DBL will remain a Kerala bank, how come there is just one Keralite on the board now? Among the top officers also it is reported that there are few (Keralites). Dhanlaxmi Bank is a pan-India bank and is effectively managed by a Board of Directors comprising professionals drawn from various walks of life. Recruitment at Dhanlaxmi Bank has always been on merit and experience. We have information from reliable sources that to show the Rs 1.62December 1-31 , 2010

crore profit as on September 30, 2010, you had deferred expenses worth crores and also given instructions to the staff concerned to debit some amounts from your customers’ accounts to put the balance sheet in the black. Dhanlaxmi Bank is an ethical organization led by a team of competent professionals. Like all banks in India, we are monitored by the Reserve Bank of India. If there were any discrepancies, the banking regulator would have noticed them. Being a listed organization, we ensure we comply with all the regulations and stock exchange guidelines, which include quarterly announcements of our results. Data available with us show that out of the 39,79,225 ESOPs the bank granted, you got 10,50,000, about onefourth, making you the largest beneficiary. The present market value of the stock comes to crores of rupees. It is also alleged that some other officers who have been with the bank for a long time got only very few. To create a sense of ownership among employees, we initiated two schemes. ESOPs were provided to existing employees as a reward for their loyalty. The allocation was arrived at on the basis of their designation and years of service. JESOPs were introduced to attract professional talent from other private sector organizations. The scheme was launched as our ability to pay fixed salary was limited. The allocation for new employees was arrived at on the basis of their past=drawn salary and ESOPs, if any. Senior employees who had taken a salary cut while joining were offered a higher allocation of JESOPs. ESOPs provide an employee with an opportunity to acquire a stake in the bank, create a feeling of ownership and thereby aligning his/her performance towards achievement of common goals. The employee gains only when the share price of the bank appreciates. This provides a high motivation for the employee to walk that ‘extra mile’ to secure the bank’s growth and profitability. The employee thinks long term as the plans have adequate protection by way of lock-in periods or staggered vesting schedule. In our case, JESOPs have a two-year lock-in, whereas ESOPs have no lock-in period. The stock options offered to me were approved by the Board of Directors and the RBI. The overall distribution of stock options was streamlined and done in a systematic way.

18 18

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19 19

KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

Buy a Lifestyle for the price of a Home! "O

ur 60 years of industry experience has given us an in-depth understanding of what our customers want,” explains Lt Gen M G Girish, Executive Vice-President, DLF Kerala. “They are looking not just for a home, but a way of life. As a company we have proved our mettle, as you can see in south Delhi and Gurgaon, among other places in India,” he adds. DLF prides itself on being a customerfriendly organization. “We are always looking for ways and means for our customers to gain at every level,” Lt Gen Girish says. The company even gives you the assurances in the form of DLF Advantages, which include paying up a penalty if possession is delayed, discount on early payments, discount on advance funding and, of course, the sheer economic advantage of scale that comes with DLF’s large projects. Customers also gain from DLF’s association with the best in every sector. So when it comes to architecture, the company has teamed up with the globally-renowned architect, Hafeez Contractor, for all its projects in Kerala. In construction too, the company has amalgamated with its JV partner, UK-based Laing O’Rourke. Laing O’Rourke is a world leader in the industry and has done significant projects like the Dubai International Airport and

the Millennium Tower and T-5 Airport Tower in Heathrow.

selves with sport and games and then dine in style in a modern restaurant ambience.”

“In our projects, we offer the best of facilities that India can provide,” says Lt Gen Girish, adding that they are looking at global living trends to see what more they can offer their customers. Which is why projects like DLF New Town Heights come fully-loaded with every urban and modern comfort, including Wi-Fi connectivity, IPTV and an integral water treatment plant, besides amenities like a plush clubhouse, swimming pool, banquet halls etc.

He stresses that the clubhouse and campus are extremely elderly-friendly, which is an important element for the people of Kerala which has a sizable elderly population that lives alone. “A great area of the project is landscaped and, hence, free of moving traffic,” he explains. “Children and older people can use this space freely. Besides, for elderly people living by themselves, having all amenities nearby, from a clubhouse to a food court and shopping centre are added advantages that make life that much simpler and more secure.”

Besides, New Town Heights will also be home to Signature Tower, which includes a modern shopping Lt Gen M G Girish DLF’s Riverside, which mall and deluxe residential complex. consists of 185 waterfront, airEverything you could wish for that conditioned apartments in 5-plus acres, is more makes a living space worth your investment of an upmarket project. Prices here range from is at hand, from a hypermarket and food court Rs 95 lakh to Rs 2.8 crore. to a beauty parlour, pharmacy, postal facilities, bank ATMs and even a florist! The Riverside boasts many ritzy features The highlight of New Town Heights, says like a 25,000-sq ft area earmarked for ameniLt Gen Girish, is the clubhouse. “It will have ties like an amphitheatre, boat jetty, angling every single recreational activity that a mod- area, integral shopping area, Ayurvedic masern club can boast,” he says. “The club will be sage parlours, salon, guest suites and resprofessionally managed by agencies in the taurant. This project, like New Town Heights, hospitality and leisure industry. And it will be also has Wi-Fi connectivity and is IP TV-ready. open only to residents, making it an indulgent A sample flat and site sales office will be readhaven for residents, who can entertain them- ied at Riverside in two months’ time; Riverside

Asset Homes: Relationship core to its business A

Asset Homes, again, was the real estate company with many first to build digital homes: wirefirsts to its credit, Asset Homes free Internet in each apartment and does not build homes but relationships common areas, biometric entry to too. It is this stress on relationships each apartment, digital surveilthat sets it apart from other players in lance system with IP camera conthe field. This relationship is between trol, video door phone in each the promoters and the clients, among Mohammed Saleem home, digital cable TV connecthe clients and among tion with option for the promoters themEPG, PPV, VoD and auselves. “Relationship is tomatic gate opening the core to the way we for owner’s vehicle. It do business’’, according also ensures that the to Managing Director houses it is building Mohammed Saleem and are eco-friendly. “BeDirectors Anil Varma and ing green is glorious”, Sunil Kumar V. Anil Varma Sunil Kumar say the Directors.

PASSLINE

is scheduled to be handed over by mid- 2011. DLF is launching a very exclusive and super-luxury residential apartment-cum-office complex with a shopping arcade on the most scenic and sought-after locale in Kochi—Bay View, DLF Marine Drive, Kochi. This fully airconditioned project has a host of exclusive amenities and facilities awaiting you. The company is planning to officially announce the project shortly. Commissioning of Vallarpadam Container Terminal and the new 4-line Highway should boost the investment opportunity with Bay View, DLF Marine Drive, says Lt Gen Girish. DLF has its own batching plants at all the sites which ensure better quality of construction. The structure strength is one level above the requirement as far as earthquake resistance is concerned. The double-wall structure in air-conditioned projects ensures optimization of power and takes care of the highquality aesthetics that DLF is known for. Balance between comfort and nature is very well maintained in all DLF projects. Buyers in Kerala, when compared with those in other States, are much ahead in awareness of their requirements, needs and desires. Sizes of rooms, ventilation and proximity to nature together with growth in their investments are matters of concern to them, says Lt Gen Girish.

Service a mission at Kalpaka Builders celebrated name in the field of construction and one of the fastest-growing builders in Kerala with over a decade of experience, Kalpaka Builders Pvt Ltd brings to its clients a splendid selection of housing projects at several spots in Kochi.

Kalpaka ensures the timely completion and delivery of all its housing projects.

With a team of efficient and dedicated engineers, supervisors and other officials,

ing, home care services, after-sales services and home loans.

“At Kalpaka, the relationship with the client does not end with the structure of a house. I believe in building dream homes and relationships with the proud Kalpaka Builders is committed to owners. And, so, Kalpaka ofa service mission that entails delivfers the client an array of serery of nothing less than top-notch vices so essential to every home quality and impeccable service. owner. This is just to reiterate Having built landmarks of com- Sunith Vasudevan the commitment to the client”, mitted service over strategic locations in and says its Managing Director, Mr Sunith around Kochi, Kalpaka Builders has now ex- Vasudevan. tended its realm of service to other major citTo this end it has focused its attention on ies. the spheres of home building, interior design-

December 1-31 , 2010

KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

Experience city life with surround nature A

life close to nature is a rare bliss in urban life today. It is a true blessing if the conveniences of the city are blended with the refreshing ambience of green nature. That is exactly what Seiken Builders intended while visualizing its latest villa project at Kozhikode, Seiken Courtyard. These luxury villas, inspired by nature as their tagline goes, indeed is a testimony to eco-friendly living. Seiken Courtyard, a harmonious blend of private homes set within the ambience of community living, consists of 19 individual villas, and is atop a gentle, natural, elevated terrain, nestled in a cloak of nature. Each villa, 1,959-2,848 sq ft, is an inspiration in design and aesthet-

ics, crafted to provide distinctive inmarble and designer ceramic tiles. dividual spaces and privacy, with a All the bedrooms and living rooms host of modern conveniences and have provision for TV while there amenities for a luxurious lifestyle. is provision for telephone in all bedModern amenities including a wellrooms, living and dining rooms and appointed clubhouse, swimming the kitchen. All the toilets are empool, snooker, recreation hall, health bellished with superior-quality club, Wi-Fi system, automatic rechrome-plated fittings along with mote entry system, designer landprovision for geyser. The Sakhariya V K Chairman scaped garden, caretaker kitchen has provision for waSeiken Properties room, driver’s resting room and ter purifier and dishwasher. automatic streetlight set the Facilities like perimeter comambience for a safe and secure upmar- pound security system, video door phone ket social lifestyle. system, LPG gas leak sensor, fingerprint Imported marble is used for the living lock system for entry door etc ensure and dining rooms while premium vitrified security for living.

Saleem C S Managing Director Seiken Properties

tiles are used in bedrooms and vitrified tiles for kitchen and work area. The master bathroom is designed with imported

Seiken Properties, a fully integrated housing development company initiated by Kerala Roadways Ltd, has been a trusted name in residential and community development projects in Kerala for over a decade. With a host of successful projects both in Kozhikode and Kochi, and over 250 extremely satisfied customers, Seiken continues its commitment to provide high-standard quality, value and efficiency in a trusted and professional manLocated just 350 metres from ner. Making each new project Siraj M K Thondayadu Bypass, Kozhikode, Seiken Joint Managing Director a beautiful home, and a wonKerala Roadways Courtyard lies within close proximity to derful investment.

The green way to healthy living N

oel Greenature is the first Indian Green Building Council (IGBC)-pre-certified residential building in Kerala which provides ecofriendly projects conforming to the ‘green’ concepts that are rapidly catching on in the building industry. In an interview to PASSLINE, Mr John Thomas, Managing Partner, and Ms Geetha John, Executive Partner, of Noel Villas and Apartments, discuss the present trends in the realty sector and their green projects. Excerpts:

tively involved in developing strong client relationships. We take strong initiatives in keeping the design contemporary and world-class and ensure client satisfaction by maintaining high standards. We have a dedicated team of highly qualified professionals both at the design and project sites and in the office.

comforts of a city dwelling in 2.20 acres of designer-landscaped area with two towers. This project is constructed based on the new rules and regulations of the Government, with an FAR of 2. Each tower has GF+15 floors, with four flats on each floor, and the area varies from 1,500 sq ft-2,300 sq ft.

What is unique about your projects compared with conventional buildings without the green concept incorporated in them?

As the construction boom is creating a lot of environmental problems now, what is the scientific and systematic way of getting rid of these ecological hazards?

From Noel what you buy might be an apartment, but what you will get to live is a spacious villa built in an odd and even design providing ample height between floor and roof. With Noel Greenature, it is truly owning your The unprecedented construction boom in piece of sky without losing on your little piece Kerala, which is expected to acof earth. The project is designed celerate in the days to come, is with 2 FAR, providing more open leading to widespread pollution. It space. The residents of the buildis therefore necessary to ading can enjoy improved energy efdress the environmental issues ficiency, increased water savings, associated with construction in a toxin-free materials and products scientific and systematic manner with recycled content, use of daywhich includes various factors light for better health and produclike selecting a site for the contivity, improved asset value and John Thomas struction and planning of the marketability. It is built with little imbuilding, the arrangements made for minimum pact on the land and is healthier for the people use of water and materials used to save en- living inside. ergy and the buildings. Indoor environmental Spread on a lush green environ, quality depends on designs and innovations. Greenature houses 100 villa apartments, each What is the ‘green’ specification achieved by Noel Greenature? Noel Greenature has achieved some 45 parameters of the Indian Green Building Council (IGBC) specifications and has acquired the ‘IGBC Green Homes Pre-certified Gold’ certificate. Will you elaborate on your projects and management? As engineering graduates with more than 25 years of experience in the field we are thorough with the problems and possibilities of the construction industry. We lead from the front, constantly monitor quality and are ac-

one having its private garden in front and walkway to enter the living room through the picket gate. Ventilation for all Greenature villas has been furnished with glass having U-Value (UV) to obtain natural light and to reduce heat. This ensures a better living environment and a healthy atmosphere. This also protects the eco-system. What about the other Noel projects? Noel has other premium projects in Kochi. ‘Noel Arcadia’ is one among them. It is a premium residential project at Vazhakkala, Kakkanad, and is decked with the most modern amenities. It is a stone’s throw from all the

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reputed hospitals, educational institutions, shopping complexes and commercial establishments.

December 1-31 , 2010

Another one, ‘Noel Focus’, a commercial project, is coming up by the side of SeaportAirport Road near the Cochin Special Economic Zone (CSEZ). It consists of corporate office spaces and premium guesthouse spaces. The project has three levels of basement car parking. The ground floor and first floor are shopping malls, and from the second floor onwards office space starts. The area ranges from 1,300 sq ft-2,500 sq ft. The building is centrally air-conditioned with full power backup and has common amenities like conference hall, gymnasium, cafeteria etc.

KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

Heera homes—luxury at affordable price E

stablished two decades ago in Goa, the in Thiruvananthapuram are focused on those Heera Group has diverse business ac- clients who seek luxury at affordable prices. tivities like property development, hotel opera- Both the apartments are located near hospitions, civil contracting, education and tourism- tals, educational institutions, banks, restaurelated projects. Heera has of late extended rants and shopping malls. Facilities like wellits arms to Kerala and other States. Its vast equipped fitness centre, children’s play area, experience in the real estate industry has reticulated gas connection, air-conditioned helped it to formulate and comprehend the lobby, proximity censor entry card, swimming concept of a home. It thinks that a home is not pool, jogging track etc make these projects just a place, but an expression of one’s indi- different and add value for money. Another viduality. A home has a soul, a character and a aspect which is differentiating Heera is the personality all of its own. Heera gives utmost selection of location. The projects are in the importance to implementing this concept, fo- heart of the city like Heera Crescent at YMR cusing meticulously on every detail and the Junction, Nanthancode, Heera Golden Hills at client’s needs. Quality, economy and comfort Nanthancode near Kanakakkunnu Palace, are the factors that Heera rely on to Heera Highlife at Devaswom Board achieve the needs of its clients. More Junction and Heera Blue Bells at than 30-lakh sq ft floor area in 1,700 Vellyambalam, which are marvellous happy homes in a short span of time examples of peaceful city life. They proves the success achieved. The are right in the heart of the city but Heera Home Care Division is a spenot much affected by its hustle and cial wing of Heera’s services that bustle. Projects like Heera Lake Front takes care of aspects like mainteand Heera Towers are for those nance, emergency repairs and bill/ who seek a peaceful environment. Dr A R Babu tax payments. The 24-hour division Facing the Akkulam Lake, one of the for the Residents’ Association also provides tourist attractions of the city, Heera Towers is other services like customizing apartments ac- a unique combination of natural beauty and cording to the owner’s requirements and rent- luxurious lifestyle. Heera Infocity is another ing them out in their absence. Heera apart- hi-tech project, which is located near the ments are made to satisfy varying customer Technopark, one of the largest technology requirements. Projects like Heera 4pillars at hubs in the country. Dr A R Babu is the ManagKillippalam and Heera Dreams at Sreekariyam ing Director of Heera Homes.

PASSLINE

December 1-31 , 2010

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KERALA PROPERTY EXPO, KOCHI, DEC. 17-19, 2010

Trinity—a synonym for luxury, excellence

for better cross ventilation. There are several other facilities and a green environment.

plot is very near the world-famous Lulu International Shopping Mall project site.

Trinity World is on six acres of highly valued property in Kakkanad with world-class facilities.

Aluva, which is one of the fastest-developing localities around the city, is the other location with Trinity having two waterfront apartment projects as well as a super-luxury villa project.

Trinity-The Garden, Aluva, close to the Periyar riverfront, is a thoughtfully planned and executed villa project, unique in its own standards. The project is set on an eight-acre, lush green, unpolluted tract of land. There are only 43 villas in the project in fourbedroom options, each with huge glass windows for better ventilation to let in natural light and air to the maximum. One will feel close to nature, yet pamC J Mathew Chairman pered by modern comforts.

Trinity-Periyar Sands will change the direction in which life flows, elevating one to undreamt luxury. Periyar Sands is designed to ensure that the view of the Periyar is seen from every apartment. The apartment will be a spacious 2,000 sq ft or more.

rinity Builders and Developers, a unit of Trinity Arcade Pvt Ltd, offers a comprehensive portfolio of villas and apartments in Kochi’s finest locations. Known for its speedy quality construction, Trinity homes are fast altering the cityscape. It has nine projects in various stages of completion in three of Kochi’s prime locations, including two in Kakkanad, to cater to a large chunk of the IT and IT investment crowd.

The project location at Edapally is at one of the most vantage points of Kochi. Trinity has grown steadily since its inception. The company’s intention is to have sustained and managed growth by maintaining a low debt-to-equity ratio. The company’s success lies in its ability to attract and retain experienced personnel with its good HR policies. It is also extremely price-competitive and highly quality-conscious, executing only premium projects packed with modern living amenities and providing world-class sales and after-sales environment to all, small or large. Projects: Trinity: Castle, Crest, Crown and Coral, all at Edapally; Periyar Sands, Periyar Winds and The Garden, at Aluva (super-luxury villas); and High Grove and World, at Kakkanad. Trinity’s other projects are Trinity World– Jupiter, at Kakkanad, which is located near Smart City and Infopark that guarantees high returns. The construction is specially designed with apartments placed around a central atrium

Situated at Desom, Aluva, the bustling satellite city of Kochi, the customer is just around eight km from the Cochin International Airport. Aluva Palace, Aluva Manalppuram and the Shiva Temple will be the august neighbours.

M J Luiz Director

Trinity-Coral, Edapally, is a glittering example of the high quality and value of a Trinity home. The client can live in one of these threebedroom apartments and proclaim his/her class to the world! It’s the kind of location that will add value to their life. Just 200 metres from the main road (NH-47) at Edapally, Trinity Coral is on a 2.5-acre plot, right next to acclaimed Trinity-Castle, Crest and Crown. The

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The idea behind Trinity-Periyar Sands has been conceived with a clear vision to raise the quality standards prevailing in the industry, a vision outlined by its team, drawn primarily from the fields of construction and real estate. The Roy Joseph Managing Director facilities offered are ones which set the industry standards. The project site is a mere four km from Cochin International Airport. Important schools, colleges, places of worship, K J Paul hospitals etc are Director close by. Important city hubs like Edappally and Palarivattom are easily accessible. If one has reached the pinnacle of one’s life, Trinity-High Grove is the home for one. This elegant G+14-storeyed apartment complex is right in the IT heartland of Kerala, Kakkanad. So now, one can pursue one’s personal and professional dreams, with equal fervour. Priced affordably yet not compromis-

December 1-31 , 2010

ing on the luxury elements, it offers the ideal investment opportunity. High Grove is right next to Model Engineering College, Thrikkakara, and is in close vicinity of the famous Thrikkakara Temple and CUSAT. The city’s strategic road, the Airport-Seaport Road, runs close to it, connecting one easily to some of the most prominent locations of the city. Major industrial and IT parks like Kinfra and Infopark are in close proximity. Made up of a team of individuals, passionate about making excellence in the housing scenario, Trinity is the vision of its able directors drawn primarily from real estate and construction, well respected in their own fields. Trinity-Crown, Edapally, has plush interiors, and ample air-flow. The location is just 200 metres from the main road at Edapally. The project is set on a majestic 2.5-acre site. The client will be close to the highly popular Trinity-Castle, Coral and Crest. NH 47 and NH 17 are nearby as also the Lulu International Shopping Mall site. All Trinity projects incorporate facilities like fully vitrified flooring, clubhouse, health club, swimming pool, indoor games, party area, business centre, guest room, intercom, driver’s room, centralized gas supply, home theatre, Internet broadband connectivity and sovereign quality. The reputation and credibility of the company’s promoters have assured buyers that Trinity’s projects are good investments as well as gracious lifestyle statements. Drawn primarily from real estate and construction, Trinity’s directors are well respected in their own fields. They have united with a vision to bring quality housing to Kochi.

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Prospects very good for economic growth

ccording to ace stock broker and investment guru Rakesh Jhunjhunvala, India is going through a bullish face. In a recent interview he said, “I am not bearish at this moment though there are certain corrections in the market.” Experts like him think that Indian bourses will touch the 25,000-point mark by next Deepavali. Also, despite the repeated scams in the different sectors of the economy, Finance Minister Pranab Mukhrrjee recently said that the nation was presently growing at the rate of 8.9% and is poised for a growth rate of 9% by the end of this financial year. Of course, the market and banking regulators and even the rulers can’t take the credit for this state of affairs. More than anything else, it is the outcome of the fundamental strength of our great nation. One who can recall Planning Commission Vice-Chairman Montek Singh Ahluwalia’s comment during the recent banking scam cannot but agree. He said, “A scam to the tune of Rs 1,000 crore is not going to make any difference to our strong banking

system in particular or the economy in general”. Unlike the country’s previous growth stories, this time the agricultural sector also has contributed to the overall growth by 3%. Prime Minister Manmohan Singh had congratulated Minister of State for Agriculture K V Thomas on the achievement. Thanks are also due to the abundant rain and the good harvest.

heights. This year’s Union budget is around the corner. It is accepted by all that this year’s good monsoon coupled with the impending elections in certain States, including Kerala, is sure to force the Government to introduce a budget which will at once be populist and also one that will

Usually it is sectors like banking, IT, real estate and pharma that contribute largely to growth. Growth in these sectors also was conducive to pulling the economy to new

KSFE chitties instant hits K

erala State Financial Enterprises (KSFE), a State Government undertaking, has carved a niche in the chitty business with a series of chitties including the ‘Pravasi Bandhu Chitties’ which have become an instant hit with Pravasis. ``Now we are going on with the fourth edition of Pravasi Bandhu Chitties. The new series, as the earlier ones, we are sure, will prove highly popular,” says Mr Mani Vithayathil, Chairman of KSFE.

aware of its programmes”.

There has also been a quantum jump in its agency system. It has now become a destination not only for permanent income groups but also for casual income

earners. KSFE is an example of how effectively a public-sector firm can function in today’s market economy. The catalyst for this growth was the entry of the Ponnona Chitties. The Pravasi Bandhu Chitties are intended to maintain a close rapport with non-resident Keralites (NRKs) who are the backbone of Kerala’s economy.

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One who analyses Kerala’s contribution to national growth will certainly come to the conclusion that except in a few sectors like banking and finance and real estate there is

DBFS: creating value for customers

and

KSFE has tried to remove its image as an establishment for the fixed-income group by relaxing and bringing about allround changes in its surety norms.

Mani Vithayathil

The sudden metamorphosis of KSFE from a small State-sponsored undertaking into a big corporate entity and a modern financial institution, says Mr Vithayathil, “is due to the widespread acceptance of our chitties by Keralites not only at home but all over the world. Publicity campaigns through the media—both print and visual—have also helped KSFE earn the trust and admiration of people and make them

operations

meet the expectations of industry.

hardly any growth in other sectors. All our prestigious projects are still languishing for reasons known only to the authorities. But there has been some revival of interest in Smart City which gives hope that it might get started though not very soon. According to media reports, Mr Yousaf Ali, the illustrious son of the State and the NRI business tycoon, is mediating between the State Government and Dubai’s Tecom, the promoter of the project. Let us hope that the ice will melt and a Smart City project, the dream and expectation of the people of Kerala, will fructify. It is also good news for the wellwishers of the State that two prominent business houses are tapping the market with their initial public offers. Experts in the stock market expect a slew of Kerala companies also to follow suit after the successful maiden offers. The forthcoming election may also augur well for the industrial sector. People expect a change of guard after the elections. They think that this time the mandate will be for development. For them election is the light at the far end of the tunnel.

stablished in 1992 as one of the first corporate brokerages in India, Doha Brokerage & Financial Services Ltd (formerly Select Securities Ltd) is the flagship company of the DBFS Group.

With a pan-Indian presence, which comprises over 260 branches across major cities, as well as in Dubai and Doha in the Middle East, DBFS is always closer to its customers.

Doha Brokerage & Financial As the Managing DirecServices Ltd is focused on cretor and CEO of DBFS, Mr ating utmost value for its cusPrince George has turned the tomers consistently by drawgroup from a small-time meming on its collective expertise, ber of the Cochin Stock Exresources and global change to a 250-plusPrince George exposure. To serve the cusbranches-strong brokerage tomers better, the company has gone be- with the entire range of brokerage acyond the traditional brokerage business, tivities and licences. Mr Prince George and offers a wide range of services, which has represented various committees of include total wealth management and in- the exchanges and associations in the vestment solutions. capital market. December 1-31 , 2010

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- Banking & Finance

How to approach a lender H

aving decided to borrow for a business, it is time then for an entrepreneur to decide on whom to approach. A decision can be taken based on factors such as the sources around, the known effectiveness, own experience and the affinity established. There is no hard and fast rule as such to it. But what is more relevant is the way one approaches a financial institution (FI)/bank. And it is always guided by the elementary rules of courtesy and openness.

By K M Nair

As an entrepreneur, your aim is to get the best possible facilities and terms that are affordable. You may want the FI to partner and share the risk. A lender’s motivations will also be on the same lines for themselves. They are interested to ensure safe and stable return on the money lent. They would never like to run the risk of having a customer who is a known cheat, or is not creditworthy. You must show that you are the one whom they are looking for; that you have a good track record or have the background and capability to excel in the chosen line; that you are positive and forward-looking; that the business you propose is definite to generate enough cash to cover all commitments including the obligations to the lenders. There are certain winning grounds, which are nothing but common sense. Basically, what you should do is to understand what the lender needs to know about you. Look at some of the tips below: 1. Know whom you are going to deal with: Once an institution is identified to go with, enquire about experiences of people about them – about quality of service, financial strength, standing in the market, organizational culture, attitude of people etc. Also have some basic data about them from their brochures, website etc for a fruitful negotiation later. 2. Give prior notice of your intention: Relationship seldom blossoms through correspondence. You must meet the lender, preferably the key person. A reference from a common friend may help them judge you better. But be sure not to throw big names or canvassing; that may not digest well in a professional organization. Call up or write to them beforehand for an appointment setting out briefly your intensions and background. 3. Avoid shopping around after establishing a relationship: There is nothing wrong in trying to know the financial sector and making comparison for the best deal. But, do it during the first leg and not after establishing a relationship. After spending hours together, a lender will not like you to say that you have found another partner. Once they lose trust in you they can spoil your chances elsewhere also. Remember that the success of a relationship is built largely on trust. With positive experiences, your standing may rise in the long run. 4. Be well prepared and ready to provide information: A lender is supposed to be a busy person. Do not beat about the bush in discussions;

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come quickly to the point. Present your proposal crisply and clearly. Have a comprehensive business plan (see box) and up-to-date data. The figures should not be wishful thinking but should be clearly firmed-up ones. State clearly what you intend to do with the funds you plan to borrow. Tell them all about the project and take them into confidence on all arrangements made and proposed. 5. Be cautious: You must not overcommit on anything, say, like bringing margin or offering security. Also resist the temptation of excess borrowing. You need to have a reasonable proportion of your own capital in the business. If you borrow, it must be the better alternative to not borrowing. The question about collateral may also arise. This might make you nervous, but lenders may find comfort in it. As they see it, your reaction to it reflects your confidence level in the success of the venture. Generally, lenders may propose certain facilities and requirements familiar to them or most remunerative or less risky. That does not mean that you stretch beyond your means to satisfy a manager’s

could be more knowledgeable than you about the risks and drawbacks of your business. It is also worth remembering that the financial sector is often a close-knit community despite the competition among all. A lender will ask another and will easily obtain references about a customer. The Credit Information Bureau of India Ltd (CIBIL), besides the Reserve Bank, also provides useful information about defaulters. You will have only wasted your time and probably closed the doors to future dealings if you have hidden the actual facts. 7. Be honest but demanding: You must not hesitate to be demanding. But, do ensure to be honest in all your talks and dealings. Seeking loan is your legitimate right; a lender is duty-bound to provide it. It is not a favour to you, but a help to themselves. The lender is supposed to respect and honour you as an entrepreneur. So, demand what you are entitled to. Explore all possibilities of getting the best. Remember, however, that getting the most favourable terms is not just a matter of lower interest alone. You must have

Brief outline of a business plan * Profile of shareholders (specify net worth also). * History of the company/business/associates * Organization and management structures * Proposed cost of project and its sources * Location details/advantages * Market study of the project t(s) * Summary of production technology * Details of raw material required/procurement * Balance sheets and profit and loss accounts forpast three years * Balance sheet, profit and loss, cash flow statements fornext 10 years * Economic benefits and SWOT analysis of the project (The author, former Chief General Manager of the Small Industries Development Bank of India (SIDBI), is presently Managing Director of the Kerala Financial Corporation. The article, intended to help MSMEs in choosing a lender, is broadly based on the Guide on How to Approach Banks published jointly by SIDBI and International Trade Centre)

overenthusiasm. You should commit only what you can afford. As for collateral, there is now a better alternative. Credit guarantee is available for loans up to Rs 100 lakh from the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) which eliminates the need for collaterals and third-party guarantees. You can always insist on guarantee cover of CGTMSE. Be that as it may, the lender may still not derive confidence in granting you a facility. It is unwise to insist on borrowing from an unwilling lender. Once you catch up the mood, quickly look for another amenable partner. 6. Be open and transparent: It is a good policy to be open and transparent with lenders. It will enable them to grasp the full situation and to give you appropriate advice. Withholding important information may cause difficulties at a crucial stage. Do not hesitate to give full details about your assets, liabilities and encumbrances. Lenders are liable to maintain all such information under KYC (Know Your Customer) norms. Bear in mind that the lender

December 1-31 , 2010

the vision to look for an alliance beyond petty gains for greater prospects and opportunities. Remember that what you need is a partner for all seasons and in all adversities; not just a fairweather partner. One last word: Be a good payer once you are through with it. Build up your reputation as one who always pays on the dot. Banks/FIs have to apply stringent risk management rules usually enforced by the regulatory authority. Non-payment or late payment imbalances their lending to thousands like you, besides impacting their balance sheet. That may also result in your getting branded as a risky debtor, making it harder or more expensive for you to borrow in future. It is better to let the lender know before-hand about your problems. They may not mind restructuring the loan or offering you supplementary support. Having seen many such complexities, they may even take you through the right path to success.

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By Bobby John Pulickaparambil

DTC provision T Section 15 (2) of the DTC provides that income from ‘special source’ shall be computed in accordance with the provisions of the Ninth Schedule. It says that the amount of accrual or receipt shall be computed as the taxable income, and no loss, allowance or deduction shall be allowed. This will be a bolt from the blue for many ‘Pravasi’ Malayalees who have invested all their hard-earned money in their homeland.

harmful to NRIs

he present Income Tax Act was enacted in 1961. The lawmakers made many experiments in the Act through amendments. The frequent changes, technical interpretation and ambiguous provisions made the Act one of the most complicated direct tax laws in the world. There was an overwhelming demand for replacing it with a simple and coherent law. The lawmakers finally decided to pay heed to the long-pending demand from the tax fraternity and the general public. That resulted in the new avatar, the Direct Tax Code (DTC), which is expected to come into effect from April 1, 2012. The DTC has received mixed response. It triggered protests from charitable and religious institutions and caused resentment in some sectors like shipping. It is pointed out that the hair-raising drafting of the code may create many problems. Moreover, there are complaints that it is harsh on NRIs. Another criticism is that a payer-friendly approach was not adopted while drafting many of the provisions. However, it appears that the makers of the code have done a reasonably good job

in immediately preceding four financial years is considered as a ‘resident’. If he does not fall within the above conditions he is a ‘non-resident’.

Residents are further classified as ‘ordinary residents’ and ‘not ordinary residents’. A person is said to be ‘not ordinarily resident’ in India in any previous year if he has not been a resident in India in nine out of the 10 previous years preceding that year, or has not during the seven years preceding the relevant financial year present in India for an aggregate period of 730 days. The residents are subject to tax in India on their worldwide income, but the ‘nonresidents’ and ‘not ordinary residents’ are not taxable in India on their income earned outside the country.

It is estimated that around 30 million Indians stay overseas for employment or other purposes. Out of them one million NRIs are visiting the country every year. They will now have to restrict their stay in India to less than 60 days to avoid becoming tax residents.

The DTC proposes to abolish the concept of NOR. It has been replaced by providing exemption to the individual on the income, which is sourced out of India. This exemption will be available from the financial year in which the NRI becomes a resident and the immediately succeeding financial year, if such an individual was a non-resident for nine years immediately preceding the financial year in which he becomes a resident. Therefore, in the case of a returning Indian who has been out of India for a long period of time, he may become liable for tax on his worldwide income (if he retains sources of income overseas) from the third year of coming to India.

According to the present Income Tax Act, individuals are classified on the basis of residential status as ‘resident’, ‘non-resident’ and ‘not ordinarily resident’ (NOR). An individual who is in India for at least 182 days in a financial year or more than 60 days in a financial year and 365 days

Income is classified as income from ordinary sources and income from special sources. Section 15 (2) of the DTC provides that income from ‘special source’ shall be computed in accordance with the provisions of the Ninth Schedule. It says that the amount of accrual or receipt shall

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December 1-31 , 2010

be computed as the taxable income, and no loss, allowance or deduction shall be allowed. This will be a bolt from the blue for many ‘Pravasi’ Malayalees who have invested all their hard-earned money in their homeland. Under the DTC there is no basic deduction on the NRO interest income. All capital gains earned by a non-resident will attract a flat tax of 30%, irrespective of the amount of capital gains. Fortunately, the code retained the current exemptions in the case of interest earned on NRE and FCNR deposits with banks.

Another problem is the onerous and cumbersome conditions prescribed for utilizing the benefit of double taxation avoidance agreement (DTAA). India has DTAAs with around 70 countries. According to the present income tax law, an NRI is merely required to give a declaration that he was a tax resident in another country. Section 291(5) of the DTC says an NRI has to submit a tax residency certificate from the country of his residency for utilizing this benefit Seafarers constitute the major chunk of crew of a ship. Seafarers, working with Indian flag vessels, are presently considered non-residents if they sail out of India for over six months. In other words their income would not be taxable in India. Going by the parameters of the DTC, the seafarers will have to stay on foreign shores or waters for at least 10 months to qualify for tax benefit under NRI status. The Indian shipping industry apprehends that the new provision would discourage people to join ships with Indian flags because of high taxation. According to them, this would make it difficult to retain manpower in Indian

shipping companies which are already facing a tough time, competing with several foreign countries that provide various tax concessions to their employees. The Finance Ministry hopes that the DTC will plug loopholes and also simplify the tax laws. It says the DTC has only attempted to clean up the provision in line with the laws globally. The department has its own reasons for the changes in law for taxing NRIs. The two main reasons are: 1 it wanted to bring it on a par with global norms (if other countries could have such rules, why cannot we?) and 2 there were concerns about revenue losses. The fallacy of the reasoning of the Finance Ministry for abolishing NOR status is apparent. Firstly, it need not bother much about some fortunate NRIs who get beneficial taxation in a foreign land as it is not its concern. Secondly, taking the revenue aspect, the ground realities are to be considered. Crores of rupees are blocked in direct tax disputes, appeals, court cases etc. One can only guess the amount of money lost due to evasion. Is it better to concentrate on the compliance, clearing of arrears and prevention of evasion aspects than exploring the possibility of tapping a section of NRIs? Some experts have suggested that the Income Tax Department can define the term “visit’ more tightly to prevent any misuse of the NOR status instead of removing the provision altogether The NOR concept is well-accepted and time-tested. It has been included in the Income Tax Act 1922. The 1961 Act has also adopted the concept of NOR after initial hesitation. Similar provisions can be seen To page 26

M ONEY P OWER - Banking & Finance 2626 UBI reaching out to rural, semi-urban areas W

ith its strong technology back-up Union Bank of market conditions. “In Kerala we have 12 such cenIndia has made its presence felt in the rural and tres, two of them in Ernakulam district. These centres semi-urban areas of Kerala. The bank’s innovative prodare helped by state-of-the-art call centres in Mumbai ucts are specially tuned in for farmers and self-help and we offer 24x7 service”, Mr Mehta says. groups (SHGs). “As part of financial inclusion the bank UBI has a network of 2,900 branches and 2,400 has imparted training to 1,000 and 3,000 unemployed ATMs all over India. In Kerala, there are 190 branches candidates in skill development for self-employment in and 183 ATMs. Another 10 branches and 15 ATMs will Nedumkandam and Perumbavoor, respectively. The soon be started in the State. Total business is Rs bank will finance these trained candidates’ projects for 3,00,000 crore, out of which Kerala’s share is about their livelihood,” says Mr M K Mehta, Assistant 3.5% , amounting to Rs 9,500 crore. General Manager of the bank. Mr Mehta says microfinance is the bank’s Under the bank’s unique ‘Adarsh Gram’ major focus area in Kerala. There are 15,000 scheme, a village in the State is to be chosen beneficiaries under SGHs. Apart from that, the for infrastructure development with the help bank’s exposure is also into education, agriculof local bodies, says Mr Mehta. There are other ture, housing loans and exports. UBI has deinitiatives for people in Ernakulam and Idukki ployed Rs 1,000 crore in the housing sector districts where UBI is the lead bank. The obalone, another Rs 1,000 crore in agriculture M K Mehta jective of the bank’s Financial Literacy and and Rs 260 crore in education. Credit Consulting Centre (FLCC) is to educate the people NRI deposits amount to Rs 1,000 crore, accounting on financial matters and to solve their problems, he for 20% of the total deposits in Kerala. There are three says. NRI branches, one each in Kochi, Thiruvananthapuram Utilizing its strength in technology, the bank has and Palakkad. The bank has shifted 40% of its total launched Village Knowledge Centres (VKCs). The idea transactions into virtual banking with the help of its is to impart knowledge of agriculture, weather and technology.

Sreerag General Finance to launch institute

reerag General Finance Ltd, the non-banking fiThe company’s foreign exchange wing can undernance company (NBFC), which commenced op- take trading in all currencies. For the clients’ conveerations in 1994 with CARE and RBI rating, is an ap- nience it has introduced a World Currency Card (WCC). proved institution which can accept deposits If a traveller needs $10,000, he needn’t carry from the public. Mr Badri Narayanan, Chairthe currency in physical form. He can buy a man and Managing Director of the company, WCC for the amount and can use it anywhere says: “We have a gamut of services under he wants. This will help the client avoid any NBFC norms. We are into finance and leasing sudden depreciation of the currency and he and have a full-fledged money exchange can use the full value of the money. The comwing also. We are planning to start chits and pany also has a tie-up with Western Union an educational institution soon. Sreerag proMoney Transfer which enables it to do invides finance only for two-wheelers and has Badri Narayanan ward and outward money transfers. so far made this available for 40,000 vehicles. While Sreerag General Finance has branches in Kottayam, most finance companies give finance against all docu- Kochi, Thodupuzha and Thiruvalla and will extend its ments and guarantees, that too to the affluent class, activities to Chennai, Bangalore and Hyderabad soon. the unique feature of Sreerag is that it finances the “The idea of starting the educational institution is to impart self-employed, daily wage-earners and workers. They lessons in prudential norms, RBI rules and regulations, may not be having any guarantee or documents apart currency, trading etc. There is no such institution now from the RC book of the vehicle. We help them buy two- and there is good demand for people with expertise in wheelers. Our experience with these people has so these fields,” according to Mr Badri Narayanan. far been very encouraging, most of them being puncMr Shaji Mazhuvencheri Parambath is the Administual in repayment.” trative Director of the company.

CorpBank targets Rs 5-lakh-cr business by 2014-15

stablished in the temple town of Udupi, Karnataka, in 1906, Corporation Bank has now grown into one of the leading public-sector banks in the country. Today it has 1,184 branches and 1,166 ATMs across India with an anticipated business worth Rs 5,00,000 crore by 2014-15. For the period ending September 30, 2010, it achieved total business amounting to Rs 1,66,700 crore, which is expected to touch Rs 2,00,000 crore by the end of this fiscal. Elaborating on the projections and goals of the bank, Chairman and Managing Director Ramnath Pradeep recently said that during this fiscal the target Ramnath Pradeep is Rs 1.18 lakh crore of deposits and Rs 82,000 crore of advances. The growth rate target of 30% is a realistic figure, Mr Pradeep said. To increase the pace of growth the bank has started different verticals like corporates and medium-level companies, small and medium enterprises (SMEs) and the retail sector. For each portfolio there are relationship managers to solve the problems of the customers. “Our interest on corporate loans is 8.25%. For retail loans we charge 12% or more. We are trying to get 35%-40% growth in the retail sector and we hope to achieve this target by giving priority to small-scale industries (SSIs) and SMEs with the help of branchless banking,” he said. Mr Pradeep said that by the end of the 2011 fiscal the bank would open 200 branches out of which eight would be in Kerala. “Our first branch in Kerala was established at Thalassery. Now we have 68 branches and 48 ATMs in the State.We will start branches at Kalpetta in Wayanad district and Todupuzha in Idukki district soon where Corporation Bank has no presence now.” Dr Kurian P Abraham, Deputy General Manager, heads the bank’s Kerala operations. “In Kerala we have deposits worth Rs 1,600 crore and advances to the tune of Rs 1,150 crore. The State contributes 1.54% of the bank’s total business,” said Dr Kurian. He is optimistic about raising this to 2% by this fiscal. Dr Kurian said the bank had disbursed Rs 12 crore to the 1,108 accounts of self-help groups (SHGs) in the State. It has a CD ratio of 70.5% in Kerala, Dr Kurian added.

Ashwani Kumar new ED of Corporation Bank

r Ashwani Kumar, General Manager of Allahabad Bank, has been appointed Executive Director of Corporation Bank by the Government. His term is for five years. Mr Aswani Kumar has held different posts in various branches/offices and the administrative office of Alllahabad Bank during his banking career spanning over 29 years.

DTC provision harmful to NRIs From page 25

in the direct tax laws of other countries as well. The concept was part and parcel of our Income Tax law for decades. But taxmen found some irregularities and foul play in using the provision. Then comes the role of expert committees. The working group on non-resident taxation headed by Mr Vijay Mathur recommended doing away with the NOR status. It observed: “Such a provision acts against the grain of ‘residence-based taxation’, which provides for taxation of a resident of a country in respect of income from any source wherever situated. India follows the concept of ‘residence-based taxation’. India also is a signatory to more than 65 DTAAs. A person availing of the status of ‘not ordinary resident’ in India is not taxed on his overseas income but only on the income earned in India. The overseas income particularly the passive income is taxed at more beneficial rates in the source countries as provided for in the DTAAs. A resident in India escapes taxation on his passive income in India because of the NOR provision and is required to pay tax only at very concessional rates in the other jurisdiction because of DTAA provisions. Such a resident is not paying tax at full rate in either country. There is no rationale for continuing with the status of ‘not ordinarily resident’ for the

reason that it militates against the concept of taxation on global basis in the case of a resident. By doing away with the status of NOR an individual would be taxable in India on global basis if he becomes a resident and the Tax Department would thereafter have to give credit for the taxes payable in the foreign country in respect of the same income. The individual would therefore not be taxed twice on the same income and the Government would get its share of revenue.” Reading between the lines one can notice the unfriendly, if not hostile, attitude of the expert group to the NRIs. The committee has miserably failed to notice the invaluable contributions of NRIs to our economy. Thus the DTC proposes to widen the tax net by abolishing the NOR status. In other words more and more NRIs would have to pay Indian income tax in the coming years. In fact this is not a pure legal-taxation issue. One cannot ignore the economic, social and ethical aspects of NRI

PASSLINE

taxation. What prompted the NRIs to become NRIs? Not all went abroad in search of greener pastures. The sheer absence of job opportunities in the homeland, ie unemployment or underemployment, prompted the old generation to do so. The quest for better opportunities, exposure etc prompted a section of the new generation to seek career opportunities abroad. For example, those armed with degrees in bio- technology and nanotechnology etc found it hard to get opportunities commensurate with their qualifications in India. Is it proper and justifiable to tax their overseas income after prompting them to leave the country by not providing sufficient opportunities in the homeland? It is estimated that India requires $1 trillion for a developing country’s infrastructure. The Central Government is forming an expert committee on financing infrastructure. The aim is to raise the investment in infrastructure to $1 trillion during the next Five-year Plan (12th Plan, 2012-2017) from the $500 billion in the present Plan. Moreover, it is expected to mobilize around 50% of the invest-

December 1-31 , 2010

ment from the private sector. Here comes the role of NRIs. The service of NRIs is badly needed for the infrastructure development of our country. Then what signals do these tax reforms send to the NRIs? Does the code treat them as ‘non-required Indians’ as a section of the media has mocked? Our nation is indebted to the service of NRIs to a considerable extent. Past records show that they have responded to the appeals of the nation in a commendable way. They are ‘notably reliable Indians’ It is high time that the politicians and policymakers of Kerala which is heavily dependent on NRIs to ponder on the subject and pressurize those at the helm of affairs to amend the proposal. The NRIs are eagerly waiting for the reaction of the Ministry of Overseas Indian Affairs. Recently, the Power Ministry opposed the proposal of the Finance Ministry to increase the import duty on equipment for power generation projects. It said that such a move would adversely affect the ongoing power projects. Thus, there is nothing wrong in the Ministry of OIA taking up this matter with the Finance Ministry. NRIs do expect such steps from the Ministry of OIA particularly when a Keralite is at the helm of its affairs. (The author is a practicing advocate in Kochi. e-mail: advbobbyjohn@gmail.com)

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By R P Deshpande

- Banking & Finance

sidized interest rates ended. Increased defaults might create financial crises in the system.

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Teaser loans to end soon?

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With the Reserve Bank of India’s new guidelines in place, it is most likely that banks will refrain from offering teaser loans and soon the National Housing Bank, which regulates HFCs, will also issue similar guidelines to discourage them.

he State Bank of India (SBI), the country’s largest bank, pioneered ‘teaser loans’ in February 2009. The bank used it as a powerful tool to overcome the fierce competition, especially the competition posed by the oldest and largest home loan lender, HDFC (Housing Development Finance Corporation). When SBI announced teaser loans, HDFC publicly censured the concept and cautioned that such loans might lead to a sub-prime kind of crisis which the US witnessed recently. But perhaps afraid of losing its supremacy, HDFC followed suit and soon announced its teaser loans. It thought that all leading banks and home finance companies (HFCs) would join the bandwagon. What are teaser loans? They are home loans offered as adjustablerate loans, in which the borrower pays a very low initial interest rate, which increases after a few years. Teaser loans try to entice borrowers by being offered an artificially low rate and small down payments (equated monthly instalments or EMIs) for the initial two-three years. Afterwards, interest is charged at rates prevailing then. For example, if the prevailing interest rate is 10% for fixed-rate home loans, a teaser loan may offer 8% for the first year, 9% for the second and 10% for the third after the

initial fixed rate tenure. For the remaining tenures, the rate prevailing then will be applicable, ie applicable at the beginning of the fourth year. Teaser loans are like a sweet dish, which one may enjoy and eat a lot initially. But later on, one may not be able to digest it and may even end up with a stomach upset. As they offer you lower EMIs to start with, you opt for a higher loan amount to acquire a better accommodation. Further, in the initial years of repayment, you may be in need of more money—for house-warming, modern interiors etc. When property prices are prohibitive, it is quite natural to seek higher loan amounts, which is the single biggest attraction of teaser loans. But after the ‘honeymoon’, ie the initial period when EMIs are lower, you will have to pay higher EMIs. By then, if interest rates have gone up, revised EMIs may become a burden to you. If the interest rate goes up by more than 3%-4%, then it may be difficult for you to service such higher EMIs which may force you to default on repayments. Teaser loans also lead to the unethical practice of luring new customers with much lower interest rates while forcing the existing loyal borrowers to pay higher rates. Take the example of Mr Harish Rajan. He has taken a Rs 12-lakh

PASSLINE

December 1-31 , 2010

home loan for 20 years’ tenure to buy a property worth Rs 15 lakh. His take-home salary is Rs 20,000 pm. A bank has offered him 8% fixed interest in the first year and 9% for the second and third years. From the fourth year, the interest rate applicable will be the one prevailing at that time. The EMI for the first year is Rs 10,038 and for the second and third years Rs 10,771. Considering the high inflationary trends in the economy, it can be estimated that the interest rates may rise to 12%-13% in three years from now. If the prevailing interest rate turns out to be 12% in the fourth year, the revised EMI will see a jump of Rs 4,824 pm (28.8%) from the first year EMI. And if the prevailing rate goes up to 13%, then the EMI will rise by Rs 6,086 (over 36%) from the first year EMI. While Mr Rajan’s income might go up by 15%-20% in the fourth year and if the EMIs go up by 30%-40%, certainly it will force him to default on repayments, and even lead to his losing the property. The Reserve Bank of India was not in favour of teaser loans and so it kept on suggesting to banks that they should not introduce them. It cautioned that teaser loans were highly risky and gullible customers might be caught in the trap, and they might evade payments after the sub-

Since none of the banks took the advice seriously and continued to offer teaser loans, the RBI had to find ways to contain such risky loan portfolios. In its second-quarter review of the monetary policy, the central bank announced a list of prudential measures, such as increasing the standard asset provisioning by banks for teaser loans to 2% from the existing 0.4% and increasing the risk weight for residential housing loans of Rs 75 lakh and above to 125% from 100%. To curb risky high-ticket loans (Rs 75 lakh and above), the RBI put a regulatory ceiling of 80% on the loan-to-value (LTV) ratio in respect of banks’ housing loan exposures. The RBI also announced increase in key ratios to rein in the inflation, such as raising the repurchase rate, the rate at which it lends to banks, by 25 basis points to 6.25% and the reverse repurchase rate by a similar margin to 5.25%. With these new guidelines in place, it is most likely that banks will refrain from offering teaser loans and soon the National Housing Bank, which regulates HFCs, will also issue similar guidelines to discourage them. Reports say that there has been strong opposition by the SBI Chairman to the HDFC Chairman’s suggestion that all lenders collectively decide to do away with teaser loans. SBI’s contention is that the dual rate loan (teaser loan) is a desirable product for consumers and profitable for the bank. However the general feeling is that all banks and HFCs will join hands collectively to scrap teaser loans in the larger interest of all stakeholders. (The author is the Director of the Institute of Home Finance and can be contacted at deshpanderp2007@gmail.com)

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- Banking & Finance It is a widely known fact that over the long term, no other asset class can deliver as much return as the capital markets, and yet most people do not want to invest simply because they perceive the markets to be too risky. Going forward, the tables will turn: not investing in the equity markets will actually increase the risk of financial stagnation of a person’s portfolio. ..............................................................................................................................................................................................................................................

By Akshay Agarwal

ome time in 1986: I wanted to invest in 1,000 shares of Hindustan Lever Ltd (now Hindustan Unilever Ltd). On enquiry, I was told I would have to go to or contact a broker from the Cochin Stock Exchange (CSE). I went to the broker who said that he would do it, and invited me to CSE. It was a completely new experience to witness the way trading happened. There were 10-12 counters, and each of them had black boards with alphabets written on them. I was told that they represented the first alphabet of the name of the companies that would be traded on the counter. So, if I wanted to buy Hindustan Lever, my broker would go to the counter with ‘H’. The brokers and their sub-brokers assembled at the counters shouted out their offers and bids to buy or sell shares. There were over 200 people in the hall. In essence, a hall full of people shouting at the top of their voice. Imagine the din! If any two people’s verbal bid and offer were close, they bargained, agreed on a price and wrote out slips which were signed by both and the trade got executed. Talk about complications (though it seemed like people were enjoying the job)! That day, however, there was no one interested in

Hindustan Lever, and I was told that it would be better to place the order with a Bombay Stock Exchange (BSE) broker. There wasn’t much of a choice, so I asked him to go ahead. The order was then passed on to the BSE broker along with a large number of similar orders. I was asked to come back the next day for the confirmation, and if confirmed, I would have to make the payment immediately. The shares would come to me, in the physical form, after about 15 days. I would then send the shares for transfer to my name and would have to pay about 0.5% of the value as stamp duty and in about 30-60 days the shares would be in my name. In a nutshell: time taken to transact: 24 hours; total time for transfer: 45-60 days; total cost: about 3% and biggest problem: big on headaches, costly and hardly transparent, Sometime in 2008: I wanted to buy another 1,000 shares of the same company. I call my friendly neighbourhood share dealer. He gives me the rate instantly. I ask him to place an order on his online terminal, and he confirms the deal. Payment is to be given the next day, and the shares to be transferred to my depository account. Time taken

to transact: two seconds; total time for transfer: 48 hours! No physical shares, no risk of bad delivery, no headaches. Cost of transactions: about 0.5%, less than 20% of what I paid in 1986! Smooth, cost-effective and, most important, 100% transparent. Talk about change! What brought about the sea change? There are two major catalysts: one was technology: Thanks to it, the markets expanded, taking a U-turn in terms of reach. Instead of the investors going to the markets; the markets went to the investors. Trading, from happening across less than 30 locations till the late 90s, now happens from tens of thousands of trading locations spread across every nook and cranny of the country. As V-Sats and broadbands, the main two carriers of information, get cheaper, this trend will only catch on further. Mobile trading will further revolutionize investments. The markets will not only come to the doorstep of the investor, they will also move with him. The other important factor was regulations. The Securities and Exchange Board of India (SEBI), ever since its inception 1992, has been unleashing a

PASSLINE

December 1-31 , 2010

wave of regulations and reforms in the Indian capital markets through all the market players, be they the exchanges, registered brokers, sub-brokers and other intermediaries, listed companies or mutual funds. It has been a huge change, but very effective. Thanks to regulators like SEBI and the exchanges, over the years the capital markets in India have moved from being very opaque to being one of the world’s most transparent markets. An industry that was largely unorganized is now dominated by professional brokerage houses that compete with the best in the world, offering world-class technology and research with equally good services at brokerage rates which, thanks to the intense competition, are among the cheapest in the world. And the results: turnovers have leaped from under Rs 500 crore a day to over Rs 1,50,000 crore a day. And brokerages have crashed, from over 1% 10 years ago to as low as 0.01% for intraday trading (a 99% crash!) or 0.25% for delivery trades (a 75% to 90% crash). On the winning side has been the investor. It is a widely known fact that over the long term, no other asset class can deliver as much return as the capital mar-

kets, and yet most people do not want to invest simply because they perceive the markets to be too risky. Going forward, the tables will turn: not investing in the equity markets will actually increase the risk of financial stagnation of a person’s portfolio. As India marches towards its goal regaining its long-lost position as one of the world’s largest economies, its capital markets are booming and, periodic corrections apart, will continue to do well. Attracted by the rising prices and thanks to the various awareness programmes that the exchanges and brokers regularly conduct, more and more investors are turning to the equity markets. A winwin situation seems to be emerging for all the stakeholders, the exchanges, the intermediaries in terms of bigger and more liquid markets and for the investors: bigger choice of good companies to invest in, lower costs and, most important, much bigger changes of seeing substantial growth in their investment portfolios. After all it’s what the equity markets are all about: Sustained growth for the long term! (The writer is Managing Director, Acumen Capital Market (I) Ltd. His email address: akshay@acmlmail.com)

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COVER STORY

'Impropriety in disbursement of loans' From page 17

and Dhanlaxmi Bank—could be called ‘banks’ in the real sense of the term. Half of these 10 have vanished now, as also the so-called small ‘banks’, and two or three more are likely to follow suit soon. Dhanlaxmi may be the next in line, many think. They say that the takeover bid has appeared as a result of the gross mismanagement of the bank and because of the greed of the new stakeholders. Employees point out that Mr Chaturvedi is a rare visitor to the head office and he and important members of his team are stationed in Mumbai. According to RBI norms, the office of the CEO should be located at the head office. There are public-sector banks which retain their head office in non-metros and have grown as pan-Indian institutions. Insiders also highlight the fact that out of 39,79,225 ESOPs (employees’ stock options) the management had allotted to employees, almost one-fourth, 10,50,000, have gone to Mr Chaturvedi himself, making him the biggest beneficiary. Another 25,00,000 are, they say, with the new core management team members who were inducted recently and who are not Keralites. The senior Keralite managers who have been serving the bank for years, including Mr Jayakumar, have got only few ESOPs (see schedule). This will enable those who hold the highest number of ESOPs to get a windfall when the bank goes into the hands of another company, they worry. But more than these factors which do not directly impact the growth or existence of a bank, it is the state of affairs for the last two years that has affected DBL, which is a regional privatesector bank. Another impropriety pointed out by many relates to disbursement of loans. Those in the know of things at DBL say big loans are not provided in Kerala except to leading NBFCs. The percentage of the bank’s credit-deposit (CD) ratio as on March 31, 2010, is 36.27 which is very low compared with that of the other banks in the State (see schedule). During the last fiscal the bank had Rs 7,098 crore as deposits and Rs 5,056 crore as advances. Of these Rs 3,730 crore was Kerala’s deposits, but advances amounted only to Rs 1,350 crore. Still DBL continues to harp on the theme that it is a Kerala bank. They however admit, half jokingly, that this claim is partially true in the sense that Kerala remains the deposit base of the bank to provide corporate loans in North India!

Since most Kerala-based banks, including those in the public sector, have maintained their base rate at 8% it is amazing that DBL has fixed it at 7.5%. Another reason for the present situation in the bank is the jacking up of salaries and the increase in other expenses. The strength of the staff in March 2009 was 1,402 but by March this year it went up to 3,275. Strangely, though the number more than doubled, there were only few new recruits from Kerala. The figure includes several employees outsourced at fabulous salaries. Top managerial appointments are on a cost-to-company basis for which the bank is paying crores of rupees as salaries and perks. The operating expenses as of March 2009 were Rs 113 crore and as of March this year Rs 193 crore, a huge spurt. This, say employees, will certainly affect the bank’s growth. Mr Chaturvedi and the bank are still confounding their critics and coming up in the media with a brilliant exposition of the size

SCHEDULE Stock options Number of options granted: 39,79,225 Employee-wise details of options granted: Name

No of options granted

Amitabh Chaturvedi

10,50,000

Jayakumar P G

42,000

Bibin Kabra

3,50,000

Rajeev Deoras

3,00,000

Manish Kumar

3,00,000

Rajrishi Singhal

3,00,000

CD ratio CD ratio percentage on March 31 in the Kerala-based private-sector banks Dhanlaxmi Bank

36.27

South Indian Bank

46.66

Catholic Syrian Bank

43.84

Federal Bank

67.33

and form of the bank in the near future which they have for some time promised. Alongside is a report PASSLINE has published about Mr Chaturvedi and Mr Jayakumar, DBL’s Chief Credit Officer, explaining to the media the progress the bank has made recently and its future plans. But their critics inside and out wonder whether as time passes and nothing happens, the expectations on which they pride themselves could lead to the resurgence of the bank. Mr Chaturvedi’s claims, as revealed to the media from time to time, include the bank’s resolve to become the fifth largest privatesector bank in the country and the number one in Kerala, its decision to add 2,000 more to its employee strength etc. DBL also claims that it is aiming at a business target of Rs 23,000 crore this fiscal. Total business as on March 31, 2010, was just Rs 12,000 crore. Since the target is almost double, most people do not attest much weight to the claim. Employees say the repeated tall claims aired at frequent intervals through the media are nothing but attempts to hide the real state of affairs and to divert the attention of the people from the many acts of malfeasance on the management’s part. The financial year is coming to a close in another three months and employees think that the performance is only likely to be worse than what it was as on September 30, 2010. That is why the bank is on a spree setting speculative targets, they say. Mr Chaturvedi to whom PASSLINE sent an email for comment has replied to us reiterating the bank’s attempts to grow into a major establishment and defending its actions. (See box). Nevertheless PASSLINE has obtained documents that corroborate the essentials of insiders’ and employees’ account. Since the takeover of Kozhikode-based Nedungadi Bank by Punjab National Bank and of Kochi-headquartered Lord Krishna Bank by Centurion Bank, which was later taken over by HDFC Bank, a few years ago,

Employees also say that in most cases, these corporate loans have no proper collateral; neither do they fulfil the required norms. These loans are risky ones too: if they turn out to be bad loans, recovery will be tough. This is the reason for the escalation in DBL’s NPAs. But, they say, the huge advances being given to NBFCs in the State carry a base rate of only 7.5%. DBL’s cost of funds is almost 7%. So in most of these advances there is hardly any margin, and sometimes the loan portfolio may end up in losses affecting the bottom line.

PASSLINE

December 1-31 , 2010

banking analysts had expected a wave of merger mania to hit Kerala. But there hasn’t been another merger yet. All that we have seen are a few attempts. There were rumours at one time of takeover of Catholic Syrian Bank by Federal Bank or some other bank. They are still rumours. Or are they? But big changes often begin with small skirmishes: so perhaps it’s not surprising that a banking backwater like Dhanlaxmi can be an easy target for takeover by big sharks. Moreover, in banking, as in almost all other fields, the weak are always looking vulnerable. It always happens that the strong are consuming the weak—with relish. This is the golden rule of finance. There is nowhere to go, no place to hide: the forces of competition make consolidation inevitable. In the changing global and Indian banking scenario it will be a tough job for a bank like DBL to exist on its own. Banking experts point out that the capital norms of banks are undergoing fast changes and by 2020 their capital base will reach Rs 6 trillion. The opening up of the financial retail market will also affect India’s small banks. It will then be a Herculean task for not only DBL but other private banks of similar size to survive. They will likely go into oblivion within no time. About his reaction to a takeover bid, Mr Chaturvedi’s thinking seems to be: “I have only one wish, to protect the interests of the shareholders.” Does it not sound like an invitation? To rework a few Abraham Lincoln lines: You can fool most investors, shareholders, employees and depositors some of the time; you can even fool some of them all the time; but you can’t fool most of them indefinitely. So DBL had better get cracking its problems, or reality will come crashing down on its credibility.

26 30

M ONEY P OWER

- Banking & Finance

Chief Minister V S Achuthanandan presenting the ‘Best Bank’ (in the private sector-traditional banks’ category) of the State Forum of Bankers’ Clubs, Kerala, to Dr V A Joseph, MD and CEO, South Indian Bank (SIB), in the presence of (L to R) Mr K U Balakrishnan, Secretary, and Mr L R R Warrier, President, of the State Forum of Bankers’ Clubs; Mr Shyam Srinivasan, MD and CEO, Federal Bank; Mr Ramnath Pradeep, Chairman and MD, Corporation Bank; Mr A K Bansal, Executive Director, Indian Overseas Bank; and Mr Abraham Thariyan, Executive Director, SIB.

Corporation Bank Chairman and Managing Director Ramnath Pradeep and Kerala Zonal Head and Deputy General Manager Kurian P Abraham receiving the Second Best Public Sector Bank Award from State Fisheries Minister S Sharma.

Corporation bank ads

PASSLINE

December 1-31 , 2010

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M ONEY P OWER

- Banking & Finance

Two public issues with potential upside By K Aravind

s V-Guard completes three years as a listed company, the move by more Kerala-based companies to come up with IPOs (initial public offerings) is adding colour to the changing corporate story in the State. The companies that are all set for IPOs are the leading gold loan provider Muthoot Finance and the jewellery major Joyalukkas. These two issues are believed to create much excitement among IPO enthusiasts in the State.

As Muthoot Finance gets listed on the stock exchange, it will be the largest listed company among gold loan companies.

Compared

with all the listed gold jewellery companies, Joyalukkas will be the biggest in terms of size and reach.

Many high net worth companies in the State, with their conservative mindset, have turned their back to public issues. As a private company turns a public limited company, the management becomes obliged to ensure transparency and declare their financial details to the external world. A disinterest towards doing such tasks was what prevented prominent private companies in Kerala from moving towards public parking. The traditional mental block of taking the company to markets and the apprehensions around public listing often prevented them from taking the plunge. Many of these companies used to have a business model that focused on profit margins alone. Hence they did not pay much attention and energy to the idea of expansion and diversification. Some of these companies shifted their line of thinking from the traditional profit margin-based model to a low-margin, high-volume model recently. The change in the business models of Kerala-based jewellers is a good example of this mindset change. Contrary to their earlier mode of concentrating on a large city to target customers in and around the place, they are now setting up shop in small towns and thereby equipping themselves to address a much larger clientele. Even traditional businesses and conservative companies took the IPO route to transform their businesses through the high-volume model and expand their footprint beyond their current, limited presence by drawing inspiration from the postIPO triumph of the likes of Manappuram, Geojit and V-Guard. V-Guard was the last to come up with a public issue. The IPO, which debuted at Rs 85, went on to trade at Rs 215. Post-IPO, V-Guard saw quite a quantum leap in its business. Its IPO came in the first half of 2008, a time when recession was tightening its grip on the economy. Because of such timing, the company had to wait for more than one year to reap the benefits of its public issue. However, the gains that

the company made during 20092010 were a direct result of its expansion efforts using the money it generated from the IPO. Kerala companies like Geojit and V-Guard that went for public issues have steadily grown in business and the investors who betted on them received matching returns. Public issues that benefited the companies and investors alike are a reflection of the new culture that sweeps the corporate sector in Kerala. It is in the context of companies like Manappuram, Kitex, Geojit and VGuard turning into multibaggers and multiplying investor wealth that we see two other giants entering the IPO market. Muthoot Finance, the company with a long tradition, and Joyalukkas, the jeweller that shines internationally, will no doubt generate strong positive response from the investors who benefited from the earlier public issues ranging from Geojit to V-Guard. Muthoot Finance: Currently only two NBFC companies focused on gold loans are listed on the stock exchange—Manappuram General Finance and Muthoot Capital Services. Though Muthoot Finance is one of the oldest names in the gold loan sector, it is debuting in the stock markets years after the entry of its peers Manappuram General Finance and Muthoot Capital Services. As of March 31, 2010 Muthoot’s branch network was the largest among gold loan NBFCs in India (source: IMaCS Industry Report’s 2010 Update). The company has 1,921 branches, according to estimates till August 31, 2010. Muthoot is currently the private entity with the largest gold reserves. It is estimated that Muthoot has 65 tonnes of gold in its possession. The company has been giving a lot of importance to brand building through highprofile advertising campaigns. The company that has been building its brand at the national level using the Delhi IPL team as its brand ambassadors is also in the forefront of popularizing gold loan as the cheapest credit instrument available in the market. As Muthoot Finance gets listed on the stock exchange, it will be the largest listed company among gold loan companies. Compared with the 1,921 branches that Muthoot Finance has, the largest listed entity in the gold loan sector as of today, Manappuram General Finance, has 1,604 branches. It is reasonable to expect the brand value and popularity of Muthoot Finance to shoot up after its public issue opens. In that sense,

PASSLINE

December 1-31 , 2010

this public issue will naturally be the next step in the company’s vigorous publicity campaign. It is worth noting the recent spurt in the stock price of Manappuram General Finance. Manappuram has nearly 23% of its stake in the hands of foreign investment companies. This kind of stake was given away mainly through QIPs. Considering the stupendous response that Manappuram’s QIP evoked, it is expected that the Muthoot Finance IPO too may receive thumbs-up from investors of all hues, including international investment companies. The extent of upside an investor can expect from this IPO depends on the price band. As the largest listed gold loan company at present and the clear leader compared with the other listed company Muthoot Capital Services, Manappuram is currently trading at a higher valuation. The NBFC (non-banking finance company) sector’s industry P/E is 24.23 and Manappuram is currently trading at a P/E of 48.56. The share price of the company that has a book value of Rs.4.63 is 30.23 times the book value. No doubt Manappuram’s stock is highly overvalued. However such a valuation is being justified based on the argument that there is no real competitor to this stock from the niche segment of gold loan providers. The company that has a stock price of Rs 139.50 has a market capitalization of Rs 5,811 crore. When deciding the offer price of the Muthoot Finance public issue, the share price and valuation of Manappuram will be the critical deciding factors. If Muthoot offers a price based on a lower valuation than Manappuram, it will pack significant value for the investors and present them with an exciting investment opportunity. The issue will fetch higher subscription if the offer price is in the lower range compared to Manappuram in terms of price-tobook value ratio and price-to-earning ratio. Undoubtedly, the Muthoot Finance IPO will be one of the largest IPOs as far as the public issues of Kerala companies are concerned. Currently the company stands second in market capitalization of all Kerala-based companies. Its market cap of Rs 5,000 crore is second only to the number one company, Federal Bank, which has a market cap of Rs 7,290 crore. Joyalukkas: Joyalukkas is the first public issue from the jewellery segment in Kerala and expects to generate Rs 700 crore-Rs 1,000 crore from the issue. With this, the

promoter stake of the company will come down to 70%-80%. Joyalukkas, one of the clear leaders in the gold jewellery retail segment, has presence in eight countries. The company, which has a turnover of Rs 100 crore, claims that it has a customer base of one crore. It employs over 3,000 people in its outlets that spread across countries such as the UK, the UAE, Kuwait, Oman, Bahrain, Saudi Arabia, Qatar and India. Very few companies of this scale operate in the gem and jewellery retail sector. All the current listed companies in this sector deal with premium brands. The share of gold ornaments in the business of most gem and jewellery companies is insignificant. The peers of Joyalukkas in the gold ornament retail segment are Sree Ganesh Jewellery House, Thangamayil Jewellery, and Renaissance Jewellery. Among these, Thangamayil Jewellery launched its public issue in January 2010. Thangamayil Jewellery, which has five retail shops in Tamil Nadu, focuses on retail business of gold ornaments. Nearly 95% of the Madurai-based company’s business consists of gold ornament retailing. Its IPO was received with much cheer. The issue that opened at Rs 75 went up to Rs 187 at one point and currently trades at Rs 161. Compared with all the listed gold jewellery companies, Joyalukkas will be the biggest in terms of size and reach. With 72.45% of its business coming from gold ornament retailing, Sree Ganesh Jewellery commands a valuation of Rs 1,150 crore. At the same time, Joyalukkas aims at drawing up to Rs 1,000 crore by diluting only 20%-30% of its equity stake. Thangamayil Jewellery had collected only Rs 28.75 crore through its public issue. With this public issue, Joyalukkas will go on to become the largest listed gold ornament retailer. Considering the response to Thangamayil Jewellery’s IPO in January 2010, there is no reason to believe anything short of a stupendous response to the Joyalukkas IPO. Thangamayil’s share price rose more than 100% at a time when Sensex gave 17% returns. Investor response to Joyalukkas will be much better as it is a company with size, more reach, better branding, presence in multiple business segments within gem and jewellery and better professionalism. (The author is the Editor of Hedge Ohari, the investment magazine from the leading stock broking company, Hedge Equities.)

M ONEY P OWER

- Banking & Finance

By Shinin Sunny

Life insurance Transition to a buyer’s market T

he recent changes in the norms imposed by the insurance regulator in the country have given a twist to the insurance market. Various products faceted from hidden charges were replaced with transparent ones. Because of the changes in the commission structure many insurance advisers have left the scene. It is now for the customers to understand the following insurance terms and find out whether they match their needs and aspirations. Sum assured: The face value of the policy. The amount is the basic risk cover on one’s life and is guaranteed to be paid to the nominee in case of one’s death. Insured: The person who is covered by the insurance. Normally, in children’s plans, the child is the insured, whereas the parent is the proposer or owner of the policy.

holder. This is the cheapest form of insurance. ULIP: Unit-linked insurance product, an investment product with an insurance component built into it. Before making the choice to invest in a ULIP, you should be clear as to what is important for you—the investment returns from the product or the life cover it gives. If you are keener on the ‘life cover’ part of it, then you should consider type II ULIPs. Types of ULIPs: A type I product gives the higher of the sum assured or fund value as death benefit. For example, ‘A’ holds a type I ULIP that gives a sum assured of Rs 5 lakh for an annual premium of Rs 50,000. In case of death in the initial years of the policy, when the fund value is less than the sum assured, the insurer will pay the agreed sum (which here is Rs 5 lakh) to A’s nominee. How-

Vesting date: A terminology associated with pension plans, it is the date when your accumulation phase gets over and the distribution phase of your policy starts. On the vesting date, you are allowed to commute (withdraw as a lump sum) a part of the accumulated value (normally a third) and the rest is used to pay out an annuity (pension), as in the selected options.

Lock-in period: Endowment policy: This is the commonly sold insurance product where the insured gets a lump sum on survival through the policy tenure. It is equal to the sum assured, enhanced by the bonuses declared over the life of the policy. Anticipated endowment: This is also known as a money-back policy. It pays a fixed percentage of the sum assured at pre-defined intervals. The bonuses are usually paid at maturity. Whole life: As the name denotes, it provides a risk cover for life or up to the age of 80-100, as opposed to the other policies which provide risk coverage till ages far below. The sum assured along with bonuses accumulated is paid to the policyholder on survival beyond the age of 80 or 100, as defined in the policy. In case of death, the sum assured plus the accumulated bonuses are paid to the nominee of the policyholder. Term insurance: In this policy there is no return in case of survival through the policy tenure. There are variants with return of premium, level and increasing and decreasing covers. The nominee gets a payout equal to the sum assured on the death of the policy-

While investors of type I ULIP will see the mortality rate being applied only on the sum at risk, type II ULIP investors will shell out additional amount as the mortality rate will be applied on the full sum assured (that remains constant). Suppose the sum assured is Rs 5 lakh on a policy and the fund value is Rs 2 lakh at a point of time, the insurer will apply mortality rate on Rs 3 lakh in type I ULIP and on the full Rs 5 lakh in a type II one. Type II ULIPs also see the mortality rate increasing with every policy year (the older the insured gets, the higher the risk of death). Of course, in a falling market (and fund value) scenario, the difference increases and so do the charges for a type I ULIP. Type II ULIPs are suitable for investors looking for the dual advantage of high insurance coverage and high returns. People who are already running a term cover and are sufficiently covered can opt for type I ULIP products and save on costs.

Participating policy: A plan which pays dividends generated from the profits earned by the insurance company. These are typically in the form of annual bonuses that accrue to the policy. There might also be terminal bonuses paid at the time of maturity. Policy classification: The broad classification of life insurance policies is into traditional and unit-linked policies. Many different polices available in the market are combinations of a few basic types of policies.

declines and becomes nil after a point (when fund value grows enough to cover the sum assured). Sum at risk is nothing but the difference between the accumulated fund value and sum assured under the policy.

ever, from the time the fund’s value goes higher than the sum assured, the death benefit will be the accumulated amount in the fund. This essentially means that post the initial years of the policy, you cover the risk with the money you yourself have saved over the years. But had ‘A’ taken a type II ULIP, the insurer would have given A’s nominees both the sum assured of Rs 5 lakh and the amount accumulated in the fund as on the date of death. However, there is no such thing as a free lunch! For the added risk the insurance company assumes under the type II policy, it charges the policyholder an extra amount. For covering the risk of ‘loss of life’ under a life policy, insurers impose ‘mortality’ charges. The insured’s age, profession, habits, health etc determine the mortality rate (expressed in rupees per thousand of the sum assured) for a policy. Sum at risk: In type I ULIPs, the mortality charge keeps declining year after year as the ‘sum at risk’

PASSLINE

December 1-31 , 2010

In case of pension ULIPs (Aegon Religare and LIC have one each), on the vesting date you can commute a part of the corpus (usually not more than 33%) and the rest is used to pay an annuity. In case of death, the payout is either the fund value or the sum assured, whichever is higher. Some companies pay the fund value in addition to the sum assured. Children’s ULIPs will have a waiver of premium features whereby the sum assured is paid in the event of parents’ death and the future premia will be paid by the company. Currently Bharti Axa, Max New York Life and India First have such plans. The other companies offer a waiver of premium rider for the ULIP plan they have. Points to remember: Funds available: It is very important to understand the fund types on offer. The funds differ in the exposure to the market. One should choose a fund matching the risk appetite. Now there are funds like Automatic Asset Allocater/Auto Rebalancing etc which automatically switch to safer fund propositions based on pre-defined parameters agreed to by the customer. Charges: Premium allocation charge: Range between 4.5% and 9% in the first year and 3% and 7.5% in the following years in all the popular plans. To page 33

33 33

M ONEY P OWER

- Banking & Finance

Pooram Kuries: the touch of class B

efore the advent of banks and financial institutions in Kerala it was chitties/kuries that people turned to for meeting their financial needs in bulk. Both chitties run by one individual and groups of individuals were there. Chitties in the State began with Sakthan Thampuran, the erstwhile ruler of Cochin State, collecting a rupee each from 100 persons and paying it to one subscriber (‘varikkaran’) who was in dire need of money. This collection method continued for 100 months till all the subscribers got their money they had paid in 100 months. Later, Thrissur, the cultural capital of Kerala, became the city of chitties/kuries. Now the city that celebrates Kerala’s festival of festivals—Pooram—also accommodates a chitty company that carries the very name of the festival—Pooram Kuries and Loans. Launched in 1995, Pooram Kuries and Loans (Pvt) Ltd has carved a niche in the business map of the city and helped thousands of subscribers to meet their urgent financial requirements. In an interview with PASSLINE, Mr C K Anilkumar, Chairman of the company, talks about the kuri business in general and Pooram Kuries and Loans in particular. Edited excerpts: In an era when there are many banks and From page 32

Some companies offer a nil charge pattern after the fifth year. Units allocated after deduction of this charge are the portion which goes into the investment bucket. Policy administration charge: This charge ranges from 0.50% to 0.80% and will be deducted on a monthly basis by cancellation of units. Some charges range from Rs 20 to Rs 60 a month. Fund management charge: Ranges from 1% to 1.5% of the fund value deducted by cancellation of units. Mortality charge: Deducted towards the life cover by cancellation of units. This varies depending on the type of plan (type I or II). Surrender charge: This is charged as a penalty for premature surrender of policy. This is applicable to most of the policies till the fifth year. The charge decreases with the number of years. Ranges between 5% and 20% of the fund value. Switching charge and partial withdrawal charges are the other charges associated with ULIPs.

New India Assurance recruiting agents

ew India Assurance Company has started a special drive for recruitment of agents. The company is inviting applicants with a minimum qualification Girish Raj of SSLC for agency. The commission for agents ranges from 5% to 15% depending on the type of policy, according to Mr Girish Raj, Chief Regional Manager (Kerala). Mr Girish Raj says customers can get in touch with the company’s call centre executives on toll-free number 1800-2091415, which is available 24x7, for enquiries about different products, tracking motor claims and grievances, in both Hindi and English. The numbers in Kochi are 2361584, 2361547.

financial institutions accepting and lending money what is the significance of chitties/ kuries?

count-keeping charges, penal interest on capitation fee etc. An interest rate of 11.25% aggregates to 18%. But in chitties there are no hidden charges.

As our history shows, even before the Does coming into force of a monetary policy or a company law, the chitty business was existing in Kerala. It was in the form of ornaments chitty, utensils chitty, rice chitty etc, which followed a system of barter. In any age, there is an urge for people to collect and save money to meet an eventuality. It was this habit that paved the way C K Anilkumar for the chitty business, which later led to the formation of registered chitty/kuri companies. Of course, banks and other financial firms offer help. But getting money from them entails a lot of formalities and intricacies. Moreover they charge heavy interest rates. That is why people prefer chitties to bank help. Rajagopal Mukkoni

this mean chitties have no drawbacks? Surely, there are shortcomings in chitties, particularly in those run by an individual, as money may be used for purposes different from those for which it is intended. What are the salient points to be pondered while joining a chitty?

How are chitties more profitable than bank loans?

There are certain things to be considered like people’s trust in the kuri company; feedback available on its directors; subscribers’ evaluation of the company; whether the matured chitty amount is duly given; any case of diverting chitty money to other businesses; whether the chitty company is doing any ‘blade’ business and whether bonus and gifts are distributed properly.

Just because banks take, besides interest, housekeeping, inspection, insurance, ac-

What makes Pooram Kuries different from other chitty companies?

We are a 16-year-old company. We began operations with 184 subscribers and monthly subscriptions of Rs 300. Now we have more than 25,000 subscribers (‘varikkars’), and kuries with amounts running into lakhs. Our good old subscribers continue to patronize us. Moreover, the prompt service provided by management and the staff to subscribers attracts more customers to the company, giving it a distinct image. I have for long been a partner in running such reputed business ventures as C P Krishnan and Sons, Chozhiyankunnath Transports and Swad Foods. Our Managing Director, Mr Rajagopal Mukkoni, is a well-known builder of Thrissur. Mr K D Varghese, Mr Martin P Thomas, Mr C A Venugopal, Mr C K Sunilkumar and Ms M Padmavathi are the Directors. A ‘varikkaran’ of Pooram Kuries can contact any of its directors at any time. We launch kuries that benefit subscribers in a highly professional way. What are the future plans of Pooram Kuries? We aim to be a non-banking financial institution. Steps are afoot in that direction. A lot of functions of a non-banking institution and a chitty business are similar in nature.

The pattern of charges In a traditional plan one is eligible for surrender only after three years and the surrender value depends on the value factor of the plan. Annuities: These are also called pension products. They could be immediate or deferred. In a deferred annuity product, you save over a long period of time and after the vesting date you get a regular income for the corpus created out of your savings. In an immediate annuity, you invest a lump sum to get regular payouts over a long period of time. Cooling-off period: A time of 15 days from the date of receipt of the policy, where the policyholder can return the policy if he is unsatisfied with any clauses. The premium paid will be refunded, with some nominal deduction. This is a very important clause, as it provides a window of exit in case of mis-selling of products.

Wealth Plus Premier (DLF Pramerica): Premium payment term five years. Option to stay invested after maturity for five years. Crest (HDFC Standard Life): Highest NAV guarantee.

Met Smart Platinum (Met Life): Asset rebalancing in volatile market conditions. Limited payment term of five or 10 years with coverage up to 99 years.

Wealthsurance Milestone Plan (IDBI Federal): Automatic asset allocator fund.

Smart Performer and Unit Plus Super (SBI Life): 5% higher than highest NAV guarantee.

Pension Plus and Endowment Plus (LIC): Highest NAV guarantee.

Invest Assure Flexi Supreme (Tata AIG): SMART and AAA portfolio strategies.

Shub Invest (Max New York Life): Compliant with the proposed Direct Tax Code which is expected to take effect in 2012. High sum

Life Time Premier and Life Link Wealth (ICICI Prudential): Option to trigger portfolio strategies in volatile market.

Riders: These are additional benefits you may buy and add to your policy at a nominal cost. The terms of riders are specific. For example a critical illness rider will entail a payout in case of occurrence of any of the illnesses as described in the product offer. Some new ULIPs and their USPs: Future Protect (Type I) and Future Protect Plus (Type II) Plans (Aegon Religare). Auto rebalancing: Automatically allocates your assets based on your risk appetite. Settlement option: You have an option to receive your maturity proceeds in instalments. The remaining portion will be invested in the market and can fetch returns. Freedom Life Advantage (Aviva): Option to increase/decrease sum assured. Option to cover husband and wife in the same policy. Max Advantage (Bajaj Allianz): Highest NAV guarantee for 10 years. Flexibility to change the premium payment term. Unlimited free switches Bright Star Edge (Bharti Axa): Children’s ULIP plan. Platinum Advantage Plan (Birla Sunlife): Self-managed and guaranteed options available. Loan on policy from first year onwards.

PASSLINE

assured.

December 1-31 , 2010

M ONEY P OWER

- Banking & Finance

Five best mutual funds for investment in 2011 I

nvestors can consider five of the best mutual funds in the large and midcap, mid and small cap, large cap, multicap and balanced segments for investment in year 2011. HDFC Top 200: This fund has given the maximum returns among the large and midcap funds in the last five years. When you consider the returns in the last three years, this fund leads the pack. It is a consistent performer with a track record of 13 years among the large and midcap mutual funds. It has given compounded annual returns of 23.77% in the last five years against the category average annual returns of 15.39%. In the last three years, the category average annual return of large and midcap funds is -0.59%. The main reason for this is the Sensex was trading above 20,000 in December 2007. The average annual return of the Sensex too has been negative in the last three years: -0.45%. In this context, the annual compounded returns of HDFC Top 200 are an impressive 10.43%. In the last one year, HDFC Top 200 has given gains of 23.04%. In the same period, the category average of the large and midcap segment has been 15.39%. An analysis of the fund’s performance of the last five years clearly indicates that the fund is a consistent performer. It could consistently beat the Sensex and category average, giving returns that top the category average. It failed to beat the Sensex only in 2006. When the stock markets went through mayhem in 2008, the Sensex was down 52.45% but HDFC Top 200 was down only 42.35%. When the markets rebounded strongly in 2009, the Sensex gave 81.03% and HDFC Top 200 gave a higher 94.46%. The fund that has allocated 81% of its assets to large-cap stocks has put 19% of its assets on the top three stocks in its portfolio. Financial services sector stocks consist of 26.67% of the portfolio. The fund has reduced its exposure to the energy sector from 21.37% to 16.92% in the last two months. Currently, 94.40% of its assets are in equities. Exposure to midcap stocks is at 15.59%. With Rs 9,068-crore-worth of assets under management, HDFC Top 200 has one of the high AUM funds. The fund saw 228.76% growth in its AUM last financial year. This is the highest AUM growth that any equity mutual fund had last year. The risk grade of HDFC Top 200 is below average and the return grade is high. Top 10 holdings:

Weightage

Stock

(%)

SBI

8.42

ICICI Bank

5.58

Infosys

5.40

Bank of Baroda

4.78

L&T

4.48

ITC

3.45

Titan Industries

3.24

Tata Motors (DVR)

2.90

ONGC

2.70

IDFC Premier Equity Plan-A: IDFC Premier Equity Plan-A boasts a better track record

among midcap and small-cap funds. This is the midcap and small-cap fund with maximum returns in the last five years. IDFC Premier Equity Plan-A, which was launched in 2005, has given an annual average return of 26.52% till today. It stands fourth among the midcap and small-cap funds that has given maximum returns in the last three years and fifth among the midcap and small-cap funds that has given maximum returns in the last one year. Risk grade of this fund is low and return grade is high.

name rightly suggests, a majority of its investment is in large-cap stocks—87%. The fund has invested 92% of its assets in equities. In the last two years, the fund has given higher exposure to stocks in the financial sector. At one time, it went up to 26%. However, the fund has reduced this exposure at present—to 19%. Maximum exposure is now given to the energy sector—21.99%. Top 10 holdings Stock

In the last five years, this fund has given returns of 26.90%. The midcap and small-cap fund segment has returned an average of 15.36% during the same period.

Bharti Airtel

In the last three years, the average annual return from this fund is 8.54% against the category average negative return of -2.31%. The average return from the Sensex during the same period has been 0.70%. IDFC Premier Equity Plan has given 38.31% in the last one year. At the same time, Midcap and small-cap funds have given an average return of 27.48%. The Sensex has returned 16.67% during the same period. The fund has been giving beating-category average returns ever since 2006. In 2008 when midcap and small-cap funds suffered an average loss of 63.41%, this fund went down 53.14%. When midcap and small-cap funds gave 99.54% in 2009, IDFC Premier Equity Plan-A returned 102.12%. The fund that has an AUM of Rs 1,786 crore has invested 88% of its assets in equities. Out of this, 75% consists of midcap and small-cap stocks. At present, the fund has 93.15% investment in equities, 4.93% on bonds and 1.92% in cash. Most of the top 10 stocks in the fund’s portfolio are midcap stocks. Franklin India Bluechip Fund: Franklin India Bluechip Fund will secure a top slot in the list of best large-cap funds regardless of which period you take for analysis. The fund that has given the best returns among large-cap funds in the last three years stands below average in risk grade and high on return grade. Franklin India Bluechip stands second among the funds that has given high returns in the last five years. This fund ranks fourth in the list of large-cap funds that has given maximum returns in the last one year. The average annual return from this fund in the last three years is 4.76%. The large-cap funds have returned an annual loss of 0.77% during the same period. In the last five years, Franklin India Bluechip Fund has given returns of 19.89% against the large-cap funds’ average annual returns of 16.04%. In the last one year, this fund has given a higher annual average return of 24.22% against the large-cap funds’ 18.06%. Franklin India Bluechip is one of the oldest funds, started in November 1993. It has given an average return of 26.33% since its inception. When analyzing the returns by calendar year from 1993 to 2009, the performance of this fund was consistently above that of largecap funds all along except in 2007. As the

PASSLINE

Weightage (%)

8.34

Infosys

7.06

Reliance Inds

6.23

ICICI Bank

5.33

Kotak Mahindra

4.57

Bank Crompton

3.83

Greaves Grasim

3.69

GAIL

3.51

BHEL

3.39

NTPC

3.32

HDFC Equity Fund: Multicap funds position themselves to gain from changing market conditions by investing in different categories of equities in terms of valuation. HDFC Equity Fund has a track record of successfully meeting this stated objective of multicap funds. The risk grade of this fund is below average and return grade above average. This fund ranks second among multicap funds that gave maximum returns in the last three years. It also stands third among the multicap funds that gave maximum returns in the last five years and fourth in the list of multicap funds that gave maximum returns in the last one year. The fund, which debuted in December 1994, gave an average return of 23.37% till date. In the last one year, this multicap fund gave 25.67% returns. The average returns of the multicap funds during the same period was 14.83%. In the last three years, HDFC Equity Fund gave average annual returns of 10.28%. Multicap funds returned an average of 0.64% during the same period. HDFC Equity Fund gave an average annual return of 22.52% average annual return against the multicap funds’ average return of 16.93%. HDFC Equity Fund, which gave 62.70% gains in 2005 (equity diversified category average—46.83%) gave a not-so-impressive returns compared with peers and the category in general in 2006 (35.86% against category average 34.93%) and 2007 (53.61% against category average 59.56%). At the same time, when equity markets crashed in 2008, the equity diversified category recorded negative returns of 55.60% and HDFC Equity Fund recorded only 49.68%. When equity markets staged a comeback in 2009, the fund improved its performance with 105.57% returns (equity diversified category average was 84.50%). HDFC Equity Fund that has Rs 7,872 crore worth of assets under management is one of December 1-31 , 2010

the largest equity funds in terms of AUM. This is one of the oldest equity funds too, with its start in 1994, and 94.60% of its assets are parked in equities at present. The portfolio’s 64% consists of large-cap stocks and 36% of small-cap stocks. Some 27% of the funds’ assets are invested in the top five stocks in the portfolio. SBI, ICICI Bank, Titan Industries, Bank of Baroda, Infosys Technologies, L&T, NTPC, TCS, ONGC, CMC, and Tata Motors DVR are the top 10 stocks in the portfolio. The fund has given highest exposure to financial services sector—24.17%. Energy sector stocks constitute 15.78% and healthcare stocks 9.92%. Top 10 holdings

Stock

Weightage (%)

SBI

8.58

ICICI Bank

6.11

Titan Industries

4.76

Bank of Baroda

4.52

Infosys

3.94

L&T

3.46

TCS

3.31

ONGC

2.90

CMC

2.53

Tata Motors DVR

2.51

Reliance Regular Savings Balanced Fund: Balanced Funds help investors minimize the downside on their investments during volatile market conditions. Balanced funds are also the best when it comes to balancing the portfolio to minimize risk. Reliance Regular Savings Balanced Fund is a fund that investors can confidently look at, given its average risk grade and higher return grade. This is the third among equityoriented balanced funds that have given maximum returns in the last three years. This is also the fifth best equity-oriented balanced fund in terms of returns in the last five years. Though Reliance Regular Savings Balanced Fund is a hybrid fund that invests in equities and debt, it has been giving higher returns than those of the Sensex for the last several years. The fund that has invested 70% of assets in equities has given 19.01% gains in the last one year. During the same period, the Sensex has given a return of 12.56% and balanced funds 13.78%. If you compare this fund’s performance with that of some of the best equity diversified funds, you will see that the fund tops many of those equity diversified funds. The secret of such stupendous return is the appropriate exposure given to midcap stocks in the fund’s portfolio. In the last three years, the fund has given 11.55% gains on average. This is much higher than the balanced funds’ average of 2.26%. Among the top 10 slots in the portfolio, equities occupy six and bonds occupy four. ICICI Bank is the only stock that has more than 4% exposure in the portfolio. ICICI Bank, Tata Motors, Coal India, Areva T&D, Patni Computers and BHEL are the six stocks in the portfolio top 10. —KA

35 35

M ONEY P OWER

- Banking & Finance

Interest-free finance and banking feasible Passline News Service

slamic banking adheres to the tenets of the Sharia (or Islamic law) and is a rapidly growing niche in financial services. Holding a natural appeal for followers of the Islamic faith, who constitute roughly 25% of the world’s population, Islamic banking products are also attracting increasing interest from many nonMuslims. Banks that are global in scope, or that aspire to be, should take note of this trend.

England, France, the US, Hong Kong and several other countries have the interest-free banking system along with the conventional banking system. A high-level committee on financial-sector reforms of the Planning Commission headed by Dr Raghuram Rajan has also recommended interest-free Islamic banking to be introduced in the banking system for inclusive growth.

Pure Islamic banks, along with Islamic subsidiaries and ‘windows’ of conventional banks, currently control close to $400 billion in assets globally, compared with $100 billion in assets in 2000. Expansion over the past few years has been driven by high oil prices, which have led to more petrodollar wealth in the Middle East, as well as by increasing percentage of both Muslims and non-Muslims who find the philosophy of Islamic banking attractive. For example, since the Sharia forbids the earning of riba (directly translated as excess, but often interpreted as interest) on the grounds that money generating more money without accompanying liability or risk is detrimental to society, depositors are treated like equity shareholders. They earn a portion of the bank’s profits instead of interest. Loans are structured as asset-based diminishingpartnership or leasing agreements. A sukuk, or Islamic bond, is asset-based rather than debt-ased, with bondholders receiving ‘rent’ on the asset instead of interest. Overall, a premium is put on the concepts of transparency, cooperative ventures, shared risk and contractual certainty—elements that loom larger than ever in the wake of such events as the subprime crisis and other headline-grabbing scandals that have challenged public confidence in financial institutions. The Sharia also prohibits financial involvement in industries such as those related to

gambling, alcohol and adult media. So Islamic banking products are of interest to the burgeoning ethics-investing segment. Indeed, many pundits say that Islamic banking, given its attractive characteristics, would quickly become a powerful phenomenon were it called by a secular name. It may still become a global force if current growth trends gain momentum. The untapped potential is truly vast. Major banks should therefore ask themselves a critical question: Given the appeal of Islamic banking both to members of the rapidly growing Muslim faith—already 1.6 billion strong— and to non-Muslims alike, can the opportunity to pursue this business really be ignored? The adoption of an interest-free banking system in the country offers a great opportunity to attract substantial investments from countries in the West Asian region to India, says Muddassir Siddiqui, a leading authority on interest-free banking. Institutions and high net worth individuals from these countries are looking forward to investment opportunities in India, one of the fastest-growing economies in the world. The traditional relationship between India and Arab countries will also act as a catalyst for selecting India as the investment destination. According to projections by global consultant major McKenzie, investment surplus in

the West Asian region is expected to be around $9 trillion (9 lakh crore). Currently, the investment surplus in the region is around $1.5 trillion. India can attract a good portion of this huge investment potential by developing the appropriate regulatory framework. A regulatory framework suitable for interest-free banking will not have any impact on the existing financial system in the country. England, France, the US, Hong Kong and several other countries have the interest-free banking system along with the conventional banking system. A high-level committee on financial-sector reforms of the Planning Commission headed by Dr Raghuram Rajan has also recommended interest-free Islamic banking to be introduced in the banking system for inclusive growth. Interest-free finance and banking focuses on transparency, cooperative ventures, shared risk and ethical investing which attracts a wide range of both Muslims and nonMuslims alike, according to reputed global consultant Boston Consulting Group. The Investment Commission of India has identified 25 key sectors spanning infrastructure, manufacturing, services, natural resources and the knowledge economy requiring an aggregate investment of $500 billion.

Two-wheeler Hire Purchase Foreign Exchange Inward & Outward Money Remittance

Investments

SGF

SREERAGH GENERAL FINANCE LTD 40/5454-E, Vellamattam Estate T D Road, Kochi - 682 035 Ph: 0484-2373214, 4021217, 3293203 (Res), 94470 63679, 94477 43679 E-mail: badrijr@sify.com, sreeragh@bsnl.in

' THE RELATION THAT LASTS' PASSLINE

December 1-31 , 2010

M ONEY P OWER

- Banking & Finance

New Millennium The No. 1 in kuri business N

takes membership of SMX

he Acumen Group officially inaugurated its taking the membership of Singapore Mercantile Exchange (SMX), an international multicommodity exchange, on the auspicious occasion of Diwali at a function organized at its corporate office in Kochi. Acumen is the first financial company from South India to obtain membership of and commence trading on the SMX. Mr T S Pattabhiraman, Chairman, Kalyan Group, inaugurated its trading by placing an order for one lot of gold through the electronic trading terminal. Mr T S Anantharaman, Director, Catholic Syrian Bank, was the chief guest. Mr Akshay Agarwal, Managing Director, Acumen Group, Mr Akhilesh Agarwal, Mr Santhosh Agarwal and Mr P R Aravindakshan Nair, Directors, and Mr George Mampilly, CEO, were present. The Acumen Group is a corporate member of NSE, BSE, MCX, NMCE, MCXSX, NCDEX, NSDL, IPSTA and also of international commodity exchanges in Dubai, Bahrain and Mauritius. “Singapore being an international financial centre, membership of the SMX will be a milestone in the international ambitions of the company,” Mr Anantharaman said at the function.

Dr V A Joseph, MD & CEO of South Indian Bank, Mr Uttam Nayak, Group Country Manager, India and South Asia, Visa, and Mr Abraham Thariyan, Executive Director of SIB, launch, respectively, ‘Visa Platinum’,’Visa Gold’ and ‘Visa Classic’cards.

Debit-cum-shopping card from SIB-Visa

outh Indian Bank (SIB) has partnered with Visa, global payment solution provider, to launch the ‘SIB Visa International Debit-cum-Shopping Card,’ the first Visa debit card launched by the bank. The partnership with Visa will provide SIB customers with greater convenience, security and rewards when they use their Visa debit cards, according to the bank. SIB customers can access 1.7 million ATM outlets around the world, shop at various Visa authorized merchant outlets and get all the benefits of Visa debit cards. Customers can also use their cards for bill payments at restaurants, tax payments, charitable contributions or online shopping, ticket booking or bill payments. Dr V A Joseph, Managing Director and Chief Executive Officer of SIB, Mr Uttam Nayak, Group Country Manager, India and South Asia, Visa, and Mr Abraham Thariyan, Executive Director of SIB, launched, respectively, ‘Visa Platinum’, ‘Visa Gold’ and ‘Visa Classic’ cards which are issued in this partnership to match issuers’ liability account segmentation models. Dr Joseph said: “By launching the card our bank is entering into a strategic alliance with Visa, the world’s largest retail payment network. The alliance will give our patrons, both domestic and non-resident Indians, an opportunity to shop, dine, book tickets and pay bills in addition to withdrawal of cash globally. This card with its various features will be of optimum use to all our customers.” “Visa is glad to extend the benefits of electronic payments to SIB’s large customer-base. This is our first association with SIB and I am confident that we will be able to strengthen our partnership with it in the years to come. Through the card we will offer SIB customers the various benefits of debit cards that they have not experienced before,” said Mr Nayak. Mr C T Davis, Deputy General Manager and Head of the Marketing Division, SIB, also spoke.

first listed broking firm in Kerala

hare broking firm Vertex Securities Ltd has 250 branches all over India and plans to open 150 more, taking the total to 400, by the end of this finical year. Of the new branches, 80 will be in Kerala. Vertex has now 100 branches in the State. It is a subsidiary of Transwarranty Finance Ltd, Mumbai. Presently the market value of a Vertex share is Rs 370. It was the first listed stock broking firm in Kerala and the first to start NSE online trading in the State. Its Chairman is Mr Kumar Nair and Managing Director Mr Ashok Mittal (previously with Karvey Broking as Managing Director). Mr Abraham M Jacob, who is the Executive Director, was previously with Federal Bank as General Manager. He was also Regional Head and General Manager at Kozhikode, Kochi and Mumbai. He joined Vertex after his retirement from Federal Bank.

With the arrangement, any card holder of any bank can withdraw amounts from ATMs of SIB all over India.

ew Millennium Kuries (P) Ltd tops the list of kuri companies in Kerala not just in the number of subscribers it has but in service also. With 53,000 subscribers and nearly 700 divisions of kuries, New Millennium, started in 2000, is located in the citadel of the State’s kuri business, Thrissur. The company’s greatest asset is that it is run by highly experienced people from all walks of life. “New Millennium is different from other kuri companies in that it has a team of 30 including chartered accountants and businessmen who have got extensive and immense experience in their respective fields,’’ says Chairman Robson Paul, who is a practising lawyer with more than 25 years of experience in law. Mr N C Chummar, the Managing Director, who has been in the industry for the last 35 years, is instrumental in making Millennium stand out from the innumerable kuri companies by taking many innovative steps from time to time. According to Mr Chummar, Millennium is the first one to brand kuries. “Our kuries like the ‘Saphalyam’ series, a new concept in the kuri field, guarantee permanent income from the investment,’’ says Mr Chummar. “By joining the ‘Saphalyam’ series one can manage the deposited amount the way one wants. We deposit the money in the name of the investors in a bank they prefer. So there is no risk factor,’’ says Mr Chummar. “Maintaining a cordial client relationship is the main thing. Last year we registered a turnover of Rs 800 crore. This is expected to rise to Rs 2,000 crore this year,’’ says Mr Chummar. The company now has its own immovable property in Thrissur town. Millennium’s main objective is to financially help the common people through its kuries.

T K A Nair hails CSB’s role in growth

r T K A Nair, Principal Secretary to the Prime Minister, has called upon the private sector to join hands with the Government for inclusive growth. “The private sector has to modify its business models and take its services to millions of people who are still left out,” Mr Nair said, inaugurating the Navathi (90th anniversary) celebrations of the Catholic Syrian Bank held at Thrissur on November 14. Mr Nair said the nationalization of banks had made a mark in the history of banking in India. “Before nationalization, banks were used only by a privileged few. Now, banks are considered as the most important instrument in implementing inclusive growth. In fact, inclusive growth has become the buzz word in the banking sector today. The unorganized sector contributes significantly to the country’s economic development. Still a huge section of it fails to avail itself of the banking services”. He urged the banks to come up with policies for inclusive growth, which would bring tangible benefits to the weaker sections and revitalize the rural economy. Public-private participation had become necessary for the rapid growth of the country. “In a fast-growing economy, State legislation alone is not sufficient for the development of the country and all have to play their role

PASSLINE

for growth,” he said. He added, “As far as I know, CSB is doing a commendable job in this respect”. Mr V P Iswardas, Managing Director and Chief Executive Officer, said CSB would launch a variety of socially-beneficial and customer-friendly products during the one-anda-half-month-long anniversary celebrations. It would try to explore the possibility of technology-enabled services to expedite financial inclusion, he added. Mr B S Mohammed Yasin, Inspector-General of Police (Thrissur Range), said: “Banks play an important role in the Indian economy. It is because of that the banks in India were not December 1-31 , 2010

much affected by the global recession while America’s economy fell like ninepins”. Mr V Krishnamurthy and Mr T S Anantharaman, Directors, also spoke. The inaugural session was followed by distribution of free solar reading lamps to students from financially backward families and hawker’s lights to fish vendors as part of the bank’s Corporate Social Responsibility programme. According to CSB sources, as part of its ‘go-green’ mission, launched in connection with the 90th anniversary, the bank would be taking steps to run some of its branches and ATMs with solar power.

M ONEY P OWER - Banking & Finance Muthoot Securities—feel Sharewealth’s aim is to make youth invest in equity the difference T S 37 36

tarted in 2007, Sharewealth, with 285 employees now, has 215 outlets all over the South, 65% of them being in Kerala. It targets 300 branches this fiscal. The other South Indian States are Tamil Nadu and Karnataka.

Commodity Exchange of India Ltd), NCDEX (National Commodity & Derivatives Exchange Ltd), NMCE (National Multi-Commodity Exchange of India Ltd), ICEX (Indian Commodity Exchange Ltd) and NSEL (National Spot Exchange Ltd). The company offers the online platform for equities, derivatives, commodities, Internet and currency trading, depository services, mutual fund distribution and research and investment consultancy. It offers excellent Internet trading products like ‘e-MINT GOLD’ and ‘e-MINT NOW’.

Sharewealth has 30,000 clients globally. The group comprises five companies— Sharewealth Securities Ltd, Sharewealth Connectors Ltd, Sharewealth Financial Services Ltd, Sharewealth Chits Pvt Ltd and Sharewealth Financial Promoted by a team of profesConsultancy LLC, Abu Dhabi. The sionals having more than 23 years’ group is managed by 12 directors experience in financial markets, and 600 shareholders with a group turnover of Rs 400 crore. T B Ramakrishnan Sharewealth has a highly competent, diversified Board of Directors. Mr T The company paid 5% maiden diviB Ramakrishnan (Ramki), Chief Executive dend this year. Officer and Managing Director, is a stock Educating the youth about the merits market analyst of repute, former Treasurer and demerits of the equity business and and Governing Council Member of Cochin encouraging them to invest in shares is the Stock Exchange Ltd (1998-2000) and former prime motive of the company. Kerala comKerala Regional Head of Sharekhan with panies like the Manappuram Group, V-Guard experience in financial marand Federal Bank are its cuskets. tomers. Mr Ramakrishnan says the Sharewealth, the first corfocus of his company’s busiporate member of the National Stock Exness is the customer—customer service, change of India Ltd (NSE), Bombay Stock customer relation and, above all, customer Exchange Ltd (BSE) and MCX Stock Exsatisfaction. change Ltd (MCX-SX), Thrissur, is actively He asserts that 100% profit is not posexpanding its retail distribution network to sible from the equity business. According reach out to investors nationwide as well to him, Tamil Nadu, unlike Kerala, has the as globally. It is a depository participant in advantage of having mature investors. CDSL. Kerala investors are after making a fast Sharewealth is a member of all the mabuck. Nowadays, formation of group invesjor commodity exchanges—MCX (Multitors is a trend emerging in Kerala.

PASSLINE PASSLINE

he Muthoot Group has had the singular provider with unremitting attention and providhonour of securing market leadership in ing the customers with a world-class service. all the financial service space it had entered. MSTL will take upon itself customer eduThrough MSTL, it proposes to achieve leadercation as a significant platform of operations ship by positioning itself as a highly with the overall objective of inprofessional outfit dedicated to creasing the investors’ populaservice excellence, unflinching tion in the equity market. It strongly compliance with regulatory norms believes that the Indian growth and sustained customer education. story will continue to gather momentum while The Muthoot Group has emerged as one of growth slows down in the western hemisphere, India’s largest financial groups of its kind with offering equity investors opportunities to take business interests in 17 diverse fields and a in returns far more than those in other asset network of over 2,400 branches nationwide classes. MSTL will build its strength offering to serving 75 million customers. With trust built the customers market insights through a dediover 123 years of unblemished sercated research team and will strive vices to the community and with valto build customer loyalty on the platues driving its business process, the form of right service at the right time. group is now on a critical diversificaMSTL offers personalized sertion journey. The Muthoot Group meavices in equities, derivatives, cursures its prosperity not with the profit rency and PMS, besides commodity it makes, but with the trust that people trading through another vertical – have in it—treasuring this trust since Muthoot Commodities Ltd. 1887. G R Ragesh The Muthoot Group has had the In its sustained effort to emerge as a finansingular honour of securing market leadership cial supermarket for its diverse customers, the in all the financial service space it had entered. group is making its foray into the securities Through MSTL, it proposes to achieve leadertrading space through Muthoot Securities Tradship by positioning itself as a highly profesing Ltd (MSTL) making it a natural progression sional outfit dedicated to service excellence, on the group’s substantial presence in wealth unflinching compliance with regulatory norms management services. MSTL brings to the highly and sustained customer education. competitive securities trading business its roMr G R Ragesh, a Fellow of the Institute of bust financial strength, experienced profesCost and Works Accountants of India, is pressional team, legendary trust of a vast customer ently a Designated Director of Muthoot Securibase and an enduring commitment to values. ties Ltd besides holding the post of Chief FiMSTL will position itself as a different service nancial Officer.

December December 1-31 1-31 ,, 2010 2010

M ONEY P OWER

- Banking & Finance

Gold as an investment option By Abraham M Jacob

old is a conventional form of investment in India and people keep it as an asset. It has easy liquidity for their immediate requirements and acts as a hedge against inflation. It is estimated that our country has a stock of 18,000 tonnes of gold (physical, which is inclusive of that with the Reserve Bank of India and institutional holdings) worth Rs 35,67,207 crore. This accounts for about 11% of global stock. In October last alone 42 tonnes

was imported into the country. India is the highest consumer of gold and tops the importing countries. This year we are importing around 340 tonnes. Gold has been there in the bull market for the past 10 years. Its price at that time was $300 an ounce. Presently it is around $1,400. The declining value of the US dollar is the main reason for this spurt in price. During this time last year the price was $ 1,000. The price is expected to cross $1,500 this financial year. For an investor, gold has a long-time store value. Even with any corrections, experts see much appreciation for gold in the future. In other words, in the future also the appetite for gold is expected to remain unchanged Gold is one asset that does not depend upon the Government’s promise to pay.

spreading wings A

Gold ETF: Gold ETF (exchange traded fund) is an in-

vestment fund traded on the stock exchange, just as stocks, at approximately the same price as the net asset value of the underlying asset. One needs only a trading account and demat account with a stock broker.

to find time for selling and to fall into jewellers’ trap on various charges, even half a gram can be purchased, no wealth tax, no capital gains tax after one year, and settlement within T+2 rolling.

ETF is like an index having low-cost, taxefficient, stock-like features with price at international market levels. It is an open-ended mutual fund listed and traded on the stock exchange like other stocks. Without taking physical delivery of gold, the investor can participate in buying and selling in the bullion market. When gold price moves up ETF appreciates and when it moves down it comes down.

What we need is to change our mindset. Instead of going for physical gold, which is kept idle, the best way is to go for ETF which is in all respects a highly recommended investment. For any investor who wants to invest in gold to meet their contingencies, gold ETF is the ideal option.

The following are the benefits of ETF: No adulteration, a diversified and assured portfolio, a hedge against inflation, considered to be under the global asset class, less volatile compared to equities, held in electronic form, extremely liquid, transparent pricing (no making charges, impurity etc) and no storage required, no need to worry about theft, no need

cumen, which has 14 years of impeccable service in the equity broking sector, has increased its branch network to 550-plus and regional offices to 32. The company has spread its wings to Gujarat and the North East by opening eight and six locations, respectively. More will be inaugurated this fiscal.

According to Mr Akshay Agarwal, Vice-Chairman of the Acumen Group, the company’s focus is on running its existing locations more efficiently and also inducing its franchisees to run the offices more lucratively and T S Anantharaman Akshay Agarwal confidently. Formerly known as the Peninsular Group, the Acumen Group consists of Acumen Capital Markets India Pvt Ltd, Acumen Commodities India Ltd, Peninsular Middle East DMCC and PCML Properties Pvt Ltd. ‘Dream, Plan and Achieve’—this is the group’s formula for working. With corporate membership of all major exchanges in the country, its commodity arm has considerable presence in the market and is doing well. Recently it had started doing business in the Singapore Commodity Exchange. “The commodity market in India is Akhilesh Agarwal dominated by metals and crude oil

whereas the presence of agricultural commodities is not up to expected levels,” says Mr Akshay. He feels that though the stock market will undergo some corrections, it will become steady at 19,000-20,000 points soon and end up at 22,00023,000 this fiscal “considering the feelgood factors in the Indian market.” He also George Mampilli thinks that the Aravindakshan Nair market will reach 25,000 points by next Deepavali with bank stocks being the growth engine in the rally especially those of public-sector banks. Acumen is set to launch portfolio management soon. Mr P R Aravindakshan Nair and Mr Akhilesh Agarwal are the Directors and Mr George Mampilli the CEO of the group. Mr T S Anantharaman is the former Chairman.

PASSLINE

December 1-31 , 2010

Buy gold ETFs at the current price, hold them in your demat account and sell them in future whenever you want money to buy jewellery or for any investments. Some of the present funds are Gold Bees, Kotak Gold (Kotak), Relgold (Reliance), Q Gold Half, Gold Share (UTI), ICICI Gold ETF and SBI Gold.

(The author is Executive Director, Vertex Securities Ltd)

M ONEY P OWER

- Banking & Finance

Retail investors to the fore: Bhuvenendran "T

he Sensex broke the 23,000 mark during Deepavali. All the feel-good factors are now in place. GDP is marching to a two-digit figure. Corporate results are excellent. The IPO of Coal India has created a lot of confidence in the market and a slew of IPOs are also in the pipeline. Not only PSU

listings, good private-sector IPOs will also hit the market in the 200 branches, half of them coming days”. These were the words of Mr N Bhuvenendran, in Tamil Nadu and CEO of Hedge Securities, who was in a jubilant mood while Maharashtra. talking to PASSLINE recently. “Retail investors are turning out According to Mr in large members to invest in the market. This is evident from Bhuvenendran, the spurt in gold price will not be a threat to the the turnover of broking companies. Our turnover also has share market. “Institutional investors may hedge part of their doubled this time over the previous year. Though investment in gold. But I don’t think retail and small there is a sudden downward trend this time we investors will go for it,” he said. need not worry about it because now the new Three batches of candidates have passed out offers in the market are from fundamentally strong of Hedge School of Applied Economies, an acaand also Navratna companies. Naturally risk will demic institution being run by Hedge Equities, and be very low at least for another three or four all of them have been well placed. Most of them months. This is the time for small investors, and have joined Hedge Securities itself. The aim of the they can invest now without much fear. But midinstitution is to groom high-calibre financial profescap companies will also tap the market in the comBhuvenendran sionals competent enough to take Kerala’s finaning months. By that time investors should be careful before they pick the shares of those companies,” Mr cial market to the next viable level. Bhuvenendran said. Hedge Equities is completing its three years of operations. One of the youngest stocking firms in Kerala, it was started at the time of the global recession with 10 branches and now has 148 branches in South India. In a few years’ time it will have a pan-India presence. This fiscal the company will start

Mr Bhuvenendran feels that the people of Kerala should invest in shares as the stock market is the backbone of our country. By investing in the market, we are in a way becoming part of the nation-building activity. It is also obvious that a wise investor can make money with an appropriate investment decision, he says.

M R Kumar takes over as LIC Southern Zonal Manager M

r M R Kumar has taken over as Zonal Manager (in charge) of the Life Insurance Corporation of India, Southern Zonal Office, Chennai, from December 1, 2010. Joining LIC in 1983 as a Direct Recruit Officer, Mr Kumar has worked in different zones of the corporation as Marketing Manager, Bangalore Divi-

PASSLINE PASSLINE

December November 1-31 1-30,, 2010 2010

M R Kumar

sions I & II; Senior Divisional Manager in charge of Ahmedabad and Ernakulam Divisions; Regional Manager (Marketing), Eastern Zonal Office, Kolkata; and Regional Manager (Personnel and Industrial Relations), Southern Zonal Office, Chennai. Before his present assignment he was Regional Manager (Marketing), LIC, Southern Zonal Office, Chennai.

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December 1-31, 2010

RN 65561/94 Reg. No. KL/EKM/116/2009-2011

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