Emerging Kerala
Grand Kerala Shopping Festival
Kochi Metro
Column: The big data
ENTERPRISE & ECONOMIC Price `50 $5
Vol 2 Issue 9 October - November 2012
KERALA
Waiting in the wings Kerala plans to launch its own airline company
Vol 2, Issue 9 November 2012
Taking wings RNI No. KERENG02297
Editor K J Jacob Principal Correspondents Aby Abraham G K A P Jayadevan Design and Layout Renu Arun Website Suhas K Sales and Marketing Jose Thomas Printed, published and owned by K J Jacob and published from Independent Media, XI/173 B, Mulakkampallil Buildings, Kunnumpuram-Civil Station Road,Thrikkakkara, Kochi,Kerala-682 021 Phone: 0484-2421916 and Printed at Sterling Print House Pvt.Ltd. Door No: 49/1849, Ponekkara-Cheranelloor Road, Aims Ponekkara P.O., Kochi - 682 041 Phone : +91 484 2802522, 2800406 *Editor: K J Jacob For subscription, advertisement : sales@economic-update.in Tel: +91 99475 39023 We value your feedback. Please write to us at: letters@economic-update.in Read us at www.economic-update.in Cover design : Anoop Radhakrishnan
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very pioneering idea comes with risk. For Kerala, which has seldom shown the spirit of risk-taking, the idea of the Cochin international airport was a risk many said it could not afford to take. However, after a decade of its inception, CIAL has become a sterling example of clarity of vision and efficiency in management. It has become the poster boy of public-private partnership initiatives all over the country. The idea of Air Kerala also carries huge risks on its wings. An airline company owned by a State government is indeed a novel, but risky, idea. Especially since it is conceived as a tool to ensure adequate number of flights to the Middle East at affordable prices. There could be conflict of interests, as our cover story says, and the project calls for display of management abilities of the highest order to make it viable. We wish it all the best. More than the project, what surprised us was the huge interest the non-resident Indian community has shown in the project. It was not just a show sans commitment. They are willing to put their hard earned money into it. It is not just Mr V J Kurian, the government’s pointsman for the project, who gets calls showing interest by non-resident Keralites in the project. The story on Air Kerala on our website is still being frequented by people who keep asking how they can buy shares of Air Kerala. This interest cannot be an expression of a desire to fly on one’s own airline. Airline companies the world over have hit a bad patch of late, and the well-read Malayalee cannot be ignorant of this. He also knows the travails of the domestic airline companies, many of them sinking. We would like to believe that the NRKs have the money and the willingness to invest it in projects that would take the future of the State forward. They are not looking for an immediate profit from the project but see it as a long-term investment. The CIAL experiment, where everyone who put their money in that once-doomed project is reaping a rich harvest now, must be the model they want us to emulate. Now the challenge is for the government. There is money waiting to be invested. If we show the imagination to utilise a share of the `60,000 crore NRKs send home every year, Kerala need not look for foreign sources to fund its projects. Are we imaginative enough?
Contents COVER STORY
26 Coming home in Air Kerala
The travel woes of the non-resident Keralites, who play a major role in sustaining Kerala’s economy, have forced the State government to consider launching its own airline. The success of the Cochin International Airport has emboldened the move. But it may not be an all-smooth take off, warn experts 4
Contents
17 Sustainability mantra Emerging Kerala focuses on industries and technologies that can harness the unique strengths of Kerala 19 The first station Work on Kochi Metro, the most ambitious infrastructure project Kerala has undertaken in recent times, begins 22 Powering purchase The Grand Kerala Shopping Festival reaches the sixth edition this year, and promises big changes 36 Kerala Statistics Kerala hosts three operational airports and is building the fourth one. How does the air travel industry fare?
31 Taming the number Handling of big data poses big challenges, and offers equally big opportunities, writes Mr S R Nair
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The big picture
Of late, Kochi has become a favourite port for cruise liners to call at. Last year, around 58,000 cruise tourists came to Kochi on 44 ships; as many as 50 day-visits by luxury cruise liners has been confirmed till now this year. The proximity to the international shipping route makes Kochi one of the most-preferred cruise destinations in India. The tourists get down at the port, go around the city, sight-seeing or shopping, and return to the ship. Normally they stay in the city for a day. Tourism companies also tie-up cruise liners and 6
chartered flights so that passengers coming in flights board the ship after spending some time in the city, while those from the cruise lines board the flight back home. The growing profile of Kochi has the Cochin Port Trust build a dedicated cruise-passenger facilitation centre. The 1,500-sq m centre has dedicated Customs and Immigration counters in addition to X-ray scanning machines for baggage, metal detectors and special rooms for rest, prayer and feeding. It also has ample parking space for luxury coaches, tourist taxis and auto-rickshaws. 7
After going through your magazine, I often wonder whether so much is happening in the industrial space of our State. I have returned to Kerala after more than 25 years of service in the armed forces. I have never got the impression that State would be able to match the development in other States. At best, I used to think that we shall do well in tourism and Ayurveda. Initiatives like that of the Coconut Development Board must be wholeheartedly welcomed, as it has the potential to change the economy of Kerala villages. It would also promote entrepreneurship among our young men and women J Paul George, Kochi I follow the news on Emerging Kerala that appear in your magazine. It is time Kerala made its advantages known to the whole world through an appropriate means, and Emerging Kerala must have fitted that Bill. It looks like the government was well prepared to present itself before the investing community which converged in Kochi. The future of our economy depends on the young entrepreneurs coming out of the campuses. I hope they got a chance to meet and interact with the highly successful entrepreneurs who attended the event. It will sure inspire them to give their best shot at entrepreneurship. M P Praveen, Kochi Your magazine often covers the potential Ayurveda holds. However, I am of the opinion that the State is not yet ready to welcome a big flow of tourist-patients to the 8
State. There are hardly any big Ayurveda hospitals in the State which can accommodate hundreds of foreign patients. On the other hand, Sri Lanka is making big investments in the sector, and is attracting more tourists there, though we claim that we are the cradle of Ayurveda. I suggest that the government study the Lankan model and see what we can adopt from them. Unless we make a timely movement, we will have to settle for the crumbs while our neighbor enjoys the big spread. T Raman Menon, Thrissur I have a complaint that Update seldom covers the manufacturing sector in Kerala. True, the State does not have big industries, but that does not mean that we are just a service sector economy. There are smart and nimble companies which do well in value-added manufacturing. The service sector, of course, creates a lot of jobs but the longterm sustenance of an economy must also factor in the health of the manufacturing sector. If the media keeps its eyes shut on them, then there is no hope of them making it big. Ramesh G, Thrissur I follow your updates on the film industry. Of late, we celebrate a new wave in Malayalam cinema, which is made possible by the efforts of a generation of brave hearts. Kudos to them. I understand that they also follow very innovative marketing strategies, involving the new media
including the social media. As it does not involve huge expenditures, and the result can be tracked with some precision, such strategies work, especially for low budget movies. I am sure that these filmmakers will be able to overcome the constraints of money and bring glory to the Malayalam cinema, once again. Vinod Narayanan, Thiruvananthapuram I carefully read the column of Mr S R Nair, in which he often illustrates how technology can be a big booster for businesses. At the same time, I also get the feeling that the businessmen in Kerala are not open to the changes happening in the cyberspace. Is it that the people, despite their wide exposure to the world outside, do not allow technology to enter their premises? Do they think that such a move would make them lose control of their companies? Don’t they understand that flat managements can act fast and take right decisions? They must take a cue from the examples that Mr Nair gives. That is the only way for them to be able to remain competitive and grow fast. K V Babu, Kozhikode
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I say!
Long before globalisation became a buzz-word, Kerala was connected to the rest of the world. A rich history of spice trade gave this beautiful State a global orientation many centuries back, even before Vasco-da-Gama landed off the coast of Kozhikode in 1498 Dr Manmohan Singh, Prime Minister, inaugurating the Emerging Kerala global connect in Kochi
"We have added one more ‘P' to PPP. Air Kerala would be Public-Private-People’s-Participation model" Oommen Chandy, Chief Minister, talking about the State governemnt’s plan to launch an airline – Air Kerala – along the lines of CIAL "This programme (MGNREGA) has helped break down social inequalities, empower rural people, build up rural infrastructure and revive economic growth" L K Advani, senior BJP leader, in his address on ‘Social Development’ at the 67th session of the UN General Assembly
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"You consult the astrologers about rahu-ketu to know about suitability of stars before getting married. You should also look whether there is a toilet at your groom’s home before you decide to get married" Jairam Ramesh, Rural Development and Water and Sanitation Minister, talking to villagers before launching the third edition of Nirmal Bharat Yatra "Manufacturing is the elixir for many of our economic and social woes" Anand Mahindra, chairman and managing director, Mahindra and Mahindra, speaking at the inaugural of the Indian Manufacturing Show
AT A GLANCE
Russia taps giant gas field
Russia’s State-run energy giant Gazprom has started production at Bovanenkovo field in Siberia. Discovered around 40 years ago, the field is one of the world’s three largest natural gas fields with reserves estimated at 4.9 trillion cubic metres. But it remained inaccessible amid permafrost till recently. The field will produce 115 billion cubic metres of gas: almost the volume of gas it exports to Europe. Russia is the world’s largest exporter of energy providing about 30 per cent of Europe’s natural gas imports. Europe sinks deeper into recession... Services and manufacturing activity in the Eurozone slowed down sharply in October, according to data published by Markit. The Composite Purchasing Managers’ Index fell to a three-year low of 45.8 for the month from 46.1 in September. (A value below 50 indicates contraction). Manufacturing slowed to 45.3 from 46.1 in September while services improved marginally from 46.1 to 46.2. Business sentiment in Germany also fell for the sixth consecutive month. Its
Business Climate index sank to 100, from 101.4 in September. France’s main statistical unit, INSEE, also slumped to a threeyear low. .. as China rebounds on stimulus effect Factory output and retail sales accelerated in China in September as the economic stimulus provided earlier started taking effect. But the growth slowed for the seventh consecutive quarter. The Chinese economy grew 7.4 per cent in the JulySeptember period on a Yo-Y basis. Analysts expect growth to increase in the fourth quarter to 7.6 - 7.7 per cent and discount the possibility that the country would reduce interest rates or reserve requirements in the quarter. Apple Unveils iPad Mini Apple, the market leader with 70 per cent share in tablets, is taking the fight right to its competitor’s doors. It has introduced a smaller, cheaper version of the iPad to compete with low-cost tablets from the likes of Microsoft, Google and Amazon. The new device will be available from $329, against the $499 price tag that the latest version of iPad car-
ries. The price is still much higher than that of competitors, who offer tablets at around $200 a piece. Pandit steps down as Citibank CEO
Vikram Pandit, CEO of Citibank since December 2007, and John Havens, the bank’s COO, resigned after differences with the board, just a day after the bank declared better than expected quarterly results. Mr Pandit is credited with steering Citigroup, which was in pretty bad shape during the financial crisis, out of trouble. But recent events – the $15m package given to the CEO in 2011, its plans to increase dividends and buy back shares and the stake-sale in its retail brokerage JV at a huge loss - raised questions about the management of the bank still on government support. Mr Pandit has been succeeded by the bank’s current chief executive for Europe, Middle East and Africa, Mr Michael Corbat. And Japan posts record trade deficit Raking up disputes in times of crises is a bad idea - especially with your biggest trading partner. Japan, coming out of the tsunami and nuclear
disasters, is learning it the hard way. The country recorded its biggest-ever trade deficit of ¥3,219 billion ($40.6 billion) in the first half of the fiscal year, up 90.1 per cent from the same period a year ago. Exports fell 2 per cent with that to China falling 8.2 per cent billion in the first half, due to a boycott of Japanese products in China. Lenovo pips HP as largest PC maker A smaller share of a shrinking market – that is what tech giant HewlettPackard has to deal with. It lost its place as the world’s largest PC maker - a position it held since 2006 - to Chinese company Lenovo in Q3, 2012, according to Gartner. Lenovo shipped 13.77 million units during the
quarter, a Y-o-Y increase of 10 per cent, on the back of aggressive pricing, overseas acquisitions, and a still expanding home market. Lenovo’s market share improved to 15.7 per cent while that of HP declined from 16.4 to 15.5 per cent. Worldwide PC shipments fell over 8 per cent to 87.5 million in the quarter as tablets and smartphones gained. 11
AT A GLANCE
Airtel is world’s fourth largest mobile operator…
Bharti Airtel, with over 250 million connections, is the world’s fourth largest mobile operator. China Mobile tops the list with 683.08 million connections, followed by Vodafone (386.88 million) and America Movil Group (251.83 million), according to analysts Wireless Intelligence. Bharti Airtel had become the fifth largest mobile operator in the world after it acquired Zain Group's mobile operations in Africa in June 2010. ...but India may run out of phone numbers India may soon run out of mobile phones as the subscriber base in the country inches to the 1 billion mark, the limit of the existing number sets. DoT is looking at various alternatives such as introducing 11 or 12 digit phone numbers to tackle the problem. TRAI has also suggested using numbers allocated for landlines in the mobile domain. Indian firms in takeover spree It is raining acquisitions, that too foreign, after Infosys bought Lodestone consulting last month. Rain Commodities Ltd is buying speciality chemicals group Ruetgers 12
in a 702 million euro deal – the biggest Indian takeover of a Germanowned business till date. Dr Reddy’s Laboratories Ltd has announced its plan to buy Dutch firm OctoPlus for an €27.39 million (about Rs 193 crore). And Indian Hotels is once again looking to take over US luxury hotels group Orient Express Hotels for $1.8 billion, after its previous attempt failed in 2006. NSE, MCX, BSE in top 20 global list NSE, MCX and BSE are among the world’s top 20 derivative exchanges for trading volumes in the period January-June 2012. National Stock Exchange is ranked fifth, MCX 10th and BSE at 18th position on the list compiled by the Futures Industry Association. CME Group tops the list with 1.55 billion derivative contracts, followed by Korea Exchange, Eurex and NYSE Euronext at second, third and fourth positions. As many as 971.8 million derivative contracts were traded at NSE, 489.3 million on MCX and 97.4 million on BSE during the period. Manufacturing up, IIP rises in August India’s industrial produc-
tion rose 2.7 per cent Y-o-Y in August after contracting by 0.2 per cent in July, raising hopes of a turnaround in the economy. Manufacturing, which constitutes about 76 per cent of industrial production, rose 2.9 per cent. Industrial production expanded 0.4 per cent in the April-August period. Demand for office space up Grade-A office space absorption in the country’s seven major business hubs - Mumbai, DelhiNCR, Bangalore, Chennai, Hyderabad, Pune and Kolkata – increased to 7.6 million sq ft in the JulySeptember, from 5.9 million sq ft in April- June quarter, says consultancy DTZ. Bangalore led with
a demand for 3 million sq ft in the period, a 67 per cent sequential growth. But rentals remained stable as the supply more than matched demand with a sequential growth of 188 per cent to 9 million sq ft. And services grow at a fast clip India’s services sector, which contributes 60 per cent of its GDP, grew at its fastest pace in the last 7 months in September. The HSBC purchasing
manager's index for the services sector rose to 55.8 in September from 55.0 in August. Employment too touched a 15-month high, as the new business subindex touched its highest level since February. Raguram Rajan is Chief Economic Advisor
Dr Raghuram G. Rajan, former chief economist of the International Monetary Fund, has assumed charge as the Chief Economic Advisor in the Ministry of Finance. One of the few economists to have correctly predicted the 2008 financial crisis, Dr Rajan is expected to be a key member of Finance Minister P. Chidambaram's team that will prepare the Budget for 2013-14. He had earlier worked as the honorary economic advisor to Prime Minister Manmohan Singh in 2008. Dr Rajan is also being entrusted with the task of bringing out the Economic Survey. “The world economy faces very serious challenges right now and India is no exception...I hope that over the coming days, I can help in whatever solution we devise,” Dr Rajan said.
AT A GLANCE
Kerala is guest’s own country A study by online travel portal TripAdvisor reveals that Kerala provides the best accommodation in the country, for tourists. Travellers gave the State’s properties the highest average review rating of 4.27 out of possible 5, as per the study. Kerala was followed by Rajasthan, Haryana, Sikkim and Uttarakhand with ratings of 4.25, 4.18, 4.14 and 4.07 respectively. SCMS is Asia’s Best Emerging B-School
Kochi-based business school, School of Communication and Management Studies, (SCMS) has bagged Asia’s Best Emerging B-School Award at the 3rd Asia’s Best B-school Awards function held in Dubai. Pramod P Thevannoor, senior director, SCMS group, received the award Kerala is a different place now, says CM
TiEcon Kerala 2012, a conference of entrepreneurs and professionals held in Kochi, has given a big push to entrepreneurship in Kerala by lining
from Chea Chamroeun, founder and president, Chamroeun University of Poly-Technology, Cambodia. IT sector tops new companies’ list As many as 742 new companies with a total authorised capital of `182.67 crores were registered in Kerala during July-September this year, according to data released by Registrar of Companies, Kerala and Lakshadweep. Of them, 47 were big size companies with total authorized capital of `50 lakhs and above. Thirteen of them were public and the remaining private. Ernakulam saw the highest number of companies – 277, followed by Thiruvananthapuram with 105 and Thrissur with 101. The IT sector accounted for the highest number of companies - 103 followed by 96 in the manufacturing sector, 89 for chit, 66 for construction, 61 for wholesale trade, 38 for retail trade, 23 for agriculture, farming and plantation and 17 for real estate and 6 for stock, shares and
up venture capitalists, angel investors, management consultants and successful businessmen at the two day-event. Chief Minister Mr Oommen Chandy who inaugurated the meet said Kerala is a “changed place” for investment and the government’s policy was to create a ‘positive atmosphere’ for environment-friendly businesses to flourish. Despite Kerala
securities sector. NABH accreditation for Cherthala taluk hospital Cherthala taluk hospital has become the first taluk-level government hospital to get the accreditation of the National Accreditation Board for Hospitals and Healthcare Providers. The hospital is only the ninth one in the State and the 151th in the whole country to get the accreditation. Two other government hospitals n the State - the Government General Hospital in Ernakulam and the Government Hospital for Women and Children at Thycaud in Thiruvananthapuram had received the accreditation earlier. Maradona kicks off heli–taxi services After Joy Alukkas, another jewellery group from the State is taking to the skies. Bobby Chemmanur Airlines was launched by football legend Diego Maradona in Kannur on October 24. The airline will operate a heli-taxi service at a rate of `3,000 – `10,000. The service will
having the lowest mandays lost due to labour issues in the whole of South India, the State was still perceived as being a difficult one to work in, he regretted. More than 1000 delegated deliberated different aspects of entrepreneurship, opportunities and challenges it provides in more than 20 sessions which covered diverse
be available throughout Kerala and to destinations in the neighbouring States such as Velank-
anni, Pazhani, Madurai, Bangalore, Mumbai, Chennai, Mysore, Ooty, and Coimbatore. GEMS group buys Centum Everonn Education Limited, part of Sunny Varkey-led GEMS Education - Dubai, will acquire Centum Learning Limited, a privately held company of the Bharti group in a cash and stock transaction, the value of which remains undisclosed. Centum Learning offers training programmes and skill development solutions for corporates in 21 industry verticals. Everonn is one of the largest VSAT education network in the world and has presence across the educational eco-system.
areas such as converting an idea into a successful business, getting funding for business, growing small business and institutionalising it, exit strategies, tourism, wellness, Ayurveda, life sciences and neutraceuticals, electronic and bio-medical industry, information technology, food and agri processing, clean and green technologies.
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project tracker
LNG terminal to go on stream in October The LNG terminal at Puthuype, Kochi will be commissioned in October. According to Dr AK Balyan, managing director of Petronet LNG Ltd, 97 per cent of the works relating to the project has been completed. The company plans to commission the first two phases of the terminal, with a combined capacity of 5lakh mmtpa together. Industries in an around Kochi would start getting gas from next year, once the first phase is completed. In addition, PLL also plans to supply gas in tankers to customers who do not have pipeline connectivity. PLL has offered to supply gas to industries in the region at a price
of $14/unit. But it is yet to finalise agreements with customers for the gas. Railways takes over Kanjikode land The Railways has taken possession of 230.10 acres of land at Kanjikode near Palakkad to set up the coach factory. Mr Piyush Agarwal, Divisional Railway Manager, Palakkad, handed over a cheque of `32.44 crore to Mr PM Ali Asgar Pasha, Palakkad District Collector, as the price for the land. Railways 16
will soon build a boundary wall and other basic support infrastructure designed to secure the land. It has also requested 90 more acres of land for the second phase of coach factory. The State government and the Railways had in June jointly surveyed the land and demarcated the portion of land to be handed over to the railways for setting up the factory. It is hoped that the Railways would expedite the project as it has got possession of the land. Master plan for Technocity ready The master plan for Technocity – Phase 4 of Technopark, Trivandrum – is ready. The project will have 30-million-square-feet built-up space, entailing an investment of `5,000 crore. It will be developed
in the Public Private Partnership (PPP) Model. Technocity has been conceived as an integrated township, offering business spaces well as social infrastructure. It would offer state-of-the-art IT/ITes infrastructure along with social infrastructure in the form of residential apartments, shopping malls, multiplexes, hospitals, hotels, educational institutions etc. It would also cater to high growth sectors other than IT such as biotechnology, nanotechnology, high-end manufacturing and research and development. Major companies such as TCS and Infosys, have already taken up space in the park. Elias George is metro chief The State Cabinet has reconstituted the director board of the Kochi Metro Rail Limited (KMRL). Mr
Elias George, Principal Secretary (Power) will be the new Managing Director of KMRL. Chief Secretary K Jayakumar, Principal Secretary
(Finance) VP Joy and Principal Secretary (Water Resources) VJ Kurian will be the other members of the board. One more member will be nominated later. KMRL had to be restructured into a joint venture between the Central and State governments, after the centre gave its nod for the Kochi Metro and agreed to fund the project. The company director board was to have five representatives each from the Central and State governments, with the Centre nominating the chairman and the State, the managing director. The Centre had earlier nominated Mr Sudhir Krishna, Union Urban Development Secretary as the ex-officio chairman. New alignment for Hill Highway The new alignment of the proposed hill highway from Kasaragod to Thiruvananthapuram has been almost finalised. The hill highway will extend from Nandarappadavu in Kasaragod district to Parassala in Thiruvananthapuram district. Numbered as State Highway 59, it will pass through districts except Alappuzha. The highway would have a standard two lane width of 18 to 24 metres. The 1,195-km long highway is expected to be the longest highway in the State. The new alignment drawn up by NATPAC uses the existing road network in the region to a large extent. The implementation of the hill highway will be taken up in stages, district-wise in view of the high costs of the project.
Emerging Kerala
Sustainability mantra Investor meet focuses on technologies and units that can harness unique strengths of Kerala
P
erhaps the best picture of the newly-emerging Kerala was painted by the Deputy Governor of the Reserve Bank of India Dr Subir Gokarn. Speaking at the Emerging Kerala global connect, held in Kochi on September 12-14, Dr Gokarn listed out the factors that go in favour of the State: a long sea shore, high literacy rate of over 90 per cent, huge remittances from abroad, comfortable weather round the year, rivers across the State that provide electricity, irrigation and transport facilities, an enviable topography and history which can attract tourists round the year. They are on par with many of the developed nations, he said, while exhorting the
State to identify its real strengths and plan its future accordingly. The State’s efforts to make the most of the blessings Dr Gokarn listed were on display at the meet, conceived as a biennial event for marketing Kerala as an investment destination. The 26 focus sectors
The Confederation of Indian Industry (CII) announced at the meet its decision to set up a Centre of Excellence in Entrepreneurship in the State
the government presented, with the stress on clean and green technology enterprises, made the intentions of the State government clear: it can pursue the paths of development and prosperity only at a pace and formula its sensitive ecology allows. As such, projects in the knowledge-based industry dominated the proposals that were presented at the meet. Calling the meet which he inaugurated “a confluence of talent, expertise, and experience”, Prime Minister Dr Manmohan Singh said, “We would like the State to embark on a path of people-focused inclusive growth, driven by knowledge and innovation, and mindful of environmental concerns.”
Prime Minister Dr Manmohan Singh speaks after inaugurating Emerging Kerala global connect in Kochi
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The Prime Minister, who also attended a special meeting of the State Cabinet held in Kochi on September 12, urged the State government to derive maximum possible benefit from the Centre’s initiatives, especially the National Skill Development Mission. “This would go a long way in tapping the energies of Kerala’s educated unemployed,” he said. Of the 4,676 participants registered for the meet, 2,512 were business delegates. And most of them had business-to-business and business-to-government meetings, with the hope of clinching a deal. KSIDC was the nodal agency of the event while the Confederation of Indian Industry (CII) and the National Association of Software and Services Companies (NASSCOM) were the partners. Representatives from several major foreign countries, including the US Ambassador, the British High Commissioner, and a Chinese Vice-Minister, attended the meet. Telecom Commission chairman and mentor of the State Mr Sam Pitroda; Planning Commission
vice-chairman Dr Montek Singh Ahluwalia; the Prime Minister’s Adviser, T.K.A. Nair, and CII chairman Adi Godrej also attended the meet. ‘Emerging Kerala’ also saw the announcement of major investments, some of which were already in the public domain. The biggest of them was the mega expansion cum diversification plan of the BPCL Kochi Refinery. When complete, the `18,000 crore project would give birth to units in the eco-friendly petro-chemical industrial units in the public, joint and private sectors. The meet witnessed a renewed focus on entrepreneurship. In the backdrop of the State government announcing a slew of measures for the entrepreneurial class, the Con-
The government has announced that it will come out with the preliminary list of approved projects by December this year
Sessions on tourism and food in which leading industrialists participated 18
Infosys co-chairman Mr S Gopalakrishnan speaks at a session on IT industry federation of Indian Industry (CII) announced at the meet its decision to set up a Centre of Excellence in Entrepreneurship in the State. It has already been announced that the Kerala Industrial Infrastructure Development Corporation (Kinfra) would create one lakh sq ft built-up space in 16 months for incubators and complete the first phase of 25,000 sq ft by May 2013. It has also announced setting up of a Technology Innovation Zone on about 10 acres in Kochi at an initial investment of `100 crore. These measures, together with the government decision that a student who works to create a knowledge, innovation, wealth and jobs at or through government of India recognised incubators will be given 20 per cent attendance and 4 per cent grace marks in the academic course he or she attends, are expected to attract more young people to set up their own shops in the State. Kerala, the first State to pass a law for setting up single window clearance boards, has also announced the formation of the Kerala State Investment Board to speed up clearance for proposals. This will, however, require amendments in the single-window clearance Act, including making the application process online. The government has set up various committees to process the project proposals submitted at the meet. The government is expected to come out with the list of projects which have cleared the first level of scrutiny in December 2012 ■
Kochi metro
The first station Project to help Kochi manage traffic, retain its edge
Prime Minister Dr Manmohan Singh lays the foundation stone for the project The work on one of Kerala’s most ambitious infrastructure projects got started when Prime Minister Dr Manmohan Singh laid the foundation stone for Kochi metro rail project on September 13, 2012. The `5164-crore project is expected to be commissioned in four years. The expectations of the people on the project was echoed in the Prime Minister’s words when he said he hoped Kochi would evolve as “a very important economic and logistical hub” of the country with the International Container Transshipment Terminal at Vallarpadam becoming operational. The Prime Minister, who was in the city to inaugurate the Emerging Kerala global connect, pointed out that the transport infrastructure of the city was “under severe stress, with the demand for travel rising steeply in recent years.” The Union Cabinet had on July
12 cleared the fully-elevated link, covering 23.6 km from Aluva to Petta with 23 stations. Officials of the Japan International Cooperation Agency, which is expected to fund the project, have already visited Kochi and expressed their satisfaction on the preliminary work on the project. The Kochi Metro rail project was
conceived a decade ago when the city was poised for big growth with many major projects including the Smart City project being talked about. Though several of them did not take off as planned, the city continued its growth. The project assumes significance as the Ministry of Urban Development of the Union Government estimates that the average city speed will fall to 6 to 8 kmph by 2030 unless urban transport is not properly planned and developed now. Kochi, the commercial capital of the State, cannot afford to be plagued by the traffic snarls. The Kochi Metro is part of the Government plan to have a mass rapid transport system for all three of its major towns: Thiruvananthapuram, Kozhikode and Kochi. The government has already formed Kerala Monorail Corporation Ltd, a special purpose vehicle to build monorails in Kozhikode and Thiruvananthapuram. As the State is projecting itself as a preferred investment destination, it can ill-afford to have the ills of the metros, which have been looked down upon by the industry, especially those in the knowledge sector. The Kerala government has set up Kochi Metro Rail Corporation (KMRL), a special purpose vehicle for the construction and running of the metro project. The Central government, which has taken equity participation in the project, is also represented in KMRL. Dr Sudhir Krishna, Secretary, Ministry of Urban Development who chairs the KMRL board is also the chairman of the Delhi Metro Rail Corporation, the principal advisor to the project ■ 19
When my information changes, I change my opinion. What do you do, sir?
John Maynard Keynes (1883-1946) The most influential economist of the 20th century.
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Everybody knows that technology changes business. Today, the change flows through the net. And the fact is, Kerala is the most networked State in India.
Of the 978 Panchayats in Kerala, 99% have broadband connectivity.
Information changes
Be updated
For subscription: 0484-2421916, +91 9947539023 or subscription@economic-update.in ----------------------------------------------------------------------------------------------After all, our opinions ought to change!
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Retail
Powering purchase GKSF, Kerala’s own shopping festival, has been gaining strength over the years
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t is holiday season again. And the sixth edition of the Grand Kerala Shopping Festival (GKSF) is about to start. The festival which aims to make the State that is already a prominent tourist destination a global shopping destination too, will be held in the State from December 15, 2012 to January 31, 2013. The festival, held in the peak holiday season, aims to develop a second shopping season in the State, in addition to the Onam season that heralds the shopping season in the whole country. Visitors who throng the State during the period – the tourists and the non-resident Keralites on their annual sojourn to their roots – would be provided a unique shopping experience as part of the festival. Traditional products of the State will be showcased during the event, in addition to the regular products. The shopping spends by tour22
ists in Kerala stands at just five per cent against a global average of 15 per cent. The State Tourism Department, in association with the Industries, Finance and Local SelfGovernment departments, has been organising the GKSF every year since 2007 to redeem the situation and promote shopping here using the brand value of Kerala tourism. To attract more ‘shopping tourists’ to the State, road shows were held across the country, in states such as Delhi, Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. This year also, the government is trying to woo shoppers from outside the State by offering a 100 per cent VAT refund during the festival. Road shows in each of the districts of the State are also being held to promote the event. This year, the festival has spread to the Internet also, with GKSF setting up an exclusive online portal where surfers can purchase gift vouchers for their family and friends. The Global Village The focal point of GKSF this sea-
This year, the festival has spread to the Internet also, with GKSF setting up an exclusive online portal where surfers can purchase gift vouchers for their family and friends
son will be the Global Village being started at Bolgatty Island in Kochi. The village being set up on the lines of the Dubai Shopping Festival, on the Lulu Convention Centre premises in Bolgatty, will feature products, art forms, cultures and traditions from around the world. It will have around 400 stalls housed in a massive 1lakh sq ft fully air-conditioned structure. The Village will have six main themed pavilions – besides International, Indian and Kerala pavilions. A special ‘Weaves’ section dedicated to handlooms and textiles from across the country will also be part of the Village. It is hoped that the Village will raise the festival to the level of major shopping festivals in the world in the not too distant future. In addition, six exhibitions have been planned in the major cities of the State. A Handloom and Folklore expo in Kannur, a tea expo in Kalpetta, a Mappila Fest in Kozhikode, an exhibition on tribal arts and culture in Kottakkal, a spices expo in Kottayam, a health and ayurveda expo in Thiruvanathapuram are among those planned. A Contemporary Art Fair featuring works of more than 200 artists will also be organised at Kanakkunnu Palace, Thiruvanathapuram from January 3 to 26. Responsible shopping Buoyed by the success of its ‘responsible tourism’ initiative, the State Tourism department, the main organiser of the event, is extending the concept to shopping too. It aims to promote eco-conscious shopping as
part of the sixth edition of GKSF. A ‘responsible-shopping corridor’ stretching across the length of MG Road in the State capital Thiruvanathapuram will be organised as part of the festival. Shoppers will be encouraged to buy eco-friendly, organic and fair-price products as part of the initiative. It also aims at promoting recycling and improving civic and health amenities at stores and shopping centres. Registration More than 7,000 merchant establishments across the State including jewellers, textile retailers, electronic stores, furniture stores, antique shops and beauty parlours have registered for the current edition of GKSF, surpassing the previous year’s figure of 5,000 by a large margin. As this year’s festival focuses on tourism
and allied businesses, homestays and houseboat services have also signed up for the event in large numbers. Last year a business of `1,000 crore was achieved during the festival. The figure is expected to be much higher this year, going by the increase in registrations this time around.
The Shopping Village will be set up on the lines of the Dubai Shopping Festival, on the Lulu Convention Centre premises in Bolgatty, and will feature products, art forms, cultures and traditions from around the world
Gifts The sixth edition comes with a modified prize structure to ensure a higher chance of winning gold. In addition to the 101 kg of gold, high-quality Kerala handicrafts and handloom products will also be given away as prizes. High quality GKSF branded T-shirts, caps, thermo-flasks, coffee mugs and umbrellas will be given as scratch-and-win prizes, in addition to the gold coins. There would also be daily prizes though SMS, weekly draws offering gold and mega prize draws that offer up to one kg of gold. South Indian Bank is the title sponsor for this edition of the festival. Malabar Gold will be the Associate sponsor, Tata Motors, the Platinum sponsor and Bhima Gold, Department of Consumer Affairs and BIS, the co-sponsors ■ 23
BUSINESS CALLED LIFE
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The festival season begins in November in Kerala. It also means busy time for elephants and mahouts, too. Elephants are part of the celebration in many temples, even taking part in the rituals. Authorities of temples vie with one another in bringing in the most celebrated of the elephants for the festival. The going rate for the elephants ranges from `8,000 a day to `60,000. The mahouts get a pay ranging from `1,000 to `1,750.
Photo: Sivaram V.
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cover story
Coming home in Air Kerala
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The frequent disturbances in flight schedules and an unjustifiable pricing system for flights to Gulf countries force the government to look for launching an airline on its own. While the proposal is met with great enthusiasm from the flying population, experts want the government to study the scene carefully before venturing in Kuruvilla Chacko
W
hen Chief Minister Mr Oommen Chandy revealed the government’s interest in reviving the half- decade old idea of a State-run airliner to cater to the non-resident Keralite community in the Gulf region, it made Malayalees the world over sit up and take notice. Never before had a project involving them captured their imagination more than that of an airliner operated by their home State. For, in one stroke, it promised to wipe away the twin problems of high fares and low flight frequency emigrants wanting to return home during the peak season face. Critics might have lampooned on the numerous impractical angles to such a venture, but both delegates and investors at the Emerging Kerala meet where the Chief Minister made the announcement chose to celebrate the occasion. And why not? It was indeed a time to celebrate, because be rest assured that whether the venture takes off immediately or not, it has given a glimmer of hope to an entire State which has among its common folklore countless stories of a son abroad who hasn’t broken a fast with his family on Eid, or of a husband who hasn’t had the pleasure of eating an Onam meal served by his wife on a plantain leaf cut from his own backyard, for the past many years. For such families and many more, Air Kerala provides the means to return
home every year, if nothing else. The plan According to the Chief Minister, the initial investment for the project will be about `200 crore. The government and the Cochin International Airport Limited (CIAL) will hold 26 per cent stake and the remaining will be held by private individuals and non- resident Keralities. With the initial euphoria surrounding the project having subsided, this is the question on everyone’s mind. Can an airliner, which does not function in true corporate management style but instead follows the PPP route of the Cochin International Airport Limited (CIAL) be able to sustain itself unless dynamic pricing and year round operations are brought into the picture? Will the idea of a part-time airline company running on leased aircraft turn
Kerala has among its common folklore countless stories of a son abroad who hasn’t broken a fast with his family on Eid, or of a husband who hasn’t had the pleasure of eating an Onam meal served by his wife on a plantain leaf cut from his own backyard, for the past many years
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Interview: V J Kurian
We have proved skeptics wrong once T
he State government has entrusted Mr V J Kurian, managing director, CIAL, to lead the efforts for launching the airline. Speaking to UPDATE on the project, Mr Kurian said people must be patient and give the idea a chance. He however, was non-committal, saying the feasibility report, expected by December, will play a crucial role in the future of the project. Excerpts from an interview: How do you view the Air Kerala project? It is too early to talk of the future course of action. Ernst&Young is expected to prepare a feasibility report by December. Only after receiving the report can one give a fair response on the implementation details of the project. We are still working out its operational structure. When we tried setting up the CIAL long ago, there were skeptics out to be another loss-making PSU in the making, drawing a hole in the pocket of the taxpaying citizen residing back home? Can such an enterprise balance itself as a peoplefriendly, yet self sustainable venture? When one considers the economic loop, the picture becomes clearer. On one side, a private investor who puts in his money for the project and on the other, the government which tries to keep prices low during the peak season. Obviously while the government may tend to populist needs, the investor’s intentions would go beyond pleasing the passengers in order to get maximum returns on his investment. He would 28
who said the PPP model would not work. But we have registered profits of `100 crore last year. There is no reason why an airline formed along the same model will not work. But isn’t there a difference to the way an airport is managed and an airliner is run? Yes, there is. And we will surely conduct further operational studies. It is probably a first-of-its-kind initiative anywhere in the world. After all, we are trying to operate an airline where the passenger is the owner. We are making him a shareholder in the company. There will be a number of issues to be handled, but we will sort them out once we receive the final feasibility report. Do you think an airline company operated with a majority private stakeholder share (76 per cent as against the government’s 24 per cent) will be able to balance passenger interests with investor interest? We made it very clear during the Emerging Kerala meet itself that investors may not necessarily make profits in the first two or three years. But in the longer run they will. And we are already getting so many en-
quiries from Malayalees around the globe on how to invest, where to invest etc. Just the other day I received an e-mail from an investor in the Gulf region who mentioned that he sent an SMS to individuals enquiring of their interest to invest in Air Kerala. And within an hour, he received a positive reply from 1106 NRKs! This shows that there is immense interest in the present model of the project. A few industry insiders have mooted an idea that the Kerala government instead try to buy out a 51 per cent stake in Air-India Express. Will that work? We did consider this idea sometime back. But the Air-India Express management disallowed it. So we shelved the idea. How confident are you of the Air Kerala project? Very confident. CIAL was a risk, but we made it a success. There is a similar risk with the Air Kerala project because we are trying out a new model here. But give it time and it will work. Only those investors who have full confidence in the project need invest in it.
want the airline to follow a dynamic pricing model, of high peak season
fares and low off season fares, if he is to get his fair share of profits. Such pricing will also ensure that the airline will run smoothly for the rest of the year. But for this to happen, Air Kerala would need to function like any other airline, which would ultimately be in direct contradiction to its real purpose which is to provide affordable air fares all year. So if passengers gain, investors and the airline’s standards may suffer, probably to gain over a longer period of time (See interview with VJ Kurian, managing director, CIAL). But if investors recover costs quickly, then passengers will find no difference between the fares of Air Kerala and
The initial investment for the project will be about `200 crore. The government and the Cochin International Airport Limited (CIAL) will hold 26 per cent stake and the result will be held by private individuals and non- resident Keralities
The hitch
Central rules mandate that an airline requires a minimum five years service and a fleet of 20 planes to launch international flights. The state government is trying to seek a waiver to the rules.
The Cochin international airport, the first greenfield airport in India made possible through the public-private partnership, is the model the government wants to follow other airlines. An aviation expert based in Kochi, under the condition of anonymity, expressed the fear that a populist airline would find it difficult to operate at high standards amidst stiff competition if prices were altered to suit passenger needs. “Passengers should understand the logic behind uneven airfare pricing instead of blaming airlines for fleecing passengers during the peak season. Airlines resort to dynamic pricing to compensate for the losses incurred during the off season.” He added that passenger occupancy rate is as low as 20 per cent to the GCC (Gulf Cooperation Council) countries from Kerala in the off season. “Most airlines incur huge losses during this period. Unless they recover the costs in the peak season, how can they operate smoothly for the rest of the year?” The ticket rates are ample proof of his statement. During the off season, say November, a one way fare from Cochin-Dubai/Dubai-Cochin costs anything between `800013,000 if booked early (akin to a domestic Kochi-New Delhi airfare) while it goes up to at least `25,000 during the peak season of Onam, Ramadan, Dubai Shopping Festival and the summer vacations. “It’s a
simple equation of supply and demand. If Air Kerala keeps its fares constant year round, it will never be able to manage its operational costs in the longer run,” he says. The supporters of the Air Kerala project, however, feel that it is here where the minority share (24 per cent) of the government in the proposed private-public shareholder composition will be of use. Says Mr E M Najeeb, chairman and managing director, Air Travel Enterprises, “By resorting to a PPP model, even if the government is a minority shareholder in it, there is a fair chance that fares will not be allowed to zoom out of proportion. There will be regulation to some extent. If the fare to a GCC country is, for example
The investors would want the airline to follow a dynamic pricing model, of high peak season fares and low off season fares, if he is to get his fair share of profits. Such pricing will also ensure that the airline will run smoothly for the rest of the year
`40,000 during the peak season, we can at least rein it to around ` 30,000 which is a balanced amount.” But the worry of cost management apart, Mr Najeeb who is also chairman of the Indian Association of Tour Operators (IATO), Kerala chapter, feels that Air Kerala should be welcomed simply because if nothing else, it will at least provide the added benefit of increased flights during the peak season. “Many Gulf returnees are unable to find a seat on any of the airlines during the peak season even if they are willing to pay the increased fares. By having an extra airline catering exclusively for the NRK and the tourist market, problems such as flight cancellations or diversions by other national carriers can be avoided.” Another thought that has speeded up the airline project is the impact it can have on the tourism sector in Kerala. Industry experts say airlines can boost tourism, citing examples of Singapore and Dubai, and Air Kerala would be able to do the same in Kerala, too. At present, global financial consultants Ernst & Young is in the process of carrying out an updated report on the feasibility of the project, which was first released in 2005. While Mr Kurian of CIAL, whom the government named to lead the project, has asked investors and the public to keep on hold their reservations about the project until the report comes out, Mr Najeeb handed out a word of caution: “The parameters for the report should be set after consultation with an independent group of professional aviation experts, and only then should the consultants give the same. And the government should not blindly accept the feasibility report” ■ 29
The build up to Air Kerala T
hough Emerging Kerala 2012 was the latest platform to voice out the State’s interests in launching its own airliner, it surely wasn’t the first. The Air Kerala project has been in the pipeline for many years now and was first proposed in 2005 during the UDF tenure at that time. The Air Kerala International Services was registered as a fully-owned subsidiary of the CIAL in 2006 after the detailed project report had been submitted by global consultancy firm Ernst & Young during the same period. But thereafter, the project lost steam, what with even the Central government rejecting the proposal for not meeting the requisite criteria for operations. It would have continued to remain in slumber mode, had it not been for the step-motherly treatment meted out by the Air India Express airliner to NRKs travelling in and out of the GCC countries in the recent past. The national airliner which operates more than 70 per cent of its flights out of Kerala with more than 80 per cent of its crew being Malayalees, has time and again been accused of following unscientific criteria to fix dynamic fares, and has also diverted or cancelled flights without intimation. Last year, over 402 services operating in the Kerala-Gulf region have been cancelled, with 112 of these flights not having any valid reasons and 168 flights being cancelled in the last two months alone. Enough reason for the project to gain momentum once again. Chief Minister Mr Oommen Chandy as well as other leaders in the State have come out openly against the Air India Express, which started operations in 2005 with a flight between Thiruvananthapuram- Abu Dhabi, for its ‘indifferent attitude’ of flight cancellations and exorbitant fares towards passengers from the state. This despite a major chunk of the airline’s revenue coming from the State’s travelling NRK populace.
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The failure of Air-India Express to rise to the expectations of Kerala-based passengers has fast-tracked the project The last straw in the quagmire was the diversion of flights from airports in Thiruvananthapuram and Kozhikode to service Haj pilgrims flying out of other States in September this year. Passengers were left high and dry in the wee hours when the airliner cancelled a large number of outbound flights without even an SMS, mail or telephonic intimation as is the case usually for cancelled/ diverted flights. This was followed by the much worse ‘hijack’ case in October where the Kochi bound passengers were taken to Thiruvananthapuram and refused to be flown back to the original destination. The skirmishes that followed led to a major embarrassment to both the airliner and the State. Evidently such unprofessional practices, including untimely and frequent disruptions of flight, despite booking weeks in advance, have additional repercussions such as affecting the visa validity and joining dates of many of the travelling passengers who have to shell out additional money to travel in other airlines. Many of the times the refund is also difficult to recover, and one just has to open websites such as www.con-
sumerboard.in, www.complaints.in and www.grahakseva.com, to find a long list of pending complaints bearing the mark of frustration of passengers travelling in the AI Express. Recently, to powder up its fallen image, the airliner announced its winter schedule in which the number of flights operating out of Kerala have been increased from 92 per week to 119. Further, in the same press conference in Kozhikode, which is its busiest airport in Kerala, the AI Express COO sought to improve relations and promised normalised fares. But the government is obviously not prepared to take the risk again, a reason why the Chief Minister recently mentioned, “The government is “really tired” of taking up issues repeatedly with Air-India with no positive response. This is the basic reason which prompted us to float Air Kerala as a state-sponsored carrier, mainly to serve non-resident Keraliites working in Gulf countries.” Only time will tell whether the idea is a roaring lion or just another toothless tiger seeking to keep up the morale of 2.2 million NRKs residing in the Middle East ■
Tech Column
BIG DATA
Taming the number A new technology paradigm for business growth include capture, curation, storage, search, sharing, analysis and visuali-
S R Nair Managing Director, Team Frontline Limited
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an you imagine the growth of digital data in our world today? Organisations have been computing volumes of commercial data for decades that had grown into huge size in the archive that is seldom used for making any meaningful present-day decisions. This data is complimented by the data that comes from the online world (that include social media, ecommerce and search) and the communication medium such as mobile phones. Every day, 2.5 quintillion bytes of data is created, to the extent that 90 per cent of it in the world today has been created in the last two years alone. This data comes from everywhere: posts at social media sites, digital videos and pictures, commercial transaction records, sensors and probes used to collect climate information and mobile phone GPS signals, to name a few. Today we call it ‘Big Data’. Big data is a collection of large and complex data sets that make it difficult to process it using the conventionally available database management tools. The challenges
The big data can be analysed so that correlations can be found to observe business trends, identify natural catastrophes such as cyclones and storms, determine quality of research, prevent diseases, connect legal citations, prevent crime and determine real-time traffic conditions
sation. Big data sizes are a constantly moving target, as of 2012 ranging from a few dozen terabytes to many petabytes of data in a single data set! The beauty is that from these large data sets, value can be generated. The big data can be analysed so that correlations can be found to observe business trends, identify natural catastrophes such as cyclones and storms, determine quality of research, prevent diseases, connect legal citations, prevent crime and determine real-time traffic conditions. Big data dimensions According to a research report by META Group, now part of the worldwide technology research and consulting house Gartner, the challenges and opportunities of data growth are three-dimensional. They
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The above 3V model dimension is detailed below with examples: Volume: Enterprises amass ever-growing data of all types, easily growing into terabytes and even petabytes of information. Eg., Turning 12 terabytes of tweets created each day into improved product sentiment analysis or converting 350 billion annual electricity meter readings to better predict power consumption. Velocity: Sometimes just two minutes is too late. For time sensitive processes such as catching fraud, big data must be analysed as it streams into your organisation. Eg: Scrutinising 5 million trade events created each day to identify potential fraud or analysing 500 million daily call detail records in real-time to predict customer churn in enterprises. Variety: Big data is any type of data; structured and unstructured data in many forms such as text, sensor data, audio, video, click streams, log files and the like. New insights are often found when analysing them. Eg: monitoring hundreds of live video feeds from surveillance cameras to target points of interest or exploiting the data growth in images, video and documents to improve customer satisfaction. The source Big Data can come from every source. It could be the data coming from web logs, Radio Frequency Identification (RFID), sensor networks, social networks, social data, Internet text and documents, Internet search indexing, call detail records, astronomy, atmospheric science, genomics, biogeochemical, biological, complex and often interdisciplinary scientific 32
Activity: IOPS
are volume (amount of data), velocity (speed of data in and out) and variety (range of data types and sources). Gartner has updated its definition of Big Data as follows: "Big Data are high-volume, high-velocity, and/or high-variety information assets that require new forms of processing to enable enhanced decision making, insight discovery and process optimisation."
File/Object Size, Content Volume research, military surveillance, medical records, photography archives, video archives, and large-scale ecommerce. Big Data in science ◘ The four main detectors at the Large Hadron Collider (LHC) at the experiments in CERN (to find out the fundamental particle that gives the property of mass) produced 13 petabytes (13,000 terabytes) of data in 2010. ◘ Decoding the human genome originally took 10 years to process; now it can be achieved in one week. ◘ Google used the huge Internet data to demonstrate a link between online behaviour and real-world economic indicators. Using the study on Google queries logs made by Inter-
Data management and analytics industry on its own is estimated to be worth more than $100 billion and growing almost at the rate of 10 per cent a year which is roughly twice as fast as the software business as a whole, worldwide today
net users in 45 different countries in 2010, it could assimilate the hint that there may potentially be a relationship between the economic success of a country and the informationseeking behavior of its citizens. For instance, it had shown that the higher the per capita GDP of each country, the more its citizen enquires about the future. Big data in Government ◘ In 2012, the Obama administration announced the Big Data Research and Development Initiative, which explored how Big Data could be used to address important problems facing the government. The initiative was composed of 84 different big data programmes spread across six departments. ◘ The United States Federal Government owns six of the ten most powerful supercomputers in the world for the analytical purposes of the big data. Big data in business ◘ Wal-Mart handles more than 1 million customer transactions every hour, which is imported into databases estimated to contain more than 2.5 petabytes of data — the equivalent of 167 times the information contained in all the books in the US Library of Congress.
◘ Facebook handles 40 billion photos from its user base. ◘ FICO Falcon Credit Card Fraud Detection System protects 2.1 billion active accounts world-wide. Big data market Big data has increased the demand of information management specialists. Global software companies such as Oracle, IBM, Microsoft, SAP, HP and the like had spent more than $15 billion on software firms truly specialising in data management and analytics. This industry on its own is estimated to be worth more than $100 billion and growing almost at the rate of 10 per cent a year which is roughly twice as fast as the software business as a whole, worldwide today. Developed economies make increasing use of data-intensive technologies. There are 4.6 billion mobile-phone subscriptions worldwide and there are about 2 billion people accessing the internet. Between 1990 and 2005, more than a billion people worldwide had entered the middle class which means more and more people who gain money will become more literate which in turn leads to information growth. The world’s effective capacity to exchange information through telecommunication
The world’s effective capacity to exchange information through telecommunication networks was 281 petabytes in 1986, 471 petabytes in 1993, 2.2 Exabytes in 2000, 65 Exabytes in 2007 and it is predicted that the amount of traffic flowing over the internet will reach 667 Exabytes annually by 2013! networks was 281 petabytes in 1986, 471 petabytes in 1993, 2.2 Exabytes in 2000, 65 Exabytes in 2007 and it is predicted that the amount of traffic flowing over the internet will reach 667 Exabytes annually by 2013! Big data technologies Big data requires exceptional technologies to efficiently process large quantities of data within tolerable elapsed times. A 2011 McKinsey
report suggests suitable technologies include A/B testing, association rule learning, classification, cluster analysis, crowdsourcing, data fusion and integration, genetic algorithms, machine learning, natural language processing, neural networks, pattern recognition, anomaly detection, predictive modeling, regression, sentiment analysis, signal processing, simulation and time series analysis and visualisation. Additional technologies being applied to big data include Massively Parallel Processing (MPP) databases, search-based applications, data-mining grids, distributed file systems, distributed databases, cloud-based infrastructure and the Internet. A new platform of big data tools has arisen to handle sense-making over large quantities of data; E.g. Apache ‘Hadoop’ Big data platform Big data analytics can be done with the software tools commonly used as part of advanced analytics disciplines such as predictive analytics and data mining. But the unstructured data sources used for big data analytics may not fit in traditional data warehouses. Furthermore, traditional data warehouses may not be able to handle the processing demands posed by big data. As a result, a new class of big data technology has emerged and is being used in many big data analytics environments. Other than Hadoop, the other technologies associated with big data analytics include NoSQL databases and MapReduce. These technologies form the core of an open source software framework that supports the processing of large data sets across clustered systems. Big data analytics Big data analytics is the process of examining large amounts of data of different types to uncover hidden patterns, unknown correlations and other useful information and insights. Such information can provide companies competitive advantages over rival organisations and result in business benefits, such as more 33
effective marketing and increased revenue. The main goal of big data analytics is to help companies make better business decisions by analysing huge volumes of transaction and other data to generate very effective business intelligence (BI) programmes. Though it is generally assumed that big data is unstructured data but consulting firms like Gartner and Forrester Research consider transactions and other structured data also to be valid forms of big data. Pitfalls that can hamper organisations on big data analytics initiatives include a lack of internal analytics skills and the high cost of hiring experienced analytics professionals. There are other technology challenges in integrating Hadoop systems and data warehouses. There is a big belief that big data and advanced analytics can transform business. Some companies have already seen significant value. Recent academic research found that companies that have incorporated data and analytics into their operations show productivity rates 5 to 6 per cent higher than those of their peers. Time has come now to define a pragmatic approach to big data and advanced analytics that is rooted in performance and focused on impact. Here are some scenarios that illustrate how companies have used advanced analytics to deliver business impact. It is the right questions that give right answers: Because the very scale of the data makes it easy to lose your way or get trapped in continuous loops of analysis, it is more important to ask the right questions at the beginning of the analytical process. Good questions should identify the specific decisions that data and analytics will support to drive positive business impact. For example, asking two simple and straight questions helped one well-known Insurance company find a way to grow its sales without increasing its marketing budget: First, how much should be invested in marketing, and second, to which channels, vehicles, and mes34
sages should that investment be allocated? These clear markers guided the company as it triangulated between three sources of data, helping it develop a model to optimise spending across channels. Being creative: More data can reveal models of consumer behavior, giving more specific views of risks and opportunities. One telecom company in emerging markets recognised that its data could solve a longstanding challenge faced by financial service companies: how to meet the need of millions of low-income individuals for revolving credit without a credit-risk model. Executives at the company realised that the payment histories of their mobile network could be used as a way to solve that challenge. Using this data, the company created an innovative risk model that could assess a potential customer’s ability to repay loans. Now the company is exploring an entirely new line in emerging market consumer finance by using these analytics as the core tool. Optimising spending: There are many trade-offs in business such as price versus volume, cost of inventory versus the cost of a stock-out etc. In the past, many such tradeoffs have been made with very little data but with lot of gut instinct. Big Data and advanced analytics – particularly more real-time data – can eliminate much of the guesswork. A multinational telecom company had been spending heavily on traditional media (TV/Print). Later, it also started to spend on Social media. To begin with, the company did not have tools to ascertain the impact of social media as it had with other media. When it started to combine data from traditional media with that of key social-media sites, it yielded a model that demonstrated that social media had a much higher impact than the company had assumed. More critically, company analysts found that the primary driver of social-media sentiment was not its television commercials but customer interaction with the company’s calls centres and in fact, that poor call-handling was
subtracting almost as much value as the TV advertisements were adding. By reallocating some media spending to improve call-centre satisfaction, the company increased its customer base significantly and gained several million dollars in revenues. Keeping it simple: Too much information is very challenging for decision makers. That’s why it is important to keep reports simple or they will never be used. One large B2B manufacturer recognised that a large percentage of the company’s sales flowed from a small proportion of its customer base, but sales growth with those big customers was sluggish. Managers wanted local sales representatives to find new customers, so the company created a central analytics team that gathered detailed data and built predictive models that identified the local markets with the highest new-customer sales potential. Rather than give the sales reps reams of data and complex models, the team created a powerful tool with a simple, visual interface that pinpointed new-customer potential by pin code. This tool allowed district sales managers to see pin codes where there was an opportunity for high growth and deploy their sales teams in these areas. In the end, using the tool the company could double its rate of sales growth while actually cutting its sales costs. Every challenge has an opportunity associated with it. Big data originally was a challenge; of archiving, protecting and reusing. No technologies existed in using the big data to give sense making direction. But with the availability newer technologies of data warehousing, data managing and data analytics; big data has now become big opportunity for corporates. The insights that are derived from big data is augmenting the intuition of managers, thereby enhancing his decision making ability with a high percentage of success. In these times of high and mighty competition, technology such as big data analytics will hone corporates to traverse the challenging times that they endure ■
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Kerala statistics
K
erala has a unique distinction of having an airport in all its three major towns. They connect the states all major Indian cities. Airlines operate direct flights to international destinations such as Dubai, Abu Dhabi, Doha, Sharjah, Muscat, Dammam, Colombo, Male, Bahrain, Kuwait, Singapore and Kuala Lumpur. CIAL Passengers
’11-’12
’10-’11
’09-’10
Domestic
2130992
1982146
1652847
International Aircraft
International
2586658
2358579
2226860
18304
18537
18091
Passengers
’11-’12
’10-’11
’09-’10
Domestic
226761
230227
205940
Domestic
21877
21882
22812
Operating flights - Air Arabia, Air Asia, Air India, Air India Express, Bahrain Air, Emirates, Etihad, Go Air, Gulf Air, Indian Airlines, Indigo, Jet Airways, Jet Lite, Kingfisher, Kuwait Airways, Oman Airways, Qatar Airways, Saudi Arabian Airlines, Silk Air, SpiceJet, SriLankan Airlines.
CALICUT
International Aircraft
International Domestic
36
1982955
13450 2700
1829752
13812 2884
1657929
14708 2907
Operating flights - Air India, Jet Lite, Air India Express, Qatar Airways, Oman Airways, Saudi Arabian Airlines, Bahrain Air, Air Arabia, Emirates, Etihad, RAK Air, SpiceJet.
CALICUT
THIRUVANANTHAPURAM Passengers
’11-’12
’10-’11
’09-’10
Domestic
978847
684061
637808
International Aircraft
International Domestic
1835952
15531 11708
1842824
16656 8213
1695912
15185 10166
Operating flights - Air India, Air India Express, Air Arabia, Emirates Airlines, Etihad, Jet Airways, Kuwait Airways, Oman Air, Qatar Airways, Silk Air, Sri Lankan Airlines, Tiger Airways, Indigo Airlines, Bahrain Airways, Maldivian Airlines, SpiceJet, Jet Konnect.
37
40