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Cochin Dies and Moulds Private Limited, founded by Mr M G Sukumaran, has proved beyond a shadow of doubt that industry can not only survive but prosper in Kerala with enlightened and scientific management, a dedicated and devoted workforce and quality products and services. Mr Sukumaran’s group has stakes in the non-banking business too, with its Homfit Finance and Leasing Limited (HFLL) having grown into a very successful financial services company providing easy finance to consumers in both towns and villages.

Passline News Service erala is often dubbed a perilously unfit place for entrepreneurs to set up projects, especially big ones, because of its excessive attachment to politics and its militant trade unionism, which destroy the entire foundation of an establishment. But there is one company which has proved beyond a shadow of doubt that industry can not only survive but prosper in the State with enlightened and scientific management, a dedicated and devoted workforce and quality products and services. The company is Cochin Dies and Moulds Private Limited which has been running successfully and prof-

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PASSLINE

January 15-February 14 , 2011

itably for years. Located in the industrial estate of Athani in Thrissur district, Cochin Dies and Moulds manufactures and markets plastic and allied moulds and components. With hi-tech modern equipment for tool manufacturing, Cochin Dies and Moulds, the first ISO 9001-2008-certified company in the field, has been bagging orders from over 30 frontline private- and public-sector companies, including prestigious To page 3


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Constant modernization is the company's feature From page 2

establishments like Indian Space Research Organization (ISRO), for making moulds for plastic and rubber products. There was a time when Keralites had to go to Bombay (Mumbai) to get caps for bottles because no company was manufacturing bottle caps in the State then. This made Mr M G Sukumaran think of launching a unique product much in demand but scarce in Kerala. Thus was his Cochin Dies and Moulds Private Limited born in 1990. It goes to Mr Sukumaran’s credit that he could foresee the potential of a unit for tools and dies in the small-scale sector even in the 1980s. Now, by securing orders from plastic, rubber and other factories, Cochin Dies and Moulds has become a mega-unit in tool and die manufacturing in the private sector, says Mr Sukumaran, Chairman and Managing Director of the company. The unique feature of the company is its attempt to constantly modernize the tool room. For this Mr Sukumaran has never missed a chance to attend industrial seminars and exhibitions all over the world. He invests a large portion of the company’s profit to make his products most modern, and even

all types of plastic products, such as engineering components, household items, bottles and caps and various types of fast cycle hot runner moulds etc. Mr Sukumaran, who started a finishing school of his own for grooming expert workers, is now busy completing his new project, the M G S Institute of Technology, at Veloor in Thrissur district, where courses will start during the coming academic year. The institute’s aim is to familiarize ITI and other diploma holders and engineering graduates with new technology and innovations in their sectors and to make them ‘industryready’. Similarly, the company will also start production of plastic-allied industrial products.

Enviable personality M

alayil Gopalan Sukumaran alias M G Sukumaran, son of Gopalan Malayil, is a well-known personality in the political and social circles of Thrissur. His political career began with his becoming a member of the Ayyanthole Grama Panchayat in 1980 and holding positions in the Youth Congress. He also served as Thrissur Block Congress Committee Secretary and Vice-President of the SNDP Thrissur Union. Mr Sukumaran is the General Secretary of the Thrissur District Consumer Guidance and Research Society of India and Founder-Chief Promoter-Vice-President of Cherukida Vyvasayi Welfare Cooperative Society Limited. Mr Sukumaran inno-

vated and successfully experimented with novel reforms in micro entrepreneurship. His focus is on Gandhian vision development, which he feels should start from villages. He has always been striving to help the poor segment of people. Above all, Mr Sukumaran is a very successful businessman with an enviable knack of developing business ventures. He has a 100% track record of converting new ventures into grand successes. His normal day starts at 5 am and often ends at midnight. He visits all the business units daily and makes an appraisal of the daily business interacting with senior staff.

updates the machinery in his factory, which has the computerized CNC machine and the spark erosion machine etc for die making. Moreover, hot runner moulds that help make a product without even wasting a bit of raw materials are manufactured at Cochin Dies and Moulds.

Mr Sukumaran, who says that supplying the best-quality moulds and dies for any industry within the minimum time possible is the To page 4

Mr Sukumaran selects graduates from the NTTF, CIPET and various other prestigious institutions to be in charge of various operations in his company. The company has now become the topmost maker of moulds for PVC and

PASSLINE

January 15-February 14 , 2011


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Stakes in non-banking business too From page 3

HFLL Companion (Micro Entrepreneur Scheme): This is an innovative prod-

secret of his success, has stakes in the nonbanking business too, with Homfit Finance and Leasing Limited (HFLL) heralding his entry into the field. Mr Sukumaran’s wife is a bank professional in Thrissur. HFLL, an RBI-approved institution started in 1992 with headquarters in Palakkad, has now shifted its corporate office to Thrissur. Since its inception HFLL has grown into a very successful financial services company providing easy finance to consumers in both towns and villages. Mr Sukumaran attributes its success to the fact that it has become a dependable destination for villagers for their financial requirements. Keeping this in mind HFLL has developed several innovative and popular gold loans, hire-purchase loans, business loans, money transfer facilities, personal loans, microfinance schemes and insurance services. Two of these are Gold Purchase Scheme and Micro Entrepreneurship.

HFLL Gold Strength Loan: This loan is different from other gold loans in several respects. For loans up to Rs 5,000, only 7% interest is charged, which is one of the lowest rates in the industry. Daily collection service is provided by HFLL which helps the customer in a big way to make his payments prompt sans losing his gold due to default in payment. Moreover, 125% to 150% of the price of the gold kept as security will be given as loan for loyal customers. Remittances can be made at any branch of HFLL as all the branches are linked online. Insurance coverage for gold is provided. Locker facility is also available at all

HFLL MY Own Vehicle Loan (hirepurchase loan): HFLL provides loans to

loan amounts range from Rs 25,000 to Rs 5 lakh for 6 months to 36 months. Very low interest rates and easy instalment schemes are the advantages of HFLL Solutions. Daily collection service makes the payment procedure easier.

customers to own two-wheelers, threewheelers, four-wheelers and luxury vehicles. Its vehicle loans have simple procedures and the lowest interest rates. The daily collection service makes payment of instalments easier. Mobile services are also provided.

HFLL Money Transfer: This is an easy way to send money from the Gulf to one’s kith and kin in Kerala. The money will literally reach the doorstep through direct home delivery services.

branches. Loans will be disbursed within three minutes and the whole process is displayed on the computerized screen.

HFLL Solutions (business loans): Having been successfully providing loans for small enterprises for the past several years, HFLL has now introduced HFLL Solutions which are loans for the business class. These

PASSLINE

HFLL Support (personal loans): This product is devised keeping in mind that every person will have personal financial needs. HFLL Support provides personal loans on personal security of customers and that too at low interest rates.

January 15-February 14 , 2011

uct devised as part of HFLL’s social commitment to provide financial support and empowerment to women in rural areas to help them start ventures. HFLL will provide technical support and financial backing for such ventures through this scheme. HFLL Insurance: HFLL provides a single window for all insurance needs through a tieup with a reputed Insurance Regulatory and Development Authority (IRDA)-approved insurance services broking firm. The insurance needs of different sectors of society will be met by HFLL under this service. Special insurance products for pregnant women, students and so on have already been launched. Future plans: HFLL has plans to grow into a financial supermarket very soon. It will open 25 branches during the current financial year in Thrissur, Palakkad and Malappuram districts, most of which will be in small towns like Valakkavu, Vadakkekkad, Althara, Anjoor, Mullurkkara, Maranchery and Ayyanthole and 1,000 branches across Kerala within five years. Its vision is to deliver all its services on the doorstep of the customer by 2015. A new service called ‘Dial a Loan’ will be launched in Thrissur soon. HFLL is in safe hands to realize its vision under the able leadership of eminent personalities like Mr Sukumaran, who is also Founder Chairman and Director of Subscribers Chits Pvt Ltd and Fair Kuris India Ltd based in Thrissur, and Directors, Mrs Rajani Ramachandran, Mr Krishnakumar and Mr Jithin M Sukumar.


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From the Editor ...............................................................................................................................................................................................................................................................................

Radia, Kalmadi, Raja… I

think India is the only nation in the world where people discuss bribe and corruption lightly in their

drawing rooms and in teashops. Whenever or wherever a few people gather, the topic of their discussion usually is which political parties, politicians or bureaucrats are going to be trapped during the day. One group may argue proudly that in the next scam the political party they owe allegiance to will surpass the other. The other group will not give in easily and they will speak for their favourite party and their icons. In India news about a scam in the media hardly lingers for more than a day or two as the next one takes over immediately. People

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Editor & Publisher

treat such things as if they are sipping a cup of tea, even if the amounts involved in the scams run into billons

VARGHESE PAUL

of rupees.

Thiruvananthapuram

Both our print and electronic media are today competing with each other in exposing at least one story of

PRASANTH

this kind every day. But I shudder to recall to memory the recent remark by a leading Supreme Court lawyer that

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eight of our former Supreme Court Chief Justices were corrupt and they amassed wealth disproportionate to their known sources of income amounting to crores of rupees. Nowadays the common people in India are

Chennai

forced to believe, much against their will, that our judicial system is corrupt from top to bottom thanks to the

AUGUSTINE JOSEPH

recent revelations appearing in the media about the judiciary. The law takes its course, without any mercy, if a

Ph: 09381000534

small person commits a crime and he/she is punished and thrown behind the bars. But those who are Bangalore

responsible to hold high the mantle of justice and trust indulge in favouritsm, corruption and bribery with

JAYACHANDRAN

impunity. Who is responsible for this situation? Unfortunately the present judiciary has lost all morals, unlike

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in the past, and those who are supposed to prevent evils surfacing are sitting tight and just watching things. They are unable to move a finger against these things because they too are sailing in the same boat.

Delhi

Footnote: I think it is high time that the Union Government introduced new units for measuring money.

AFGANULLAH

Lakhs and crores no longer work; there are too many zeros to handle. The huge amounts mentioned in the

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recent scams have an upside: they have given us convenient new units for communicating large figures: Rs 1,000 crore—1 Radia; Rs 10,000 crore—1 KalmadI; Rs 1,00,000 crore—1 Raja.

Manager-Marketing

This will be easier for us to account for large numbers. For example;

SAJAN K Keethara Publications Pvt Ltd 38/125 1st Floor, Narakathara Road, Kochi-682 035, Kerala, India. Phone : +91 484 4027002 Marketing : +91 484 3294564 Editorial : +91 484 3043572 e-mail

„

Mukesh Ambani’s new residence in Mumbai costs 4 Radia;

„

India’s total annual subsidy on kerosene is Rs 2 Kalmadi;

„

India’s loss in the 3G scam is approximately Rs 1.7 Raja.

: passline.com@gmail.com mail@passlinebusinessmagazine.in

www.passlinebusinessmagazine.in

Readers' views

Varghese Paul

S

ir,—Apropos your editorial in the December issue of PASSLINE urging the authorities to initiate steps to bring all citizens irrespective of age, caste, creed and religion within the ambit of health insurance, I like to remember and remind the readers of a period when all parties, political leaders and the media used to raise the slogan ‘Health for All by 2000’. It however went into oblivion by the year 2000 when strange, chronic and fatal malaises without remedy or treatment began to leave the diseased to die began to afflict mankind. Therefore, it is high time the Government introduced such an insurance scheme covering the entire population

S

ir,—The editorial was superb. We believe that the authorities concerned should take action to bring all citizens within the ambit of health insurance. This can start with making the scheme compulsory for Government servants and members of their families. The public should be educated on the various mediclaim schemes run by insurance companies as many people are not aware of these. The agents concerned should also get proper training as awareness should be created among villagers and uneducated people. Sadanandan K A and Group of Senior Citizens, e-mail

Ajith Kumar, e-mail PASSLINE

January 15-February 14 , 2011


6

DEVELOPMENT

By A Special Correspondent

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Though Kerala is ahead of all other States in the country in social development and has been able to prosper individually, it is paradoxical that economic growth continues to evade it. Why is it that the State has failed to grow economically in tandem with its other advantages?

erala is undergoing a paradoxical situation: even as its people are prospering, the State is falling far behind in economic growth. Because of the highly successful social welfare programme it initiated a few years ago Kerala not only achieved universal literacy rates but life expectancy levels comparable to those of many western societies. Surprisingly this is not reflected in the economic development of the State. According to Dr P C Cyriac, eminent economic analyst and writer, the ‘Kerala Model’, the term used to explain the phenomenal achievements of the State in quality of life/human development indices, is on a par with Western countries like the US, while the per capita income happens to be very low, maybe one-fiftieth of the US figure. “This achievement became possible only because of the spread of education here. With good education, the people managed to get jobs outside Kerala in other parts of India, and also abroad. Since these people sought to retain their links with their roots, they sent money home regularly. And here, though agriculture and industry failed, the services sector flourished on the strength of these remittances. This model will work so long as the skill-sets available here continuously get upgraded/modified to meet the changing demand patterns outside,” says Dr Cyriac. Despite the failure in agriculture and industry, money flows in, and with it the services sector flourishes and income levels too rise thanks to the enterprising and hardworking Keralites who choose to go out, adds Dr Cyriac. Studies show that in Kerala the percentage of the population in the 15-to-25 age group is rising 1.6% annually. This means that to keep all these young people employed, it will have to create thousands of jobs a year. In order to do that

PASSLINE

its economy needs to grow at least 10% a year. Current levels of growth, however, do not give any promise that this is possible in the near future. There is, on the contrary, evidence that Kerala won’t make it. The claim of the State’s Finance Minister, Dr Thomas Isaac, that Kerala’s growth rate is now 10% when even the national figure is far below it is liable to be contested by many.

due share in developmental activities. Some others were self-inflicted.

Since the formation of the State on November 1, 1956, Kerala has been ruled almost alternately by the Left Democratic Front (LDF), headed by the Communist Party of India (Marxist), and the United Democratic Front (UDF), led by the Congress. The Communist parties were believers in the message that profit is synonymous with exploitation, markets should be ruthlessly curbed and wealth redistribution (rather than its creation) should be the Government’s policy focus. Though this view changed later and even the communists started harping on private investment for progress there had in between been decades of squandered economic opportunities. “The LDF governments in power in Kerala have always openly supported the nonperforming public-sector units and wasted a lot of money. The UDF governments have been totally lacking in political will and have failed to push forward their project proposals in the face of violent opposition from the Left. Perhaps they could have forced through at least a few projects if only they had awarded them after a transparent selection/tender process,” says Dr Cyriac.

A greater role for the private sector has only been realized late by the ruling fronts in the State, especially by the LDF. That this realization also dawned on the CPI (M), one of whose nominees, Mr Elamaram Kareem, presides over the Industries portfolio today, was a good sign and explains whatever little has happened on the industrial front.

After the country embraced privatization in the early 1990s, and the overall economy perked up, reform could not take much root in this part of India for many reasons. One was the absence of enlightened leadership or visionary leaders in both the UDF and LDF dispensations. Another was the utter inability of the rulers to present the State’s case at appropriate forums and get its January 15-February 14 , 2011

There is practically no investment in the State. Scores of clearances are needed for approval of an investment, domestic or foreign. There is a widespread feeling among investors that in spite of reforms there is simply no way of doing business here without being trapped by the bureaucracy, for which Kerala has unique genius.

It is reported that one of the major decisions taken by the third International Congress on Kerala Studies, organized by the ruling CPI (M), held at Thiruvananthapuram recently was the clarification of the position of the party on major infrastructure projects such as national highways and water transport networks. ‘‘Huge investments are required for the renovation of road and water transport networks in the State,’’ said Dr Thomas Isaac, who was also the Academic Committee Secretary of the study congress, while summing up the three-day deliberations. The vision document prepared by the congress says private investment can be accepted for developing national and State highways and the North-South express rail corridor. This is an endorsement of the Union Surface Transport Ministry’s stand that national highways can be developed only on the BOT (build, own, transfer) basis. The vision document makes it clear that private investment in road development should be confined to national and State highways. ‘‘It is the responsibility of the To page 7


7 never had a toehold—information technology (IT)—Kerala has shown some command. But even in this sector it is one of the worst performers in the country. Look at the country’s per capita IT exports. While Karnataka had Rs 1,36,383 in IT exports per higher-educated graduate in 2005-06 and Maharashtra Rs 28,887, Kerala had posted a mere Rs 1,422. Even Orissa had more per capita exports than Kerala! At a session on ‘Kerala’s Industrial Investment Potential’ held as part of the International Congress on Kerala Studies, Mr Elamaram Kareem admitted that the State’s image outside left much to be desired. He said the impression that wealth creation is a crime should go if we have to attract private investment. “Wealth creation is inevitable for progress and Kerala will be able to retain its skilled talent pool only if it attracts private investment, particularly in IT and biotechnology,” he said. Despite many changes on the administration front, Mr Kareem said, several unhealthy tendencies prevailed in the State. He cited procedural delays and the negative attitude of bureaucrats as reasons for the State’s inability to attract ample private investment. “Of course the State has gone in for legislation to establish a single-window clearance system, but it can hardly be called a success. A study of 17 ideal investment destinations conducted by the World Bank had ranked Kochi at the 16th position,” he said. As the Minister said, red tape has made Kerala one of the most difficult States for conducting business in all of India. The World Bank report, to which Mr Kareem referred, found that it took a new business in Kochi more than 210 days to obtain building permit approvals and utility connections, whereas a business in Hyderabad could do the same in about 80 days.

Agriculture also on the decline From page 6

State Government to find investment for renovating village, block and district roads in the State. For this, we need to spend Rs 10,000 crore in the next five years,’’ says the document. “For raising this much money, taking loans is the only option,” said Dr Isaac. Sadly many, including governments, either do not learn, or do so very late, lessons, despite the fact that there are case studies before them. What happened to the auto industry in the country when Government controls were relaxed in 1991 is an example of how private industry can prosper to the people’s benefit, when the red tape is loosened a little. The Government invited foreign companies to enter the market. As a result, BMW, Daimler Chrysler, Fiat, Ford, General Motors, Honda, Hyundai, Renault, Suzuki, Toyota and Volkswagen are all successfully manufacturing here. Old, pre-reform auto plants, such as those making the Ambassador and the Premier Padmini, the latter with Fiat tie-up and know-how, lost market share. At the same time demand soared for cheaper, better Indian-made cars. Auto industry employment also rose. Unfortunately, Kerala could not copy this national success because it could not attract a single automobile company, let alone

any other company, to start manufacturing here though BMW officials had inspected one or two sites in the State for locating its plant. Bureaucratic hurdles and lack of farsightedness of the political leadership failed the State again. Today, Kerala’s neighbour Tamil Nadu boasts nearly a dozen global auto majors having already set up shop or are in the process of doing so in the State. Reports say that Chennai and its neighbouring areas are gradually becoming the Detroit of India. There is also the story of Dell chief Michael Dell arriving in Mumbai a couple of years ago. The purpose of the visit was to explore the possibility of starting in India a hardware unit of Dell, the number one personal computer manufacturer in the world. No sooner did he land in Mumbai, it was reported, than the country’s Home Minister, Mr P Chidambaram, went to him to personally receive him, and held discussions with him for an hour. In a matter of just eight to ten months, Dell not only launched its plant near Chennai but also started production there! It must be remembered that Tamil Nadu is ruled by the DMK and Mr Chidambaram belongs to the Congress, though both the parties are allies. One can’t imagine a similar thing happening in Kerala. In one sector in which the Government

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Of course Kerala could initiate what could be referred to as the most successful social welfare programme in the developing world. The universal literacy rates and life expectancy levels are the successful outcome of this programme. Naturally the question arises: Why was Kerala not able to improve its economic growth naturally with its latent human capacities? In fact the Kerala Model of social development has only held back, rather than taken it forward, that is, economically. In Kerala, unlike in other States, Government policies have had a less positive impact on social development and a more negative impact on economic development than has been commonly perceived. Many of the State’s successes can be attributed to institutions like Christian missionary schools, colleges and hospitals that predate the welfare State. For example, despite the wide availability of public healthcare services, Kerala has the fourth highest level of private health expenditures in the country: more than 86% of total per capita healthcare spending in the State is conducted in private institutions. Agreeing with this view, Dr Cyriac says Government policies like the much-talked-about land reform/land ceiling measures did not result in a great amount of redistribution of land. At the same time, in respect of paddy, the class of people who had used innovative methods to reclaim kayal lands and increase the production and productivity got dispossessed of their holdings and quit the scene. The new owners lacked in resources, knowledge and enterprise, says Dr Cyriac. “And Government help never reached them in sufficient measure and when needed.”

January 15-February 14 , 2011

“I agree that the governments in Kerala did not contribute in any significant manner to the improvement in living standards and quality of life. Perhaps if they were not there with their ‘welfare’ measures, labour productivity and discipline levels would have been much better. The atrocious systems of nokku kooli and attimari and the exploitative approach of the headload workers would never have developed into the anti-enterprise bulwark which serves to drive away investments from Kerala,” he says. Agriculture which used to be the mainstay of the people of Kerala until a few years ago is also on the decline with area under it falling steeply and because of certain Government policies, contributing to the decrease in the State’s GDP and overall growth. “Government policies are to be squarely blamed for this situation,” says Dr Cyriac. “The paddy farmer should be liberated and given freedom to use whatever seed he wants, whatever men or machine he wants, whatever he wants,” he says. The massive migration from the State has helped Kerala outpace even Gujarat in the matter of economic benefits accruing to its people over the last several years—driven completely by remittances, which made up more than 20% of the State’s income in 2007. What would happen to the State if the huge remittances were to suddenly stop? “There will be no cash flow and there will be widespread distress everywhere in Kerala,” says Dr Cyriac. Undoubtedly Kerala has enormous potential. Some of its advantages over other States —in high technology, education, healthcare, social development—can be put to effective use to improve the economic growth of the country as a whole. And Kerala’s economic goals—improving infrastructure, boosting service exports, attracting investment in industries and strengthening the State’s knowledge economy—are also the goals of the country. So development of Kerala can definitely contribute to national development too. That Kerala has failed to make use of its vast, dormant potential, human capital, the greatest developmental force, makes one wonder why the State has remained apathetic to making efforts that will take it forward. On the eve of the Kerala Studies Congress, Dr Thomas Isaac said that with the average growth rate of 10%, Kerala is ahead of other States in the country but it is witnessing the emergence of frightening new inequalities and developmental challenges. “The time has come for Kerala to sit up and take note of developmental challenges and the emerging inequalities at different levels. The rich are getting hugely rich and the poor are being pushed downward. There are all sorts of disparities growing, some of them inter-regional,” he said. Mr M K Balan, Electricity Minister and himself a Marxist, also lamented at the congress that pressure from ‘within’ forced him to scrap the Kerala State Electricity Board’s deal with Korean firm KDN for IT-related works under the Restructured Accelerated Power Development and Reforms Programme for slashing transmission losses. A letter written to him by Chief Minister V S Achuthanandan was one of the reasons for calling off the scheme, Mr Balan said. “All procedures related to the deal had been completed transparently when a media report appeared alleging irregularities,” he said. The path to sustainable economic growth seems lost to Kerala. The people can only hope that healthy competition may eventually prevail.


8

GOLD LOAN

By Antony Ooden

As gold is zooming, all financial institutions including NBFCs (non-banking finance companies), banks and even individuals have started the gold loan lending business and it is booming. Most of the lenders provide 80% to 100% of the market value of gold as loans. The rate of interest varies from 5% to 30% depending on the period, amount required and purity of the commodity.

T

he end of the second decade of this century may see the price of gold touching Rs 2,000 a gram versus Rs 1,950 at the end of the final year of the last decade when it was $1,430.95 (31.1 g) in the global market. With 10% labour charge added, an 8-gm gold ornament may then cost around Rs 18,000. Last year there was 28% growth in gold consumption. The supply of the yellow metal is falling. No new mines have been discovered. The existing ones are getting exhausted and miners are digging as deep as 5 km. Gold content in ore has come down from 12 gm a tonne to almost 2 gm. And it costs more and more to take that out. As gold is zooming, all financial institutions including NBFCs (non-banking finance companies), banks and even individuals have started the gold loan lending business and it is booming. Most of the lenders provide 80% to 100% of the market value of gold as loans. The rate of interest varies

PASSLINE

from 5% to 30% depending on the period, amount required and purity of the commodity. Gold loans for agricultural purposes are given at 5% to 7.5%. For agricultural loans the landed property of the customer and his/her status are also considered. Seven banks in India have now been permitted to import gold. They are four associate banks of State Bank of India—State Bank of Hyderabad, State Bank of Bikaner, State Bank of Travancore and State Bank of Mysore—besides South Indian Bank, Karur Vysya Bank and Punjab and Sindh Bank. With this the total number of banks allowed to import gold has gone up to 30. This will create new opportunities for customers and lead to healthy competition among banks resulting in protection of clients’ interests, say experts. According to World Gold Council data, India imported about 624 tonnes of gold and 1,260 tonnes of silver in 2010, an increase of 25% over the figure for the previous year. Today, gold has become the first option of the people who are in need of urgent money.

January 15-February 14 , 2011

Statistics on gold show that it will remain so for more than a decade. According to Mr V P Nandakumar, Chairman of the Manappuram Group of Companies, a front-runner in the gold loan business, gold loans will continue to grow faster than the other lending sectors, be it asset financing, housing finance, infrastructure, industrial lending etc in the current year and the next few years. “In fact the organized gold loan sector in India is expected to register growth rates of 30% to 40% over the next five years,” he says. The Muthoot Pappachan Group, another leader in the field, has two NBFCs under its fold, extending gold loans—Muthoot Fincorp Limited and Muthoot Capital Services Ltd. The first is mainly into the gold loan business and the second also offers other types of loans including two-wheeler loans. Mr R Manomohanan, Chief Executive Officer of the group, says: “A gold loan is basically a personal loan. Gold loans will continue to retain the top position among personal loans To page 9


9

'Personal loans carry much higher interest' paying huge remunerations as promotion charges. “You have to look upon the issue in terms of costs versus benefits. The relevant consideration is whether the increase in business justifies the expenditure. We believe that the extra volumes generated make it cost-effective. Indeed, our experience has been that our net non-interest operating expenses ratio has fallen in the past A lot of NBFCs and banks offer one year because the increased personal loans. They do not attract costs are being spread over a so much attention as gold loans. The V P Nandakumar much larger business level’’, says main drawback may be the security, Mr Nandakumar. period and the interest rate of the personal Says Mr Manomohanan: “The companies loan. Personal loans are often prone to degiving publicity for their gold loan products fault and the method of recovery is often are big corporates having a large network of found to be horrible. branches and huge volumes of business. The Mr Nandakumar puts it thus: “Gold loans, aim of publicity is to popularize gold loan prodlike personal loans, are often used for shortucts. Such advertisements help the people in term household requirements. However, in need by pointing out an easy way of leverterms of the cost and ease in getting the loan aging their gold ornaments for their immediand in terms of the convenience in repayate cash flow. The volumes of business done ment, gold loans are a better bargain. Perby the companies are very large and the adsonal loans are unsecured loans and thereditional volume generated by the advertisefore carry a much higher rate of interest. ments is also substantial. Compared to the Moreover, they require considerable effort additional volume generated by the adverin documentation formalities and you are tisements, the expenses for such advertisecommitted to an inflexible EMI schedule. Gold ments are so small that the impact of such loans, on the other hand, are cheaper and expenses on the pricing of the product is can be got in minutes. You can also stretch minimal’’. the repayment to your convenience: the only There is criticism that such advertiserequirement is that you have to service the ments convey a message to the public that interest periodically.’’ gold loans are the easiest way of getting About interest rates, Mr Nandakumar money for their needs. Moresays, “Our base rate is 12%. However, deover because of the brand pending upon how high the loan-to-value ambassadors who have (LTV) is, an additional risk weight premium an iconic image people ranging from 3%-12% is charged over and will easily fall for above the base rate. The interest and risk these loans without premium is applicable only for the days the thinking of other money was actually utilised. There are no prepayment penalties. Our gold loan products have a tenor of one year. And depending upon how high the LTV is, customers are required to service the interest at specified periodicities. For example, in schemes where the LTV is the maximum, interest will have to be serviced monthly, whereas in schemes with a lower LTV, it may be serviced at quarterly, or even half-yearly, intervals.’’ From page 8

in the near future, at least for the next 10 to 20 years. The main advantage of a gold loan is the ease with which it can be taken compared to other types of personal loans. The ease emanates from the security which is gold, compared to other types of assets as security for other personal loans’’.

On this, Mr Manomohanan airs his views thus: “A gold loan is a better option compared to other personal loans since the procedures are very simple and the time taken for processing is very short. Normally the rate of interest varies from 12% to 20% per annum depending upon the schemes, repayment schedule etc. Similarly the period may vary from one month to 12 months in the normal course. There are also innovative schemes which permit repayment periods up to 36 months’’. Not only individuals but corporates too choose gold loans as a better option for large amounts. Lots of advertisements are appearing in the print and visual media eulogizing gold loans with highly paid actors, cricket players and icons from different walks of life endorsing them. The common people wonder how the companies manage to survive after

options. The result is that the loans eventually become bad loans and people lose their pawned gold. Will not this leave a blot on society? “The question would have had merit if the prevailing reality had indicated high default rates in gold loans. In truth, default rates in gold loans are among the lowest across all categories of loans, indeed, default rates today are well below 1%,” says Mr Nandakumar. In Mr Manomohanan’s opinion, gold loans are the easiest way of meeting immediate cash requirements. “The rate of interest on gold loans may be slightly high compared to loans by commercial banks. However they are not higher than the rates of interest on other types of personal loans. There are now many big corporates engaged in the business of gold loans with a very large number of branches. The competition among such organized players ensures that the rate of

PASSLINE

interest charged is competitive, market-related and advantageous to the customers. Also, a gold loan is an immediate source of cash and can be easily repaid by the borrower by taking any other types of loans at a lower rate of interest, if any such loans are available,’’ he says.

gold in the future? “For many reasons, including cultural and historical, gold cannot be easily substituted. Besides, gold is also held as a store of value. In this sense, when the price of gold goes up, it only reinforces the popular perceptions about this metal being a very good store of value, and it further enhances the investment value of gold”, says Mr Nandakumar.

There are a couple of companies and individuals who lend gold loans at 100% of the market value “For various reasons like easy even though they don’t want to adsaleability, estabvertise the rate of interest directly R Manomohan lished quality as it depends on the purity, amount and the standards, ease of apperiod of loan. And they do brisk business. praisal etc, gold is There is also a limit to the amount given. Many accepted as a secompanies fully concentrate on the gold loan curity for loans. It business alone. Some combine it with other may be possible businesses. that other metals Mr Nandakumar says: “Gold loans can be had for amounts ranging from Rs 1,000 to Rs 1crore and the LTV would vary depending upon the scheme. As a rule we give anywhere from 65% to 90% of the market value of gold as loan. As for the quantum of business, at the end of last fiscal year, our gold loan assets under management (AUM) stood at about Rs 2,500 crore. Today, we have reached the level of Rs 6,400 crore’’.

“There are no stipulated minimum or maximum amounts for gold loans. We are giving loans as small as Rs 1,000 and under special circumstances loans in the range of up to Rs 1 crore are also considered. The annual turnover of the group is in the range of Rs 20,000 crore,’’ says Mr Manomohanan. The share of gold business in relation to the total business of a company varies depending on the size and turnover. Manappuram is focused on gold loans, which constitute the bulk of its lendings—98% to 99%. Gold loans constitute more than 95% of the total loans extended by the Muthoot Pappachan Group, according to Mr Manomohanan. With gold spurting, naturally the prices of other precious metals like silver, platinum, palladium, diamond and pearls also rise. Is there any chance of these items replacing

January 15-February 14 , 2011

or gems will also be accepted as

security for loans in future. However, they are not likely to replace gold in volume or popularity because of the above reasons and also because of the quantity in supply”, says Mr Manomohanan. Goldsmiths or people with experience are employed by companies for appraising gold. Is the job of an appraiser a demanding one? Is there any scope for a training centre/institute for such appraisers? Here is how Mr Nandakumar sees it: “Our experience is that appraising gold is a fairly uncomplicated skill that can be picked up with on-the-job training. However, it would be nice if we could employ people already trained in the art. Yes, starting training institutes for gold appraisers is definitely a good idea.” Mr Manomohanan says: “Members of staff in the branches acquire expertise in appraising gold by experience. The experienced staff are given training and appointed as appraisers. There are sufficient in-house facilities for the training of gold appraisers”.


10

TAX-SAVING

By K Aravind

U

nder section 80 (c) of the Income Tax Act, your investments up to Rs 1 lakh are exempted from income tax. Employees Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificate, fixed deposits with a term exceeding five years, life insurance policies, unit-linked insurance plans (ULIP), equity-linked savings schemes (ELSS) and New Pension Scheme (NPS) are the instruments by which you claim tax exemption under section 80 (c). Also, the interest you pay on home loans and children’s tuition fee are also exempted from tax, but these too should be within the upper limit of Rs 1 lakh. Tax Slabs Income

Tax

Upto 1.6 lakh

Nill

1.6-5.00 lakh

10%

5.00-8.00 lakh

20%

8.00-10.00 lakh

30%

Public Provident Fund (PPF): In all other tax-saving instruments, the upper investment limit is Rs 1 lakh, but in PPF, you can only invest up to Rs 70,000 a year for tax exemption. PPF, in which you have to invest for 15 years, offers an annual interest rate of 8%. The returns you get on maturity are not taxable. You can take a loan up to 25% of the invested amount in the third year. At the end of six years, you have the option of withdrawing up to 50% of the money in your PPF account. Income from PPF is totally exempted from income tax. Bank FDs with a term of five years: After PPF, the most preferred tax-saving investment among taxpayers is bank fixed deposits that have a term of five years and more. When interest rates are soaring to new highs, bank deposits have become attractive. Banks currently offer 8%-8.50% on FDs with five-year maturity terms. Bank FDs have a drawback when compared with PPF: on maturity, you have to pay tax on the interest. However, to avoid tax deduction at source (TDS), the depositor can give an affidavit in form 15G or form 15H. 5-Year FD Interest Rates of Prominent Banks

Investments that save tax loans is another added advantage. Compared with other investment schemes, insurance policies have a longer term. Unit-linked insurance plans (ULIPs): These schemes barely help you to survive inflation and do not offer high returns. However, investors who can take some risk can aim for higher returns in the longer term by investing in insurance schemes and mutual funds that invest in the stock market. ULIPs offer a good combination of insurance protection and higher returns. They are designed to create wealth in the long term, offer tax breaks and cover life. The recent decision to cut allocation charges of ULIPs has made such schemes more attractive. ULIP returns are not taxable. The lock-in period is three years. Equity-linked savings schemes (ELSSs): MFs that offer tax savings are called ELSSs. The lock-in period for these schemes is the same as for ULIPs—three years. Returns from ELSSs are not taxable. If ULIPs benefit longterm investors more, ELSSs suit those investors who want to withdraw their capital and returns in three to five years. Five Best ELSSs Scheme

NAV

3 year Return

22.17

6.51%

SBI

8.50

ICICI Bank

8.50

HDFC Bank

8.25

SIB

8.25

Fidelity Tax Advantage

23.67

5.47%

Bank of Baroda

8.25

HDFC Taxsaver

243.33

5.35%

Canara Bank

8.00

ICICI Prudential Tax Plan

148.67

3.66

Sahara Tax Gain

39.49

3.08

National Savings Certificate (NSC): National Savings Certificate, which comes under post office savings schemes, is a sixyear deposit scheme. Interest is taxable, but tax for the interest amount will not be deducted from the source. The interest (annual interest from NSC is 8%) from NSC will be reinvested. This type of deposits can be transferred from one post office to another. Life insurance policies: Life insurance policies are the next popular category of investments that most of the taxpayers depend on to save tax. Returns from life insurance schemes are not taxable. The facility to take

Canara Robeco Equity Tax Saver

New Pension Scheme (NPS): The New Pension Scheme (NPS) of the Union Government for employees in the unorganized sector was launched on May 1, 2009. Funds in Scheme E of the NPS, which invest up to 50% in equities, have given average returns of 30.26% (per NAV on January 11 2011). Compared with similar schemes such as the Public Provident Fund (PPF), which gives an annual return of 8.5%, NPS has given a return that is very high.

PASSLINE

NPS has six funds under its umbrella— SBI Pension Fund, UTI Retirement Solutions Pension Fund, IDFC Pension Fund, Kotak Mahindra Pension Fund, Reliance Capital Pension Fund and ICICI Prudential Pension Fund. These funds invest under Scheme E, Scheme C and Scheme G. Scheme E invests primarily in equities. Scheme C invests in liquid funds, bank deposits and corporate bonds. Scheme C focuses more on Government securities. Scheme E has a maximum cap of 50% in case of equity investment. UTI Retirement Solutions Fund has given maximum returns in Scheme E in the last one year—36.20%. SBI Pension Fund ranked the lowest—15.80%. NPS has started looking attractive after posting impressive results of securing over 40% average returns within just one and a half years of its existence. As the Direct Tax Code (DTC) comes into effect on April 1, 2012, NPS will be the only tax-exempted investment scheme under Section 80(c) of the Income Tax Act. This is a clear distinguishing factor for NPS. Remember that your investments in ULIPs and ELSSs will not be eligible for tax exemption from April 1, 2012 onwards. According to DTC, apart from NPS, only provident fund and insurance policies can claim tax exemption at the time of redemption. If stock markets continue to rally, the only equity-linked instrument that will fetch you tax exemption will be NPS. This will enhance the prospects of NPS as an attractive investment option for all kinds of investors. However higher charges remain a drawback of the scheme. Compared with other schemes NPS continues to be an expensive investment option. The lowest investment in NPS is Rs 6,000. If you do not invest Rs 6,000 yearly, you have to pay a fine of Rs 100. The lowest instalment is Rs 500. The investment should continue for a minimum period of four years. Each transaction has a charge of Rs 30. Apart from these charges, there is a record-keeping fee of Rs 350 every year. This means anyone who invests Rs 6,000 in NPS has to shell out Rs 470 under different heads of charges. In other words, even if you invest the minimum amount in this scheme, the charges you pay are 7.8% of your investment. This is too expensive and unsustainable. Record-keeping charges are

January 15-February 14 , 2011

expected to reduce as the number of investors in the scheme increases. Which one to select?: Choosing the right investment scheme for tax savings has to be done keeping in mind your risk appetite, investment term and the frequency of investments. These factors should guide you on whether to stick to traditional investment instruments or think beyond them and go for equity-linked instruments. Presently, the available equity-linked investment schemes are ULIPs, ELSSs and NPS. Among these only ELSSs offer the flexibility to go for one-time investment or multiple instalments through a systematic investment plan (SIP). Some ULIPs also allow single-premium options. Equity-linked savings schemes have given an average return of 17.17% in the last one year. However, if you take into consideration their long-term performance in the last three years, they seem to be too weak. These schemes had registered an average loss of 0.34% during this period. This can be blamed on the stock market crash of 2008. Children’s education and home loan repayments: In an age where educational expenses have increased beyond affordable limits, one would be relieved to hear that they can give you some tax relief. Those with kids should look at how much they are spending for the education of their children before going for tax-saving investments. A proper calculation of how much you can save in income tax by claiming exemption for educational expenses will give you much more relief and flexibility. Income Tax Act section 80 C exempts children’s tuition fee up to Rs 1 lakh from income tax. You can avail yourself of this for a maximum of two children. If both husband and wife are employed and they have two children, both of them can claim exemption for the education expenses of one child each. Likewise, the portion of your EMI that covers the principal of your home loan is also exempted from tax. The maximum amount you can claim in a year is Rs 1 lakh. (The author is the Editor of Hedge Ohari, the investment magazine from the leading stock broking company, Hedge Equities)


11

ISSUES

By P D Johnny (pdjohnny@yahoo.in)

The Union Government’s initiative, though belated, should bring the situation in the affected areas under control, win back the confidence of the deprived population, restore faith in the administrative machinery and make them become part of the mainstream. However, this would depend on the quality of implementation of the plan. The immediate need is restoration of peace.

T

he recent Union Government announcement of an allocation of Rs 1,500 crore for development schemes in 60 tribal and backward regions, mostly affected by Naxal violence in seven States in central India, is a welcome step. The Cabinet Committee for Economic Affairs has approved the implementation of an Integrated Action Plan (IAP), included in the Union Budget this year, with 100% grant assistance for the current year (2010-11), aiming at quick resolution of basic problems like health, drinking water, energy and roads in these areas. For 2011-12, Rs 1,800 crore will be earmarked. Each district will receive Rs 25 crore this year and Rs 30 crore next year. The move signals a distinct departure from the earlier stand of the Union and some State Governments that the turbulent situation in these areas poses a serious law and order problem which should be tackled by use of force alone. Bloody clashes in these States—mainly Chhattisgarh, Jharkhand, West Bengal, Orissa and Maharashtra—between Maoists and the police/paramilitary forces have taken a heavy toll of human lives, including those of innocent civilians. The Maoists, though small in number, are highly committed to their cause and deeply motivated. Being familiar with the terrain and forests, they have a clear edge over the Government forces. Around 60,000 CRPF ranks, in addition to local police forces in the respective States, are officially stated to be engaged in combating the rebels who are also well trained in guerilla warfare and are members of an outfit called People’s Liberation Guerilla Army (PLGA) in which the presence of women is also stated to be significant. They appear to be enjoying the confidence and support of the native population as they have proved their commitment to the cause of the tribals by intervening in cases of harassment by State forces and forest officials and those of exploitation by local businessmen. In West Bengal, the re-entry of the movement coincided with the resistance and protests against forcible acquisition of large areas of land and evacuation of small and marginal farmers for setting up industries in Singur and Nandigram. Turbulence in Lalgarh of West Midnapur

district follows ‘excessive police action’ against tribal protesters. It is common knowledge that Naxalism which surfaced in the 1960s is the fallout of underdevelopment and exploitation of the poor. The movement took birth in and around Naxalbari in northern West Bengal to spearhead the agrarian agitation seeking justice for the poor farmers from the wealthy, exploiting landlords. It soon spread to other States like Andhra Pradesh and Bihar where also the poor were being exploited by rich landlords and where land reforms still remain a distant dream. Although the movement also attracted the motivated youth in Kerala during the same period, it soon lost sheen after the implementation of land reforms in the State in the 1970s. The problem continues to be more acute in States where land reforms have not been implemented, denying empowerment to the poor sections of people. Disturbances in the North East also can be attributed to underdevelopment and growing unemployment.

Around this time, many splinter Naxal groups, though sharing the same ideology but separated in terms of strategy, decided to work together under the banner of the Communist Party of India (Maoist) in 2004. The State Government, awakened from the initial shock, launched counterattacks with modern weapons and vehicles, making use of the funds liberally provided by the Union Government. Specialized police cadres were formed and trained in guerilla warfare. Simultaneously, the welfare measures and infrastructure development initiated by the then Chief Minister Y S Rajasekhara Reddy also started bearing fruit and the Naxalite influence in the State slowly started waning. In Bihar too, similar efforts by Chief Minister Nitish Kumar succeeded to some extent and there too the movement became weaker. The strategy adopted by both these State Governments was almost similar— recognizing the problem as not just

In West Bengal, Bihar and Andhra Pradesh, the movement attracted support from intellectuals and students also. In Bihar, the militant revolts were directed against Bhumihars (wealthy landlords). In

A n d h r a Pradesh, it was organized under the banner of the People’s War Group (PWG). Many politicians and policemen were killed through landmine attacks, and the mode was guerilla warfare, the leaders and the ranks taking shelter in thick forests and coming out in the open to mount planned attacks. It even appeared that the State administration was reduced to mute witnesses to the bloodshed. Fake encounters involving the rebels and avenging killings of the police officers and politicians, including even ministers, had become common. Many senior civil servants were abducted to get the arrested Naxalite leaders released. Initially the police just could not cope with the guerilla warfare and lost out both in strategy and operations.

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January 15-February 14 , 2011

a law and order issue but as a socioeconomic one. The potential ranks of the movement were gradually weaned away from the violent path by providing them with means of livelihood and protection from exploitation by landlords. The effective implementation of the Mahatma Gandhi Rural Employment Guarantee Scheme since 2005, with Central and State Governments’ participation, also played a positive role in this regard. In Bihar, clashes between the Bhumihars’ private armies and the Naxalites were becoming frequent. But the Government took more stringent and effective steps to check the illegal activities of the private armies. This paid off and bloody battles became rare. The situation started returning to normal. With these developments in the two States where they were strong, To page 16


OUTLOOK

12

A better Kerala, a better India and a better world

By K P Joseph

A

s India enters the second decade of the 21st century (and the third millennium) a glance at the India of tomorrow will be an interesting exercise.

whole of mankind. And this oneness feeling applies to communities/countries in all living processes. In other words, all development has a value-driven dimension.

In his recent address to India’s Parliament, US President Barack Obama had acknowledged India as a global power. He said, not emerging, but an already emerged global power.

Hence corporations and corporate bodies—tools of development—have to realize that they cannot sustain themselves if they are just money-making machines. They have not only to make money but share part of it with the less fortunate in the community.

Let me recall here that during a visit to the US more than 20 years ago I had many a time tasted the condescension with which Americans talked to me about India and Indians. No longer is this the case.

I am confident the coming decades will indeed be turningpoint decades for India. India is being listened to with greater respect by the nations of the world. I believe that the trend will continue and provide more Keralites with an opportunity to become the formal and nonformal spokespersons of the new world and new India and the new philosophy of corporate sharing.

I must confess here that I did not agree with President Obama fully. But it dawned on me that he was referring to the 330-million-strong Indian middle class whose social, economic and cultural ‘wealth’ is in no way inferior to that of the US wealth. He had closed his eyes on the other India that is Bharat, caught up still in its feudal heritage. The population of the US is around 300 million plus and the Indian middle class is more in number. No wonder India can contribute in no mean measure to a better global economy in the coming years. Kerala and India: Let me here mention Kerala in India’s development scenario. Kerala is, in comparison with bigger buddy States, a small State and holding only 3-plus percent of the country’s population. However it holds 14-plus percent of India’s middle class and working class with middle-class aspirations. This means 14% of the 330 million middleclass Indians are Malayalees.

This is the gospel truth of the 21st century. It is spreading wide today. The need for sharing what you have with your neighbour has been the universal gospel message from ancient times. The rich nations have to share what they have—jobs, food, knowledge—with poorer nations. Indian IT people should not have visa barriers to seek placements in the US, Europe and Australia. In fact a visa-less globalization is the need of the hour.

Government at a Cabinet-level post, is a believer in this philosophy. He is a Pravasi awardee and has dedicated his retirement years to promote the new global social philosophy. He runs the AACR (Association of Americans for Civic Responsibility) and I am sure it has provided inspiration to the making of a better America and eventually to the making of a better world. More such initiatives are required to translate the new philosophy into reality. In India itself Narayana Murthy of Infosys, Premji of Wipro and Shiv Nadar of HCL Technologies are leading the way to provide this type of social conscience to industry leaders. Turning point for India: I am confident the coming decades will indeed be turning-point decades for India.

Corporate Social Responsibility (CSR) will be a crucial component of this new global philosophy.

India is being listened to with greater respect by the nations of the world. I believe that the trend will continue and provide more Keralites with an opportunity to become the formal and non-formal spokespersons of the new world and new India and the new philosophy of corporate sharing.

My friend Joy Cherian, a Kochiite, about whom I have written in journals as the US Indian American and the first Asian who served the US

(The author is a former Consultant to the United Nations and an eminent writer. He can be contacted at: kpjoseph2005@gmail.com.)

This must be the outcome of the search for a better world in our era. And

There may not be Tata-Ambani-Birla-level industrial houses owned by Keralites but their contribution to development of India and Kerala will be pronounced in the coming years: around four times their population base. The 14% formula is reflected in the list of inclusion of 14 Malayalees out of the 106 Pravasi awardees so far—2003-2010: Aniruddhan Dr 2007, Azad Moopen 2010, Billy Nair 2007, Joy Cherian Dr 2008, Manoj Night Shyamalan 2004, A P S Mani 2008, P Mohammed Ali 2004, P N C Menon 2009, C K Menon 2006, Ravi Pillai 2008, Shashi Tharoor 2004, Soman Baby 2008, Thomas Abraham 2008, Yussaf Ali M A 2006. May I use this occasion to request the Government of Kerala to initiate a Forum of Malayalee Pravasi Award Winners and take their advice to take Kerala further fast forward. The new world and the new India: The other day I spoke to the first Muslim youngster to marry a girl in our family circle. My thoughts flew to my favourite philosopher, Sree Narayana Guru. Did he not say that all humans belong to one caste, one religion and one Godhead and It is not the religion of a man or woman that matters but his or her human behaviour? Sree Narayana- model inter-marriages beyond racial, linguistic and colour and country barriers are on the increase today. I am with Malayalam writer Basheer that each human being (every citizen) belongs to one unitive

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January 15-February 14 , 2011


TELECOM SECTOR

13

A

By K Vijayachandran

The C&AG report has exposed the total lack of transparency and poor efficiency of spectrum management, which continues to be shamelessly primitive in the global context and totally unsuited for a telecom market of continental proportions.

Raja, Telecom Minister in the Manmohan Singh Government, was forced to resign, and is now facing corruption charges by the CBI. He is the second victim of the massive telecom reforms initiated by the Narasimha Rao Government in the early 1990s as part of the economic reforms and structural adjustment programme.

undertakings were virtually blocked from taking up expansion/diversification programmes and were even prevented from entering new technology areas like the Internet and mobile phone business. These policy initiatives were virtually directed at the destabilization of the telecom infrastructure created in the country after Independence.

The first victim was Sukh Ram of that Government, who was arrested by the CBI in 1996 and, after long trials, sentenced to three years’ rigorous imprisonment in 2009. He was also fined Rs 3 lakh and his disproportionate assets worth Rs 4.25 crore were confiscated. Of course, neither the CBI nor the courts had cared to assess the damage caused to the national economy or to estimate the losses to the public exchequer because of policy changes and the subsequent corrupt implementation.

India had adopted a two-legged policy for telecom development under the discipline of the national Fiveyear Plans. Similar to India Post, telecommunication services in the country were built up based on federal principles. There were nearly two dozen telecom circles under the Department of Telephones (DOT), virtually one circle for every major State. Later the metro cities were brought under the MTNL set-up, and BSNL was established to take care of all the circles minus the metro regions. Then there were the technology development, project engineering, training and planning divisions organized on a zonal basis in support of this field set-up, functioning on a federal basis and enjoying substantial regional autonomy.

But the Sukh Ram scandal of 1996 was a pygmy in financial terms compared to the present Raja scandal. The Comptroller and Auditor General (C&AG) has estimated a revenue loss of Rs 1,25,000 crore in the Spectrum deals of 2008 (Report No 19 of 2010-11): Ref. www.cag.gov.in). The Sukh Ram scandal was the direct offshoot of the New Telecom Policy of 1994 (NTP1994) which was soon replaced by NTP 1999, taking into account the big possibilities that had opened up for line expansion because of the revolutionary changes in wireless telephony by way of mobile or cell phones. This was a big opportunity for the private sector which tried to monopolize the new space being created by the new technology. In the early days of these NTP regimes, public-sector

Side by side with this line expansion, a fairly comprehensive manufacturing industry was developed in support of the national telecommunication network as part of the twolegged policy. Indian Telephone Industry (ITI) manufactured not only telephone instruments but also telephone exchanges. Much later, the C-DOT initiative was organized under Mr Sam Pitroda, which helped in developing electronic exchanges for urban and rural applications of various standardized capacities, making the best use of an oncoming ICT revolution.

PASSLINE

Several industrial units were set up in the public and private sectors for large-scale manufacture of electronic exchanges. Industries for telephone cables and other accessories, promoted by DOT, had already come up all over the country by then in public and private sectors. With the success of the C-DOT technology, India had acquired the capability of building one telephone exchange per day, using indigenous technology, equipment and skills. Waiting time for telephones had dramatically come down when NTP1999 was installed as a successor to NTP1994 with its implied stress on private-sector participation and FDI.

* Enable Indian telecom companies to become truly global players.

NTP1999 had declared its principal objectives to be:

Any detailed review of the fulfilment of the policy objectives of NTP1999 is beyond the scope of this article. However, it may be noted that rural and other remote areas continue to be neglected: even the extremely low rural penetration of 4% was the contribution of BSNL. With regard to the Internet and broadband, BSNL has emerged as the topper, despite the handing over of VSNL to Tata for a song. The C&AG report has exposed the total lack of transparency and poor efficiency of spectrum management, which continues to be shamelessly primitive in the global context and totally unsuited for a telecom market of continental proportions.

* Strive to provide a balance between the provision of universal service to all uncovered areas, including the rural areas; * Encourage development of telecommunication facilities in remote, hilly and tribal areas of the country; * Convergence of IT, media, telecom and consumer electronics and thereby to propel India into becoming an IT superpower; * Convert PCOs into public teleinfo centres having multimedia capability like ISDN services, remote database access, Government and community information systems etc; * Strengthen research and development efforts and provide an impetus to build world-class manufacturing capabilities; * Achieve efficiency and transparency in spectrum management; * Protect defence and security interests of the country;

January 15-February 14 , 2011

A box item, illustrating the status of the telecom network in the country as given in the DOT Annual report of 2009-10 is reproduced elsewhere. There was a big jump in cellular phones, and this was mostly the contribution of the private sector. The rapid expansion of the mobile phone sector and easy availability of connection as well as the fall in longdistance charges recorded were primarily because of the more recent technology changes at the global level and not because of any initiatives or innovations by policymakers or businessmen in the country.

Mobile phone spectrum and licences were cornered initially by big Indian companies like Reliance and Tata, and then the numerous small players riding on a liberalized FDI regime. The big players, like Reliance, had initially chosen the CDMA technology and were trading in imported To page 14


14 Present Status of Telecom Sector

DOT a totally confused body From page 13

mobile phones for profit, possibly even collecting commissions from foreign companies like LG and Motorola. Reliance had priced its CDMA set at well over Rs 20,000, and selling them to customers packaged with term loans, arranged through sister institutions. Thanks to the big profit margins in mobile telephony, even small inefficient firms based on GSM technology thrived in the market, with all sorts of dubious schemes meant for confusing the clients. The market for mobile telephony in the country matured and stabilized only with the entry of BSNL in the market a few years later with its CELLONE brand based on GSM technology. Till then, the small as well as the big players in the private sector were mostly engaged in making the proverbial quick bugs or in fishing in troubled waters. NTP1999, despite its declared objective, has not helped to develop a world-class manufacturing industry in support of the mobile phone revolution in the country. Not even the big players, like Reliance, Tata and Birla, had cared to invest in R&D and human resources needed for developing a world-class industry, promised in NTP1999. Even the promise of meeting the defence communication needs was neglected by DOT. Based on the experience of C-DOT, one may say that a Nokia-type initiative was within the reach of Indian companies and the Indian Government for developing mobile phone technology. In the meanwhile, China has turned out to be a major supplier of communication equipment to the coun-

try, including mobile phony, and now Tata is collaborating with Israeli institutions to check and certify on spy-ware in their supplies! And now there is a proposal from Huawei of China to invest $2 billion during the next five years for establishing a new R&D campus in Bangalore, and equipment manufacturing facility in Chennai, engaging some

tronage extended to them by the Government. They were simply asked to mend for themselves. A sophisticated industry like the public-sector Hindustan Teleprinters Ltd reportedly diversified into tourism. Many of them have turned to export markets for survival: not only cable makers but also others like C-DOT, Telecommunications Consultants India Ltd (TCIL) and ITI find their products and services more and more acceptable in foreign markets. Exports by these Indian companies had reportedly

(DOT Annual Report 2009-10) Q

Indian Telecom market is one of the fastest growing markets in the world.

Q

With its 562.21 million Telephone con nection as on December 31, 2009, it is the second largest network in the world after China.

Q

It is second largest wireless network in the world.

Q

About 15 million connections are being added every month.

Q

The target of 500 million telephones by 2010 has been achieved in September 2009 itself.

crossed the Rs 130billion mark in 200910, which was about 23% of their total, according to the latest annual report of DOT.

5,000 people. The Chinese company has currently 6,000 employees working in India.

The administrative reports of DOT for the last decade are indicative of the serious strains experienced by that organization, thanks to the mindless reforms forced on it and the organizations under its charge. Administrative autonomy enjoyed by Statelevel circles has been considerably eroded and DOT has lost even the minimal federal features that existed under the earlier regime. Administration of the new projects and statutes like Universal Access Service, Universal Licensing etc are highly centralized with DOT

Under the impact of NTP1999, most manufacturing industries promoted under the earlier policy regime in the public and private sectors lost the pa-

in Delhi without any regional or State-level counterparts. The telecom organization in the country has lost its integrity and sense of purpose and direction with the introduction of the Telecom Commission and TRAI (Telecom Regulatory Authority of India). DOT is a totally confused organization today and virtually incapable of seeking and serving national goals. The C&AG has pointed out several examples of failures by DOT at the policy and procedural levels. News reports indicate that even the policy objective of protecting the defence and security interests of the country remains unfulfilled. And the policy perspective to “propel India into becoming an IT superpower, through the convergence of IT, media, telecom and consumer electronics”, sounds altogether hollow, especially after the Spectrum scandal. These are the messages from the C&AG report: Parliament should have a re-look at the ongoing telecom reforms, and subject NTP1999 and its after-effects to a serious review.

Fed Bank revises rates on NRE term deposits Federal Bank has revised the interest rates on NRE term deposits and FCNR deposits from January 1. The revised rates on NRE term deposits for one year to less than two years, two years to less than three years and three years and above are 2.53%, 2.60% and 3.09%, respectively. For FCNR deposits in US dollar, the revised rates are: one year to less than two years: 1.78 %; two years to less than three years: 1.85%; three years to less than four years: 2.34%; four years to less than five years: 2.79%; five years only: 3.22%

Cdre Subramaniam takes over as CMD of CSL Commodore Kartik Subramaniam has assumed office as Chairman and Managing Director of Cochin Shipyard Limited (CSL). He was Director (Operations) at the shipyard and had been officiating as Chairman and Managing Director since May 2010. A marine engineer by training, Cdre Subramaniam served the Indian Navy for three decades before joining the CSL. Holder of a master’s degree in defence studies, he brings with him vast experience in setting up defence infrastructure projects.

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Kochi Mayor Tony Chammany inaugurating the Waste Disposal and Palliative Care Facilities sponsored by Cochin Shipyard Ltd (CSL) in the presence of Mr Dominic Presentation, MLA, Dr Beena, Ernakulam District Collector, and Cdre K Subramaniam.

CSL on the path of CSR T

he Waste Disposal and Palliative Care Facilities at the General Hospital, Kochi, sponsored by Cochin Shipyard Limited (CSL) was dedicated to the people by Mayor Tony Chammany the other day. Mr Dominic Presentation, MLA, Dr Beena, Ernakulam District Collector, Cmde K Subramaniam, CSL Officiating Chairman and Managing Director, Mr V Radhakrishnan, CSL Director (Technical), senior doctors and staff of the hospital were present during the occasion. Based on the biodegrading technology, the waste disposal facility, it was revealed, would go a long way in solving the waste

January 15-February 14 , 2011

disposal problems of the hospital and ensure qualitative improvement in care and hygiene. The palliative care unit would ensure care and support for the terminally ill patient. As part of its corporate social responsibility (CSR), CSL has sponsored schemes to provide succour and help to the community. This is in the line with the Government directives on the subject. According to the policy, the company aims to contribute towards causes relating to community development, green technology, capacity building and art, culture and sports.


15

CHECKPOST

By Bobby John Pulickaparambil

The courts have time and again deprecated the practice of detaining goods and vehicles at checkposts stating minor technical defects. An opportunity should be given to the dealer to rectify inadvertent mistakes in the documents and minor clerical errors. Sometimes, there may be bona fide omissions to carry all the required documents along with the goods. The transaction may be genuine and there will be no scope for tax evasion. In such circumstances, it is unjustifiable to detain the goods and vehicles solely for the absence of one particular document. It is only just and proper to give reasonable time to the dealer for the production of additional supporting documents.

A

nyone who has experienced the struggle to transport goods through a border tax ‘checkpost’ (checkpoint) will agree that the word is a synonym for corruption. It cannot be denied that checkposts have brought disrepute to the tax departments. Though the Government has initiated various steps to make our border checkposts corruption-free, complaints of harassment and corruption are plenty. The media has exposed the fallacy of the claim that the Walayar checkpost is corruption-free. Is a corruption-free checkpost possible? Well, one cannot be blamed for doubting the feasibility and possibility of establishing a corruption-free tax checkpost. Section 46 of the Kerala Value Added Tax Act (KVATA) 2003 provides for establishment of checkposts in places where the Government considers they are necessary in order to prevent tax evasion. Thus, it is clear that checkposts are intended to prevent tax evasion. They cannot be a tool for harassing genuine dealers and a hindrance to inter-State trade and commerce. Article 301 of our Constitution mandates free flow of goods and services throughout the territory of India. Therefore, only reasonable restrictions can be made on interState movement of goods.

Kerala Finance Minister Thomas Issac visiting the Walayar checkpost

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January 15-February 14 , 2011

It is important to know the extent of power of a checkpost authority. More often than not, the officers at checkposts assume that they are the authorities empowered to determine the entire tax liability of the dealer. A checkpost authority in fact is not expected to make an assessment. His job is only to verify whether the goods are accompanied by proper documents as prescribed in law and to prevent a possible tax evasion. Section 47(2) of the KVATA confers power on the checkpost authority to detain the goods if he has reason to suspect that the goods are not covered by proper and genuine documents or any person is attempting to evade tax. Hence any detention is unjustified and unauthorized unless there is inadequacy of documents or an attempt to evade tax. Checkposts are intended to prevent tax evasion, not to raise revenue. It is not another revenue recovery mechanism. There are instances of checkpost authorities demanding that dealers clear tax arrears for the release of goods and vehicles. The question of demurrage is another problem. Often dealers are faced with hefty demurrage because of unnecessary detention of goods and vehicles at checkposts. Once the goods are intercepted at a checkpost and a notice demanding security deposit is issued the options before the dealer are either to pay the amount demanded in the notice or to approach the High Court filing a writ petition for the release of goods and vehicles. In the second option, by the time he gets a favourable order from the court, demurrage may have arisen. Thus, for all practical purposes, the dealer is prone to surrender to the bargaining power of corrupt officers. In this context, it is pertinent to examine the delay in the case of customs clearance. In the customs law, there is an option to transfer the goods to a bonded warehouse. The apex court has held that if the goods are unnecessarily detained for no fault of the assessee, the Customs Department will be liable to compensate for the consequential demurrage. (Union of India v Sanjeev Woollen Mills, 1998 (100) ELT 323 SC and also Donald & Macarthy (P) Ltd v Union of India, 1997 (89) ELT53 (Cal). Such measures should be applied to value added tax also. The detention of goods alleging undervaluation is another serious issue. It is settled law that an allegation of undervaluation must be supported by some material. However, it is not uncommon that genuine dealers are harassed by detention of goods by simply alleging undervaluation. To page 16


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Implementation is important From page 11

the Maoists started diverting their attention to other States. The movement thus spread to tribal pockets of Jharkhand, Chhattisgarh, Orissa and Maharashtra where the poor were exploited by Government officials, police and the local affluent people. The crores of rupees spent on uplifting the poor, including tribals, were not reaching the intended beneficiaries but being pocketed by officials and contractors. All the trumpeted economic growth and prosperity in the country were only mirages for the poor and not making any appreciable change in their lives. In fact, their living conditions were becoming worse and they were being deprived of their livelihood in the name of development. The erstwhile Bastar region in Chhattisgarh (which was part of Madhya Pradesh till 2000), has more than two-thirds of area under forests with 65% tribal population. The undivided district (it is now subdivided into four districts), was one and a half times larger than Kerala in area. It is part of the Dandakaranya region now, rich in mineral wealth, mainly iron ore. Besides providing iron ore to various steel plants in the country, it is also exporting iron ore. Tribals, the original inhabitants of the area, never benefited from the wealth produced there. Besides, these tribals who find their livelihood in farming activities and collection of minor forest produce were being even forced to leave the area to facilitate uninterrupted mining operations. Deprived of whatever little pieces of land, which they had to surrender for excavation of rich minerals, they were also

being hounded out by police and forest officials from their subsidiary occupation of collecting minor forest produce including tendu (beedi) leaves. The police, forest officials and petty traders were sexually exploiting the tribal women, the last-named by offering them cheap commodities and liquor. (This author, who spent nearly a decade during the 1980s and 1990s in that region, has first-hand knowledge of the ground realities there). In the early 1990s, the then PWG leaders began organizing the tribals, taking up their cause. Their first success came in the form of getting the wages for collection of tendu leaves enhanced. Gradually, the Naxalites started highlighting the tribals’ social and economic problems and put fear in the minds of the exploiting traders and police and forest officials. Against this background, the Union Government’s initiative, though belated, should bring the situation in these areas under control, win back the confidence of the deprived population, restore faith in the administrative machinery and make them become part of the mainstream. However, this would depend on the quality of implementation of the plan. The immediate need is restoration of peace. The rebels should first realize that their genuine demand for social and economic justice has finally been recognized by the authorities. They should also realize that to end the exploitation against them and bring about qualitative changes in their lives they must join the mainstream which will bring them benefits from the positive measures now initiated by the Government. The Governments concerned should

also be sincere in their approach to ensure that the intended benefits really accrue to the target group. Government-sponsored schemes are usually mired in malpractices and known to be benefiting only the officials and middlemen involved. The present plan envisaging approval of schemes at district levels by a committee of the Collector, Superintendent of Police and Forest Officer creates apprehensions that all powers will be concentrated in bureaucrats and that the representatives of the potential beneficiaries, tribals and other poor sections, may not have any role in identification and implementation. Such schemes may not succeed. Implementation also requires constant and effective monitoring. This task has been assigned to the Ministries/Departments of Rural Development and Panchayati Raj at national and State levels. There should be proper coordination between and among all agencies involved and close monitoring. A built-in provision for a social audit to realistically evaluate the progress should also be there. Active involvement of nongovernmental organizations (NGOs) and voluntary agencies in close monitoring and realistic evaluation would ensure transparency. Identification of schemes which would benefit large numbers of beneficiaries, viz community schemes, should get priority. The potential beneficiaries should not only be aware of the details of the schemes but they should also have a say in their identification, besides active involvement at every stage of implementation.

Excess power is the root cause of corruption From page 15

It is high time to do away with this power of the checkpost authority. The interest of the department will not be affected by such a move since all issues relating to valuation can be settled at the assessment stage. In fact the assessing authorities concerned are better equipped to deal with this valuation issues. The courts have time and again deprecated the practice of detaining goods and vehicles at checkposts stating minor technical defects. An opportunity should be given to the dealer to rectify inadvertent mistakes in the documents and minor clerical errors. Sometimes, there may be bona fide omissions to carry all the required documents along with the goods. The transaction may be genuine and there will be no scope for tax evasion. In such circumstances, it is unjustifiable to detain the goods and vehicles solely for the absence of one particular document. It is only just and proper to give reasonable time to the dealer for the production of additional supporting documents.

Goods transported through an approved parcel agency stand on a different footing. Such goods need not be detained at the checkpost. A specific direction to the parcel agency not to release the goods from its godown will protect the revenue. It is understood that despite specific departmental instructions in his regard the checkpost authorities are still detaining goods and vehicles of approved parcel agencies causing hardships to consignors as well as transporters. It is baffling why appropriate disciplinary action is not taken against the erring officials. Section 47(2) of the KVAT Act confers discretion on the checkpost officers in certain circumstances. The first proviso to the section says the officer can permit further movement of goods if the dealer furnishes a bond for the security amount. The second proviso to the section says the goods can be released

on payment of advance tax in cases of minor technical errors if a registered dealer owns it. But, unfortunately, the checkpost authorities seldom exercise this statutory discretion. Failure to exercise discretion is in fact negation of the statutory right of a person. This is an area which requires the urgent attention of the authorities concerned. It should be made mandatory to mention the reason for declining to exercise the statutory discretion. This will check the scope of corruption at checkposts to a considerable extent. Moreover it will reduce the tendency of dragging dealers unnecessarily to court.

Sometimes, the security deposit demanded may not be a burden to the dealer. But, he may be reluctant to pay the amount because of the apprehension of delay in adjudication of the matter and consequential delay in refund, if any. This emphasizes the need for time-bound adjudication and speedy refund thereafter. Computerization of all checksposts and commercial tax offices and providing videoconferencing facilities will reduce the scope for corruption. It is true that some efforts have been made in this regard by the State Government. However, the progress in this direction is still at sixes and sevens. There are complaints that notices issued from checkposts are neither legible nor clear. Legible notices in unambiguous terms are the right of dealers. Altering the position after the issuance of notices is another unhealthy practice adopted by some of the checkpost officials. Such practices should be curbed by stringent action. Finally, it should be borne in mind that excess power is the route cause of corruption. (The author is a practising advocate based in Kochi)

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Nagarjuna combines tradition with modernity T

he first corporate house in Kerala’s ayurvedic sector, the Nagarjuna Ayurvedic Group is one of the best solution providers in healthcare through the ancient system of medicine and treatment. In its search for excellence, Nagarjuna has brought together the ‘Ashta Vaidya’ and the ‘Arya Vaidya’ schools of thoughts of Kerala’s rich ayurvedic tradition. It has also successfully integrated ayurveda’s traditional values with the modern ethos and contemporary technology. The Nagarjuna Group is involved in popularizing authentic ayurveda, conducting prod-

Good response to NGIL products N

itta Gelatin India Limited (NGIL), an IndoJapanese joint venture company, has forayed into the southern market with its new consumer healthcare product Gelixer CollagenPep, a funcG Suseelan tional food product for joint health. NGIL launched CollagenPep in Chennai and Coimbatore in December and will be launching it in other major metro cities by April 2011.

uct and clinical research, manufacturing and The main manufacturing unit of NHCL is marketing ayurvedic products, providing ho- situated at Thodupuzha in central Kerala, listic ayurvedic treatment services, assisting which manufactures about 600 products, marin setting up ayurvedic treatment centres, keting them in 18 States and exporting them to propagating medicinal plant culti20 countries, thus becoming the vation, promoting ayurvedic studsecond largest product manufacies, imparting training in treatturer among the 2,000-plus ments and therapies and publishayurvedic product manufacturers ing scientific journals and books in Kerala. on ayurveda. For achieving The products are traditional these goals, the group presently ayurvedic medicines, proprietary has six entities: Nagarjuna Herbal branded healthcare and curative Concentrates Ltd (NHCL), the Dr Devadas products, FMCG/OTC ayurvedic Nambuthiripad flagship company running an herbal products, export portfolio of Managing Director ISO- and GMP-certified manufacspecialty healthcare products inturing facility; Nagarjuna Ayurvedic Centre Ltd cluding dietary supplements, single herbs, (NACL), providing authentic ayurvedic treat- herbal teas, massage oils, personal care prodments and allied services; Nagarjuna ucts, herbal cosmetic products and herbal toiAyurvedic Treatment Services (NATS); let soaps. Nagarjuna Research Foundation (NRF); NHCL’s R & D has been recognized by Nagarjuna Social Service Society (NSSS) and the Central Department of Scientific and InNagarjuna Ayurvedic Institute (NAI).

CollagenPep is a natural safe gelatin derivative and is used as functional food supplement for improving the joint health and condition of the cartilage. Collagen Peptide is already an established functional food for joint health in the US, Europe and Japan. Recently a clinical study was completed in patients with osteoarthritis to confirm the safety and efficacy of Collagen Peptide. According to Mr G Suseelan, Managing Director, CollagenPep has received positive response from consumers in Kerala. “We had to scale up production to meet the actual demand. The sale of the product exceeded the initial estimates by more than 30%,” he says. There are about 75 lakh osteoarthritis patients in India, Mr Suseelan says. The company has targeted a market share of 10% among regular users of the product. The market is expected to grow by 5% a year. Based on the positive feedback from consumers the company is expecting a turnover of about Rs 3 crore from Kerala alone in the current fiscal. NGIL is targeting revenue of Rs 20 crore from CollagenPep from the southern market and Rs 50 crore from all over India by 2012. The company has strengthened its marketing activity and set a sales target of Rs 500 crore by 2014-15. It would set aside Rs 185 crore to meet this target mainly through diversifying the product portfolio and capacity expansion. NGIL would soon introduce more products in the functional food category for improving the bone strength mainly addressing women above 40. Clinical trials for this will commence by January 2011. It is also working on products for wound care and nutritional supplements for sportspersons, dancers and other active people under the Gelixer umbrella brand. NGIL has plants at Koratty in Thrissur district, Kakkanad in Kochi and near Nagpur (Maharashtra). The fourth plant in Gujarat is nearing completion.

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dustrial Research, the first and only R & D certified ISO in Kerala. Its animal testing laboratory has been approved by the Central Government’s Committee for the Purpose of Control and Supervision of Experiments on Animals (CPCSEA). Nagarjuna is the only ayurvedic company in Kerala with such a facility. The group’s ‘Green Leaf’-certified Nagarjuna Ayurvedic Centre, the award-winning ayurvedic hospital at Kalady in central Kerala, imparts authentic ayurvedic treatments. Nagarjuna Ayurvedic Institute is the education and training wing of the group, which undertakes ayurveda nursing as well as therapist training programmes along with orientation programmes on the Kerala ayurvedic system and specialities for ayurvedic doctors from outside Kerala as well as for international students.


Jaffna International Trade Fair, 21-23 January 2011

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T

he second Jaffna International Trade Fair 2011 (JITF), organized by Lanka Exhibition & Conference Services (Pvt) Ltd, a presidential award-winning company, in collaboration with the Chamber of Commerce and Industry Yarlpanam, has ‘Open for Business’ as its theme because of the tremendous growth in Jaffna and which is now ready for business. JITF, an annual event, is scheduled to be held from January 21-23, 2011, at Main Street in Jaffna.

The landmark fair marks a turning point in the development of the North with the current rebuilding of infrastructure. The purpose of holding the fair once again is to strengthen and bridge trade links between the North and the rest of Sri Lanka. With the opening up of the main A9 highway relinking the North and South, the revival of the Jaffna economy has gradually boomed. Jaffna rapidly emerging as the major market for all industries, the exhibition will be the most comprehensive gateway

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January 15-February 14 , 2011

for all sectors to come together and witness restructuring that is taking place in the North. JITF ensures the creation of a platform for entrepreneurs and manufacturers to build up their business relationships by strengthening their connections. Companies can expand their businesses and will have an opportunity to analyse the market first hand. Jaffna is aggressively pursuing To page 19


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Jaffna International Trade Fair, 21-23 January 2011

JITF will help make Jaffna a key business centre From page 18

partnerships and business plans with the entire world as it is expected to dominate world trade in the years to come.

mand in the education industry. As in previous years foreign exhibitors will be seeking maximum possible exposure due to the demand in the ‘post-war’ scenario. The organizers are also planning to work together to have investor forums to develop Jaffna.

Reflecting this optimism, the current trade fair The Jaffna public’s per capita income is exceptionally high invites a massive number of booths covering as they are self-sufficient in spite of getting a lot of foreign an extensive range of products and services remittances from relatives. Interested in re-investing these across a wide section of industries such funds JITF will best thread together the long-awaited trade as building, construction, interiors, hospigap ensuring that Jaffna becomes a bustling centre tality trade, processed for commerce in the country. With the Board of Investfood and agriculture, ment, Sri Lanka Export Development Board, and banks food and beverages, opening branches in Jaffna, JITF will be the driving packaging, machinery, force to reunite the business community hailing from cosmetics and beauty all parts of the Island. By being a part of JITF 2011, products, electrical apentrepreneurs can reach large areas of the growing pliances, electronics, northern market in a short time. Previously attracting fabrics and garments, K Poornachandran over 30,000 visitors JITF has drawn in huge players gifts and toys, glass- Chairman, Chamber of Commerce and in all industries with over 300 stalls from over 200 ware, handicrafts, Industry of Yarlpanam companies making it the first and largest exhibition hardware and tools, hosted in Jaffna. health and hygiene, home appliThis year blue chip companies such as Diesel and Motor ances, industrial products, sanitary ware, stationery etc. Engineering Plc and Ceylon Cold Stores have already come Adyapana-Kalvi Jaffna—higher aboard JITF 2011 as valued sponsors. With literally hundreds education and career exhibition of industrialists expected from all industries, visitors can see, series held in Colombo and try and build new business opportunities and fresh trade links Kandy—has also taken a expanding their spectrum for future development, all offered path to Jaffna. Con- under one roof. To help MICE tourism the Sri Lanka Convention currently held with Bureau has looked at a convention and exhibition centre which JITF, Adyapana-Kalvi is proposed to be built in Araly to host exhibitions of this magJaffna will invite lo- nitude. The organizers surely have proved in the past and are cal and international geared to host an exhibition of this magnitude in Jaffna. institutes and universities to showcase the scope and de-

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January 15-February 14 , 2011

This is a tremendous opening for anyone seeking opportunity in the North. JITF 2011 will be a guide to a great time of trade when Jaffa is now ‘Open for Business’.


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Good scope for Kerala to do business with Sri Lanka island that are underdeveloped, like Jaffna. The northern parts of the island are ready for development and are ripe with opportunities. The Government is building the infrastructure to ensure its development.

By Murali Gopalan

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here are great opportunities for bilateral business and trade relations between Sri Lanka and Kerala. This is the conclusion of a delegation of 13 TiE Kerala members who visited Sri Lanka recently to explore the possibilities of doing business with the postwar island nation. The striking similarity of the people of Sri Lanka and Kerala as also the two regions in matters of culture, cleanliness, attitudes, food habits and tastes can be put to mutual benefit, feels the delegation. The island has two-thirds the population of Kerala while Kerala has two-thirds its land mass.

Besides the charter members who define the direction of the organization, TiE Kerala has nearly 150 members who are students, aspiring and established entrepreneurs, professionals etc. Its President is Mr Murali Gopalan, CIO of UST Global, and Vice-President is Mr John K Paul, Managing Director of the Popular Group. It is headquartered in Kochi where its office is headed by Executive Director K Chandrasekhar. (The author is President,TiE Kerala )

TiE Kerala is a body of entrepreneurs with the mission of nurturing entrepreneurship in the State and is part of a 15-year-old worldwide network of similar 56 chapters, headed by ‘TiE Global’ in Silicon Valley, California, USA. TiE Kerala is eight years old and comprises 38 charter members who are successful entrepreneurs and professionals based in the State. TiE Global predominantly comprises IT-based entrepreneurs. However TiE Kerala is unique in the TiE global universe with its diverse representation from agriculture, automobiles, education, exports, finance, FMCG, garments, hospitality and tourism, healthcare, IT, manufacturing, publishing, real estate etc. They nurture entrepreneurship through a series of discussions aimed at educating, mentoring, angel investments, partnerships and joint ventures and networking with a global audience who have a similar mindset. The TiE Kerala delegation, who met the Ministers of Industry, Agriculture and Tourism in Sri Lanka, was very impressed by their welcoming nature. They are very keen to help to forge ties with Kerala and help businesses that are interested in investing in and trading with Sri Lanka. There are several opportunities in sectors like agriculture, exports, tourism and hospitality, education, IT (small business) and healthcare. The post-war situation appears quite promising and there is a general sense of optimism and upbeat attitude among the officials, businessmen and people of Sri Lanka. They are welcoming and extremely keen to forge partnerships. TiE Kerala signed a memorandum of understanding (MOU) with the Federation of Chambers of Commerce in Sri Lanka (FCCSL) to help facilitate business. The Board of Investment located in Colombo is the first port of call for businessmen interested in doing business with or in Sri Lanka. It is a single-point window and facilitator. Consultants like KPMG work with BOI to smoothen the process. The High Commission of India has able and willing officers who can help businessmen from Kerala with information and guidance related to the local real situation in parts of the

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Jaffna International Trade Fair, 21-23 January 2011 .......................................................................................

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Good potential for partnership between Kerala and Jaffna

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

By Job K T

Kerala has proven technology and business experience in agriculture, fisheries, tourism, small and medium industries, housing, education, healthcare etc. It can provide technology, financial investment, products and skilled manpower to Sri Lanka. Manufacturing units can be started with the active support of the Sri Lankan Government and Government agencies and even with the private sector.

T

he bilateral relationship between India and Sri Lanka aiming to achieve greater economic development of the region has achieved better momentum after the end of years of internal disturbances in the island nation. The two countries can benefit from mutually contributing areas of strength. The liberation war had practically ravaged the economy of Sri Lanka. The province of Jaffna was particularly affected. The people abandoned their agricultural activities and fled their places. Jaffna is now free from the clutches of the LTTE. The Government of India is keen to revive the economy and has formed a Joint Committee on mutual cooperation. The committee has identified various areas of collaboration especially for the internally disturbed persons (IDPs). The active involvement of the public and private sectors is encouraged in the revival process. The possibilities of private partnership with the country can be explored.

Tourism: Jaffna is surrounded by seven uninhabited islands famous for their scenic beauty. Tourism was the main source of income of the area. Well connected by air, it can boost the tourism industry further. Activities related to this sector are hotels, resorts, travel agencies, packaged tours, aurvedic tourism, adventure tourism, skating, jet skiing, parasailing, scuba diving, water skiing, wind surfing etc. Schools of higher learning in tourism, hospitality management and catering and training travel guides and front office staff etc can also be started to meet the growing needs of the industry.

Agriculture: Agriculture is the main occupation of the people of Sri Lanka. The major agricultural products of the country are paddy, coconut, rubber, onion, tobacco and vegetables. Jaffna was also famous for the production of these items. But its agricultural activities declined because of the prolonged internal trouble. Now it depends upon other parts of the country for its agricultural goods. The liberation of Jaffna from the LTTE has created great interest in the area to be self-sufficient in agricultural production.

tries have enormous production potential to meet the captive demand. Housing: The internal war either destroyed the houses of many people or partially damaged those of many others. It is estimated that there is need for one million houses in Sri Lanka. There is huge demand for building construction materials starting with rubble, bricks, hollow bricks, cement, steel, tiles, asbestos sheets, roofing sheets, doors and windows, glasses, paints etc. India can provide, apart from cost-effective building materials, low-cost building technology and skilled labour. Education: Yet another area where Sri Lanka requires urgent support is education. The war has resulted in the demolition of schools/ colleges. The library in Jaffna was destroyed during the internal conflicts. Support is needed for rehabilitation of institutions of higher learning. India can extend a helping hand in the construction of schools/colleges, faculty exchange, students’ internship etc. Health sector: The war has affected healthcare delivery. Superspeciality, speciality and general hospitals are needed for the rehabilitation of the health sector. The Government alone cannot bridge this gap. Private investors are welcome to start high-quality hospitals in Sri Lanka. It also needs equipment for upgrading facilities and also specialist doctors.

Kerala has a great opportunity to cooperate with Jaffna in revamping its lost agricultural activities. Support can be extended for raising seedlings and introducing modern farming techniques and harvesting and post-harvesting processes. Assistance in technology and marketing for value-added products of paddy like parboiled rice, instant food items and bakery products can be provided. Similarly, a variety of products like coconut milk and powder, tender coconut chips, coconut water, coconut jam, desiccated coconut powder, coconut shell powder, charcoal, activated carbon, mechanized defibring units, curled coir, coir ropes, coir matting and mattresses and geotextiles can be thought of from coconut. Kerala has a competitive advantage to offer technology for the production of these products. Fisheries: Jaffna has a stretch of coastal line. Once upon a time, it used to boom with fishing and allied activities. It can regain its lost glory in fishing without much difficulty.

Small and medium industries: Sri Lanka had a name in the small and medium industries field. Natural resources like coconut, rubber, minerals and marine products were the inputs of a variety of products. It is reported that around 30,000 products can be manufactured from natural rubber alone. The items that can be started based on rubber are nurseries, plantations, block rubber, centrifuged latex, rubber bands, balloons, gloves, rubber foams, rubber sheets, moulded products and blended goods with plastics. Limestone deposits are found in certain parts of Sri Lanka, including Jaffna, which can be converted into resins, adhesives, polymers, glass, cement, exhaust gas scrubbers, scrubber reagent, roofing materials, drilling mud additives and agriculture neutralizers.

Kerala has a solid footing in the fishing industry. It can assist Jaffna in fishing, preservation, canning and export. Fish can be preserved and converted into high-value products like dry fish, fish pickle, fish cutlets, fish mass and fish oils for which collaboration arrangements can be explored.

According to the 2010 census, the population of Sri Lanka is about 20 million, Jaffna alone having 0.50 million. The people require a variety of products and services. A portion of the demand is met by domestic production. However, a lion’s share of the current requirements is addressed by India, China etc. Local small and medium indus-

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Partnership potential: Kerala has great advantages in partnering with the rebuilding process of Sri Lanka. It is very close to the island nation. Moreover many Keralites have migrated there for work and business. In both Sri Lanka and Kerala the climatic and geophysical conditions are almost the same. Kerala has proven technology and business experience in agriculture, fisheries, tourism, small and medium industries, housing, education, healthcare etc. It can provide technology, financial investment, products and skilled manpower to Sri Lanka. Manufacturing units can be started with the active support of the Sri Lankan Government and Government agencies and even with the private sector. Jaffna requires speedy economic recovery. It has to bring back the IDPs to normal life. Massive support is urgently needed to increase the agricultural production to achieve food safety. The once-vibrant tourism industry has to be brought back to its lost glory. Small and medium industries should be started to meet internal demand and for economic development. The Jaffna administration alone cannot achieve these. Investors with appropriate strategic partnerships can support these. (The author is a professor at the Centre for Management Development, Thiruvananthapuram. He can be contacted at jobkt012@gmail.com)


Jaffna International Trade Fair, 21-23 January 2011

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Steel re-rolling mills are viable projects of raw material has to be procured and processed to get the above finished production.

By G Rama Mohanan Nair

Suppliers of plant and equipment and technology are available in India. It can be said that this industry is a good choice for investors who have the basic resources and are on the lookout for viable project ideas.

S

teel is the generic name for a group of ferrous metals, which because of its abundance, durability, versatility and low cost is the most useful metallic material known to humankind. Steel in the form of bars, plates, wires, pipes and tubing is used in the construction of buildings, bridges, rail tracks, aircraft, ships, automobiles, machinery and many other applications. Re-rolling is the principal operation involving heating of billets and rolling to proper contours, dimensions and lengths. The demand is ever on the increase for re-rolled products both for structural steel and rods. There is good domestic and export market for re-rolled products. Most of the re-rolling industry belongs to the small and medium enterprise (SME) sector. Substantial quantities of re-rolled steel products are being exported to neighbouring countries like Bangladesh, Nepal and Bhutan. Fabricated steel items are also exported to developed counties including the US and Canada. But India remained a net importer of steel during April-September 2010. The per capita consumption of steel in India is growing at only 3.24% and stands at 32 kg in 2010. In China these figures are 7.5% and 185 kg, respectively. This is because a vast majority of our rural folk is living in homes made of mud or brick. As more and more people migrate to concrete homes, this picture will improve.

Land and building: A land area of about 250 cents (10,000 m2) is required. There should be good road access to the factory plot and it should not be a marshy place where trucks and Lorries loaded with heavy equipment/materials should not get sunk. Proximity to HT three-phase power source is also an important cost factor. Better if it is away from thickly populated areas. Buildings of about 4,100 m2 of covered area are to be built for factory sheds as well as office, store etc put together. Electrical items: Connected load and maximum demand: total connected load=4140.00 kW; load in kVA=4,140 =4870.58 kVA 0.85 30 min. integrated max. demand = 2,922.35 kVA at estimated load factor of 60 % Say=2,925.00 kVA. Production and demand: There are approximately 2,600 re-rolling mills in India out of which approximately 1,800 are working inclusive of scrap rerollers. Of the 1,800, 1,167 are on the lists of the Government and governmental agencies. *

In the case of total finished steel (alloy+non-alloy) during April-September 2010, production for sale stood at 30.406 t**, growth of 4.1% compared to the corresponding period of the previous year, in which contribution of the nonalloy steel segment stood at 28.875 t, while the rest was the contribution of the alloy steel segment (including stainless steel). The contribution of the main producers stood at 8.699 t (remains same), while the rest (21.707 t)

Annexure

cline of nearly 11.3%), while the rest was the share of the alloy steel segment (including stainless steel). *

Imports stood at 4.492 t during April- September 2010, growth of 32.7% compared to the previous year, in which contribution of the non-alloy steel segment stood at 3.981 t (growth of 30.4%), while the rest was the share of the alloy steel segment (including stainless steel).

A rough estimate of present demand for re-rolled steel stands at 12 t. The fact that India remained a net importer of steel shows that there is a demand gap for steel in the country. Old units may continue to fail for various reasons and assuming an annual growth rate of 5% in demand the need for new units will continue to exist. Profitability: The annexure shows that there is a return on investment of 40% (PBT only is considered.). Strictly speaking, profitability has to be worked out on a case-to-case basis. This should be taken only as a rough indication. Generally the breakeven point of this plant is about 30% and pay-back period is about 4.5 years. (See annexure) Suppliers of plant and equipment and technology are available in India. It can be said that this industry is a good choice for investors who have the basic resources and are on the lookout for viable project ideas. ————————————————————————— **Million Tonnes Note: Units of measurement, power etc. are indicated in BIS abbreviations.

Profitability Analysis

Sl. No

Rs.in Lakhs

1

Land

250 cents( 10,000 m2) @Rs 25000/-per cent

2

Electricity

connected load 3010 kW

3

Buildings

62.50 Installation cost

87.50

3.1

Mill shed, civil works and foundations, water tanks, Weigh bridge etc.

3.2

Factory Building

25.25

( As per para. 6)

881.50

4

Machinery cost

4.1

Erection cost

185.93

35.00

4.2

Lubricating oil, Grease first fill, cost of spares etc.

18.00

There are viable investment opportunities in the field for people who have the resources and are looking for project ideas.

4.3

Govt Levies, Transportation, Insurance- 10% of Equipment Cost

88.15

4.4

Preoperative expenses @1.5% of Equipment Cost

13.00

4.5

Engg. and consultancy Charges

15.00

Product-mix and annual capacity: The main products envisaged for the purpose of this project are TMT (thermo mechanically treated) bars, plain rods and CTd (cold twisted) bars of sizes varying from 8 mm to 25 mm most needed by the construction industry.

5

Project cost excluding Margin money for Working Capital

The capacity of production proposed for the plant under consideration is 12 tonnes/hr x 10 hrs a day x 300 working days in a year; this means 36,000 tonnes (t) annually. The raw material: The raw materials used are M S billets of sizes 100x100 mm (120 kg), 100x125 mm (135 kg) and 90x115 mm ( 105 kg) available from main manufacturers (SAIL, Tata, Reliance) or other major manufacturers (Jindal, Essar, VSP etc). As there is wastage of about 6%, 36,000x1.06=38,160 t Cost estimate for mill equipment: Sl. No.

Item Details

Amount (Rs. In Lakhs)

Sales revenue @ Rs. 36,700 / t

Working capital is assumed to be 20% of the sales TO=

x 36000 t

7.1

Margin Money for WC

25% of WC

2642.40 660.60

8

Project Cost including Margin Money for Working Capital

2072.43

9

Medium Term Loan

1554.32

10

Interest on MTL @ 12%

11

Working Capital loan

11.1

Inerest on Working Capital @12.5%

12

Depreciation on Buildings @ 10%

21.12

13

Depreciation on Machinery @ 15%

132.23

14

Electricity charges @ 95 kWh/t x Rs. 9.5 / kWhx 36000 t

324.90

15

Furnace Oil Charges at 38 lit/ tx Rs 36/-x36000 t

16

Billets

17

Salaries and Wages + benefits( 30%)

18

Overheads 5% of TO

19

Total Expenditure

20

Net profit Before tax

21

Equity in this case

21.1

Percentage of Profit on Equity

assumed as 75% of Project cost

186.52 1981.80

492.48 10913.76 21.62

( Production,Administrative and Sales)

660.60 13000.95

Re-heating Furnace

:

82.00

Roughing Mill Complex

:

95.00

3.

Intermediate Mill Complex

:

65.00

4.

Continuous Mill Complex

:

80.00

5

T.M.T Process equipment

:

55.00

6.

Cooling Bed and Auxiliaries

:

105.00

was the contribution of the major and other producers.

8.

Mill Auxiliaries and Accessories :

169.50

9.

Electrical installations

230.00

Exports stood at 1.474 t during April-September 2010, a decline of 4.2%

211.05

Percentage of Profit on TO: 211.05 / 13212

1.60

518.11

compared to the previous year, in which contribution of the non-alloy steel segment stood at 1.306 t (de-

PASSLINE

247.73

Rs. 28600 x 38160 t

1.

:

13212.00

6 7

2.

Total Rs 881.50 lakh (rupees eight hundred and eighty-one lakh and fifty thousand only).

1411.83

January 15-February 14 , 2011

40.74 (The author is a retired General Manager of Kerala Small Industries Development Corporation and is presently an Industrial Consultant based in Kochi. He can be accessed at ramamohanan@gmail.com)


Jaffna International Trade Fair, 21-23 January 2011

23

Padmashree offers a wide range of courses T

he Padmashree Charitable Trust was formed in 1994 with the main aim of providing quality education. Being the first one to start a physiotherapy institute in Bangalore, the group now has several colleges under its umbrella and offers a wide range of courses from health sciences to life sciences including Physiotherapy, Nursing, Medical Laboratory Technology, Biotechnology, Microbiology, Genetics, Biochemistry, Plant Tissue Culture and Computer Applications. Today, the group has made tremendous progress under the able leadership of its Managing

Apart from the state-of-the-art educational complex the institutions have tie-ups with reputed hospitals Situated at Nagarbhavi in to impart clinical training to paramediBangalore, the institute has an cal students and close links with overall academic atmosphere biotech companies/research instias it is in close proximity to Bantutes for providing training to the galore University campus at biotech students. There is also a Jnanabharathi, the National special course to teach the student Dr Ashwanth Law School of India University, English and train those students who Narayan C N and Ambedkar Institute of Techplan to take their IELTS/TOFEL and nology. The courses are affiliated to Rajiv other board exams. Gandhi Institute of Health Sciences, BangaThe group also provides postgradulore, and Bangalore University. Trustee, Dr Ashwanth Narayan C N.

A conveyor that makes loading and unloading effortless A

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

Murali

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

ate courses. The library of the institute has the unique distinction of having over 10,000 volumes comprising various medical and general books of foreign and Indian authors, reference books, journals etc. It is maintained in a serene atmosphere to disseminate knowledge to students. Padmashree also offers merit scholarships to all students who excel in university examinations and secure distinctions, and organizes several conferences, seminars, workshops and national conferences.

V-Guard corporate office wins award T

he new corporate office of V-Guard Industries Ltd at Vennala in Kochi has bagged the ‘Gold Leaf Award’ for Architectural Excellence, State Level, in the public and semi-public buildings category for 2009-10 instituted by the Indian Institute of Architects-Kerala Chapter. The design of the building is a collaborative effort of engineers at V-Guard and Veega Land, along with renowned architect Roy Antony. The stylish 12storreyed structure has been designed as an environment-friendly building by employing green building principles. Besides the corporate office, the complex also houses V-Guard’s Research and Development Wing, various product groups and marketing division. Work stations have been provided for around 400 employees, along with a cafeteria that can accommodate 200 people, four conference halls with seating capacities ranging from 20 to 200 people and also a rooftop meeting place that can accommodate about 500 people. The office complex has a roof garden, fitness centre, recreation room and library, in addition to the extensive open area on all floors and retiring rooms for visitors and guests. Nestled in 1.5 acres of greenery, all 12 floors have a two-metre verandah each lined with flower beds on the periphery, which occupies 20% of the total construction area. The unique advantage of the design is natural cooling, as the verandahs and plants block direct sunlight and heat, bringing down the temperature within the building naturally and restricting the use of air-conditioning to just 5% of the area, saving energy. Rain water harvesting has also been effectively implemented with a 3,30,000-litre capacity tank in which all rain water that falls on the roof is collected and then treated and used for drinking and for domestic and

PASSLINE

January 15-February 14 , 2011

irrigation purposes. The additional source of water is a well in the compound, and the water is treated to make it suitable for drinking and domestic uses. The water used for washing and flushes is collected, recycled and treated properly in a sewage treatment plant, and in turn used irrigating gardens on all 12 floors and on the ground through an automated irrigation system that ensures minimum water wastage. The property also maintains the ‘zero discharge’ policy according to pollution control norms. The building materials used too have been selected carefully to minimize the impact on the environment.


24

Jaffna International Trade Fair, 21-23 January 2011

Deepam Group: kindling hearts and hearths W

aste or effluents from an industrial venture usually make the environment dirty. Thrissur-based Deepam Group however does not fully agree with this notion. Deepam makes eco-friendly and user-friendly products from waste, in short, agricultural waste, ie arecanut palm leaves. So Deepam has become a well-known name in India, especially in Kerala. The group not only manufactures products for people but machines also, providing employment directly and indirectly to lots of unemployed in rural India making them self-employed. Its activities contribute much to the nation’s economy by uplifting rural poor and providing income to arecanut growers besides bringing in foreign currency inflow. They also help make the environment pollution-free. Deepam’s products are palm leaves plates and cups, paper cups, paper plates, paper carry bags, office files, envelopes, umbrellas and school and vanity bags. The company also manufactures the machinery for making

these items and imparts training for making these products.

machinery, envelope making machine, chappathi making machine and pappadam making machine.

The machines include those for hydraulic concrete block making, stationary high-density concrete block and paver block making plants, flyash brick making plant, pan mixer, construction winch lift, designer cement tiles, vibrating earth rammer, screed vibrator, palm plate making machine, paper plate making machine, arecanut palm plate making machine, paper plate making machine, paper cup making machine, paper carry bag and office file making

The above machines are designed with modern and advanced technology for easy manual operation for men and women.

Kailas: specialist in all branches of dental care Kailas Dental Aesthetic and Implant

Customers fall for Shepherd products Shepherd Mouldings & Components

Centre, the first ISO-certified dental clinic in Kerala, is one of the finest of its kind in the State providing world-class treatment facilities. Located at Thiruvananthapuram, the centre has the most modern sophisticated technology and treatment facilities. A dedicated team of highly qualified doctors and adaptation of the latest practices and maintenance are the key factors that make the centre unique. With three clinics in prime locations at Thiruvananthapuram, Kailas offers easy accessibility and cost-effective services. Utmost hygiene, latest sterilization methods and meticulous documentation are the hallmark of Kailas Dental Clinics. They specialize in all branches of dental implantation, crowns and bridges, dentures, periodontal treatment, surgical treatment and orthodontic treatments. For the first time in the history of dental care, Kailas Dental Aesthetic and Implant Centre has introduced the concept of cardiac dentistry. Kailas provides the ultimate dental treatment and care exclusively for cardiac patients with most modern and sophisticated electronic gadgets like multi-channel monitoring machines,

“We could successfully manufacture various machines, purely aimed at uplifting rural India”, says Mr Lonappan Panthallookaran, the Chairman of Deepam Palm Dish. Deepam Umbrellas and Bags and Sanjos Engineering Works are its sister concerns.

life-supporting gadgets etc. There is an exclusive kids’ point also. Kailas has recently opened its Centre for Dermatology and Cosmetology. The centre offers treatment for acne and scars, vitiligo, skin rejuvenation, photo aging, hair and nail disorders etc.

PASSLINE

(Pvt) Ltd of the Shepherd Group of Companies was launched in 1999. Its ‘Jewel’ brand of drainage fittings captured the market in no time not only in Kerala but in parts of Tamil Nadu and Karnataka where it has dealers and wholesalers. If the PVC drainage fittings under the ‘Jewel’ brand have become so popular, in fact a rage among users, it is because of the insistence on the products’ quality by the manufacturer. “That is why we have built a tale of romance between customers and our products”, says Mr Mathew Abraham, Managing Director of the group. Shepherd Plastics and Chemicals was started in 1996 in the Major Industrial Estate of Kalamassery, Kochi. What are the specialities of Jewel

January 15-February 14 , 2011

products? Says Mr Abraham: “The drainage fittings ensure efficient collection and movement of sewage from buildings having complicated networks of pipelines. They are easy to install by the more common solvent cement method”.

Using the most modern, automatic machinery and technology for manufacture, all the products are manufactured to ISI specifications. The ‘Jewel’ range of products includes multi-floor traps, top tiles, plain and door elbows, plain and door tees, reducers, couplers and end caps and cowls.


Jaffna International Trade Fair, 21-23 January 2011

25

Hykon achieves phenomenal growth E

stablished in 1991, Hykon India has become one of the leading players in power electronics, renewable energy and energy-efficient products from Kerala. Launched in a humble way by

a committed and dedicated technocrat, Mr Christo George, an engineering graduate, with a working capital of Rs 50,000 and just five e m p l o y e e s, the company has achieved phenomenal growth. Hykon, an ISO 9 0 0 1 : 2 0 0 0 company, is now a well-reputed company with pan-India presence having varied interests in medical transcription, information technology and solar energy. It is a multi-crore-turnover company today.

In the renewable energy market, the company has its position by installing large solar water heating systems of capacities 10,000 to 30,000 litres per day across towns in western and southern India. “By 2014, Christo George Hykon will become a multinational company and will be exporting energyefficient products. By the year 2019, Hykon will be a leading research institute catering to the needy society for non-conventional energy and marketing the same product throughout the world at affordable cost for the common man,’’ says Mr Christo George, who is also the Chairman of the Hykon Group of Companies comprising Hykon Electronic Systems, Hykon Power Electronics (P) Ltd, Hykon India (P) Ltd and Hykon Transcripts (P) Ltd. Driven by a committed and dedicated group of executives, the company has constituted a policy-formu-

Kraftwork products help solve power problems ower failures and power shortage P are frequent in Kerala. It is in these circumstances that the relevance of an organization like Kraftwork Solar Pvt Ltd is felt. Its solar energy products are to a great extent a solution to the problems faced by the State on the power front. Having been in the industry for the last 17 years, Kraftwork is the pioneer in solar water heating technology in Kerala manufacturing solar water heaters since 1994. The company’s products now include solar driers, solar photovoltaic systems and gas-fired systems. Kraftwork has over 5,000 solar thermal

lating core committee to plan strategies for each of the companies. “We firmly believe that total employee involvement is the key to sustainable growth and it is our philosophy too,’’ says Mr Christo George. The

visit www.passlinebusinessmagazine.in

installations across Kerala and Tamil Nadu. Commitment to quality, dependable aftersales service and state-of-the-art K N Iyer designs make Kraftwork one of the most-sought-after in the industry. “We ensure that we deliver the best to the customers. We promise them complete satisfaction and years of trouble-free performance,’’ says Mr K N Iyer, Managing Director. Kraftwork has been in the forefront of developing solar driers for the market. It has through its in-house R&D and collaboration with several universities and research institutions developed various models of solar driers of different capacities to dry a range of products from vegetables, fish, mushrooms etc. Kraftwork’s Solkraft range of solar water heaters includes both domestic and industrial models. The Solkraft range of photovoltaic systems includes SPV modules, solar lanterns, solar homelighting systems, solar streetlights and solar power packs.

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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company has gone national and international through tie-ups with many major companies. In order to market its equipment to the western market, it has tied up with Powertronics. Hykon also has joined hands with China-based Sinyu Lighting Engineering, one of the leading exporters of fluorescent tubes and lighting sets.

January 15-February 14 , 2011


Jaffna International Trade Fair, 21-23 January 2011

26

Newmatic makes all construction machines N

ewmatic Engineering Company started functioning in 1999 at the Ollur Industrial Estate in Thrissur district. Launched in a small way with an investment of just Rs 30,000 to manufacture hollow bricks and small machines, Newmatic now makes all types of construction machinery, which are marketed throughout Kerala, Tamil Nadu, Andhra Pradesh, Assam and Punjab.

pavement block-making machines, hollow block-making machines, double and single vibrators, earth rammers, high-density hydraulic-operated pavement block-making machines, block-cutting machines, hydraulic hopper type-mixing machines, pan mixers, concrete mixers full bags and concrete mixers of mechanical hopper types.

The company’s product variants include the Newmatic brand of soil interlock block, hollow block, pavement block designer, designer cement tiles, tiles making machinery, concrete mixer and earth rammer. It also makes rubber moulds and PVC moulds for pavement and floor tiles of different types and sizes, wall tiles and interlocking bricks.

The company, which gives a lot of importance to after-sales service, has a turnover of Rs 1.2 crore, and is exporting its products to the Middle East. Its expansion plan includes manufacturing heavy-duty machines. About 75% of its total business is in Kerala.

The company also provides industrial consultancy. The machinery section includes soil interlock blockmaking machine, soil crusher, sieves, cement soil solid block-making machine, high-density hollow block and

Mr Sony Joseph, the chief of the company, is an ITI certificate holder in this field. HIs wife Julie is also very much involved in the business and knows its intricacies very well.

Andrew Pappachen gets new position Mr Andrew Pappachen, former Global President and Global Chairman of the World Malayalee Council (WMC), was sworn in recently as the Environmental Commission in Montville, New Jersey, US, where he resides. An environmental engineer by profession, Andrew has a master’s degree. The commission position is voluntary.

Andrew Pappachen

Andrew now works as the Director of Operations for Newark Watershed Conservation and Development Corporation and Chairman of the Asian American Heritage Council of New Jersey.

“The new appointment is recognition of the services of the Indian community,” Andrew said.

SAES to upgrade business S

outh Asia Exhibition Services (SAES) network which is a multinational organization is focusing on upgrading the trade fair business in South Asia with the objective of promoting the region as a venue for international trade fairs and events. It is operating currently in India, Sri Lanka, Pakistan and the Maldives. Managed by talented professionals having many years of experience in the industry, SAES focuses on industryspecified trade fair industry in South Asia with the objective of developing it into international levels by raising standards and attracting overseas participation.

Sadana—introducing quality products at right time that help to reduce costs of proOne of the leading duction. manufactures of flour mill machinery, oil mill machinNow Sadana is the forerunery and tile machinery, ner in the tile and tile manufacSadana Engineering Inturing machine field. The madustries is a well-known chines are manufactured using name in the sector. Italian technology and have a Launched in 1989 by Mr good market all over India and the Mavis Davis, Sadana EnMavis Davis Gulf regions. Introducing fine gineering Industries has quality products at the right time now attained a brand status. in the markets making use of the opportunities around is the key to the Mr Mavis Davis, who has estabsuccess of his business, says Mr lished a name for himself in the brickDavis. Low competition, big demand, making field, is also a well-known inquality products at affordable rates— vestor. When brick and cement prothese are also some other reasons duction become popular, Sadana sucfor Sadana’s achievements, he says. ceeded in manufacturing machines

Some of the industries for which SAES organizes events are construction, apparel, agriculture, education, food, travel, hospitality, jewellery, printing, packaging, IT and security. SAES has an ever-expanding network of sales agents in Sri Lanka, India, Malaysia, Dubai, Singapore, the Maldives, Hong Kong, Thailand and Pakistan.

The 5th International Central Asia Carpet&Flooring Exhibition Almaty-Kazakhstan 3-6 March 2011, Atakent Exhibition Center Agent In India/Sri Lanka:

“CRUZ EXPOS”, Chingam, K. P., Vallon Road, Kadavanthra,

Main Product Themes: „ Carpets(had –made) „ Woven carpets(machine-made) „ Texile Floor coverings „ Resilient floor coverings „ Wood and parquet flooring „ Laminated coverings „ Fibres,yarns and textiles „ Tools and machines

Cochin – 682 020. India. Tel:+91-484-2320290, 4064135, Mob: +91-8893304450. www.catexpo.kz mail: cruzexpo@gmail.com PASSLINE

January 15-February 14 , 2011


27

INSURANCE

By Shinin Sunny

A health insurance

Senior citizens’ schemes that fetch you tax benefits

cover that you give the senior members of your family will fetch you tax benefits. Here are some popular health/mediclaim policies that may suit you.

P

opted for, under Section II. Diseases covered under critical Illnesses are coronary artery surgery, cancer, renal failure, ie failure of both kidneys, stroke, multiple sclerosis, major organ transplants like kidney, lungs, pancreas or bone marrow, paralysis and blindness, which can be covered with extra premium.

eople think of tax-saving avenues during this part of the year. Tax exemptions under Section 80 C and 80 D become relevant here. There is space for Rs 20,000 if investments in infrastructure bonds are pushed to Section 80 CCF. This is the right time to think of senior members of your family. A health insurance cover that you give them will fetch you tax benefits. Let us analyse some popular health/medi-claim policies and see whether they will suit you.

The sum insured is fixed per person. Under hospitalization and domiciliary hospitalization cover, the sum insured is Rs 1,00,000 and under critical illness cover Rs 2,00,000. Critical Illness cover is an optional cover under the policy. Those who do not opt for critical illness cover are entitled to hospitalization and domiciliary hospitalization expenses paid on reimbursement basis or as cashless hospitalization. Those opting for critical Illness cover may opt for claim either under Section I or Section II (if not hospitalized) or under both sections for those diseases categorized above as critical Illnesses but claim under Section I will be paid either on reimbursement basis or as cashless hospitalization if it is otherwise admissible. If in any policy year a critical illness is diagnosed and claim paid thereafter, in subsequent renewals the person may make use of cover both under Sections I and II but with the exclusion both under Sections I and II of that particular critical illness which has been diagnosed and claim paid in the preceding policy year.

Varistha Mediclaim: This is for senior citizens from National Insurance Co Ltd. It covers hospitalization and domiciliary hospitalization expenses under Section I as well as expenses for treatment of critical Illnesses, if

People in the age group of 60-80 can enter this scheme fresh. However, for renewal, age limit will be extended up to 90 years in which case the premium of 76-80 age band will be loaded by 10% up to 85 years and 20% up to 90 years. No medical checkup is required if the insured was covered under any health insurance policy of National Insurance Company or other Insurance companies uninterruptedly for the preceding three years. Other persons have to undergo the following medi-

cal checkup at their own cost: blood/urine sugar; blood pressure; echo-cardiography; eye checkup including retinoscopy. Senior Citizen Specified Diseases Insurance: This comes from Oriental Insurance Co Ltd. The minimum sum insured that can be selected is Rs 100,000 and the higher sums insured can be selected in multiples of Rs 100,000 up to a maximum of Rs 5,00,000 and covers specified diseases only. There is a compulsory co-payment of 20% on the admissible claim amount and discount in premium is allowed for opting for voluntary co-payment. The benefit of continuity will be extended if the person is already insured with any mediclaim policies of the company. Cashless service through TPA is limited to Rs 1 lakh. The following are covered: accidental injury: 100% of sum insured; knee replacement: 70% of sum insured; cardiovascular diseases: 50% of sum Insured; chronic renal failure: 50% of sum insured; cancer: 50% of sum insured; hepato-biliary disorders: 50% of sum insured; chronic obstructive lung diseases; 20% of sum Insured; stroke: 20% of sum Insured); benign prostrate: 15%; orthopaedic diseases: 15%; ophthalmic diseases: 10%. The policy is available to any Indian citizen who is aged 60 years and above and for hospitalization in India only. Pre-acceptance tests required; physical examination; urine(microalbumin urea); glycocylated haemoglobin; ultrasonography (whole abdomen and pelvis); X-ray both knees (anteposterior and latrel); complete eye test including fundus etc; stress test (TMT). Senior Citizen Specified Diseases Insurance: In this plan from United India Insurance Company the sum assured can be between Rs 50,000 and Rs 3,00,000. The policy will pay to the insured person a daily cash allowance as given below from the third day onwards for the period of hospitalization in To page 28

Schedule 1

Premium comparative rate chart for senior citizens

Age

Bajaj

National

Allianz

Insurance

New India

Oriental

Star Health

United India

Insurance

1 lakh

2 lakh

1 lakh 2 lakh

1 lakh 1.5 lakh

1 lakh

2 lakh

1 lakh 2 lakh

1 lakh 2 lakh

61-65

7909

12357

5072* 7507*

4671* 6940*

5460* 10556*

4908 9326

4098

7868

66-70

11863

18536

6304* 8889*

5157* 7656*

5824* 11041*

4908 9326

4872

9394

71-75

-

-

6756* 9425*

5703* 8469*

6916* 13832*

-

5374

10560

76-80

-

-

8360* 11136*

6248* 9282*

7401* 14560*

-

-

6632

13034

above 80

-

-

-

-

-

-

-

-

-

-

-

-

-

Note: For more information read the company’s brochure/policy wording. These rates are inclusive of service tax (10.3%). New India Max. Sum Insured Rs.1.5 Lakh. * Included other loading @ 10%

PASSLINE

January 15-February 14 , 2011


28

Schemes fetching tax benefits From page 27

connection with admitted claims subject to a maximum stated below on payment of additional premium. The age at entry can be 61 years to 80 years and taking a mediclaim policy for the first time. Senior Citizens Mediclaim Policy: Under this policy from the New India Insurance Co Ltd, the sum insured per person is Rs 1 lakh or Rs 1.5 lakh. Limited cover for hospitalization in Government ayurvedic/ homoeopathic and unani hospitals. Senior citizens holding a current mediclaim policy can on renewal migrate to senior citizen mediclaim policy. A point to note is that pre-existing conditions are covered after 18 months of continuous insurance with the company and further pre-existing conditions like hypertension and diabetes mellitus and their complications are covered after 18 months of continuous insurance but only on payment of an additional premium. Cumulative bonus is allowed on every claim free (renewal) year at 5% per annum to a maximum of 30%. The policy is

tals across India (subject to exclusions and conditions). In case of admission in non-network hospitals, the expenses incurred would be reimbursed within 14 days from the submission of all documents. And 20% of co-payment of the admissible claim is to be paid by the member if treatment is taken in a hospital other than a network hospital. However waiver of co-payment is available on payment of additional premium. The entry age for this plan is 46-70 years. Renewal of the plan is possible up to an age of 75. Senior Citizens Red Carpet Plan: Under this plan from Star Health and Allied Insurance Ltd, the minimum sum insured Rs 1,00,000 and maximum Rs 200,000. Treatment is possible at networked hospitals only. All preexisting diseases are covered from the first year, except those for which treatment or advice was recommended by or received during the immediately preceding 12 months from the date of proposal. Diseases for which treatment or advice was recommended by or received during the immediately preceding 12

Schedule 2 Since the pre- and post-hospitalization covers are beyond the scope of this article please refer the product brochure for details. No claim will be payable in respect of the following diseases/conditions contracted during the period starting from the first day of inception of the cover for the first time.

aesthetic treatment of any description; hair transplant; plastic surgery other than as may be necessitated by an accident or as a part of any illness/disease; surgery for correction of eyesight, cost of spectacles, contact lenses, hearing aids etc; convalescence, general debility. ‘run-down’ condition or rest cure; congenital external diseases or defects or anomalies; sterility, any fertility, sub- fertility or assisted conception procedure; venereal diseases; intentional self-injury/suicide; all psychiatric conception procedures; venereal diseases; intentional self- injury/suicide; all psychiatric and psychosomatic disorders and diseases/accidents due to and or use, misuse or abuse of drugs/alcohol or use of intoxicating substances or such abuse or addiction etc;

Sl. No Name of Disease/Ailment/Surgery

Waiting Period

1

Any skin disorder

18 months

2

All internal & external begining tumors, cysts, polyps of any kind, including benign breast lumps

18 months

3

Begining Ear, Nose, Throat disorders

18 months

4

Begining Prostate Hypertrophy

18 months

5

Cataract & age related eye ailments

18 months

6

Diabetes mellitus

18 months

7

Gastric/ Duodenal Ulcer

18 months

8

Gout & Rheumatism

18 months

9

Hernia of all types

18 months

10

Hydrocele

18 months

11

Hypertension

18 months

12

Hysterectomy for Menorrhagia/ Fibromyoma, Myomectomy and Prolapse of uterus

18 months

13

Non Infective Arthritis

18 months

14

Piles, Fissure and Fistula in Anus

18 months

15

Pilonidal Sinus, Sinusitis and related disorders

18 months

16

Prolapse Inter Vertebral Disc unless arising from accident

18 months

17

Stone in Gall Bladder & Bile duct

18 months

18

Stones in Urinary Systems

18 months

19

Unknown Congenital internal disease/defects

18 months

20

Varicose Veins and Varicose Ulcers

18 months

21

Age related Osteoarthritis & Osteoporosis

48 months

all expenses arising out of any condition directly or indirectly caused by, or associated with, human T-cell lymphotropic virus type III (HTLD-III) or lymohadinopathy-associated virus (LAV) or the mutants derivative or variations deficiency syndrome or any syndrome or condition of similar kind commonly referred to as AIDS, HIV and its complications including sexually transmitted diseases; expenses incurred at hospital or nursing home primarily for evaluation/diagnostic purposes which are not followed by active treatment for the ailment during the hospitalized period; expenses on vitamins, tonics, mineral water and allied items unless forming part of treatment for injury or disease as certified by the attending physician; naturopathy treatment, unproven procedure or treatment; experimental or alternative medicine and related treatment including acupressure, acupuncture, magnetic and such other therapies etc; expenses incurred for investigation or treatment irrelevant to the diseases diagnosed during hospitalization or primary reasons for admission; private nursing charges, referral fee to family doctors, outstation consultants/surgeons’ fees etc; external and/or durable medical/non-medical

22

Joint Replacements due to Degenerative Condition

48 months

Schedule 3

available for people between the age of 60 and 80 years. Pre-acceptance tests required; CBC; blood sugar (fasting); blood sugar (PPS); SGPT; SGOT; cholesterol; triglycerides; serum creatinine; urine routine; ECG; X-ray chest PA view; physical clinical checkup; eye checkup for cataract and glaucoma; pap smear test.

months from the date of proposal will be covered from the second year onwards. The age at entry is between 60 and 69. Renewals are guaranteed beyond 69. The greatest attraction of this plan is that no pre-insurance medical test is required.

Silver Health: Under Bajaj Allianz G I C’s Silver Health, the sum insured can range between Rs 50,000 and Rs 5,00,000. A USP of this plan is that pre-existing diseases are covered up to 50% from the second year of the policy. Flat benefits of 3% on admissible hospitalization expenses are paid towards preand post-hospitalization expenses. With Silver Health, the member has access to cashless facility at a wide network of 2,400 hospi-

Other general exclusions to keep in mind are: injury or disease directly or indirectly caused by or arising from or attributable to war, invasion, act of foreign enemy, war-like operations (whether war be declared or not) or by nuclear weapons/materials; circumcision (unless necessary for treatment of a disease included hereunder or as may be necessitated by any accident); vaccination, inoculation or change of life or cosmetic or of

(See Table 1, 2, 3)

PASSLINE

equipment like ambulatory devices, ie walker, crutches, belts, collars, caps, splints, slings, braces, stockings etc of any kind; CPAP, CAPD, infusion pump, diabetic footwear, glucometer/ thermometer, nebulizer and similar related items etc and also any medical equipment which is subsequently used at home etc; all non- medical expenses including personal comfort and convenience items or services such as telephone, television, ayah/barber or beauty services, diet charges, babyfood, cosmetics, napkins, toiletry items etc, guest services and similar incidental expenses or services etc; change of treatment from one system of medicine to another unless necessitated and agreed/allowed by the TPA/company; treatment of obesity or condition arising therefrom (including morbid obesity) and any other weight control programme, services or supplies etc; any treatment required arising from the insured’s participation in any hazardous activity such as scuba diving, motor racing, parachuting, hang gliding, rock or mountain climbing, other allied similar activities etc; any treatment received in convalescent home, convalescent hospital, health hydro, nature care clinic or similar establishments; any stay in the hospital for any domestic reason or where no active regular medical treatment is given by the specialist/physician; outpatient diagnostic, medical or surgical procedures or treatments, non-prescribed drugs and medical supplies. massages, steam bathing, shirodhara and like treatment under ayurvedic treatment; any kind of service charges, surcharges, admission fees/registration charges, file charges etc levied by the hospital; doctor’s home visit charges, attendant/nursing charges during pre- and post-hospitalization period; treatment which is continued before hospitalization and continued even after discharge for an ailment/ disease/injury other than the one for which hospitalization claim is made/admissible.

The following diseases or the disease-led conditions also form exclusion in the policy. Diabetes

Hypertension

Diabetes & Hypertension

Diabetic Retinopathy

Cerebro Vascular accident

Diabetic Retinopathy

Diabetic Nephropathy

HypertensiveNephropathy

Diabetic Nephropathy

Diabetic Foot /wound

Internal Bleed/ Haemorrhages

Diabetic Foot

Diabetic Angiopathy

Coronary Artery Disease

Diabetic Angiopathy

Diabetic Neuropathy

Diabetic Neuropathy

Hyper / Hypoglycaemic shocks

Hyper / Hypoglycaemic shocks

January 15-February 14 , 2011

Coronary Artery Disease Cerebro Vascular accident Hypertension Nephropathy Internal Bleeds/ Haemorrhages


29

SIB bags yet another ‘Best Bank’ award U

nion Finance Minister Pranab Mukherjee presented ‘India’s Best Bank 2010’ award in the ‘Business WorldPricewater House Coopers Best Banks Survey 2010’ to South Indian Bank (SIB) recently. Dr V A Joseph, Managing Director and Chief Executive Officer of SIB, received the award at a function held in Mumbai. This is the third time in a row that SIB is bagging the ‘best bank’ award. In November last Kerala Chief Minister V S Achuthanandan presented it with the ‘Best Bank’ (in the ‘Private Sector-Traditional Banks’ Category’) award of the State Forum of Bankers’ Clubs, Kerala. In the ‘Financial Express Awards for India’s Best Banks 2009’ by the global management consultancy Ernst & Young, SIB had bagged the ‘Best Bank’ award in the ‘Traditional Banks’ category. “This coveted award speaks strongly about the corporate metamorphosis SIB has undergone by effecting rebranding, achieving asset quality, implementing banking technology and recruiting young and qualified per-

sonnel. This also reflects the commitmentto excellence of our team members in these turbulent times when even global financial institutions have been in trouble”, saidDr Joseph. According to SIB, it has crossed Rs 44,000 crore in total business and has seen consistent improvement over the years in its asset quality on account of higher recoveries and low delinquencies. The net NPA had improved to 0.38% as on September 30, 2010, from 0.43% of the corresponding previous year. Moreover, the NPA provision coverage has stood at 70.54% which is well above the RBI stipulation of 70% ensuring lower provision in future. The ‘Vision 2013’ of the bank envisages a total business of Rs 75,000 crore, a network of 750 CBS branches, 750 ATM centres and an employee headcount of 7,500 to attain ROA of 1.2% by FY2013.The bank is poised to achieve Rs 48,000-crore business this fiscal.

Union Finance Minister Pranab Mukherjee presents the award to Dr V A Joseph, MD and CEO of South Indian Bank, in the presence of Mr Avik Sirkar, Editor-in-Chief, Amrita Bazr Patrika Group, and Mr Venkat Chary, Chairman, MCX.

2010 a year of awards for Sobha Developers The year 2010 saw infrastructure development giant Sobha Developers bagging a slew of awards. Nine frontline companies and organizations presented the company with awards as recognition for its achievements in the construction field and merit in security steps. On December 8, the Food Court built by Sobha Developers for Infosys Technologies Limited at Hinjewada in Pune was selected for the Best of Best Award of the Builders Association of India and in November it got the

Economic Times’ Acetech Award for Excellence in Interior Design for the Infosys Global Education Centre. The other awards and recognitions were: a special mention in the category of Recreational Architecture Awards announced by Architecture + Design Magazine and Spectrum Foundation for construction of the Bangalore Food Court Terminal Buildings in February; Baer Technologies Services’ the Best Contractor, Working With Safe Practices at the Site Award in March; Construction Source India’s Best Real Estate Developer for IT Infra-

structure Award; Lead of American Communications Professionals’ three different awards in July; Silver Award in real estate category; Best in-house Gold in the AsiaPacific Region and 93rd position in Worldwide 100 Top Annual Reports; Construction World’s India Top 10 Builders Award in August; Indian Concrete Institute’s Birla Super Endowment Award for the outstanding concrete structure in Karnataka in September and the Indian Concrete Institute Award for the Global Education Centre in Mysore Infosys Campus.

RNP approach shown at Cochin airport A

irbus’ Quovadis RNP subsidiary and IndiGo have successfully demonstrated, using an Airbus A320, the first ‘required navigation performance’ (RNP) flight of any commercial airliner in India at Cochin International Airport, the nation’s seventh busiest airport. Specially developed by Quovadis, the RNP procedure for this airport was validated using Airbus flight simulators. Following this successful flight by IndiGo, Jet Airways will also demonstrate this procedure at the airport using a Boeing 737-800 soon. Together, all operators with ‘RNP-capable’ aircraft will benefit from RNP approaches at the Cochin airport once the new procedures have been officially published by the authorities. “RNP approaches are a great way to achieve savings while improving safety,” says Mr Paul-Franck Bijou, Chief

PASSLINE

January 15-February 14 , 2011

Executive Officer of Quovadis. “RNP navigation has the necessary flexibility to optimize and segregate trajectories from non-RNP traffic, terrain and obstacles”. The new procedure for India, which has been jointly financed by Airbus and the French Civil Aviation Authority (DGAC), brings the following benefits to both local authorities and airlines at the Cochin airport: fully managed approach on contained trajectories; a much shorter flight path saving 40nm for operators on each approach, equating to approximately 1,000lb fuel saved per landing, whilst reducing noise emissions and easier air traffic management especially in areas with reduced or no radar coverage. “We are looking forward to flying commercially RNP APCH at the Cochin airport in the very near future,” says Mr Aditya Ghosh, President of IndiGo.


3030

FUNDING

Kerala has good prospects for attracting VC/PE funds considering the abundant availability of a variety of agricultural raw material resources. The opportunities are in the following sectors: spices; plantation products; processing of rubber, coconut, value-added cashew, pineapple, mushroom, strawberry, cocoa, tapioca, seafood and meat; floriculture; dairy farming and processing; forest/wood-based industries and agro exports.

By A T Pillai he growth potential of the agro/food processing sector in India has not been fully exploited. This is mainly attributed to small-scale operations, inability of entrepreneurs to take high risks and lack of awareness of or information on business and funding opportunities. Involvement of a resourceful external partner can possibly improve productivity and marketing and bring about consequent high earnings on investments made. The infusion of funds from venture capital (VC) and private equity (PE) companies is an option to accelerate the growth of agro/ food processing and other agribusiness activities in the country.

T

PE and VC firms raise capital from high net worth individuals and institutional investors and then invest this capital in profitable enterprises, but expect high returns, usually 20%-25%. VC/PE funds target successful family-driven private limited companies. These funds prefer to invest 20% to 35% of the equity or more depending on the nature of business and equity support required by the promoters. The equity investments are made after a due diligence study. Both VC and PE funds are temporary in nature ranging from five to seven years after which they exit. By that time a VC/PE-supported company will have stabilized and reached a comfortable position. VC and PE funding companies work more or less on a similar pattern. While VC companies focus on start-up and early-stage firms, PE companies fund mostly established companies looking for funds for

expansion. The advantage of VC/PE investment is that it brings in strategic advisory firms to provide support and ensures proper utilization of capital for the growth of the company. VC and PE firms are registered with the Security and Exchange Board of India (SEBI) and are well regulated and tracked. PE/VC funds are much different from those of traditional banks and their monitoring mechanism is also different. The main selection criteria for investments are: growth potential of the sector; strong technology base of the company; integrity and reputation of the promoting group; strong market demand for the products; potential to earn high return on investment; a well-articulated business plan; strong exit strategy; investment will be in private limited/unlisted public limited companies. India has witnessed a tremendous rise in PE and VC financing since 2004. Indian companies are now creating partnerships with PE/VC firms. The focus of investment used to be the information technology, infrastructure and healthcare sectors, but the firm now fund other sectors as well. In recent years, agribusiness companies have attracted VC and PE funds from Indian and global investors. As the lifestyle of Indian society is fast changing because of economic prosperity, investors see great potential for earnings in the agribusiness sector. Companies that have benefited from these funds recently include those involved in milk processing, rice processing, seed production, edible oil, fruit

PASSLINE

January 15-February 14 , 2011

and vegetable processing, quick service restaurants (QSRs) etc. It is learnt that many agro-based proposals are in the pipeline to secure equity funds. Securing these funds is worth if the investment size is Rs 12 crore or more, considering the high administrative cost involved. There is no upper limit. However, some VC funds invest in small deals as well. Kerala has good prospects for attracting VC/PE funds considering the abundant availability of a variety of agricultural raw material resources. The opportunities are in the following sectors: spices; plantation products; processing of rubber, coconut, valueadded cashew, pineapple, mushroom, strawberry, cocoa, tapioca, seafood and meat; floriculture; dairy farming and processing; forest/wood-based industries and agro exports. There are other opportunities as well. Existing companies interested in scaling up their operations or setting up new agribusiness ventures have to prepare business plans for submission to VC/ PE funding agencies. The resource potential in Kerala is unlimited and entrepreneurs should make the best use of the equity funding support available from VC/PE firms. This is a good opportunity to attract foreign direct investment (FDI) in Kerala as most of the agro-products in the State have export prospects. (The author is an agri-business consultant and can be contacted at: atpillai1935@yahoo. com.)


THE ENVIRONMENT

31

The 3.29-acre plot that IOC acquired about 10 years ago is an ideal location for people mainly on travel as it is environmentfriendly. Here is a place where you will find everything—almost— you want and need for your rest.

IOC’s eco-friendly and winning mix of business and pleasure Passline News Service

hicles is free of charge; for big ones like buses a fee of Rs 100 is charged).

fter a tedious long journey with your family you wish to have some rest and fill your car with petrol. You are just 5 km from Angamaly, at a place called Pongam. Beside the bus stop at Pongam on NH 47 you notice an Indian Oil Corporation (IOC) petrol station, Jubilee Retail Outlet (JRO) with a vast parking space nestled in elegant environs. Its allure is unmistakable. You murmur to yourself: I have come home to the place of my dream.

You then want to relieve yourself. There are comfort stations for both women and men. You may quench your thirst, can have something to eat and then have a short nap. You can also enjoy yourself by watching butterflies, cute birds, pet animals. No problem, your kids can enjoy the icecream or soft drinks at the pizza hut or play or rest at the children’s park while adults may take their meal at the hotel, or take rest at the dormitory cots.

After fuelling the vehicle you park it there. (Parking for light ve-

The 3.29-acre plot that IOC acquired about 10 years ago is an ideal location for people mainly on travel as it is environment-friendly. Here is a place where you will find everything—almost— you want and need for your rest.

A

The new concept of converting barren lands into eco-parks was conceived by IOC Senior Divisional Retail Sales Manager (SDRSM) V R Menon and endorsed by Chief Manager (Retail Sales) Soman Mathews about six months ago. The objective is to help enrich the quality of life

of the community and to preserve the ecological balance and heritage through strong environmental conscience. This is the first such outlet by IOC in India. The first priority was to protect the degenerating multicolored little species—butterflies—which proffer hues of colours to nature and to your eyes simultaneously and cool the hearts of onlookers as these cute ones perch and fly up from different varieties of host plants planted suiting the habits and tastes of the caterpillars. Butterfly gardening is a conservation-cumeducational programme. “Since most of the butterfly host plants are confined to natural patches of vegetation, it is important to conserve such types of vegetation which is usually found along roads, rivers and open landscapes. As we conserve, we are indirectly conserving a variety of native plants and animals. Butterflies require specific eco-climatic conditions. High temperature keeps butterflies away from the plants. So we can enjoy them only at dawn or dusk’’, says Mr Alexander Mathews, Business Manager of the retail outlet. Besides butterflies, chirping parrots, cooing doves, cocking guinea hens and mooing rabbits and swans etc add glitter and glamour to the park. On the environmental side, waste management is a problem everywhere in the world. Passersby can see assorted dustbins placed everywhere to carry non-biodegradable and biodegradable wastes. Later some agencies collect them to the processing units. The food waste is converted there into vermin-compost to be used for the multiple medicinal or herbal plants growing there. ‘We have a plan to plant vegetable saplings there,” says Mr Mathews. Apart from this, there is a biogas plant, a rainwater harvesting system and a wastewater treatment plant which cater to the water needs of the pump, a hotel and a park. The biogas serves the fuel needs of the hotel and saves nearly Rs 150 a day on this account. IOC consults Kerala Forest Research Institute (KFRI) for guidance.

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January 15-February 14 , 2011


32

MANAGING

By Sundaresh G

If you wish to plan for a year sow seeds... If you wish to plan for ten years plant trees... If you wish to plan for a lifetime develop men ... (Kuan Chung Tzu)

T

at some point can propel economic growth of a nation, but then a population without ‘employable skills’ could also become a burden on reasons of unemployment.

he primary focus during the days of ideating on larger issues of manpower was to reach back to the basic skillneed-inequality general assessment of employer needs with regard to their manpower. Though we realized it early on, employer needs kept changing on the dynamic environment shaped by global business vitalities posed by opportunities, competitiveness and challenges created by it. The sustained yet sometimes growing disparities between employer requirement and campus produce have been a potential threat to the idea of a given surplus of employable manpower in the country. A report in 2005 projects India as the one among the few countries having surplus manpower by the year 2020. Over the last few years, we have witnessed seamless efforts by corporates on making their employee intake to a workable suitability by enforcing large amounts of time and other resources. The idea is to correctly identify opportunities and build a coherent roadmap, which should result in effective implementation and hence optimize the opportunities which were not realized. Let us check these following patterns. The number of students not attending primary schools in India is 8 million. The percentage of surplus population in India by 2020 is estimated at 8%. Though the numbers do reveal much for many it could be

PASSLINE

hiding lots. On one side we are talking about 8 million children not getting even primary education, on the other a surplus by 2020. It is quite intriguing to think these as two sides of the same coin! It should not remain a mere fascination of some statisticians on the surplus manpower our country would have which can be an advantage for a growing economy. Without a proper roadmap, policy for education, skills development etc it would remain a dream for us to achieve the benefit of the surplus manpower. When we talk of employable workforce we mean ‘the number of people capable of work and among those, those willing to work. Moreover, such manpower should have the necessary education, skills and opportunity to work. The probable future risk of having either surpluses or shortages, or both, in particular kinds of manpower skills can then be reduced by good planning so the balance between demand and supply can be achieved and then maintained through continuous readjustments and reassessment of both demand and supply sources. It is agreed that population growth at some point can propel economic growth of a nation, but then a population without ‘employable skills’ could also become a burden on reasons of unemployment. The risk we are running into is quite huge; so is the opportunity.

January 15-February 14 , 2011

Without proper planning, policies and execution the risk of surplus turning to just another overpopulated country looks probable. The importance of manpower planning then is not to plan for having adequately trained labour only, but to create suitable opportunities for them to use their skills. Bad planning can bring about low economic prosperity with overpopulation, unemployment and underemployment. It may be mistakenly thought that the overpopulated countries must have an abundance of labour. The fact is not that, because having an abundance of non-skilled workers may also mean having a shortage in semiskilled or skilled workers, or in both. Surplus in some skills and shortage in others may be found to equally create a situation of imbalance. By 2020, there will be a global shortage of 56.5 million skilled people and India will have a surplus of 42 million of working age. With right actions in education, training, retraining, skills development in varied sectors and deployment of continuous assessment of the progress of creating an employable surplus would benefit the nation and radically change our growing economy to optimum levels in the future. (The author is the founder and CEO of Orange i, Human Resource Mentors. www.orangeimentors.com)


33

CMS: sprucing up for silver jubilee By Dr S Sree Kumar

H

istory often records only the deeds, the outward acts largely, but every act springs from an ideal which is often left unrecorded. The CMS Group of Institutions is an exemption to this general attitude. In its motto—‘Challenge Meets Success’—is enshrined the radical idealism and inventiveness of a group of ‘expatriate’ Malayalees of Coimbatore, Tamil Nadu, and their continuous struggle to overcome the challenges that came in their way.

reached its peak. With students’ strength equalling that of a university, diversification became a necessity to circumvent the stagnation that befalls many institutions of higher learning at some time or other. It was here that the sagacity of the Chairman of the trust, Mr M P Gopalakrishnan, and the Secretary, Mr C K V Nambiar, came into play. Both had the foresight to consider higher education not as a luxury but as something essential for national, social and economic development.

Mr Gopalakrishnan was born in Coimbatore as the son of Manjappali Ambattu Padmanabhan (Mala, The CMS Educational and ChariKuzhur) and Muthiyal Janakikkutty table Trust, established in 1988, was M P GOPALAKRISHNAN Amma (Mannarkadu, Nattukal). As the progeny of the Coimbatore Malayali his father was an accountant in ACC of Samajam which represented and still repreMadukkarai, Coimbatore, Mr Gopalakrishnan sents the vast majority of the Malayalees of had his schooling at Mani H S S and his colCoimbatore. At the initial stages, the trust had lege education at Government Arts College, nothing substantial to build on except a modCoimbatore. At the age of 23, he became the erate capital and plenty of self-confidence. youngest chartered accountant of But it had a clear vision which saw educaCoimbatore. Thereafter his career graph took tion not only as a vehicle for progressing in a an upward trajectory making him not only a multilingual and multicultural situation but also successful chartered accountant but also a as a crucial instrument for survival in the corporate consultant and director of several knowledge society of the future. Hence in companies. Keenly interested in social and the very year of its inception, the trust started cultural activities, he is the ViceCMS College of Science & ComPresident of Arulmigu merce. Siddhapudur Ayyappa Temple, a There was something strikingly member of the Kerala Club of modern in the very name given to Coimbatore and also an executhe college. Instead of naming the tive committee member of the institution ‘College of Arts and SciCoimbatore Malayali Samajam. But ence’, as was the usual practice the crowning glory came his way then, the trust named it ‘College of when the Governor of Tamil Nadu Science & Commerce’. Perhaps it nominated him as a member to C K V NAMBIAR was for the first time that a college the Syndicate of Bharathiar Uniis named ‘College of Science & Commerce’. versity in recognition of his service rendered This drastically different approach to modto the cause of education. ern education was a significant pointer that In Mr Velayudhan Nambiar, popularly the trust was willing to traverse roads less known in Coimbatore as C K V Nambiar, the travelled by. Moreover, the trust clearly foretrust was lucky to get another right man in saw that if our country has to progress into the right place at the right time. Born as the the 21st century, we need science and comson of Vayalot Krishnakurup and Devaki merce more than anything else. (Thalasseri, Panniyannur Amsam Desam), Mr The achievements of CMS College of Nambiar had his schooling at St Joseph High Science & Commerce for the past 23 years School and college education at Thalasseri stand testimony to the vigour and restless Brannan College. He reached Coimbatore as refashioning, which are characteristic feaan assistant in LIC and chose the city as his tures of the trust. From an institution that of‘Karma Bhoomi’. Over the years he had carved fered just three undergraduate (UG) courses, a niche for himself in the social and cultural the college has grown into one that offers life of Coimbatore. He is intimately connected 17 UG and 14 postgraduate (PG) courses. In with many social organizations of 1988, the college had fewer than 50 stuCoimbatore. Mr Nambiar is the Vice-Presidents in make-shift classrooms at Ganapathy, dent of the Coimbatore Malayali Samajam; Coimbatore. By 2007 it had more than 3,500 Chairman of CMS Matriculation School, students on an expansive 36-acre campus Maniakaranpalayam; Member of the Managwith state-of-the-art infrastructure at ing Committee of CMS Matriculation Higher Chinnavedampatti, a suburb of Coimbatore. Secondary School, Coimbatore; Life MemFurther, the college has become an autonober of Sree Narayana Mission, Coimbatore, mous institution, accredited at the ‘A’ level by a Trustee of Sree Narayana Guru PolytechNAAC and with ISO 9001: 2000 certification. nic College at Madukkarai and Sree Narayana To rest on laurels won may be a tempGuru College, Chavadi. He is a Life Member tation for lesser souls but not for people with of Sree Ayyappa Seva Sangam, passionate convictions and workaholic temSiddhapudur, Coimbatore, and also a memperament. By 2007 it became apparent that ber of Kerala Club and Kerala Cultural Centhe CMS College of Science & Commerce had tre. During his lengthy tenure as the Secre-

PASSLINE

tary of Coimbatore Malayali Samajam, he worked ceaselessly for the establishment of CMS College of Science and Commerce. The first step these two stalwarts, Mr Gopalakrishnan and Mr Nambiar, took to diversify the CMS Educational & Charitable Trust was to make the CMS Institute of Management Studies a stand-alone institution. The success of this venture prompted them to start one more B-school, CMS Academy of Management and Technology in 2009. Again, in the same year the trust started an engineering college to meet the accelerating demand for technical education. CMS College of Engineering and Technology has shown tremendous progress in a short time and has become a popular destination for those who aspire for technical education. Thus with their

Duration 2 years Eligibility: MBBS, BDS, BHMS, BAMS, BUMS, Physiotherapy, Medical Lab Technology, Nursing Pharmacy, Occupational Therapy and other Allied Health Science Graduates.

Duration 3 years Eligibility: 10+2 / P.U.C. / H.S.C With any subject combination *Approval from GOK & RGUHS awaited

January 15-February 14 , 2011

mobilizing spirit, undying commitment and clear vision these two indispensable and resolute leaders of the Malayali diaspora of Coimbatore have taken the trust successfully to heterogeneous areas of higher education. In another year’s time the CMS Educational & Charitable Trust will be celebrating its silver jubilee of service to humanity. Time has taken away many of the founding fathers of the trust. But the spirit that made the trust what it is today lives on thanks mainly to people like Mr Gopalakrishnan and Mr Nambiar. Who else can better represent the tireless striving and fierce conviction of ‘Challenge Meets Success’?


35

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January 15-February 14 , 2011


34

NM-02 SOIL INTERLOCK BLOCK MAKING MACHINE (Lever Operated) Power required : 7.5 H.P., 3 Phase 1440 R.P.M. Production Capacity : 1000 to 1500/shift Mould Size : 10''x8''x5'', 10''x6''x5'',

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NM-04 HOLLOW BLOCK MAKING MACHINE (P.L.C. Based Hydraulic) Power required : 5 H.P. 3 Phase (3+1.5+.05) Production Capacity : 1500 to 2000/shift, 8 Hrs. Mould Size : 16''x8''x4'', 16''x8''x6'', 16''x8''x8''

Export enquiries solicited

XTRAPOWER EASY FUEL card from Indian Oil is a first of its kind, unique fuel gifting option for the corporates. This smart card is an excellent and an effective tool for corporates who want to offer auto fuels and lubricants as reward or on regular basis to their employees and as gift to the customers. How the card works? Corporates can buy XTRAPOWER EASY FUEL cards in specific numbers and distri bute them as per their plans. The monetary limit for fuel for each of the cards can be preloaded by the issuing corporates. The card comes in two variants viz, single recharge and multiple recharge. Single recharge can be used for onetime glitting purpose whereas multiple recharge card can be used for incentivizing employees, channel partners etc. Corporates are provided log-in access to the website www.ioc.xtrapower.com through a specific user ID to enable them to assign the monetary limit to every card they issue. Then the cards can be distributed to their employees/customers for redemption of fuel at Indian Oil outlets. They can also use the same web interface to enhance the assigned monetary value by recharging as and when required for multiple recharge options. Benefits for the corporate: Presently, corporates offering free fuel as a gift option to customers/employees have to go through the cumbersome process of arranging and distributing printed paper fuel vouchers of varying denominations for fuel redemption. Alternatively, they tie up with specific retail outlets for redemption of fuel which requires close monitoring. XTRAPOWER EASY FUEL card provides an efficient electronic alternative to the paper fuel vouchers. The simple and easier procedures associated with the purchase of cards, flexibility in assigning monetary values as per customer’s choice and ease of distribution makes XTRAPOWER EASY FUEL card a great gifting option for corporates. Benefits to the customers: XTRAPOWER EASY FUEL card fits into the wallet like any other smart card and provides security in usage through a PIN. The card also comes with superior security features like a unique card specific 4 digit pin for authorization of fuel redemption which prevents the cards from being misused in the event of it being lost or misplaced. The customers no longer have to carry around paper vouchers of varying denominations for fuel redemption. XTRAPOWER EASY FUEL card is accepted at over 6,000 select Indian Oil outlets across the country and this network would be progressively expanded. The customers and the issuing corporates also have access to a 24 x 7 toll free number 1800 425 5599 for responding to their queries on card related issues.

“Distributors wanted for countries other than India” PASSLINE

January 15-February 14 , 2011


36 PASSLINE

January 15-February 14, 2011

TEXSHINE

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

PLASTIC HYDRAULIC

Quality l Reliability l Service l Economical Price Manufacturers of: F Screw Type 30 Tonnes-100 Tonnes F Plunger type upto 500 Gms F Insert-Screw & Plunger F Blow Moulding (Plunger & Screw Type) F High speed injection Moulding Machine 20g

126, Kannimar Nagar (Near by Athurasamam Working Women's Hostel), Sathy Road, Ganapathy. Combatore-641006 Ph: 0422-2539055, 09566615552, 9566615551 E-mail: vinplastotech@gmail.com Web: www.texshine.com

Export enquiries solicited

Export enquiries solicited Printed and Edited by Varghese Paul for Keethara Publications Pvt Ltd. 6802, Convent Road, Kochi-35 Tel 3043572 Email:passline.com@gmail.com and Printed at Ayodhya Printers Pvt Ltd., Cochin-26 Design & Layout by johnson


Passline Business Magazine Jan-Feb 2011