life in journalism: the delhi bias

A majority of Indian English media publications -- (newspapers and magazines -- are headquartered in Delhi even though 40-70 per cent of the news and features content would be getting generated from their Bombay bureaus. Since the headquarter is Delhi the editor-in-chief and his 1-3 deputy editors are also based in Delhi. Headquarter is where the production of pages (design, layout etc) takes place.

Now, my observation over the past many years has been that these editors have a large bias towards stories done from their Delhi staff. This gets manifested in many ways -- preferable treatment of story ideas from their Delhi team vis-a-vie those from Bombay, better positioning of stories of the Delhi journalists etc.

Why this bias? It could be the generic Delhi cronyism and favoritism at play. Merit kicks in only later.

The above does not happen 100% of the time but I would estimate it to happen 60-90% of the time depending on the publication and also depending upon who the editor-in-chief is.

life in general: who are the real encroachers in bombay?

I share below a latest email I received from Narmada Bachao Andolan on the issue of real encroachers of Bombay and connected matters.

Being a Bombayite (born, studied and worked here all along) I have myself observed the hypocrisy of Maharashtra's government officials/ministers and Bombay's municipal authorities (BMC) on what constitutes legal and illegal. Builders and companies influence them to break development rules and all other statutory norms in order to carry on reckless construction of commercial and residential properties. The police and BMC , as their agent, then complete the circle of hypocrisy by demolishing the shanties of the poor calling them illegal.

This is the state of affairs all over India, and even other countries like China, Indonesia, Malayasia and maybe even South Korea. The law is manipulated to either benefit the affluent and influential or to deny democratic rights to the poor and un-influential.

Anyway, here is that email I referred to above:


From:
Date: 2008/6/12
Subject: [nbapresslist] Ghar Bachao Ghar Banao Andolan Members Assemble in Thousands....
To: nbapresslist@lists.riseup.net

Mumbai Update
12 June'08

* Thousands of urban poor- un-protected workers, fisherfolk, slum dwellers, street vendors of Mumbai assemble on the occasion of first convention of Ghar Bachao Ghar Banao Andolan.
* What right does governments have to demolish our homes? echoes the question.
* Challenging State's hypocrisy booklet 'Who are Encroachers of Mumbai' and a periodical 'Andolan Ki Awaaz' released amidst resolution to strengthen the struggle of urban poor for justice and dignity.

On 2nd June thousands of urban poor of Mumbai representing the more than 7000 members of Ghar Bachao Ghar Banao Andolan converged at Azad Maidan to participate in the first convention of the Andolan. Women in large numbers and in majority, attended the convention that went on till 9 p.m. to discuss and strategise on issues ranging from right to housing to the encroachments of the elite, right to basic services including water, health, education and food, and the obstacles in realising the same. The Convention had attendance of unorganised sector workers, slum dwellers, fish workers and hawkers.


The convention was inaugurated by Justice (Retd.) Suresh H, and addressed by Laxman Gaikwad-leader of Denotified Tribals, Medha Thatte(Shramik Mahila Sangatan, Pune), Neera Adarkar(Girni Kamghar Sangharsh Samiti), Shailesh Gandhi(NCPRI) Right to Information Activist, Shaktiman Ghosh(National Hawkers Federation), Seemantani Dhuru(Avehi-Right to Education Campaign), Adv. Shakeel Ahmed, Neha(CEHAT), Anand Patwardhan (Documentary Maker), Sambaji Bhagat (Cultural Activist), Medha Patkar (Ghar Bachao Ghar Banao Andolan-NAPM,NBA) and others.

While inaugurating the convention Justice Suresh raised the question 'what right does governments have to demolish the houses of the poor when right to housing is part and parcel of Right to Life guaranteed under the Constitution of India?' He declared the policy of Government of Maharashtra of applying cut-off date as inhuman, illegal as well as violation of the Constitution. He gave the call of raising struggles at multiple fronts to oppose the anti-people policies of present day governments, be it setting up of SEZs or repeal of Urban Land Ceiling Act.

His call for struggle was seconded by Laxman Gaikwad, leader-activist associated with the de-notified tribes of Maharashtra. He drew the attention of those present towards the irony of how historically and even today, those who are earning their bread-butter by engaging in back breaking labour are labelled as criminals and encroachers, while those who are real criminals are holders of sets of power as MPs, MLAs and corporate heads.

Raising the issue of real encroachers of Mumbai, a booklet 'Who Are the Encroachers in Mumbai' was released on the occasion by Medha Thate. The booklet contains detailed cases of the encroachments of the elite over lands in Mumbai. The quoted cases include those of Atria Shopping Mall constructed by encroaching over land reserved for housing the dis-housed, 60 storied twin towers- illegally constructed over land reserved for a 12 meter wide road; scam of Hiranandani Gardens for which 230 acres of land has been leased out at the rate of 40 paise per acre. After the release of the booklet, members of Ghar Bachao Ghar Banao Andolan resolved to enter upon one of these encroachments and demand their removal in near future. A fortnightly 'Andolan Ki Awaaz' was also released during the sammelan which will be regularly brought out by the Andolan.

The issue of Hawker's & Street Vendors was raised by Shaktiman Ghosh of National Hawkers Federation who lambasted the UPA government and respective state governments of not implementing the National Street Vendors & Hawkers Policy in spite of the orders of the Supreme Court. He drew attention towards the exploitation and harassment that the hawkers have to face even in left ruled state of West Bengal. Hyder Imam of Pheriwala Vikas Sangthana, an affiliate organisation of the Andolan drew attention towards the fact that everyday, lakhs of rupees was being collected from hawkers of Mumbai by the nexus of Police-Municipal Authorities-Politicians who are violating the citizens' right to life. While on the lands reserved for hawkers as retail markets are being encroached by the builder mafia as in Walkeshwar where a 40 storied building has been illegally constructed or be it the case of McDonalds Restaurant outside VT Station which has been challenged by Sangthana in the High Court, two sets of laws are being applied; one for the rich and other for the poor.

Urban Poor's right to basic services like housing, water, health, education and food was asserted by speakers like Sailesh Gandhi, Neha, Semantani Dhuru, Mahatam Mouraya, Kausalya Salvi, Prabjot Kaur and others. Rights of these services were forcefully reiterated by the slogans of thousands of members of the Andolan that were present for the Sammelan. Role of financial institutions and corporates like World Bank, ADB, McKinsey International, Reliance, in
encroaching and violating the constitutional and human rights of urban poor like during the implementation of Bank funded MUTP or drafting Vision Mumbai statements.

In the afternoon a delegation from the Sammelan went and met the Chief Minister, Shri Vilas Rao Deshmukh. He was made aware of the issues being raised by those present and asked to give a date on which there could be a conclusive meeting, this demand was accepted and in the next few days such a meeting would be taking place.

The Sammelan ended with those present taking a pledge to continue with their struggle of renewing cities based on the principle of equity and justice with renewed vigor and strength.

life in financial markets: equity derivatives trading in india under threat from singapore exchange?

I usually notice that when a change in a regulatory policy is made in India's equity market in response to some perceived negative impact of an existing policy. On a particular issue a wrong action is taken for a wrong reason whereas the same issue demands right action for the right reason. Stuff happens because of all this. I wrote something last week about such a case for the magazine I work for. Here it is:

THINK GLOBAL, LOSE LOCAL

Regulatory arbitrage is causing derivatives trading volume in Indian indices shift to overseas exchanges gradually but dangerously

In the last couple of weeks, despite the trading action in the Indian stock market being subdued due to the bear grip, the liquidity of Indian equity units listed abroad has risen. Some market players in India are apprehensively watching this trend as it means the revenue from brokerage, depository operations and other intermediary activities, that otherwise would occur here, is now shifting overseas bit by bit.

On the Singapore Exchange's (SGX's) derivatives trading segment, the last seven months (from November 2007) has seen multiple times increase in the value of trades and open interest positions in its listed-futures contract on India's most actively traded index – the National Stock Exchange's (NSE's) 50-stock Nifty. The number of Nifty futures traded in the first ten months in 2007 averaged at just 16,202 per month. From November 2007 to May this year this has zoomed to 744408 Nifty units per month, a 45 times increase.

There is a reason for this. Many global hedge funds and some global equity investors prefer to take country exposure through an investment in futures contracts on the leading index of that country. In the core 2005-07 period of the bull run, these investors did this for India through the Nifty futures traded on the NSE. It was done through participatory notes (P-notes) issued by foreign institutional investors (FIIs) where the underlying Indian asset was Nifty futures. These accounted for a third of all FII investments through P-notes.

The central government, in order to curb the sliding rupee due to very high dollar inflows, made the Securities and Exchange Board of India (Sebi) ban FIIs from issuing P-notes that had derivatives as underlying and impose tight limits on the rest of the P-notes. This happened in October 2007. "It is no coincidence, therefore, that the November-onwards rise in Nifty futures volumes on the SGX coincides with the Sebi ban," says Sanju Verma, head of institutional business, at HDFC Securities.

Nifty futures is one of a couple of other international indices' futures traded on the SGX. The average traded value of Nifty futures in SGX is now around 15 per cent of that on the NSE (see graphs 'Kidling tries to overtake adult') (click on the two graphs below to enlarge them so that they can be viewed clearly) and the open interest position is still higher at around 60 per cent. The same corresponding figures in the first ten months of last year used to be 2-5 per cent and 10-12 per cent.

The threat. Can the Indian market lose its liquidity and trading volumes to other markets even as global equity investors continue, by and large, to get the exposure on India they seek? "The SGX Nifty futures trading seem like a kidling now but it will ignite at some point when most investors realise they get better liquidity there," says Ajay Shah, a senior fellow at the Institute of National Institute of Public Finance and Policy. "It is premature for me to comment on the threat but if your overseas client is not trading through you in India your business will reduce," says Trivikram Kamath, senior vice president of operations, finance and technology at Kotak Securities.

It will not be a first in case it happens. "In SGX, it has happened in the past that international indices had more volumes than the home exchange," says Ashok Jain, managing director of Arihant Capital Markets, a NSE brokerage firm. Jain also weighs the pros and cons: "there is a genuine risk of business shifting overseas but we believe it will create new business and improve depth and allocation to Indian equities."

There are also over 15 exchange-traded funds (ETFs) based on Nifty or Sensex being traded on overseas exchanges in Europe and US, including on the SGX. Trading volume in these ETFs are however not significant yet to worry about. But it is picking up, at least in comparison with trades in depository receipts of Indian companies (ADRs in the US and GDRs in European exchanges).

A recent analysis done by Instanex Capital, a Bombay-based investment advisor, revealed that during October 2007 to March this year the trading volume in eight Indian ETFs listed in the US (four in NYSE and four in Nasdaq) made up for 16 per cent of the total trading in ADRs, GDRs and the eight ETFs. Its share was more than the 12 per cent share of GDRs while the balance 73 per cent was in ADRs.

Regulatory arbitrage (due to P-note restrictions) apart, increasing transaction costs can also provide an impetus to an impending transfer of domestic liquidity to international markets. Since the last one month the effect of the removal of tax benefits on securities transaction tax is being seen. "It has not only killed arbitrage volumes but impaired price discovery and led to fall in depth and breadth in the futures and options space," says HDFC Securities' Verma. "Why would FIIs want to trade in a market which is fraught with poor depth and even the cost of transacting is higher."

The way forward. BW learns that under the new Sebi chairman, C.B. Bhave, there is an openness to re-consider the ban on P-notes having derivatives as underlying. "The ban will be replaced with limits similar to those on P-notes with cash market positions as underlying," says a senior vice president, global transaction services, of a foreign-bank custodian that along with other custodians have been in extensive dialogue with Sebi in recent weeks.

Such dialogues resulted in Bhave recently reversing his own step in imposing upfront (initial) margins to FIIs for their trades in the cash market with effect from 16 June. Now, FIIs have to pay the initial margin on T+1.

For an opportunistic government, the dollar inflows problem seems to have subsided as seen from the latest relaxation in the external commercial borrowing norms. That might give Bhave a chance to persuade the government to allow it to relax the curbs on P-notes as well.

But it was also the issue of Indian hot money being routed through P-notes that was of concern to market players if not the government. Contrary to such concerns, Sebi, on 29 May, relaxed its FII regulations to allow international funds set up by non-resident Indians to be eligible for registration as FIIs in India with the proviso that they would not be permitted to invest their proprietary funds. "A well thought out approach that distinguishes between hot money and long term flows is required, though that is again easier said than done," says Verma.

In the meanwhile, the traders in many of the domestic brokerage firms look at SGX but not with wariness. The SGX opens when the Indian time is only around 7 am. They take cues from of the change in Nifty futures as a reaction to other global markets and events that happened overnight. "That Nifty is actively traded abroad only shows India is a hot destination and it is wrong to say that it is coming at the cost of volumes here," says R. Venkatraman, executive director at India Infoline.

But it is often the case that those could get hurt the most do not realise until it is too late. When NSE started its equities market in November 1994 with counterparty risks removed through the settlement guarantee it sucked in the greater part of liquidity from that on the BSE. Even though BSE followed suit after 2-3 years the comfort level of investors—domestic or institutional, large or small0—was established with the NSE. Today, the cash market trading volume on the NSE is more than double that of the BSE. The SGX threat should not be dismissed lightly.

life in general: (part 1) ecology conservation steps

I am beginning a series of posts where I will put up tips and suggestions for those who are sensitive towards the protection of our planet's environment and ecology. All of them will be based on my own implementation of my sensitivity that began 3-4 years ago. These tips will apply to affluent people earning high incomes – they could be living in cities or small towns or even villages; it does not matter because I have seen ecologically-insensitive consumption take place even in rich villagers' homes and fields.

In this first part of the series, I take the issue of the carbon (and other hazardous substances') footprint involved in the cooking of food.

Cooking is usually done using liquefied petroleum gas (in LPG gas cylinders) or electric current (in case of electric rice cookers, ovens, microwave etc). We can reduce our footprint here by cutting down on the quantity of the gas or electric power. There are various ways of doing that.

We can avoid excessive heating of our food or tea. Say a dal or any other gravy dish is being made. Once it starts boiling we can put the gas burner on low flame and switch it off completely after the spices and other ingredients have got reasonably seeped into the gravy.

The lesser the time needed for cooking the better. For this very season, we can cut down substantially on fried foods that require higher temperatures (that means burning gas on full flame) and longer cooking time. The cooking oil used here is a lot too. All cooking oils are heavily processed items made in large manufacturing units that require large power consumptions and also sometimes ecologically-damaging waste products.

It may be difficult to give up fried foods completely for those of us who love their taste and flavour, but we can reduce their consumption by anywhere between 10 and 90 per cent. We can even try doing it in phases – 10 per cent in the first 3 months, another 10 per cent in the next 3 months and so on. Alternatively, we can completely not have fried foods for an extended period of one month 3-4 times a year, our consumption will be down by 25-33 per cent in the first year itself.

Not just fried foods, but there are other dishes too that require extensive cooking. Non-vegetarian

When making tea or coffee many boil the tea leaves in water (mixed with milk for those who don't drink black tea) uptil a few minutes after the boiling point is reached. Here, there is ample scope for reduction. We can cut down drastically the post-boiling length. We can also change the way we make tea. For instance, I make my tea by boiling water first (before i switch on the gas burner I add mint leaves to the water so that is flavour can get seeped in the water).

As soon as the water starts boiling {that takes about 2-3 minutes for one cupful of water quantity (see the photo to the right, (thats water and mint leaves being readied for my cup of tea!) and 3-4 minutes for two cupfuls and so on...} I reduce the burner to low flame. After a minute, I switch off the gas, immediately put one (or more as required) teaspoons of tea leaves in the boiled water and cover the container with a lid (see the photo below). In a tea cup, I add sugar and milk (i use just one-half of a teaspoon of milk), and after 3-4 minutes I take out the lid and pour the tea in the cup through a strainer.

In this process of making tea I use less of cooking gas and also achieve another saving. When tea leaves are simmered in boiling water-&-milk the container gets grimy with the stickiness of milk and the fermented juices of boiled tea leaves. This grime is not there when you boil just water (with or without mint-leaves/other-herbs-or-spices added to it), add only tea leaves to it after switching off the gas and use the milk directly in your teacup.

Less grime means much less water required to wash the containers. Using less water is one of the ways we contribute our bit to the conservation of natural resources in more ways than one (that I will take in a later post).

To cook food we use various types of containers, pans and tawas (plates). Here we could try to use less number of utensils and container. When we use less of them we also buy less of them and when we buy less of them we reduce the carbon footprint involved in the manufacturing of those containers and utensils. Also, if we are making two dishes we can check if the same container or pan can be re-used instead of using two different ones. We can, for instance, use the same steel pressure cooker when making two gravy items (one dal and one with vegetables). After the first one is made, transfer it in a serving bowl and re-use the cooker for the second one. This also helps in reducing the water needed when we wash the utensils. The less the number the less the water and also less work for the maid that most of us hire to do the dishes and for other household work and also chemical-based dish washing liquid or paste we use for cleaning the cooking vessels.

The same can be done for the container (like the one in the picture above) in which we make tea or coffee. When we are drinking 2-4 cups of tea in a span of a few hours we can use the same container after removing the previous tea's boiled leaves (that incidentally can be

There are some who generally use less of them for cooking but buy more of larger sizes to cater to serving guests and for party occasions. I don't know what the solution could be here except that we can try to buy less of such rare-occasion dishes/utensils/containers notwithstanding little compromises we would have to make on the social front.

Even the type of containers or vessels we use for cooking can make a difference. Teflon-coated non-stick pans and vessels can be avoided because Teflon is a plastic additive and the manufacturing process involves the release a lot of noxious chemicals and hazardous waste products. For the tawa we can use earthern tawas to make rotis that does not require oil or butter and for other items the tawa can be an iron tawa instead of a teflon-coated non-stick tawa.

life in financial markets: corporate social responsibility

As a journalist, I have never done any reporting on the petrochemical and oil refinery industries until recently when I was asked to write about Reliance Industries' (RIL's) corporate social responsibility (CSR) initiatives. My take on CSR is that while companies would always strive to produce more and profit more products that may or may not be hazardous to the society or the environment it is ultimately for urban educated consumers to apply their minds in using a little or more of the end-products of any company.

As an aside, for the first time, as a small part of my working on the CSR story on RIL I had a look at petrochemical manufacturing. Poly vinyl chloride (PVC) is one of the petrochemical products and it is made from the mixing of chlorine and ethylene and is used in many products. Some find PVC hazardous.

Other petrochemical products include polyethylene and polypropylene that are used in products similar to those in which PVC is used. Then, you have the polyester products from petrochemical plants that are used in textiles and other things. More about these and other petrochemical products can be read in the 5-6 pages around page 25 of RIL's annual report for the financial year 2007-08 that can be downloaded from their website.

Anyway, I visited the Hazira industrial belt (near Surat in Gujarat) where RIL has one of its petrochemical plants in India. Impressions from just one visit might not be wise to rely upon but I can at least share two photographs I took when I was there. The one to the right is a daytime (1110 hours) picture taken on 8 May and it shows a small part of the Hazira industrial area (that stretches from the western outskirt of Surat right upto Hazira port that lies on land reclaimed from the Arabian Sea). The photo above to your left is a nighttime (0133 hours) picture taken on 9 May of RIL's glittering petrochemical plant.

Coming back to the CSR story, here is what I contributed:

CAN IT BE RELIED UPON?

RIL has taken steps in CSR but it is early days yet to conclude whether these are baby steps or giant steps.

Sometime in March this year, Amisha (name changed), a young woman in her early twenties, staying on her own in a shanty in Silvassa was noticed by Gujarat State Network of People Living with HIV (GSNP+). She was HIV+ and even though her husband, working in a government authority body, had infected her, he threw her out of his home after she delivered a baby child (who was not HIV+). In a state of shock and hurt, she took to small-time work and earned a meagre sum of Rs 500 a month.

When she also developed tuberculosis and fell severely ill she was noticed by GSNP+ who immediately bought her to Reliance Industries' (RIL's) health centre at Mora village near its Hazira petrochemical plant at Surat district in Gujarat. This well-equipped health centre provides free treatment for tuberculosis treatment based on the strategy recommended by the World Health Organisation, known as Directly Observed Treatment, Short-course or DOTs in short. It also gives free treatment for phase I AIDS-affected people.

Amisha got swift treatment from RIL-appointed chief medical officer, Dr Ashok Mewara, and his team at the Mora health centre. "But she did not want to go back and insisted to us that she be allowed to work at the centre for just food and accommodation and no salary," says Dr Mewara. But Dr Mewara gave her the job of a cook as well as a salary. "She is now aiming to seek qualification as a nurse and we will support her."

This young woman might very well represent another side of RIL's tough corporate image of doing all that it takes to grow its businesses and profits year after year. The company, last year, even got the TERI (The Energy and Resources Institute) Corporate Award for Business Response to HIV/AIDS.

Other companies in India, who cover AIDS in their CSR initiatives, limit themselves to spreading awareness of risks and protection measures but RIL goes further and funds full-fledged treatment with the expertise of its NGO partners GSNP+ and Lok Vikas Sanstha. "RIL believes in doing it differently," says Dr. Shrinivas Shanbhag, group medical advisor at RIL. "We started the Mora centre in May 2004 on the back of a World Economic Forum request to join them in their fight against tuberculosis across the world."

Later that year, when many TB patients were getting diagnosed as HIV+, RIL upscaled the entire centre to include treatment for AIDS. RIL has started duplicating the Hazira model at its Jamnagar plant at Saurashtra and will soon go live with an AIDS-treatment at its Patalganga. According to a World Bank case study on corporate responses to HIV/AIDS, RIL spent Rs 75 lakh on the Hazira initiative providing active antiretroviral therapy to 330 patients and treatment to 166 tuberculosis patients and monitoring 626 HIV+ cases.

But RIL's CSR is not about fighting TB and AIDS though. Its annual report of 2006-07 lists several other projects encompassing healthcare, education, workforce safety and environmental health. These encompass initiatives at and around its plants such as Jamnagar, Dahej and Patalganga.

For instance, the 9-year old Dhirubhai Ambani Hospital, at Lodhivali in Raigad district on the old Bombay-Pune highway, provided free treatment to 453 highway accident victims during 2006-07 as well as free or subsidised treatment to other patients from poor families in the surrounding areas. In another case, RIL has tied up with the National Association for the Blind to fund corneal transplant surgeries, at Rs 5,000 per surgery, on those blind people who come from the poorest sections. Till date, it has funded 5600 surgeries.

Hardev Singh Kohli, executive director at RIL and a member of the company's health, safety and environment committee, recalls the time 20 years ago when Dhirubhai Ambani had invited him to join the Hazira unit when it was being set up. "He told me to ensure that if the villagers face any problem the company should take care of it." Kohli lists the initiatives.

In mid-90s, RIL contributed to the about Rs 25-30 crore cost of building of the Wier-cum-Causeway dam on upstream Tapi that supplies water to the industrial units at Hazira. Before this, the state government was diverting millions of litres of water from an irrigation canal to Hazira's industries and depriving farmer of water for crop cultivation. "Environmental concerns were raised but I told them that if any damage occurs RIL will take care of it," says Kohli.

Kohli also highlights RIL's initiatives in innovatively using polyester products. "Subsequent to the incidents of fire in train compartments, from the polyester plant we recently started making a product blended with bico fibre that is now being used by the Indian Railways in the cushions of seats of their coaches as an improved safety feature." The company recently started a project involving rag pickers who get PET bottles for it that is then recycled and converted into a fluffy fibre that is used filling in pillows and brings down their cost by half.

In a community initiative, Surat, two years ago, it constructed a new school building for physically disabled children for Disable Welfare Trust of India that provides free education to disabled children, and currently funded and got government approval for the school to extend their classes from 10th standard to 12th standard.

RIL's Corporate Sustainability Report (CSuR) for 2005-06 states the company's investment in various community initiatives across locations was Rs 36.45 crore in 2005-06. It was less compared to Rs 45.08 crore spent in 2004-05 because as the report stated "we believe in developing self-sustaining financially independent ventures for communities, like public schools and hospitals."

As with every major company in the country setting up large industrial units RIL has had its fair share of criticisms regarding environmental issues and acquisition of land from villagers that have their lands within the company's chosen factory sites. But it is also believed to the one company that pays a generous value for the land acquired for its projects.

Environmental issues remain. "The real risk is of what a single deadly mishap can do because at any given day the large manufacturing units of companies like Reliance are consuming crores of litres of water and tons of other hazardous raw materials into their manufacturing process," says Darshan Desai, a chemical engineer and member of Prayas Team Environment India, a Surat-based NGO into animal welfare and environmental protection.

New green technologies have helped RIL bring down emission levels at its various plants. The company's CSuR for 2005-06 stated that data on air emissions of sulphur and suspended particulate matter are captured via online monitors at each manufacturing location.

The report also lists other measures such as recycling 23,000 tons of packaging material, reverse osmosis plant at Jamnagar reducing overall water consumption there by 3 per cent, a 26 per cent reduction in hazardous waster generation over previous year from 27.46 thousand metric tons (tmt) to 20.43 tmt, a flare gas recovery system at Jamnagar reducing emissions of carbon dioxide, nitrogen and sulphur and only a marginal increase in total wastewater generated from 11.65 million cubic metres (mcm) in 2004-05 to 12.16 mcm in 2005-06.

Surprising it is therefore that RIL finds it name in the list of non-responding companies to the Carbon Disclosure Project (www.cdproject.net) that was launched in 2000 at No 10 Downing Street in London. The project that has institutional investors as its members, asks all large companies to disclose detailed information on greenhouse gas emissions. In 2006 and 2007, RIL and many other Indian companies, who were asked by the CDP, did not respond.
RIL has come a long way. The changing dynamics of the global marketplace is also making it fine-tune its CSR strategies. How much of it translates into real value and sustains, only time will tell.

life in general: tender coconut water!

Last month, I worked on a story on tender coconuts for the magazine I work for. It was an idea that came to me in March when I was drinking tender coconut water, as I often do, at one of the street-side retailer near my office. The final outcome of all that is what I share below. The story talks of coconut orchards (or coconut groves as some would prefer to call it). To your left is a photo I clicked of one such large coconut orchard when landing at Coimbatore airport last month (when I had gone to report on Tirupur and Coimbatore for an industrial slowdown story... see the second post prior to this one). I can't say for sure whether this orchard had trees bearing tender coconuts or hard coconuts but I know that after landing at Coimbatore and heading to Tirupur by road I halted near a village to drink tender coconut water at a street-side vendor and he said it came from one of the local orchards in Coimbatore district itself.


Here is the story I wrote:

TENDERLY TOUCH

The business in one of nature's most valuable gifts has exciting dynamics.

In the hot afternoon sun of 11 April, the steady summer breeze was swaying about 180 trees in Krishna Prakash's five acres of coconut palm orchard in Mandya district in southern Karnataka. At that exact moment, a bright orange-coloured truck carrying about 6,000 tender coconuts was nearing Bombay in its 28-hour and 1,200 km long trip from the Maddur APMC (agricultural produce market committee) mandi in Mandya to green tender coconut wholesaler K.B. Beeravunni's area of operation in Andheri in Bombay.

The truck reached Beeravunni at midnight. Two of Beeravunni's men boarded it and in the next four hours of the night they took it for delivery along seven western suburbs from Bandra to Goregaon covering 20 kms. They unloaded all the 6,000 tender coconuts at 30 streetside retail outlets. Beeravunni caters to around 100 retailers but that day he had got phone calls from 30 for replenishment of their stock. Some of them retail outlet were delivered 100-150 tender coconuts while some got 200-250, and it took 5-10 minutes to unload at each outlet. In the night golden lights of Bombay's streets, none of the retailers were present at the time of delivery but Beeravunni's men would cover the unloaded fruits with the retailers'tarapaulin sheet.

In the morning the 30 retailers came to their outlets and sold 60-90 per cent of their tender coconuts by late evening. The sweltering humid heat of Bombay's summer ensured that. These retailers' stock got replenished next night by Beeravunni or some other wholesaler's truck that came from Maddur.

BW takes a look at the business of tender coconuts in the country. Due to their concentrated populations the cities are the largest market for tender coconuts. Green coconuts of Kerala and Tamil Nadu are best suited for extracting oil while that of Karnataka are tender and has more water content.

Bombay is the largest market in the country currently accounting for around 170,000 tender coconuts every day during the peak months of March to June and mid-September to mid-November and between 80,000 and 130,000 during other months. At an estimated average per-coconut retail sale price of Rs 15-16 during the peak months and Rs 11-12 during the other months the total turnover in a year in Bombay would currently be between Rs 53 crore and Rs 69 crore. Maddur APMC agents and Bombay's wholesalers further estimate that Bombay accounts for 40-50% of all India sales. The estimated national retail sales of tender coconut in a year, therefore, would be between Rs 106 crore and Rs 172 crore.

There are 45-50 tender coconut wholesalers in Bombay catering to 2,000-3,000 retailers. Beeravunni gets his hired truck every second day during peak season and twice at other times. Some of them deal in quantities like Beeravunni while some of them are bigger transporting in 1-2 trucks every day during the peak season. There are two types of trucks used – the regular sized one that are licensed to weigh maximum 10 tons carry 5,600-6,000 tender coconuts and the longer truck that have a maximum licensed capacity of 15 tons carry 8,500-9,300 pieces.

The dynamics. "The last few years have not seen much growth in income but it has been steady," says Beeravunni. "The business has been recovering from a slump two years ago when a pest attack caused extensive damage to the coconut palms in Mandya and other places." Mandya APMC's figures bear this out – 49,560 metric tonnes were transported out in 2005 while it was lower at 43,003 in 2006. It picked up only last year at 56,568 metric tonnes.

The Mandya district's hundreds of acres of coconut palm orchards not only grow the most number of tender coconuts in the country but also figure in the top growing regions in Asia. At an estimated average weight of 1.6 kg per tender coconut (big-sized ones weigh around 1.9 kg while the small-sized ones weigh around 1.1 kg) Mandya's 2007 produce translated into 35.35 million pieces. Of this, about 26 million got transported to Bombay, and the rest to Bangalore, Hubli, Pune, Thane and elsewhere in Karnataka and Maharashtra.

"Nine out of every 10 trucks during December to June come from Mandya and the one remaining truck comes from Mangrol in Junagadh district in western Gujarat," says Beeravunni. Herein, lays an interesting twist in the story. The Mandya tender coconuts plucked from the orchards in end-June and upto September-October tend to loose their green skin colour and become black from the outside within 2-3 days of storage.

The water inside, however, does not spoil. "But consumers think the black-skinned ones are spoilt and don't buy them and so we shift our purchases to Gujarat at that time," says Beeravunni. The tender coconuts from Mangrol do not suffer from this problem. From July to October, therefore, Bombay's consumption demand, which anyways reduces by 25-40 per cent, is met from Mongrol. From November to February, the winter months, the demand is half.

Conscious tender coconut water drinkers can notice the difference in taste – the ones from Mandya are sweet and contains more of tender milky kernel (or malai) while the Mongrol ones are mildly salty and has much less malai content. It is not surprising because Mandya district in central Karnataka far away from the coast while Mongrol is right along the Porbandar coast of the Arabian Sea in western Gujarat. Soil conditions cause the change in taste.

But some factors are secular in nature. A severe pest attack in 2005 and 2006 on tender coconut palms was from an airborne pest and it coconut palms across the states of Kerala, Karnataka, Gujarat, Tamil Nadu and others.

Mongrol is about 1,000 kms away from Bombay. When Bombay is picking its tender coconunts from Mandya, Mongrol supplies more to its regular markets in Gujarat, Delhi, Punjab and Haryana.

The economics. At the coconut palm orchardist's end the cost-dynamics are noteworthy. Each tree in Krishna Prakash over 180 fruit-bearing trees in his five acre orchard in Mandya yields fruit three times in the year. "In this region, one coconut palm seedling takes seven years to grow into a proper fruit-bearing tree," says Prakash. One seedling costs Rs 100. The costs an orchardist like Prakash incurs during these years are on manure (organic at times and chemical at times) and labour, and these can add up to Rs 250 per month.

The cost of fertile land would vary across states but most orchardists like Prakash own their land since the last 30-40 years at the least. "From a matured tree I get 50-70 tender coconuts in every fruitation," says Prakash. "The highest I have ever got from the local APMC agent who comes to collect the tender coconuts directly from my land is Rs 3.50 per fruit." Prakash's 180-odd trees yields fruits three times a year but there are orchardists whose trees gives yield upto six times a year.

A big-sized tender coconut costs the Bombay consumer anywhere between Rs 15 and Rs 20 currently, up by 30-50 per cent from Rs 9-13 just two years ago. But in this period Prakash has seen his per fruit realisation fluctuate between Rs 3 and Rs 3.50 only, that is, in a range of 10-20 per cent only.

The largest margins in the tender coconut business are made by the APMC agents some of whom, depending on the state and the district, are also politically connected. This is partly because they receive their APMC agent licenses from the state government. That is also the reason why no one hears the orchardists' plea with the state governments to hike the government-determined minimum prices at the various mandis. There are 15-20 agents in Maddur APMC and about 20-25 agents in Mongrol that make up for more than 75 per cent of all tender coconut trades in the country.

The relationship between APMC agents and the orchardists vary depending on size and need of the latter. If an orchardist is small having one acre or less and in need of advance money for personal expenditure or a marriage in the family then a APMC agent would pay him a lumpsum of Rs 1-10 lakh and fix in advance the rate at which he will buy future harvests of the orchardist. This rate is invariably a low rate and worse, the orchardist gets the same lower rate for 3-7 years, depending on the original agreement, even if the rate to the Bombay consumer doubles.

The next powerful element in the business chain is the city wholesaler who also needs to have strong local contacts, some of them political or municipal, to survive in the business. They took make a neat packet from the business although the growth in income has not been much for them either in the last few years. Streetside retailers take their relevant cut too in the chain, but are generally not as well placed as the wholesalers. "Even on the hottest days when there is a rush of people to drink the tender coconut water, there is a limit to how much I can earn," says Anna, a retailer in Kandivli who, interestingly, puts 50-70 tender coconuts on his bicycle at a time and roams from area to area to sell. "The cutting of the hard nut and then fleshing out the malai takes a fixed amount of time."

The cash-flow management is interesting. At times the city wholesaler has to pay the APMC agent upfront for the produce that is loaded by the agent in the trucks. At other times credit is offered for 1-2 months and is usually a continuous rolling process. The wholesalers, in turn, collect payment from the retailers days, sometimes weeks, after a delivery.

No books of accounts are prepared except for some loose sheets of papers in which the wholesaler details the number of tender coconuts supplied to each retailer at different days. The payments made are in cash, except in the case of some wholesaler-APMC agent dealings where the wholesaler deposits cash directly in the bank account of the APMC agent. "Most of us have been in this business for around 30 years and the trust between all of us is good," says Beeravunni.

The good and the not-so-good. In the end, the tender coconut water business is among the most dynamic in the un-organised sector. It is also the only trade in fruits where the end-produce is in liquid form. The end-consumer does not have to do anything to extract the juice out of the fruit. The juice is in ready form ready to be drunk.

Tender coconut is also perhaps the only fruit that is recommended the most by nutritionists and doctors, and one of the major factors in the large consumption demand in the ailing populations of cities.

But there is a flip side. The weight of the water and the malai inside the tender coconut is less than a quarter of the weight of the outer shell. These heavy shells, in millions of quantity, go to the cities' garbage dumps and add to the problem of land requirement for those dumps. The government nor the private industry has thought it fit to manufacture from the husk of the empty tender coconut shells an end-product that can be used as soft wood.

The transportation from more than 1,000 kms away by diesel trucks also leads to a high carbon footprint. However, it is still ok if one compares the carbon footprint of other nutritious fruits that too travel thousands of kms to reach the cties.. Let's drink tender coconut water to that!

life in general: this week's bomb blasts in jaipur

The city of Jaipur in the state of Rajasthan in India experienced tragedy this week (13 May 2008) when 5-6 bombs went off at different places in the city, mostly near Hindu temples. More than 70 persons were killed and many more were grivously injured. It is sad -- the got caught in the vicious cycle of violence affecting many parts of Earth today. May the killed ones' souls get healed in the astral world.

Jaipur clearly has been targeted this time because it is a major destination and transit point for tourists visiting India and June-August is the time when most tourists from Europe take their annual/bi-annual holidays. A newsreport or two also seems to suggest this.

The planners and executioners of the bomb blasts is very likely to be from Pakistan. It is not surprising but in recent weeks the level of activity from Pakistan's extremists camps has increased. The infiltration and firing incidents at the India-Pakistan border at Jammu & Kashmir has also gone up. This increase in extremists' activity coincides with the end of elections in Pakistan and the formation of a government by a coalition of political parties who won the contested seats. The military no longer has all the say in the government and so those divisive elements within Pakistan's military who are connected with the ISI (intelligence agency of Pakistan) appear to have decided to up the ante with regard to formenting trouble in India as well within their own country against the democratic system.

Pakistan's military's divisive elements and their ISI have in the last 2-3 decades, time and again, created trouble across the border in India.

But what is a new phenomenon is the rise of Hindu terrorism in India. And I am not just talking of the mini-genocides carried out by Hindu extremists in 1984 against Sikhs in Delhi and in 1993 and 2002 against Muslims in Bombay (1993) and Gujarat (2002). I am talking of a group that is carrying out bomb blasts similar to what Pakistan's extremists do.

The September 2006 blasts near a mosque in Malegaon in Maharashtra state and the May 2007 blasts in a mosque and other places in Hyderabad in Andhra Pradesh state were, in my view, the work of Hindu extremists. 99 out of 100 mainstream media publications/channels attribute these two to Muslim extremists from Pakistan. But they do not ask the question as to why will Muslim extremists carry out bomb blasts near their own religious places. There is also no precedent of their doing such a thing in US, UK, Lebanon or any other country where Muslims are not in a majority.

life in general & financial markets: tirupur and coimbatore

I visited Tirupur and Coimbatore (in the southern Indian state of Tamil Nadu) during 22-25 April to report on an industrial slowdown story in the magazine I write for. This was not the first time I was visiting these two cities (Tirupur in particular, Coimbatore I had not seen the main city and had just travelled from its airport to Tirupur that is 60 kms away). See here and here for two blog posts on my earlier visit to Tirupur.

This time around I split the three days I was there equally between Tirupur and Coimbatore. Landing at Coimbatore airport very early in the morning (8 am) I headed straight for Tirupur. On the way, when I was 4-5 kms near Tirupur, I had tender coconut water at a lonely streetside vendor (see photo alongside). He said he stocks the tender coconuts from the nearby orchards itself. The coconut water was sweet and the most delicious I have ever had.

Tirupur is the largest knitwear textile industrial hub in India (see the photo alongside of the inside of a garment company where beyond a display room a woman and her fellow colleagues are sewing or applying other final touches to a textile garment). But lets not talk about work -- at least not yet.

The one thing I love the most as a traveller to Tirupur is its food. The dosas, the sambhar, and the mint chutney are yummy. If you happen to visit this small city do not fail to go to Annapoorna restaurant near Kumaran Road to have its south Indian fare. The thing I hate the most about Tirupur is its maddeningly crowded arterial roads, particularly the Kumaran Road where I stayed at a hotel. You can not cross the road at all unless you take a risk and make a dash for it. Worse than Bombay because there are no traffic signals at the key junctions and hardly any traffic discipline. Also, the rickshaw drivers fleece you, charging a fare that is 2-3 times what you would pay for a similar distance in Bombay.

The rickshaw driver problem was only worse at Coimbatore (see the photo alongside of a Coimbatore rickshaw driver with whom I had a major fight because he was quoting outrageous fare for a small distance ride). But the roads are wide and traffic is less chaotic here than in Tirupur. I had some spare time one evening and went for a giantwheel ride at an annual summer fair going on at a place not too far from the hotel where I was staying.

Now, back to work-related matter. I present below the two write-ups I contributed based on the visit to Tirupur and Coimbatore.

1) Tirupur - doshas afflicting the land of dosas

The statistic was all that everyone was waiting for in Tirupur in the first and second week of April – the approximate figure of Tirupur's exports during the 2007-08 financial year. As soon as Tirupur Exporters Association (TEA) got an estimated figure from the banks and released it there was a headline in southern India's business daily soberly stating a fact 'Tirupur knitwear exports show 10% dip in growth'.

From Rs 11,000 crore in 2006-07 the exports of knitwear ready-made textiles from Tirupur came down to about Rs 9,950 crore in 2007-08. The net effect was more than 10 per cent because the annual growth rate was 30 per cent for two consecutive years—2005-06 and 2006-07. If the momentum had to sustain then the 2007-08 figure ought to have been Rs 14,300 crore. The Rs 9,950 crore, therefore, reflected a fall of 30 per cent. The slowdown had arrived.

You do not see it on its heavy traffic arterial roads nor do you see any decline in the exorbitant rates charged by its auto-rickshaw drivers but Tirupur has taken a breather from being a 24x7x365 throbbing industrial city. And it is not just due to the one-day-a-week electricity holiday imposed by the power-deficit Tamil Nadu State Electricity Board on all the industries in the state. The rupee appreciation of 2007, the tough competition with Chinese, Bangladeshi and Pakistani companies and the slowdown in the US consumers demand has rattled the over 5,000 textile unit strong Tirupur hub like never before in its 30-year old history.

"Tirupur's entrepreneurs have had to face a lot of challenges right from inception," says Raja Shanmugham, partner in Warsaw International, an Rs 60 crore turnover textile export company in Tirupur. "But the sudden attack on dollar last year made us very vulnerable." Shanmugham is referring to what more than one-third of the 3,000-odd exporter companies experienced from July-August last year lasting till recently.

Orders from international buyers were committed to by many of Tirupur's exporters in late 2006 and early 2007 when the rupee-dollar rate was over Rs 44 started getting processed in the months following May when the rupee-dollar rate had crashed below Rs 40.

More than two-thirds of all Tirupur's exports were invoiced in dollars even though only about 30 per cent, the largest proportion though, went to the US. "Buyers told us that if we increase the purchase price they will take their orders to textile companies in Bangladesh, PakistanChina," says P. Vidhyaprakash, director of Styleman Textiles, a medium-sized exporter. "The price of a T-shirt that is fixed at $2 could not even be raised to $2.20 because other countries are able to deliver at $2." and

Exporters had little choice but to comply and take a hit on their bottom line. Says Shanmugham, "We could not refuse as relationship with international buyers takes much time to establish and so we went ahead and executed the orders at a loss to retain the customer."

Small-sized companies, however, could not keep doing this beyond a couple of weeks. With the economics becoming unviable they stopped taking new orders. "Committed orders are also going down because of the downtrend in the US economy," points out Shanmughan.

"Around 10 per cent of all textile and ancillary units have shut shop and 10-15,000 textile workers lost their jobs," says S. Sakthivel, executive secretary of TEA. "Of these 6 per cent will be ready-made garment companies and 4 per cent will be the companies doing job work such as knitting, dyeing and bleaching, fabric printing, and embroidering for them," says Dinesh Kumar, partner in Thirumalai Knit Designs, a medium-sized that deploys imported knitting machines in its design job work for Tirupur's garment exporters.

Sakthivel points out that increasing global competition had already made the going tough for every one. "In the last one year Vietnam has joined the global market as a textile garments supplier."

But the real run for exporters' money is coming from Bangladesh and China. "Under the Free Trade Agreement that Bangladesh has with the US and European countries and in its capacity as an under-developed country it can claim to a waiver of 12-13 per cent import duty imposed on its supplies to them," says Shanmugham.

In fact, Bangladesh's textile companies imports the raw material cotton entirely from India. "It also has the cheapest labour," says R. Gopalakrishnan, chairman of Tirupur-based Royal Classic Mills that sells half it wares to the world and the other half to the consumers here in India.

As per estimates, India's share in global knitwear market is about 3 per cent, Bangladesh's is 4-5 per cent, China's is 25-30 per cent and the rest is taken by other countries such as Greece, Italy, Turkey, Thailand, Singapore and Cambodia.

China too scores over India on its infrastructure. Shanmugham says that it takes 11-12 hours for him to just transport his stock from Tirupur to the port at Madras or Tuticorin. The same distance in China would be covered in just 3 hours at an average 100 km per hour. The roads there are so much better. "I pay the trucker Rs 5,000 but in China the same trucker would charge about Rs 2,000 because he can make twice the trip in the same time as my trucker does," says Shanmugham.

Exporters in Tirupur are quick to point out that the textile industry works on wafer-thin margins unlike the software services industry where the mark-ups are high. They also claim that textiles is the only industry after agriculture that employs the most labour in the country. And they are facing internal competition with regard to manpower too. "You don't need big educational qualifications here but BPO companies are enticing those educated youth from the villages who would otherwise work in our units," says R. Sivaram, executive director of Royal Classic Mills.

Royal Classic has escaped the wrath of the exporters' turmoil because it consciously decided to target the domestic market as far back as 20001. Today its sales to domestic are a little over 50 per cent of its total sales. It has 56 shops all over the country—some owned and many franchised—that sell their Polo T-shirts, trousers and other ready-made garments for the youth. As a result, it managed to increase its sales turnover from Rs 30 crore in 2006-07 to Rs 50 crore in 2007-08.

All the banks, public or private, have their branches in Tirupur. But Tirupur's textile units are having a tough time negotiating with the banks for working capital requirements in the face of decline in sales and hit on margins. As such the interest rates charged by banks to businesses have shot up in the last two years from 7-8 per cent to 12-13 per cent.

A recent move by the government has helped them in getting government assistance in the bearing of that amount of interest that is over 7 per cent base. Some are seeking rescheduling of long-term loans as well. "We have got our loans rescheduled from five years to eight years," says Gopalakrishnan.

But Tirupur exporters, who are expecting another fall of 10 per cent in sales in the current financial year, are braving it out. They are cutting costs wherever they can and even if they can save 2-5 per cent they are going for it. "In cutting the cloth if the earlier wastage was 18-20 per cent then we are bringing it down to 16-18 per cent by prudently applying automated machines," says Shanmugham.

Royal Classic management claims the quality was already there and they are currently focussing on improving efficiency. "For instance, we want to bring down the turnaround time in converting yarn to ready-made garment from 90 days to 45 days," says Gopalakrishnan.

Tirupur lives and breathes on its textile units even if the air and water has gotten polluted in the process. You can even smell the chemicals in the air at times if you are out there roaming the city and its outskirts. Mansoor Ali, an owner of a medium-sized footwear shop at the heavy traffic density Kumaran Road in Tirupur was seeing his business grow rapidly till last year. "But my two children—one six years old and one just six months old—have developed respiratory trouble and the doctor tells me to take them out of Tirupur," says Ali.

His business this year has not fallen but he has had to sell his stock at discounts because the customers are bargaining for lower prices of late. This sentiment is echoed by G. Ananda Kumar, branch manager of a large retail shop 'Bharath Electronics & Appliances', "I give more discounts and only then am I able to sell." His sales are down 5-10 per cent this year compared to last year.

Risk-taking entrepreneurs, hard working labour, zealous commitment to quality and international customers' deadlines, lack of governmental interference at the state level and governmental financial subsidies at the centre level, and a magnetic attraction for all types of units connected to textile industry, have been behind Tirupur's success story in the last two decades. That will perhaps see it ride the choppy waves.

2) Coimbatore - dharnas on wide roads against narrow margins

It was an unprecedented sight. On 12 April the presidents and senior officials of 16 industry and manufacturers' associations came out on the streets of Coimbatore in the hot April sun. Normally it is the labourers who come to the streets. But industrialists doing a dharna on the streets?

Coimbatore is famous for its high-technology finished engineering products such as machine tools, printing presses, pump sets, castings for automotive sector. But the current state of affairs with the small and medium industries in Coimbatore is such that their representative associations came out on the street.

Exporters among them were hit by the rupee appreciation last year. But what was the last straw for all of them was the sudden price in their raw materials, particularly the prices of iron and steel products. These have shot up by 25-40 per cent in the first three months of this year itself.

In a 5 March 2008 letter sent to Bangalore-based Kudremukh Iron & Steel Company, the Coimbatore chapter of The Institute of Indian Foundrymen (IIF) wrote "you have increased the prices very often which uprooted the viability of the foundry units and had a devastating effect on them." The letter gave instances of how Kudremukh had revised the prices of pig iron it was selling to Coimbatore's steel foundries from Rs 15,600 per ton in April 2007 to Rs 19,650 per ton in January this year, and then again to Rs 21,150 per ton in February and once more to Rs 23,400 per ton.

In Coimbatore city and at its outskirts there are 150 steel foundries. In a good year they produce 100-250 tons a month. There are additional 350 units that are into production of engineering goods such auto components, and castings. Of these, 150 units are directly or indirectly into exports producing 500-1,000 tons in a good year. The balance 200 units are small catering to the domestic market and producing around 100 tons a month.

"In the last three months there has been a slump in production to the extent of 25 per cent across all the sectors in the engineering industry here," says S.V. Jagadesan, IIF chairman and managing director of Indo Shell Cast that manufactures for export and domestic end-products such as market automobile levers, yokes, shafts, piston ring cylinder castings and brake application parts. "Pig iron apart, we use raw materials like manganese and other chemicals and their costs have also shot up by 50-100 per cent in the last one year."

Copper prices of LME are also quoted by a section of Coimbatore's companies. It was $2,600 in mid-2006 and presently it is around $8,200. Says C.R. Shanmughasundaram, president of Southern India Engineering Manufacturers' Association whose 250 members comprise of a large number of pump set manufactures, "Companies who started exporting in last 2-3 years have stopped now."

Coimbatore's non-textile industries are saved from one threat – that of intense global competition from China and other countries that Tirupur's textile units encounter on a daily basis. "In engineering products the Chinese are not a major threat yet," says D. Balasundaram, chairman and MD of CPC that is into exports of gray iron, castings and other components. "The Indian engineer understands the world standards and conventions used in engineering language far more better than his Chinese counterpart." His company's turnover has been affected by 3-5 per cent due to the recent price hikes in raw materials and last year's rupee-dollar fluctuation.

Coimbatore's exporters highlight the fact that the dollar depreciation affected even the Chinese companies. "Somewhere along the line the difference was neutralised," says K Ilango, joint MD of RSM Autokast that exports and sells domestically components such as brake drums, hubs, spring and equaliser brackets and clutch pressure plates for heavy duty trucks and trailers. RSM Autokast that had 40 per cent of its production exported has managed to survive the dollar-rupee turmoil due to the 60 per cent sales to domestic market.

Unlike Tirupur's exporters, Coimbatore's engineering companies are not greatly in favour of exporting at a loss. Ilango points out to his company's strategy, "whatever we are able to sell at least at a zero profit we are going ahead; but we won't sell at a loss as otherwise our financial health will be ruined."

Most companies in Coimbatore incur raw material cost of 50-60 per cent and the recent past price hike has dented their profitability. As in Tirupur, therefore, they fear going to the banks for loans. "Now we have to stock minimum two months of raw material stock as we do not how the prices will move," says Shanmughasundaram.

Companies with sales above Rs 8 crore ($2 million) are doing a smart thing though to bring down their borrowing costs. "I have taken dollar loans through SIDBI's assistance and the interest rate was LIBOR (around 2.75 per cent) plus 3 per cent," says Ilango. This is also designed to protect the company from dollar-rupee fluctuations.

Some others peg their non-American buyers to base the orders in Euros. "We have pushed European, African and European customers to convert to Euro," says C.N. Ashok, director-commercial in Autoprint Machinery Manufacturers. "To American customers I am trying to quote the prices in rupees directly though they will remit the equivalent of rupees in dollars on the day of remittance."

The slowdown in Coimbatore is going to be felt more acutely in this financial year. "How we handle this year will be a litmus test," says Ilango. "We opened the champagne bottle too soon; we had seen growth stories for only 2-3 years."

Outside the factories, on the streets, the effect of slowdown is not visible to the eyes. But big retail shops are finding it in their sales. "TVs and other appliances' sales is down by 30-40 per cent," says K. Balakrishna Shetty, partner in a large electronic appliances shop 'KS Shetty & Company' at a prime locality Gandhipuram in Coimbatore. "The new year sales on 30-31 December last year flopped for the first time."