Industrial Vi e w First and only platform forMSMEs

VOLUME 01 ISSUE 09 FEBRUARY 2014 PAGES 60 Rs. 100 Technology in Banking The Next Frontier AP lacks good SSI policy UTURE FUEL Banking sector to succour wilting SMEs UPA AP transforming into a mecca of business (L to R) Shankarachary, Cherlapally, ILA executive member and FSME-AP advisor, G Prasad Kumar, minis - ter for HTLTSSI, APK Reddy, President,FSME-AP and editor, Industrial View, N Kiran Kumar Reddy, CM, AP, Sudheer Reddy, Secretary, ILA, Cherlapally and M V Rajeshwar Rao, CEO, CREDAI at the launch of the magazine at CM’s chamber

Launch of Industrial View APK Reddy, President, Federation of hief Minister N Kiran Kumar Reddy launched Small and Medium Entrepreneurs Industrial View on 22 June, 2013. The CM (FSME- AP), submitting a Chanded over the first copy of the inaugural memorandum to BJP national issue to MSME minister G Prasad Kumar. Speaking on the occasion, the chief minister general secretar, M Muralidhara said, “A magazine for the MSME sector is a wel - Rao on the occasion of latter’s come development and the need of the hour.” interactive session with the members M V Rajeshwara Rao, Former Secretary General FAPCCI and advisor to FSME-AP, Sudeer Reddy, Sec - of FSME- AP in Hyderabad. retary, Cherlapally Industrial Local Authority, Sankarachary, Cherlapally, ILA executive member and FSME-AP advisor were also present on the oc - casion. rajamyndar reddy Contents SMEs in the Globalisation Era 6

Panjab Simplifies SME Functioning 30

THOUGHT PROVOKING 34

The jurisdiction of court cases pertaining to the items published in Industrial View will only be Hyderabad (the place of its publication). Cases of other jurisdictions will not be entertained. RAGHURAMA RAJU KALIDINDI - Editor MEDIA CONSULTANT 9849350555 PRINTED & PUBLISHED BY ARANI PRASANTH KUMAR REDDY ON BEHALF OF FEDERATION OF SMALL AND MEDIUM ENTERPRISES OF ANDHRAPRADESH, PRINTED AT HARSHITHA PRINTERS, 6-2-985, YOUSUF BUILDING, KHAIRATABAD, HYDERABAD - 04. PUBLISHED AT FEDERATION OF SMALL AND MEDIUM ENTERPRISES OF , FLOT.No. G1, DWARAKAMAI APART, HINDI NAGAR, DWARAKAPURI COLONY, PANJAGUTTA, HYDERABAD, A.P. EDITOR : ARANI PRASANTH KUMAR REDDY FEBRUARY 2014 I Industrial View I 3 Industrial Vi e w First and only platform forMSMEs

APK Reddy UPA he original Gujarati edition 2 are also worrying on growing porate players, but absolutely neg - of ‘Hind Swaraj’ of Ma - popularity of BJP, particularly of lected small to medium enter - Thatma Gandhi was banned Narendra Modi, who is advocating prises. in by the ruling British in and implementing Gandhiji’s It is not at all repetition, but an 1910; but the English translation of Swadeshi model. emphasis to say that SMEs have the same was not banned. The BJP, as a policy, is strongly been the backbone of the Indian logic was simple: the rulers knew backing the revival of regional economy. Being the dominant na - well that the English ‘Hind Swaraj’ banking and the reinvigoration of tional business employer, SMEs might have little impact on the SME lending and Gandhiji Hind engage close to 40 per cent of English-speaking Indians' servi - Swaraj model is often quoted by India's workforce and contribute tude to the British ideas. In Hind the party to help SMEs. In contrast 45 per cent to India's manufactur - Swaraj, Mahatma advocated for to this broad-based organic ing output. They play a critical role Swadeshi (self- reliance); accord - process, UPA encouraging corpo - in generating millions of jobs, es - ingly Indians should refuse all rates. pecially at the low-skill level. The trade and dealings with the British. In his tête-à-tête with this cur - country's 1.3 million SMEs ac - Thus the British, who were wor - rent edition Industrial View, BJP count for 40 per cent of India's ried of the radical thoughts of National General Secretary, M total exports. But, UPA, which has Gandhiji, banned the Gujarati edi - Muralidhar Rao also shared our been rolling red carpet to the Cor - tion to prevent the ideas from view on UPA’s criminal negligence porates and MNCs with provision spreading among the majority pub - on indigenous industry of modest of number of industrial parks, lic. investments. UPA, in its nine and showed no interest to create busi - Sharing the same logic with the a half- year rule, has been focus - ness parks, common technology British, the rulers of present UPA ing too much on big business, cor - platforms or pooled energy sources

FEBRUARY 2014 I Industrial View I 4 for SMEs. Even it is not keeping ment. Most state-awarded con - any separate State. its promise of allocating 20 per tracts required that SMEs be given Even the banks are not acting cent of space of Industrial parks to a significant percentage of the according to the rule books; actu - SMEs. As a matter of fact, SMEs value of the work. The states also ally, there should be no need for a could employ 24 persons for an invested directly into SMEs, and collateral security for loans upto annual budget of Rs. One crore, provided debt guarantees on their Rs one crore, but banks are insist - with which not more than 4 per - behalf. ing upon collateral security even to sons are engaged in corporate set But, here in India, the situation meagre amounts. Interest rates of up. is chaotically different, as SMEs banks have been high, which is de - According to economists, na - are always at the receiving end, as moralising the entrepreneurs. tional financial integration can best share of the SMEs in total bank Rubbing salt to the wounds, AP be assessed through the share of credit is gradually declining. Transco is penalizing them with its the SME sector in national credit. Kick-starting our faltering engine unilateral decisions on power con - But, it has never been robust in will require various forms of gov - sumption. AP Transco is restricting India under UPA rule, as SME ernment interventions. Credit is the SMEs to use only 60 per cent credit is consistently in downfall. only one part: equally, what is of the power sanctioned. If the Sharply increasing inequality in fi - needed is building SME capacity power usage goes over the slab, it nancial access, between the big through provision of common is lashing heavy penalties, over and the small business sectors, and overheads. five times of the standard charges, in between national regions, closes on the entrepreneurs. So, many the prospect of upward income Now, owing to the SMEs are falling prey to financial mobility for large sections of the problems arising merely out of population - presaging social po - deteriorated situation power cuts. Now, owing to the de - larisation and its political conse - and other nagging teriorated situation and other nag - quences. In Andhra Pradesh, ging problems, the SMEs are on particularly owing to the political problems, the SMEs the brink of collapse and it will hit uncertainty amid the divisional are on the brink of 40 lakh more families in Andhra politics, the situation is further de - Pradesh severely. teriorating. collapse and it will hit Thanks to the vote-bank policies When the banking is concerned, 40 lakh more families of the rulers, we are in the situation it is highly concentrated in India. where a particular part of the econ - Over 70% of banking assets are in Andhra Pradesh omy is being attacked because of held in a few banks in the top severely. the financial indiscipline, which is notch. This concentration does lit - created in a community by waiving tle for deepening the national eco - The present Chief Minister, N off loans of gigantic proportions. nomic base. For more than a Kiran Kumar Reddy wrote to RBI Here I would like to quote from the century, the progressing countries asking the banks to take up reha - famous speech of Fransisco d'An - across the globe passed through bilitation of sick or potentially conia in Ayn Rand’s ‘Atlas their developmental phase with a sick units. He assured that the Shrugged’- Money is made--before strong inclusion of SMEs and it is State government provide reliefs it can be looted or mooched--made inherent in the distribution of fi - relating to power, sales tax dues, by the effort of every honest man, nance. . interest subsidy and others to the each to the extent of his ability. An The fundamental objective was sick units, if banks come forward honest man is one who knows that to ensure that local savings served in the rescue of sick units. How - he can't consume more than he has community interests by support - ever, RBI did not oblige, stating produced. SMEs in Andhra ing local enterprise. In addition, that the policy matters have na - Pradesh are superior to the honest the states themselves took initia - tional perpective and they could men, as they produce more than tives to reinforce SME develop - not be altered for the interests of they consume.

FEBRUARY 2014 I Industrial View I 5 Small and Medium Scale Entrepreneurs in Modern India are going through a toughest ever phase in the history of recent times. All this is attributed to lopsided policies of the State and Central govern - ments, bankers, power generation and distribution companies. The industrial development during the last nine years in India and in Andhra Pradesh in particular has not been up to the mark with a good number of industries getting converted into NPAs, adversely affecting the lives of lakhs of entrepreneurs/employees. State lacks good SSI policy: Muralidhar Rao BJP leader sees a ray of hope for SMSEs

BJP National General Secretary, M Muralidhar Rao sharing his views with Editor, Industrial View, APK Reddy FEBRUARY 2014 I Industrial View I 6 owever with the politi - neglected for the last nine and half India is always the country of en - cal scenario set to un - years under the Congress rule. trepreneurs. We had occupied dergo dramatic changes Number One position at the global Hwith the resurgent Do you think this is the only prob - level. Millions of entrepreneurs Bharatiya Janata Party emerging as lem for the present situation of in - were running the economy of the the key player, changes in every dustries? nations. sphere of development is bound No, we have to respect the rules But the situation has changed; witness metamorphosiIs, come of WTO, but don’t neglect the In - the government forgot the basic 2014 General Elections. dian investors and Indian entrepre - principles of the economy to give Brushing aside his busy schedule, neurs. Here you can give sops to importance to Indian industries. suave and soft-spoken National boost this sector. Provide the basic Literally, the public money and BJP General Secretary, M Muralid - needs of SMEs and help them to the personal money are being har Rao shared his views and keen improve the imports. squandered. When small scale in - observations with ‘Industrial View’ That will help the industry and dustry becomes sick and liable, the keeping national and state perspec - the Indian economy as well. whole economy will register a tive in view. The backbone has become neg - slump. lected. That resulted in the indus - This is the situation we have Here are some excerpts trial sickness or NPA. SMEs are the today. from the interview: major employment generators. Ac - This is the worst-ever phase for the cording to the 66th round of na - What is required to revive the ail - Indian industries. How do you and tional survey, there is a large scope ing industrial sector? your party look into this issue? for SMEs to generate more em - Small industry grows when it has Yes, in modern India we have not ployment but due to unsupportive sound infrastructure. It does not seen such bad situation for indus - system they have been thrown generate power and if there is no tries. Here the question related to into a shambles.. power the industry goes the existence of small industry, The most important waste. There are no opti - which is undoubtedly backbone of thing is, SMEs provide mum conditions. It leads India economy after agriculture. employment in rural to the industry to areas and towns. As per become idle. Under the UPA rule, the focus is recent survey, two-and- We have cold not been on this sector. There is no half crore self-em - storages but no encouragement for the domestic in - ployed power supply. vestors. entrepreneurs Surprisingly, they have been en - are on roads tertaining investments from foreign for the past countries. These Foreign Direct In - 10 vestments had occupied the cen - trestage. The so-called reforms ushered in by the UPA government years. centre on foreign investments, for - eign technology and facilitations for the foreign companies. The recently held WTO meeting at Bali, Indonesia also discussed many issues based on Foreign Trade Facilitations (Technology, In - dustry and Import). Literally, this sector has been

FEBRUARY 2014 I Industrial View I 7 If there is no road connectivity how the SSI will grow. The growth was stopped because of lack of proper infrastructure. And invari - ably, SSI had become a casualty. You have converted it (infrastruc - ture) into high-cost economy by raising the interest rates. Hence, the competitive spirit will diminish. High cost credit is creating a de - fensive condition for the SSI. It leads to the non-level playing field for both import and exports. MNC works in India and consequently, they are getting loans from some other country. BJP National General Secretary, M Muralidhar Rao addressing an The interest rates in their country interaction session with Small and Medium Entrepreneurs of AP. are obviously low when compared to India. They are accepting loans incentives, loans and other benefits Neither they pressurise Central from global market. Global compa - as being decided by Union govern - government nor they provide help - nies will get loans at less interest ment. ing hand to this sector. is rate. Obviously they sell goods for National level financial system is providing basic infrastructure and lesser amounts. under implementation. road connectivity to SSIs. They The system without equilibrium States have to follow the guide - have been creating new clusters and competition will never support the lines of Central government. industrial estates. system. But only what the state govern - Non-Congress ruling govern - The SMEs cater to the local mar - ments can do is. they can allot ments have been working with lim - ket needs and the local market in - lands, decide the power incen - ited resources . frastructure is being used as the tives/power tariffs and small bene - It is highly impossible to tran - basic logic behind Indian industries. fits from their side. scend all the barriers which are The United Progressive Alliance is For example, Gujarat has its own being put forth by the Central gov - against this as they are completely power generating system. That is ernment pro -corporate ignoring small scale the reason the industries of Gujarat industries. are being supplied with sufficient What is your party’s vision on They are allotting lands to corpo - power and the production is as ex - India-China trade relations? rate companies and giving incen - pected. Industrialists of this state It is one among the problems tives to them. are quite happy. being faced by the nation. The trade Their fundamental framework is And other BJP- ruled states are deficit with China is 40 million dol - to be corporate-friendly and not giving good power tariffs and unin - lars as on date. The difference be - showing interest in saving small in - terrupted power supply to indus - tween the imports and exports with dustrial clusters and industrial es - tries. China is in the favour of China. tates. Non-Congress ruling govern - That means we have been im - ments are working bit more on in - porting more from China but ex - Are the industries all over India dustries apart from acquiring porting a little to the Communist facing the same situation? Central govt aid. But, the situation country. This is nothing but we are Here we have to observe two in Congress-ruled States is totally exporting employment to China. things. Industrial policies set by the different. Indian government supports Central Government. They give all

FEBRUARY 2014 I Industrial View I 8 China as per its laid-out their poli - Do you hold banks’ responsible for has a proven track record of good cies. We have been losing due to the this situation? governance and industrial and de - imports from China power sector. Banks have to follow the guide - ve lopment aspect as well. Power supply inputs, mobile batter - lines given by RBI in the revival Narendra Modi is the only alter - ies, toys, Ganesha statues, electri - and rehabilitation of sick industries, nate for the development in India. cal, electronic, computer but they are not following the rules. NDA has many times questioned peripherals… etc are being im - Bank managers are not taking UPA’s irrational rules and policies ported from China. risk. They are not giving impor - that led to skewed development of Basically, India has good busi - tance to the needy and deserving. the industry in the country. ness skill. But the long-term plans Targetted section is being humili - We are desperate to re-write the were not been implemented by ated even by the bankers. And even Indian glorious history as the re - UPA govt. retail marketeers are shelling out vival of industries is the only alter - Except Hyderabad no SSI cluster five per cent interest on day-by-day native, we believe. is in region. Many parts basis to micro finance system for For that, National industrial pol - of the Andhra region also don’t their existence. icy should be conceived and im - have clusters. This is attributed to plemented in right and earnest lack of good SSI policy by the gov - Narendra Modi is manner. ernment of Andhra Pradesh.. the only alternate for Though there are WTO condi - Research laboratories like ECIL, the development in tions in foreign trade business, we IDBL and other public sector un - have to work for the development dertakings are in Hyderabad. Based India. NDA has of Indian traditional industries. on this some associated sectors are many times We will include all these prob - surviving. questioned UPA’s lems into our Manifesto during the I am very much sure that only ensuing elections and will accord SMEs can boost the Indian econ - irrational rules and top priority for revival of indus - omy – there is no doubt. For that policies that led to tries. matter, no industry can go on its skewed development Andhra Pradesh industries have own but they have to be given im - special problems; BJP will spe - portance and priority. SSIs and of the industry in the cially address the problems and try micro industries are being grown country. to solve the problems after coming from forefathers. If we give impor - into power. tance to them it will definitely help The banking system for the retail It is not the problem of two re - in generating more and more em - market has not been systemized in gions. It is the problem of ‘Telugu ployment. India till today. Jaati’ Modern India also had the scope Loan without collateral security We are planning for a special of cost-based industries like toys, is only to paper but not put to im - study on the issues concerning AP saree weavers. But, now it is in a plementation. industries, sorry state. Walmart is being given loans at Industrial clusters, new clusters’ At Centre, and in Andhra low interests but the retail entrepre - re-organizations, creation and Pradesh the governments are not neurs here cough up high rate of in - make sincere attempt to solve the ready to provide skill development terest. problems at any cost. training institutes. Vocational engi - We will try to remove the na - neering colleges should work on High expectations are on Naren - tional industrial imbalances. par with professional engineering dra Modi from industrial sector. NDA plans and created system colleges. Then only the skill re - How do you assure the industries? helped UPA-I to serve India better quired for the SSIs will be devel - Yes, there are high expectations but that is no way related to the oped and can yield good results. from Narendra Modi. Because, he greatness of the Congress.

FEBRUARY 2014 I Industrial View I 9 Gujarat Ministry of State, Energy & Petrochemicals, Saurabh Bhai Patel addressing the State level convention on power crisis in AP. CHAMPIONING THE CAUSE OF INDUSTRY

ith the major political ous threat to monolith party like wards modernization of industry. party, Bharathiya Congress. In the initial days, BJP For it, modernization doesn’t WJanata Party (BJP) was looked upon as a baniya party mean at the cost of domestic in - emerging as a powerful force to trying to protect the traders and dustry for use of indigenous re - reckon with in Indian politics, all businessmen. But over the years, sources. And also it is averse to eyes are riveted towards the saf - the party underwent transforma - toe the line of encouraging the fron party, which is posing a seri - tion, shedding its inhibitions to - heavy industry by giving a raw

FEBRUARY 2014 I Industrial View I 10 deal to the small and medium in - dustry. Back in State, BJP has been actively participating in the programmes launched by MSME sector while highlighting their problems effectively across the State. Particularly when the State was afflicted by power crunch, BJP solidly stood behind the small and medium industry, by taking part in various protest pro - grammes organized at every length and breadth of the State. For a change, its State leaders brushed aside political issues and expressed solidarity with the suf - fering industries, which were on the verge of closure following the severe power shortage in the State. It is to be recalled while at the national- level, BJP top leader Muralidhar Rao vowed to breathe new lease of life into the State BJP president G. Kishan Reddy FEBRUARY 2014 I Industrial View I 11 dealt by the power problem. Though the government of the day assured that measures will be taken to protect the MSME sector, still several industries are languishing in a shambles, ren - dering thousands of persons job - less. Many a time the government assures of providing financial package to the MSME industry. But in reality, such as - surances are on paper only. The amount of Rs 1300 crores to be Senior BJP leader Bandaru Dattatreya (middle) taking part in rely given in 2011 to salvage the camp, organized by JAC. APK Reddy (left to Datta - MSME sector is still to be given. treya) also seen in the camp The step-motherly treatment given to the MSME sector is ailing MSME sector, down in power scenario in Gujarat. State causing a grave concern among Andhra Pradesh his counterparts BJP leaders like Bandaru Datta - the small and medium industries, are not leaving any stone unturned treya, Dr K Laxman, Meesala which are already caught in the to effectively champion the cause Chandraiah of Cherlapally In - death-trap. As an annual ritual of MSME sector.When a round dustrial Development Area were during the budget time, the gov - table conference on p ower crisis forefront in taking up the cause ernments at the Centre and State in the State was organized, Gu - of MSME sector. As is known, make a big announcement of jarat Power Minister Saurabhai several small and medium indus - providing financial package and Patel participated and made a tries in the State have turned other measures to boost the impressive presentation on the NPAs due to crippling blow MSME sector. But in vain. The

APK Reddy addressing a meeting where the State and National leaders of BJP are on the dais. FEBRUARY 2014 I Industrial View I 12 major handicap that is hindering the growth of MSME sector is lack of lobby at the Centre. While every field of development enjoys the patronage and protection of political masters, poor MSME sector is shorn of any sort of lobby both at the Centre and State. For instance, there is a powerful sugar lobby at the Centre to take care of the sugar barons’ and farmers’ in - terests. Union Agriculture Minis - ter Sharad Pawar played a key role in getting sanction of Rs.72,00 crores interest-free term loans for sugar idnustries. But unfortu - nately, there is nobody to pitch for MSME sector cause. Loans are announced but are not given. Measures are spelt out in a grandiose manner, but are not im - plemented. It is high time for the governments both at the Centre APK Reddy, President, FSME, submitting a memorandum to and State to come out of the shell senior BJP leader M Venkaiah Naidu, as BJP State President and take a pragmatic approach. Kisahn Reddy looks on

M Chandraiah, Vice President, Nacharam Industrial area workers union and also Cyberabad zonal president of BJ, along with senior BJP leader, Dr Laxman FEBRUARY 2014 I Industrial View I 13 Banking sector to s wilting SMEs of A

FEBRUARY 2014 I Industrial View I 14 Industrial View Bureau

he MSMEs are like the Cinderella- caught between govern - ment’s namesake patronage and the indifference of the indus - Ttries department. Industry, whether it is micro, small, medium, tiny or cottage, always toils with similar problems. Before the mighty and multi-national coveted bodies, the SMEs look like an unwanted crowd to the government at large. Except a few governments like Uttara Khand, Himachal Pradesh, no one heeds to the SMEs, when they are in need of money, energy, purchase patronage, tax concerns, tax holidays and all other relevant activities. The problems faced by the industrialists of this categories start from day one and they are perennial and eternal, with no solution. SME sector in Andhra Pradesh is waning due to slowdown in the market. Also, the production in many units has taken a hit due to the power shortage last year, due to which many units have reduced their manpower. According to ground realities, the industrial development in AP has been witnessing a downward trend and declined from 7.7 % during 2011-12 to 0.73 % during 2012-13. It was not only the registered manufacturing sector, but also unregistered manufacturing sector recorded negative growth. In registered sector, a steep decline from 9 per cent to a negative growth of 4.2 per cent, was evident. Severe power crisis faced by the industrial sector for more than 36 months coupled with high input costs, inflation, high interest rates, delay in implementation of projects and the global economic slowdown are the primary causes for the marginal performance of the industrial sector. The steep fall in rupee value too added to the woes. The micro, small and medium enterprises are worse affected. The prolonged power crisis, hike in tariff rates, imposition of FSA with ret - rospective effect from 2010-11 caused irrecoverable financial loss to SMEs. The operational costs of SMEs have increased. Fall in produc - tion with just 12 productive days in any month, and the obvious decline in orders made majority of SME accounts into NPAs. Most of these units have turned into either sick or incipient sick units. After setting up industries, AP Transco is pressurizing the companies to use only 60 per cent of the power sanctioned. In addition, if the power usage goes over the slab, AP Transco is penalizing the units by over five times of the standard charges. succor RBI reports show that 72 units had been turning sick every day. The reports further said that the total number of sick units in Andhra Pradesh at the end of June 2013 quarter was 19,481, with an outstanding credit of Rs 1256.56 crore as against 12,982 sick units with outstanding amount of Rs 833.16 crore as of March 2013 – 50 per cent increase in number of sick units in a span of 90 days. The total non-performing assets (NPAs) in the MSME sector which stood at Rs 2,589 crore in AP! March 2013, rose to Rs 3,025 crore in June 2013, recording an increase of 16.84 per cent, as per RBI data.

FEBRUARY 2014 I Industrial View I 15 SMEs face challenges as the cus - starting an industry of any category tomers demand a 90-day credit, is at its imperious peak. Usually, an whereas their suppliers provides industrialist acquires the tools of credit for 30 days. Hence, the cost production very easily, but not to of working capital is very high. The run them to producing. Banks are incentives provided to the industries the major offenders, because the should be given directly reducing working capital provision is not the procedural delays. A total of Rs. completed with the capital finance 1300 crore of incentive amount is and equipment. The unqualified blocked with the government. field officers with no in-depth In fact, at the other end, there are knowledge of running a business or more than 70 stringent enactments an industry, come as inspecting of - at central and state government ficers almost to kill the enthusiasm level and at the local self-govern - of the entrepreneurs. There is no ment level. Some of the enactments remedy for these type of problems. could empower the labour inspec - While the documentary credit time base. The flowcharts like cash tor, or a health inspector, or even a given by the banks appears appar - flowchart, business flowchart, de - police constable to arrest the MD of ently as a cushion, but in reality it mand flowchart, profitability flow - chart, should have a 60-month assessment with necessary checks and balances. A child birth takes 9 months in a mother’s womb; but, the banks prepare to dispatch an in - dustry to the tomb on 90th day. It is ver y uncalled for to declare the customer asset as NPA within three months duration. NPA dec - laration should be made from the Severe power crisis faced by the industrial 9th month of any default, but not sector for more than 36 months coupled 90th day. Once a bank declares an asset of a customer as NPA, the with high input costs, inflation, high customer loses his market credi - interest rates, delay in implementation bility and even the private bor - rowing becomes difficult. of projects and the global economic Now, the philosophy of Indian slowdown are the primary causes for the banking, with the advent of pri - marginal performance of the industrial vate players, turns pro-mighty, in a resemblance to the adage that sector. The steep fall in rupee value too feeding the elephant and starving added to the woes. the rabbit. Some egalitarian views to fill the needs and the demands an industry on even flimsy grounds. has negative impact. While a need of the sector should be originated Rather this gives the governments based banking is necessary nowa - at government level and also at an undue advantage on the employ - days, the banks’ whimsical ap - the bank level to deeply search ers, on the entrepreneurs and the proach does away with the needs. into the failure mechanism and other entities. In the process of appraising the loan convert the same into a success But, the level of corruption nor - of an applicant, the banks must ap - saga. Towards that goal let us all mally a business man faces while praise the application for 60- month awake! FEBRUARY 2014 I Industrial View I 16 Let the leader be proactive!

ndhra Bank, being convener of spirit. Indian banking system was linked SLBC, should set an example to with the spirit of nationalist movement. Athe other member- banks while Accordingly, the stalwarts of the national coming in rescue of the SME units with movement including Lalalajapathi Roy special packages on a (Punjab bank), Bhogaraju case to case basis to Pattabhi Sitaramaiah make them viable. (Andhra Bank), Dadabai Strangely, the Nouroji (Central Bank of bankers were insisting India), Firoz sha Mehta on collateral security (Oriental bank of Com - though it was not merce) pioneered banking mandatory for loans system in pre-independent upto Rs.1 crore for the India. Bharat Oversees SMEs. There were in - Bank was inspired by Sub - stances wherein the ramanya Bharathi and Alla - banks demanded a se - habad Bank was inspired curity for a meagre by Motilal Nehru. loan of Rs.1 lakh as Andhra Bank was well. The bankers founded on 20 November should sanction loans 1923. With the nationalistic to entrepreneurs as the Central Govern - initiation, the important nature of banking ment would repay the loan if the benefici - expanded into a social utility with patriotic ary did not repay it. theme. Banking in Andhra Bank emerged It is really interesting to know the story to be a wonderful apparatus for the ame - of Andhra Bank, which is one of the most lioration of the downtrodden, thanks to the inspiring stories in the banking history of later nationalization of the banks. Since India. When the organized banking of Andhra Bank played and now is also play - India was in the hands of the British and ing a pivotal role in delivering the fruits of other foreigners, the patriots like Sri Bhog - banking to the needy, Industrial View araju Pattabhi Seetharamayya, envisioned urges the leader to be proactive in rescuing India of Swadesi Banking and Swadesi the SMEs from extinction.

FEBRUARY 2014 I Industrial View I 17 SOLAR ENERGY THE FUEL OF FUTURE FEBRUARY 2014 I Industrial View I 18

FEBRUARY 2014 I Industrial View I 19 Solar Energy: successfully with solar energy. The SAVIOUR of SMEs What is cost Per Unit through Solar Energy? During What time does solar What is Solar Energy? And what The cost of installing 1 KW sys - power works and what about are its applications and advan - tem is Rs 65,000-70,000 only Night time? tages? without battery back-up. With 6 Solar power works between 8-5 Solar energy can be classified into hours battery back-up it can go up and the peak production is usually two areas: Solar power and Solar to Rs 1 lakh per KW. If we calcu - between 10-3. Solar power thermal heat. Solar power is the late the total no of Units generated doesn’t work after 6. However, electricity generated with help of and total cost of the system with there is a solution: we can provide Sun’s energy while Solar thermal appropriate time value, per Unit battery back-up, which can be pro - heat is production of steam with costs comes to Rs 4 for MW scale vided for any 6 hours. Battery the help of Sun which has several and Rs 5 for KW scale. back-up costs about Rs 9 per unit. industrial applications. Diesel genset costs about Rs 20- For tapping Solar power from Can Solar Power be used for 22 per unit now (and increasing Sun’s energy, the chief raw mate - Factories and Industries? every month). Whereas, Solar rial, Sun’s Rays are absolutely free Yes, Solar power can be used for power with 6 hours battery back- and are available in abundance. factories, and it’s a misconception up works out to half of that and Apart from providing clean source that it cannot be. For a solar power below. of energy, the costs for obtaining plant of 1 KW an area of 100 Sq this energy are invariably very less ft, is required while 100 KW PV Let’s take at requirement for a as only solar power system is system occupies 10000 Sq ft. if big house which has 3 ACs, 10 needed and even its costs have you have enough area , you can fans, 15 lights and 2 HP motor come down of recent. So much so, even install MW scale plant. and average house with 1 AC, 5 Solar energy is now at par with Motors of high capacities like fans, 5 lights and 1 HP motor and traditional electricity. 50 Hp and 70 Hp can also be run find out how much does it cost to

FEBRUARY 2014 I Industrial View I 20 shift to Solar power ? 3) There are other incentives like REC(Renewable While for a big house its cost about Rs. 10 lakhs, the Energy Certificates) certificates and Transmission small house costs about Rs 5.5 lakh -- for 25 years and wheeling waiver in theory but facing slight of free power for the day. Effectively you are peg - hurdles ging the cost of power at 6 Rs for the foreseeable fu - Apart from the above, there are bunch of extra in - ture which is a huge relief. centives for Captive Power plant.

What are the advantages of Solar energy for What is Captive Power Plant and what its benefits ? ‘Power Hungry’ Businesses? Captive Power Plant is basically a power plant , in With Solar power cost per unit is pegged at Rs 5 Per which the power generated in the plant is consumed Unit for 20 Years, Solar power is a boon to power by the investor instead of selling it to third party. The intensive businesses as they have control over the benefits are i)Cross Subsidy Surcharge and Elec - cost of power and can gain a huge competitive edge tricity duty waiver. over their competitors who don’t shift to Solar power. What is the concept of ‘Solar Crowd Funding’? At Terosolar we can have come up with an Innova - Solar power seems like lot of upfront cost, Do you tive Plan called ‘Solar Crowd Funding’ to protect have financing options available? even small consumers from power bill shocks. Ba - Yes , Solar power sounds like little high upfront sically 1 MW power will be divided amongst 5-20 costs. However the payback is about 4-5 years. Com - different persons instead of one big player investing ing to the financing, in case your requirement is the whole amount. greater than 50 KW , we can provide a good interest Lets take the case of shopping mall which con - rate of 9% for a 5-year period. sumes around 40,000 Units of Power per month ( but 1 MW produces 1,50,000 Units ), with the help of What are the incentives from Govt. for Solar en - Solar Crowd Funding , this shopping mall can get ergy? power at one of cheapest rates possible at 4 Rs per As of now, government gives lot of incentives for unit compared to 9 Rs per unit they pay currently, use of solar energy Apart from this they can get Accelerated depreciation 1) Accelerated depreciation (AD) of 80%. So in - benefits and others like CSS and Electricity Duty come tax is waived for 80% of the amount you in - waiver. Along with this they too can avail RECs with vest into Solar project , it could be a 10 KW or 1 which the payback should come down to 3-4 years, MW plant. After which you enjoy free power for next 20 years 2) Income Tax holiday for 10 years . Income earned while your competitors pay increasing power bills on Solar power projects will not be taxed for the every year. next 10 years

FEBRUARY 2014 I Industrial View I 21 With Solar power, day time is covered, are there any Solar Cooking is successfully used in Tirumala economical options for after 6 PM? and Shirdi Sai Temple, providing food to 20,000 Wind Power is a first order differential of Solar devotees every day. power. So basically when Sun sets the Wind power Solar Laundry and Air-conditioning is running in starts kicking in. Wind power along with Solar power ITC Maurya, Delhi successfully. should provide a great combination in continuous Every day we hear of many more places where power generation. Solar Thermal technology is being increasingly Along with this one other idea is that in case we used.All these applications run without electricity have generated substantial Solar power in Andhra saving on power cuts and can run extremely well Pradesh, we can use hydro power just to cater to the even in summer. peak power problem. Apart from the power generation capacities, one Solar Thermal Heat Technology sounds very excit - need to focus on Transmission losses and upgrading ing, explain more about it? the grid to Smart Grid. Solar Heat converts water into Steam, this steam can be used where ever steam is used. What is Solar Thermal Heating and what are its ad - Cooking: Solar heat provides a very efficient way of vantages? cooking compared to commercial LPG cooking. Solar Thermal heat is basically producing heat di - rectly from Sun instead of producing power. A Solar system that cooks 800 meals only costs Rs Basically direct heat generation is 50% more effi - 15 lakhs (which has 1 day storage ). cient than power production and hence gives better return on investment than Solar power panels. PAYBACK: 2 years Laundry: Hospitals and Hotels use steam for clean - ing clothes, Solar Heat can provide steam for Cloth cleaning PAYBACK: 2 years Steam Boiler : we can provide either dry steam or can provide very hot water at 90C which can offers huge savings on fuel PAYBACK: 1-2 years

Milk Pasteurization: we can provide milk boiling solution at very economic method for 30000 liters PAYBACK: 2 years Solar Heat has applications in Dairy Industry: Solar Milk Pasteurization, Solar hot water washing. Solar energy based sterilization Textile Industry : Yarning – solar hot air, Weaving – solar steam, Dying – solar hot water, Bleaching – Solar Thermal works by turning water into steam. solar hot water, Drying – solar hot air, Steam press - This steam in turn can be used for many applications ing – solar steam, Curing – solar steam like Cooking, Laundry, Washing Vessels, Air-condi - Food Processing Industry : Pasteurization – solar tioning and where ever Boilers are used. steam heating, Drying of vegetables / fruits – solar All these applications have pay-back of 2-3 years hot air, Frying of edible items – hot thermic oil, with life span of 20 years. Paper & Pulp Industry: Pulp making – solar hot Terosolar has access to the best technology in this water and solar steam, Solar Thermal Products in India. Pulp processing - solar hot water and solar steam,

FEBRUARY 2014 I Industrial View I 22 Water treatment and steam and power generation and effluent treatment – solar steam Chemical Industry: Distillation, evaporation and drying through solar steam, solar hot air, Effluent treatment through solar steam Pharmaceutical Industry: Steril - ization through solar steam or solar hot air , Granulation through hot air. Automobile Industry: Degreasing through solar steam,Drying through solar hot air, Heating of tanks through solar steam, Low temperature tempering through solar hot air, Paint Baking using solar hot air All these applications have pay- back of 1-4 years with a life span At Terosolar, we believe in What are the advantages of of 20 years. giving the best of service to our Solar Fencing? clients and customers Solar Fencing uses Solar en - Let us know about your Terosolar Terosolar is based out of Hy - ergy as input which is in Di - Company ? derabad and has operations in rect Current, this is very Terosolar is a Solar Marketing Bangalore and . useful for Industries, Agri - and Consultancy firm founded in Please contact us on culture especially where 2013. We believe the future of En - 91-9676700547, there is power Cut Problem. ergy is Solar Energy as it is one of 8884277117 or Solar Fencing like electrical cleanest and most abundant en - [email protected] fencing gives a mild shock ergy available. Terosolar wants to and disturbs the intruder but be a part of this energy of the fu - What is your Conclusion? doesn’t kill them like Alter - ture. W e have access to some of In conclusion I would like to say nating Current. the latest technologies in Solar that, if you switch to Solar Today, Solar Fencing comes with energy landscape and partnerships from Tomorrow on Solar Panel and a battery with some of the best EPC players You would be laughing when with 5 days of back-up so as in the field. Diesel Prices go up; to ensure 24/7/365 security. We have excellent financing You would be giggling when Beyond 1 km distance of options available which are un - Electricity Prices go up; perimeter Solar Fencing ac - beatable in the industry for proj - You would be smiling when tually turns out to be ects ranging from 10 Kv -10MW. Petrol Prices go up; cheaper than the traditional We have come up with an In - You will be saving the environ - Barbed wire Fencing novative business idea of Solar ment for our Kids and their kids; High Security Fencing Crowd-funding where in multiple You will be saving our country works by detecting the exact investors invest in a single Plant from Expensive oil Bills; location of intrusion along and share the benefits accordingly Your will be providing lot of with CCTV , High Fidelity (http://www.terosolar.com/crowd - jobs to your city, state and coun - Camera, Flood Lights acti - funding.php ) , and are marketing try. vation. it aggressively.

FEBRUARY 2014 I Industrial View I 23 Mekapati Rajgopal Reddy CMD

VDB PROJECTS (P)LTD Indira Nagar, Bengalore

FEBRUARY 2014 I Industrial View I 24 FEBRUARY 2014 I Industrial View I 25 RBI Dy Governor tells banks to help small borrowers in big way

BI D eputy Governor K C forming Assets (NPAs) indicating problems are not discriminated Chakrabarty, respected for that the deterioration in asset quality against. The entire approach to re - Rhis plain-speak, is a strong is driven by the medium and large structuring has to be reoriented to votary of the micro and small enter - enterprises. This is also reflected in show more compassion to the small prises (MSEs) and wants banks to the ‘impaired assets ratio’ which customers,” Chakrabarty told India’s show 'more compassion' to the small stands at 14.8 per cent for medium top bankers at a recent conference of borrowers while restructuring and large industries as compared to the Indian Banks Association. stressed loans, establishing that the 10.6 per cent for micro and small en - “Till late 90s, the banks captured ratio of impaired assets for the terprises as on March 2013. only basic data about asset quality medium and large industries is far “I strongly feel that the mecha - i.e. gross and net NPA ratios. It is greater than the micro and small nism of restructuring of small ac - only following the regulatory nudge firms. In his brilliant presentation counts needs a special mention in that the banks started collecting and before the top bankers at the IBA terms of corrective action needed. reporting data on flow of NPAs meeting recently, he told them how SMEs and other segments covered (fresh accretions and recoveries) banks are discriminating against the under the priority sector are an im - from 2001 onwards. Further, it is small and micro borrowers; portant segment of the economy as only recently i.e. since 2009, that Here are excerpts: Advances to they provide employment to a large collection of more granular data on the medium and large segments ac - number of people. It is important asset quality like segmental NPAs, count for about 50 per cent of total that the viable businesses under write-offs, recoveries etc., has bank advances and of total Non-Per - these segments facing temporary started, primarily due to regulatory

FEBRUARY 2014 I Industrial View I 26 impetus. Unfortunately, this initia - offs, in fact, contributed significantly write- off. tive in banks was limited to collect - to the reduction in the quantum of Masked in the overall recovery ing this data for the purpose of gross NPAs (in some years, write statistics that I have so far discussed, reporting to the regulator. Few ef - offs accounted for nearly 50 per cent are considerable divergences in forts were made to analyse and use of reduction) as compared to actual trends across different bank groups. this data internally for improving the recoveries and upgradations. Write The new private sector banks and quality of internal credit manage - offs as a percentage of terminal re - foreign banks recorded higher slip - ment. duction (reduction on account of page ratio (gross and net) immedi - Over the next few minutes, I will write-offs and actual recovery alone) ately after crisis but were able to present an analysis of trends in asset has consistently been above 50 per arrest the increasing trend in slip - quality and credit management of cent mark. pages through focused attention on banks based on this granular data. I These practices clearly engender credit risk management including will then attempt to draw some in - moral hazard issues as they reduce exit strategies. In recent years, the ferences from this analysis about the the banks’ drive to improve recovery ratio has risen sharply for PSBs. This quality of credit management in indicates that new private sector banks and how it has contributed to There is evidence banks and foreign banks were able the recent trends in asset quality. to manage their asset quality better Trends in Slippages and Recov - of increased use than PSBs as they were quick in ery : The flow of NPAs over the last of write offs by identifying NPAs, while PSBs re - decade shows that while the reduc - banks to reduce sorted to retrospective restructuring tion in NPAs was to the tune of Rs. NPAs, which is a to report lower NPAs initially. This 4.9 trillion between 2001 and 2013, practice eventually tipped the scale the accretions to NPAs were close to pointer to against the PSBs and thus, in hind - Rs. 6.3 trillion. If the entire period is weaknesses in sight, regulatory guidelines also con - split into two - 2001-2007 and 2008- credit tributed to the decline in the asset 2013, some interesting differences management. quality of the PSBs. emerge. While during the first pe - The bank group wise trends in riod, accretions to NPAs and reduc - efforts. They also result in leakages slippages are further re-enforced tion in NPAs are largely matched in the recovery process. This is evi - when the trends in slippages and (Rs. 1.6 trillion of accretions as com - denced by the fact that, on an aver - fresh restructuring are examined. pared to about Rs. 1.7 trillion of re - age, less than 10 per cent of the total The ratio of slippages and fresh re - ductions), during the later period the amount written off (including the structuring to advances rose sharply position altered dramatically with technical write off) is recovered fur - for the PSBs post crisis – from 5.2 accretions to NPAs far exceeding the ther bearing testimony to the poor per cent in March 2009 to 7.1 per reductions (about Rs. 4.7 trillion of recovery efforts of the banking sys - cent in March 2013. The ratio re - accretions as compared to Rs. 3.2 tem are the trends in the ratio of duced for foreign banks and new pri - trillion of reductions. upgradation to slippages. Even in the vate sector banks and stood at a There is evidence of increased use ‘good’ times, the ratio was never much more robust 1.8 per cent in of write offs by banks to reduce more than 20 per cent – a clear sign March 2013. NPAs, which is a pointer to weak - of poor standards of credit and re - It is, thus, clear that the weak - nesses in credit management. Write covery administration as well as a nesses in credit and recovery admin - offs were initially introduced as a certain amount of apathy on the part istration that existed prior to the tool for banks to manage their tax li - of banks in expending efforts to re - crisis, especially in the case of PSBs, abilities on impaired assets. How - vive accounts. The spirit of good were not dealt with in a timely man - ever, they subsequently emerged as credit management is to revive gen - ner. The crisis only exacerbated the a tool for banks to manage their re - uine problem accounts and not to re - problem. ported gross NPA numbers. Write tain them as NPAs for an eventual

FEBRUARY 2014 I Industrial View I 27 Property worth Rs 15L goes up Seemandhra stir takes toll on flames at Bajrant industry Jute Mills he two day bandh call in protest against massive fire broke out in the Bajrang Jute formation of a separate Telangana State mills of recently. The loss of which Tis costing production loss of close to Rs Ais estimated at Rs 15 lakh. 800 crore per day, according to industry esti - However, there were no casualties. Although mates. there was panic among people in the vicinity, fire - All the 13 districts of Rayalaseema and coastal fighters who had been trying to curb the fire since Andhra regions today came to a grinding halt morning finally managed to put it out. to protest the union cabinet's approval to a draft Almost 100 years old, the Bajrang Jute mill em - bill for formation of a separate Telangana state. ploys thousands of workers. “Although we haven’t made a formal assess - The mill is a unit of the ment, production loss can be estimated at Rs East India Commercial Co 500 crore in the coastal region and over Rs 225 Ltd, a public limited com - crore in the Rayalasyeema region. This is so pany incorporated in 1941, because the entire industry is participating in and promoted by Bhartia the bandh call – production houses, traders, family of Kolkata. shops, etc.” said Unit Secretary, Having carried out trad - Andhra Chamber of Commerce, Chukkapalli ing activity initially, the Prasad. company in 1945 went into The Chamber has appealed to the organisers manufacturing of jute prod - of the bandh, asking them not to include the in - ucts. It now has in its stable dustry in the agitation and strikes. “We cannot 3 jute units – Krishna Jute Mills, situated at ; afford such shutdowns. Once crippled, it is dif - Bajrang Jute Mills Ltd situated at Guntur; and Kr - ficult for us to make up the loss,” Prasad said. ishna Hessians, situated at Kottur, near Eluru, Transport services were hit with more than Andhra Pradesh. 12,000 buses of state-owned Andhra Pradesh EAST INDIA group is a premier manufacturer of State Road Transport Corporation (APSRTC) jute goods in India with an installed capacity of going off the roads in Seemandhra. about 80000 M.T. and annual production of 60000 Shops, petrol bunks, business establishments M.T. and education institutions were also shut in re - The combined turnover of the Group is USD 35 sponse to the shutdown called by YSR Con - million. The company employs 10,000 workmen in gress party for 24 hrs, Telugudesham Party for its jute manufacturing units. 48 hrs and Andhra Pradesh Non-Gazetted Of - Krishna Jute Mills and Bajrang Jute Mills manu - ficers (APNGOs) Association indefinitely. facture jute bags for packing of food grains, sugar and a small quantity of jute twine and yarn, which are mostly sold in the domestic market in India. (KNN/SD)

FEBRUARY 2014 I Industrial View I 28 Centre okays three NIMZs in AP

he Centre has given The report further added in-principle ap - that the Medak district zone Tproval for three na - could attract investments tional investment and up to Rs 43,000 crore. manufacturing zones pro - While in Chittoor and posed in Chittoor, Medak Prakasam district it is esti - and Prakasam districts of mated that the proposed Andhra Pradesh. zones could attract Rs According to a media re - 31,000 crore and Rs 43,000 port, the proposal for sanc - crore investments respec - tion of Rs 250 crore for tively. payment of advance for the The three zones are com - land acquisition for the pro - ing up on an area of over posed zones in Chittoor and 5,000 hectares each, ac - Medak districts has also cording to an official re - been agreed. lease last week.

FEBRUARY 2014 I Industrial View I 29 Vishakhapatnam port in for a big makeover

n a bid to create new employ - and associated benefits. The facil - ment opportunities in the state ity will mitigate dust pollution and Iand increase trade benefits, the increase operational efficiency as Government of India has approved the existing ore handling complex the implementation of a project to will be upgraded with latest equip - upgrade port facilities here. ment,” he added. The project would comprise of In a statement tabled in the upgradation of the existing facility Rajya Sabha today, Vasan said that at outer harbour and creation of the project will have a capacity of new facility at inner harbour for 23 million tonnes to cater to 2 lakhs handling iron ore. Dead Weight Tonnage (DWT) car - “The upgradation, operation and riers at outer harbour and up to maintenance of the facilities are ex - 65000 DWT carriers at inner har - pected to create new employment bour. opportunities” the Union Minister The estimated cost of the project for Shipping, G K Vasan said. is Rs 845.41 crore and will be fi - “The augmentation of capacity nanced by the Concessionaire. will also lead to increase in trade

FEBRUARY 2014 I Industrial View I 30 Food processing industry set to provide millions of jobs

he National Skill Devel - opment Corporation T(NSDC) has predicted that the food processing sector would require 17.8 million skilled workers by the year 2022. The projected requirement has been made based on reports of skill gap analysis studies on pri - ority sectors of the economy, commissioned by the NSDC, said Minister of State for Agri - culture and Food Processing In - dustries, Charan Das Mahant .. On the money disbursed for the food processing sector, “The Ministry has released an amount of Rs. 184.68 crore during 2012- in a year on the component of Modernization of Food Process - 13 and Rs 8.99 crore during Human Resource Development. ing Industries, provides grant-in- 2013-14 (upto 30.11.2013) to the State Governments have been re - aid for setting up of food State/ UT Governments under quested by the Ministry to utilize processing units at the rate of 25 the scheme of National Mission fifty percent (50 per cent) of per cent of the cost of Plant and on Food Processing (NMFP). HRD allocations under NMFP Machinery and Technical Civil “Under the scheme, State/ UT for skill development,” official Works subject to a maximum of Governments are empowered to data said. Rs 50 lakhs in general areas and utilize funds not exceeding 20 The Ministry under its 11th at 33.33 per cent subject to a per cent of total NMFP alloca - Plan scheme for Technology maximum of Rs 75 lakhs in dif - tions of the respective State/ UT Upgradation/Establishment/ ficult areas such as Jammu and Kashmir, Himachal Pradesh, Ut - tarakhand, Sikkim and North- Eastern States, A&N Islands, Lakshadweep and ITDP areas. This Scheme has been sub - sumed in the newly launched Centrally Sponsored Scheme of National Mission on Food Pro - cessing (NMFP) during 12th Plan (with effect from 1.4.2012) to be implemented through States/UTs.

FEBRUARY 2014 I Industrial View I 31 India to emerge as global leader in solar power sector For India to achieve its target of adding 20,000 MW of solar capac - ity by 2022, there is a need to ad - dress key issues such as structural constraints to commercial financ - ing, World Bank Country Director for India Onno Ruhl said. “In a short span of three years, India has made impressive strides in developing its abundant solar power potential. With more than 300 million people without access to energy and industry citing en - ergy shortage as key growth bar - rier in India, solar power has the potential to help the country ad - dress the shortage of power for economic growth,” he said. mphasizing that India will port. The report highlights several become a global leader in It has reduced the costs of solar challenges that could act as a bar - the development of solar energy to USD 0.15 per kWh, rier to India achieving its solar tar - E gets by 2022. These include lack power, World Bank said that it making India among the lowest will help India produce clean en - cost destinations for grid-con - of access to low cost financing; in - ergy and contribute to reducing nected solar Photovoltaic in the adequate solar infrastructure; lack emissions per unit of GDP by 20- world. of raw materials for several solar 25 per cent by 2020, over 2005 Growth in the energy sector is PV manufacturers; and an under - levels. key for India as more than 300 developed supply chain leading to The National million of the country’s people high inventory costs. Solar Mission Phase-1 (JNNSM) still lack access to electricity, and “Building on the success of is poised to make India a global industry cites energy shortages as Phase 1, the program now leader in the development of solar a critical barrier to growth, the re - needs to focus on promoting fi - power as its green growth agenda port added. nancing of solar projects by increased the installed capacity According to the report, Paving commercial banks, developing from around 30 MW to more than the Way for a Transformational shared infrastructure facilities 2,000 MW, a World Bank report Future: Lessons from JNNSM such as solar parks and identi - said yesterday. Phase 1, solar power can reduce fying comparative advantage of What is significant is that India’s dependence on imports of Indian manufacturing across JNNSM has been instrumental in diesel and coal for power genera - the supply chain”, said Ashish bringing down the cost of solar tion, reduce greenhouse gas emis - Khanna, lead energy specialist power to a level that is competi - sions, and contribute to energy and one of the authors of the tive across the world, said the re - security. report.

FEBRUARY 2014 I Industrial View I 32 release. The funding pattern comprises Dairy industry in entrepreneurship contribution, back ended capital subsidy and bank loan. The objectives of DEDS are to for Rs. 1400 crore generate self-employment and pro - vide infrastructure for dairy sector, set up modem dairy farms and in - boost by Centre frastructure for production of clean milk, encourage heifer calf rearing for conservation and development of good breeding stock, bring structural changes in the unorgan - ised sector, upgrade traditional technology to handle milk on com - mercial scale, provide value addi - tion to milk through processing and production of milk products. Under the DEDS, an amount of Rs 552.19 crore has been released as back ended capital subsidy to the beneficiaries for establishment of 1,50,908 dairy units upto Sep - tember 2013. The National Bank for Agricul - ture and Rural Development (NABARD) will be the nodal agency for implementation of the scheme. The bank will implement the n an effort to generate self-em - ployment opportunities in Idairy industry, the government will provide Rs 1400 crore for en - hancement of milk production, procurement and other infrastruc - ture required for the sector. The decision to give a boost to the employment oriented dairy Entrepreneurship Development scheme through all scheduled sector was taken by the Cabinet Scheme (DEDS) during the 12th commercial banks, regional rural Committee on Economic Affairs Plan with an outlay of Rs 1400 and urban banks, state cooperative (CCEA). crore covering activities such as banks, state cooperative agricul - “The Cabinet Committee on enhancement of milk production, ture and rural development banks Economic Affairs (CCEA) has ap - procurement, preservation, trans - and such other institutions, which proved modification and continu - portation, processing and market - are eligible for refinance from it. ation of the Dairy ing of milk,” said an official

FEBRUARY 2014 I Industrial View I 33 expansion of the national control programmes including addition of CCEA nod for one new component on control of classical swine fever under the scheme 'Livestock Health & Disease Control' will involve an investment plan to tackle of Rs 3114.00 crore for entire 12th Plan Period,” said an official notifi - cation. The scheme will ensure effective livestock health tackling of the issue of livestock health and strengthening the existing he Cabinet Committee on efforts to manage the animal dis - Economic Affairs has ap - eases, many of which are of trans- Tproved the proposal of the boundary nature with economic and Department of Animal Husbandry, zoonotic potential. Dairying and Fisheries for imple - Significantly, the scope of Foot mentation of the on-going Centrally and Mouth Disease and Peste des Sponsored Scheme "Livestock petits Ruminants (PPR) Control Pro - Health and Disease Control" in the grammes will be expanded to cover 12th Plan with certain modifications all the districts during 12th Plan, also and expansion of existing compo - including the Classical Swine Fever nents. Control Programme in the scheme. The move would have a positive The Scheme also envisages up- impact on the huge livestock popu - gradation of State Biological Pro - lation in the country, considering that duction Units and Disease their productivity is often inhibited Diagnostic Laboratories so as to by a variety of animal diseases make them Good Manufacturing which also affect international trade. Practices (GMP) and Good Labora - “Implementation of the existing tory Practices (GLP) compliant re - components with modifications and spectively.

FEBRUARY 2014 I Industrial View I 34 Move to promote organic farming, horticulture owards holistic development of the agricul - tural sector, the government has in place var - Tious schemes that promote organic farming, soil fertility, etc. “The Government is promoting organic farming through various schemes like National Project on Or - ganic Farming (NPOF), National Horticulture Mis - sion (NHM), Horticulture Mission for North East & Himalayan States (HMNEH), National Project on Management of Soil Health and Fertility (NPMSH&F) Rashtriya Krishi Vikas Yojana (RKVY) and also Network Project on Organic Farm - ing of Indian Council of Agricultural Research (ICAR)” said a release from the Ministry of Agri - culture and Food Processing Industries. The NPOF scheme provides assistance upto 25 per cent and 33 per cent of financial outlay upto a ceiling of Rs 40 lakhs and Rs 60 lakhs respectively is pro - vided as back ended subsidy through National Bank for Agriculture and Rural Development (NABARD) for establishment of bio-fertilizers production units and agro waste compost production units respec - tively. NHM is being implemented since 2005-06 in 18 states and 3 Union Territories for the holistic devel - opment of horticulture in the country. The remaining States are covered under HMNEH. NHM and HMNEH provide help for activities such as vegetable seed production, protected cultiva - tion, organic farming and INM/IPM measures for vegetables. RKVY, a vegetable Initiative for urban clusters (VIUC) is also being implemented since 2011-12 to address production and supply chain issues of veg - etables in state capitals, and identified cities with a population of 1 million and above. NPMSH&F provides financial assistance of Rs 500 per hectare to promote use of organic manure. The financial assistance is provided on the basis of project proposals received from states.

FEBRUARY 2014 I Industrial View I 35 Govt to unveil solar townships soon n an initiative to promote renewable energy and reducing greenhouse gas I(GHG) emissions, the government is planning to set up townships that are pow - ered by solar power energy. In its programme, 'Development of Solar Cities' a total of 60 cities and towns are proposed to be supported for develop - ment as “Solar/ Green Cities,” an official release from the Ministry of New and Re - newable Energy said. So far, an amount of Rs 21.23 crore has been sanctioned for preparation of master plans, solar city cells and promotional ac - tivities for 45 cities, out of which Rs 4.64 crore has been released. Further, an amount of Rs 25.55 crore has been sanctioned for execution of re - newable energy projects in 9 cities, out of which Rs 9.49 crore has been released for utilization by the concerned state nodal agencies and municipal corporations, it said.

FEBRUARY 2014 I Industrial View I 36 Banks’ norm on credit guarantee irks SMEs ndustries particularly in the terprises. the contention of this association SME segment, are being The fee payable to the Trust that there is too much ambiguity in Isubjected to guarantee fee under the scheme is one-time guar - the scheme which needs to be for bank term loans without col - antee fee of 1.5 per cent and annual looked up on. laterals, according to arbitrary service fee of 0.75 per cent on the “Our major issue is when we discretions of individual banks. credit facilities sanctioned. For take term loan from the banks, the In this regard, BBN Industries loans up to Rs 5 lakh, the one-time credit guarantee fee is charged on Association here has taken a guarantee fee and annual service the original amount of the term lead and raised the issue with fee is 1 per cent and 0.5 per cent re - loan even in the subsequent years several key banking authorities and spectively. of repayment when the total term intermediaries including the Re - “According to the CGTMSE loan gets reduced,” said Khurana. serve Bank and SIDBI. scheme, banks can lend up to Rs 1 “We have discussed the issue The Credit Guarantee Fund crore without collateral. Against with SIDBI as well, but they seem Scheme for Micro and Small En - that loan, the borrower has to pay a to be very adamant saying that they terprises (CGMSE) was launched guarantee fee every year,” said are strictly working according to by the Government of India to Senior Vice President of BBN In - the rules of the scheme,” he added. make available collateral-free dustries Association, Sanjay Khu - However, CGTMSE told the credit to the micro and small enter - rana. association that their issue is prise sector. Both the existing and “The discretion of the banks to logical and needs to be looked new enterprises are eligible to be recover from the borrower is on the upon. covered under the scheme. mutually agreed amount. This dis - The CGTMSE scheme was The Ministry of MSME and cretion creates a lot of problem and formally launched on August Small Industries Development confusion,” he said. 30, 2000 and is operational with Bank of India (SIDBI), established “They charge differently from effect from 1st January 2000. a Trust named Credit Guarantee different customers on the basis of The guarantee cover avail - Fund Trust for Micro and Small their will,” Khurana added. able under the scheme is to the Enterprises (CGTMSE) to imple - The association has also taken extent of 75 per cent of the ment the Credit Guarantee Fund up the issue with the Reserve Bank. sanctioned amount of the credit Scheme for Micro and Small En - The RBI authorities agreed with facility.

FEBRUARY 2014 I Industrial View I 37 AP transforming into a mecca of BUSINESS

FEBRUARY 2014 I Industrial View I 38 Chief Minister N Kiran Kumar Reddy who is making big efforts to woo the investors from different parts of the world to invest in the state of Andhra Pradesh has unveiled a slew of schemes to accelerate the pace of industrializa - tion in the State. Speaking on the eve of Partnership Summit 2012 held in Hyderabad, the Chief Minister said the State will soon turn into a epicentre of business growth as AP is fast turning into a investor-friendly destination.

ndhra Pradesh leads the The State has legislative and insti - While speaking at the Partnership country in awarding PPP tutional framework for infrastruc - Summit held in 2012I in Hyder - Aprojects and in attracting ture development under PPP mode. abad, the Chief Minister said that enviable quantum of investments Our State intends to derive the is his endeavor for building in for accelerated development of the maximum potential of PPP frame - ‘New Age Innovation Partner - State. The State is committed to work and at present 215 infrastruc - ships’ which will usher in mutually develop world class infrastructure ture projects involving an profitable outcomes for all of us. in ports, airports and natural gas investment of Rs. 81,000 crore Later he shed light on the advan - sectors and is emerging as a pre - (USD 15.6 billion) under PPP are tages the state of Andhra Pradesh ferred destination for investments under different stages of imple - has and provides to the potential in the country. mentation in the State. investors and corporate captains.

FEBRUARY 2014 I Industrial View I 39 WHY ANDHRA PRADESH Ports: Andhra Pradesh has a coastline of about 972 Kms and the State has recognized the im - perative need for increased port in - frastructure and the role that the private sector would be re - quired to play in de - veloping the same. Huge investments in the port sec - tor have become imperative so that infrastructure in the port sector gets modernized, up - graded and is expanded to allow handling of higher volume of cargo in the existing ports as well as in the new ports to be de - a Rich with 326 veloped. industrial parks and aAndhra Pradesh has one major SEZs Port at under a Vaccine Capital of the control of Government of India India and it is one of the coun - aIndia’s first Aero - try’s largest and busiest Port space, Semiconductor and known as East Coast Gate and related manufac - Way of India. Government of turing SEZ India is contemplating for es - aMost Reforming tablishing second Major Port State in the country’ and Ship Building facility in aHyderabad the ‘Most Business aStrategi - the State of Andhra Pradesh. Friendly City in India’ cally located in the south cen - aThe State has developed ports tral India, and is considered as aPromising opportunities and in - under the Public Private Part - vestment friendly environment a gateway to East and South nership at Krishnapatnam, Asia aReturns bloom in India, in Kakinada, Gangavaram and Andhra Pradesh they are guar - aA coastline of 972 KMs – Sec - Ports at Voderavu, Nizampat - anteed ond largest in India nam and Machilipatnam are aExcellent National and Interna - aThird largest economy in the under development. tional connectivity country aGovernment of Andhra Pradesh aProven vast Natural Gas re - aThe second state in the country is also notifying Captive Ports serves in the KG Basin to bring the legislation on the to meet the requirement of infrastructure Development aExcellent national and interna - major industries. tional connectivity, with a Enabling Act., for accelerated aInvestor would be free to fix world class international air - infrastructure development their own tariffs for various port (World’s No.1 Airport as under PPP Port services. Government will rated by ACI). aGenerated maximum employ - help in acquisition of the land ment in India and provides external connec -

FEBRUARY 2014 I Industrial View I 40 tivity upto the boundary of the Kakinada Port: The imports include Edible oil, Port. The operating Ports at Kakinada Fertilizers, Raw materials, POL, comprises of Kakinada Anchorage Iron ore, Coal, Wood pulp, Ma - Krishnapatnam Port: Port and Kakinada Deep Water chineries, Chemicals, etc. The Krishnapatnam Port is situated at Port. The Anchorage Port is under Port is capable to export bulk car - a distance of 24 Kms from the control of the Government of goes viz., Iron ore, Cement in Potti Sreeramulu Nellore Dis - Andhra Pradesh and having nec - clinker, Minerals, such as Ben - trict, southern most coastal district essary infrastructure to handle 4 tonite, Feldspar etc. It is an ISO in the State and 200 Kms north of Million Tones of cargo. The prin - and ISPS certified Port. Port, commissioned dur - cipal commodities being Fertiliz - ing 2009. The Port infrastructure ers, Maize, Rice, Cement etc. Gangavaram Port: is designed to handle super cape The Deep Water Port was estab - Gangavaram Port developed size vessels. At present, Coal, Iron lished during 1999 as part of pri - under Public Private Partnership Ore, Fertilizers, Agri-Products, vatization initiatives by the (PPP) mode during 2009, is a Granite, Project Cargo, Contain - Government and presently being most modern, all weather deep ers, Edible Oil etc., are being han - operated by M/s.Kakinada Sea - water multipurpose World class dled. Port has excellent ports Ltd., The Port is located 170 Port which offers major tangible connectivity to National Network Kms. South of Visakhapatnam and benefits to Indian Industries of Railway Line and National 650 Kms. North of Chennai. It is through deeper draft of 21 Mts., Highway (NH-5) through dedi - an all weather deep water port advanced cargo handling equip - cated railway line of 19 Kms to which can handle 50,000 DWT ment and highly efficient opera - the Chennai-Kolkata main Rail - with all the supporting port infra - tions. The Port is located in way Line and 4-lane road of 26 structure. The port is well con - Visakhapatnam and connected to Kms from Port to NH-5. nected to Rail and Road net work. NH5 with an exclusive 4 lane ex -

FEBRUARY 2014 I Industrial View I 41 press way and with 2.3 Kms Rail 20 Kms from the Port. The Port is The Port is situated in Srikakulam linkage to the main broad gauge about 45 N.M. to the north east of District on the northern bank of national network of Chennai, Visakhapatnam. The Port can be de - Tekkali creek. This Port is about 80 Visakhapatnam, Howrah rail cor - veloped as lighter age and fishing port. NM to the north east of Visakhapat - ridor. The Port is equipped to han - The market studies carried out indi - nam. The nearest NH5 is at 20 Kms dle coal and fully mechanized Iron cate that the import commodities and nearest Railway line is Naupadu ore handling system for handling which can be handled at this port are junction about 7 Km from the Port. It vessels upto 2,00,000 DWT. Fu - Crude, Soya oil, Raw cashew, Iron has good potential for development of ture developments include plan and Steel scraps. The export com - lighterage and fisheries Port. The mar - for handing of dry cargo, break modities can be Soya meal, Cashew ket studies carried out indicate that the bulk, liquid and container cargoes. kernel, Granite, Ferro products, Jute commodities which can be handled and Iron products, POL and chemi - through this Port include LPG, LNG, Kalingapatnam Port: cals. Thermal coal, Cooking coal, Lime The Port is situated in Srikakulam stone, Fertilizers, Soya meal, Cashew District on the bank of Vamsad - The Port is proposed to be kernel, Granite, Iron products etc. hara river. The nearest NH5 is developed under PPP mode. The Port is proposed to be about 20 Kms and Railway line is Bhavanapadu Port developed under PPP mode.

FEBRUARY 2014 I Industrial View I 42 Airports airport at free of cost to Air - Andhra Pradesh, being the third ports Authority of India, be - New Proposals largest economy and strategic lo - sides supply of water & a Aviation University: Establish - cation in the country, is keen to electricity and security arrange - ment of Aviation University in develop air linkages with the ment at free of cost for 5 years. Hyderabad for imparting train - emerging Growth centers of the Regional Airports ing to Aviation Personnel. The State. Government of Andhra aGovernment of Andhra Pradesh matter is under examination in Pradesh has already developed also plans to set up Regional consultation with the Govern - world class International Airport Greenfield Airports, for better ment of India. viz. Rajiv Gandhi International linkage and for triggering eco - aDevelopment of Heliports / He - Airport at Shamshabad, Hyder - nomic growth in the State. Var - lipads: Government of Andhra abad under PPP route with State ious incentives are proposed to Pradesh is planning to develop support. be given for Aviation Sector in existing Helipads / Heliports the State viz. Land, Infrastruc - connecting Pilgrimage / Tourist Tirupathi International Airport ture and Fiscal support. Centers in the State. Upgradation of Tirupathi Interna - tional Airport Presently, Govern - ment of Andhra Pradesh has extended support for upgradation of the existing Airport at Tirupathi to International standards planned by Airports Authority of India dur - ing 2010.

Rajiv Gandhi International Air - port at Shamshabad, Hyderabad Non-Metro Airports aGovernment of Andhra Pradesh is supporting the Aviation sec - tor in respect of some of the Non-Metro Airports through they are under the control of Airports Authority of India. These are all expected to mate - rialize during XII plan period. aIn line with the above, Govern - ment has entered into MOUs with Airports Authority of India in 2007 for up-grada - tion/modernization of Non- metro Airports at Vijayawada, Rajahmundry, Kadapa & Warangal. aAs per MoU, Government of Andhra Pradesh will provide additional land required for ex - pansion/up-gradation of the

FEBRUARY 2014 I Industrial View I 43 Natural Gas a17 Geographical Areas (Gas) Exploration and Production Gas Transmission Grid have been identified for City The State owned Andhra East-West Pipeline (Kakinada- Gas Distribution (CGD) for Pradesh Gas Infrastructure Corpo - Maharashtra-Gujarat) has already transport, domestic, commer - ration (APGIC) has won four been laid and it is in operation. I) cial and Industrial use. Propos - blocks in KG basin along with Kakinada-Haldia, II) Kakinada- als for 9 Geographic Areas are other consortium partners in KG Chennai Pipelines were awarded submitted to Petroleum and basin along with other consortium to an entity by Government of Natural Gas Regulatory Board partners in NELP VIII round bid - India and III) Central India (PNGRB) and 8 more are ding conducted by Directorate Pipeline (Kakinada-Madhya under preparation, The districts General of Hydrocarbond (DGH). Pradesh via Bhilwara) is under ex - covered in the first 9 Geo - The other consortium partners in ecution. graphic Areas are: 1) Srikaku - these four blocks are ONGC, BG, Thus, the entire State of lam-, 2) OIL and NTPC. Total area cov - Andhra Pradesh can be covered Visakhapatnam-North of East ered under four blocks is 4578 Sq. with pipeline network and City Godavari, 3) Krishna-West Go - Kms. Total investment required to Gas Distribution (CGD) network. davari-South of East Godavari, complete the Minimum Work Pro - Keeping the above gas Trans - 4) Khammam, 5) Karimnagar- gramme is approximately USD mission Grid in view, APGIC has Warangal, 6) Rangareddy- 405 Million. The E&P activities already taken action to fully tap Medak, 7) Nalgonda, 8) are at different stages in these four the potential and initiated the fol - Chittoor and 9) Mahaboobna - blocks. lowing action: gar.

FEBRUARY 2014 I Industrial View I 44 tion. Authority RLNG Terminal in the Coast of aEntrusted with the responsibility Andhra Pradesh of conceptualizing and identify - aState Government is keen to es - ing projects and ensuring their tablish an RLNG Terminal in conformance to the provisions the Coast of Andhra Pradesh laid down in the AP IDE Act, keeping in view the growing 2001 gap between the demand and Creation of Infrastructure & In - supply of Natural Gas. vestment Department in 2005 aAPGDC got the mandate to es - aTo achieve development and tablish initially an FSRU Ter - growth objectives of the State minal and subsequently a by creating adequate and ‘state- permanent land-based Termi - of-the-art’ infrastructure facili - nal in the State of Andhra ties in the areas of Ports, Pradesh. Airports, Natural Gas aAPGDC has initiated the aTo act as a single window process of finding suitable lo - agency for clearing all PPP pro - cation and scouting for Strate - posals gic Partners who got Creation of Infrastructure Corpo - considerable exposure in estab - ration of Andhra Pradesh (INCAP) lishing LNG importation Ter - in 2005 as a service agency to the minals including FSRU. Department, envisioning” Better Institutional Arrangements in the growth for Shared Prosperity” State aTo design, develop, promote aEnacted Andhra Pradesh Infra - and monitor infrastructure proj - structure Development En - ects in the State through Public abling Act (APIDE Act) in Private Partnerships and supe - aThe remaining 8 districts will 2001 rior investor returns. be covered by proposed 8 Gas. aProviding enabling environment aINCAP has been a Transaction aThe preparation of Regional for rapid development of phys - Advisor to Government of State Grid covering all districts ical and social infrastructure Andhra Pradesh. of Andhra Pradesh is in progress. aTo attract private sector partici - aStrengthened project structuring pation in presenting bankable skills by entering MOUs with aAPIIC is also a partner in projects International Finance Corpora - Bhagyanagar Gas Limited tion (IFC), part of World Bank (BGL), which has already aInviting private players in de - signing, financing, construc - group and Infrastructure Devel - taken up the City Gas Distribu - tion, operation and opment Finance company lim - tion in 3 major cities of Vi - maintenance of infrastructure ited (IDFC) a premier jayawada, Kakinada and the projects in the state Infrastructure group in the entire district of Hyderabad. aIdentifying generic project risks country. aAndhra Pradesh Gas Distribu - Present assignments tion Corporation Limited aDetailing various incentives (APGDC) is a Joint Venture of aDetailing the project delivery aAdvising on the Development of all non-major ports, APGIC and GAIL Gas Lim - process ited. APGDC) keen to partici - aDetailing procedures for recon - aAdvising on the Development of all regional Airports, pate in the business of CGD ciliation of disputes Networks, Trunk Pipeline and aReducing administration and aDevelopment of Andhra Pradesh Bhavan in New Delhi Regional Grids, CNG and im - procedural delays. port of LNG and its regasifica - Creation of The A.P. Infrastructure

FEBRUARY 2014 I Industrial View I 45 BHEL to ramp up vendor base

he Bharat Heavy Electricals Limited (BHEL) has ufacturing firms across the country and abroad to be new Tproposed to expand its vendor base so that it can reg - vendors. The dealers could be Indian stockists, traders, ularly receive quality and competitive inputs. It procures distributors, dealers, authorised agents, channel partners, materials and components on a regular basis from sup - Indian sales offices or subsidiaries of registered foreign pliers spread all over the world. For this purpose, it is principals. backed by a strong supplier-base which is continually up - BHEL is engaged in the design, engineering, manu - dated. facture, construction, testing, commissioning and serv - In this regard, the BHEL project engineering and sys - icing of a wide range of products and services for the core tem division (PE&SD) BHEL has invited bids from man - sectors of the economy.

FEBRUARY 2014 I Industrial View I 46 Now plastic parks to come up in Odisha, MP, Assam and TN

he Government of India has approved the setting up of Tfour plastic parks in Odisha, Madhya Pradesh, Assam and which manufacturers of tele - com, automobile and others will use to source raw material. “Final approval has been given for setting up of Plastic Parks in Odisha at Siju Village, Kujanga Tehsil, in Jagatsinghpur District and in Madhya Pradesh at Tamot Vil - lage, Gohargunj Tehsil, of Raisen District. ‘In principle approval’ has also been accorded to the proposed plastic parks in Assam, Tinsukia District and in Tamil Nadu at Voy - alur Village, PonneriTaluk of Thiru - vallur District),” said Minister for Chemicals and fertilizers, Srikant Kumar Jena in the Lok Sabha today. The Government of India, he said provides grant funding up to 50 He pointed out that while the vir - proximity to market or PCPIR per cent of the project cost, subject gin plastic bags are not per-se inju - zone where raw material availabil - to a ceiling of Rs 40 crore per proj - rious to health or hazardous to ity is preferred. PCPIR- Petro - ect under the scheme. environment as plastic is a chemi - leum, Chemicals and A major area of concern is the cally inert substance; recycled / Petrochemical Investment Region indiscriminate littering of used plas - coloured bags are. (PCPIR) is a flagship scheme of tic bags and the absence of organ - The government had launched the department of chemicals and ized segregation/cleaning of plastic the National Plastic Park Policy in petrochemical to develop projects wastes in urban centers. 2010 and modified it in 2013. The to ensure raw material availability “Accordingly, the Ministry of policy seeks to organise the plastic of the petrochemical and plastic Environment and Forest has noti - manufacturing and processing in - industry. fied the Plastic Waste (Management dustry by setting up dedicated The setting up of plastic parks and Handling) Rules, 2011 under plastic parks. States, which did is certainly timely as most units in the Environment (Protection) Act, not have special zones for the sec - the industry belong to the small 1986. These Rules regulate the tor, were asked to earmark land for and medium category. While manufacture and usage of certain such parks. they produce and process plastic, plastic products, and the manage - The projects had been short - there is no common hub for them ment of plastic waste,” Jena said. listed depending on either their to source raw material.

FEBRUARY 2014 I Industrial View I 47 Centre moots MSME varsity in Hyderabad

Ongole, Tirupati and Medak. Participating in the Golden Ju - bilee Celebrations of Ni-MSME, Chief Minister N Kiran Kumar Reddy who was also the chief guest on the occasion, said that during the past 3 years an esti - mated Rs 1,40,000 crore worth of industrial proposals were cleared. Among those industrial proposals cleared were those of PEPSI, Cad - bury, ISUZU-MISUBISHI and Mahindra & Mahindra. He also added that despite all the agitations, they have been in a position to provide jobs to nearly 4,20,000 in private sector even since he was sworn in as Chief Minister of Andhra Pradesh. “We had major power crisis during the last summer. However, this summer there will be no he government is planning was encroached upon by the peo - power cuts to the industry because to convert the National In - ple in and around Ni-MSME we have well planned measures in Tstitute for Micro, Small Campus at Hyderabad. place capable of producing 2000 and Medium Enterprises (Ni- Addressing the gathering, the mw power through thermal MSME) here into an MSME Uni - Minister also requested the Chief sources. versity. Minister to provide land for a tool Other dignitaries present on the This was announced by Union room at Vishakhapatnam with a occasion were Joint Secretary, Minister of State for MSME, K H budget of Rs 150 crore. If the land Ministry of MSME, Surendranath Muniyappa at the Golden Jubilee is provided within a couple of Tripathi, Minister for Higher Ed - Celebrations of Ni-MSME here weeks, foundation arrangements ucation, K Pardasaradhi, Joint recently.. would take off, with no loss of Secretary Ministry of MSME, He also requested the state gov - time, he said. Anil Kumar, CEO, KVIC, Mum - ernment to provide 100 acres of Muniyappa said 18 industrial bai, Uday Pratap Singh, MSME land in the state capital to begin manufacturing zones are in the Board Member G V Reddy and work on the proposed university pipeline out of which 3 will be es - Director General Ni-MSME, M or evict the land (50 acres) which tablished in Andhra Pradesh in Chandrashekar Reddy.

FEBRUARY 2014 I Industrial View I 48 Govt mulls preferential treatment for SMEs in IT investment regions pecial consideration will be given to the small market is likely to sustain vendor investment, with the and medium enterprises (SMEs) for inclusion in SMEs becoming more sophisticated in their demand for Sthe IT investment regions to come up in Andhra customized software and applications to increase busi - Pradesh. ness flexibility,” it said. Despite the difficult economic conditions, the most The report further said that, in the broad domestic obvious growth opportunities are in the public sector software market, telecom, government, manufacturing and among SMEs, said Government of Andhra Pradesh and retail are key verticals driving demand, with enter - in its detailed project reports (DPR) submitted to the prises focusing on improvement of customer-service Centre in October on the IT investment Regions (ITIRs) experience, efficiency and decision support. development authority with Andhra Pradesh Industrial It also focused on some of the key challenges by Infrastructure Corporation (APIIC) and other stakehold - the IT industry in India – maintaining confidentiality ers. of sensitive client data such as bank, health and other “The ITIR is expected private details; maintain - to develop into a key in - ing competitive edge dustrial region IT, ITES over low cost destina - and Electronic Hardware tions such as the Philip - manufacturing sectors. pines, Malaysia, China, Special consideration will Russia; matching the be given to accommodate supply of trained man - Small and Medium Enter - power to meet the spi - prises (SMEs) in the pro - ralling demand; posed ITIR,” said in a diversification to new release. areas of business; infra - It is expected to attract structure bottlenecks in investments to the tune of areas such as seamless Rs 2 lakh crore, generate internet connectivity, un - revenues of Rs 3.11 lakh interrupted power and crore, besides creating direct employment to 1.5 million water supply, transport connectivity; and tax holiday people over the next 25 years. withdrawals. “It is estimated that the Indian domestic manufactur - “Even as global enterprises increasingly look to ing companies can expand the production to USD 100 broaden the base in their choice of countries from a risk billion by 2014 and USD 400 billion by 2020 with a mitigation perspective, the size, quality and scale of the very significant contribution to GDP, at 20 per cent for Indian labour pool continues to differentiate it from all 2020, at par with other economies. The electronic hard - other countries,” it states. ware industry aspires to seize 20 per cent of the manu - The major cities in India which house IT & ITeS are facturing opportunities Indian domestic sector Bangalore, Chennai, Hyderabad, , Pune, Delhi provides,” said the report. and Kolkata. Annual exports from the proposed ITIR are esti - However, leading companies are now diversifying mated to be about Rs 209,221 crore and Rs 14,401 crore and moving delivery centre locations beyond Tier 1 from IT and Electronic Hardware cities to Tier 2 and 3 cities, to achieve better cost com - Manufacturing(EHM) respectively, in the year 2035. petitiveness and less employee turnover. “Despite the difficult economic conditions, the local Some of the key factors for the concentration and

FEBRUARY 2014 I Industrial View I 49 growth of IT/ITeS industry in these cities are- estab - par with their medium and major counterparts in the AP lished connectivity to international and other domestic ITIR area. cities; well-established physical and social infrastruc - The growth of the IT sector had fuelled the growth ture - power, water, telecom etc; well defined real estate of other sectors as well and has much wider impact on laws, regulations on ownership and transfer of property. the economy. According to a NASSCOM report, “… Through the ICT Policy, Andhra Pradesh aims to at - every Re 1 spent by the IT/ITES sector (on domestically tain leadership in the information economy by devel - sourced goods and services) translates into a total output oping local enterprise and attracting best-in-class ICT of about Rs 2 in the economy…” companies and institutions, focussing on development The ITIR policy of the Centre visualizes that the of human resources and infrastructure. State Government would play the lead role in setting Under the ICT policy some key areas like start-ups up of the ITIRs. The infrastructure would be created/up - and SMEs, IT SEZs have been identified as being crit - graded through Public-Private Partnerships to the extent ical for providing the right ambience for attracting in - possible. vestments into the State and have been provided As per the policy, Central Government will provide incentives. the necessary viability gap funding for external physical Both, the ICT Policy 2010-2015 and Electronic infrastructure through existing schemes. The Depart - Hardware manufacturing Policy 2012-2016 of AP Gov - ment of Electronics and Information Technology ernment provides requisite impetus to the MSMEs in (DeitY) is the nodal Department of the Government of IT, ITES and EHM verticals to setup, grow and pro - India to process proposals relating to setting up of vides level playing field to sustain their operations, on ITIRs.

FEBRUARY 2014 I Industrial View I 50 Technology in Banking The Next Frontier The day is not far off when the banks would be viewed more as technology companies offering banking products and services! While bank branches would continue to function, they would reorient themselves as relationship centers rather than routine banking service providers. In the banking industry, technology adoption has graduated from being viewed as a Cost Centre to a Profit Centre. And rightly so! With a growing number of domestic banks now moving towards centralization and begun offering B. Brahma Reddy innovatively packaged multi-channel products involving huge investments, IT Governance has become the norm of the day, says B. Brahma Reddy , Syndicate Bank.

FEBRUARY 2014 I Industrial View I 51 s the success of banking gressively started pursuing tech - state-owned banks, the Core is now getting increas - nology-based service offering Banking Solution (CBS) has been Aingly dependent on soon. However, unlike the two, in implemented in a phased manner. proper adoption and utilization of case of the public sector banks or According to the latest estimates, technology, IT Governance has as - PSBs, technology adoption had CBS covers around 90 per cent of sumed great significance. IT Gov - been dictated more by regulatory the bank branches accounting for ernance, simply put, refers to a legacy. Nonetheless, the rapid nearly 98 per cent of the business subset of Corporate Governance, strides made by the technology volume. Technology - enabled which is concerned about ensuring sector and their swift adoption by services such as ATMs (including appropriate direction and control the competitors since the past shared ATMs aided further by the of IT activities, doing checks and decade have forced the public sec - National Financial Switch initia - act using performance metrics, tor banks also to get their acts to - tive of RBI), Internet banking, key goal indicators, maturity mod - gether and jump onto the tech anywhere branch banking, credit els, etc. This article attempts to bandwagon by launching IT-en - cards debit cards, etc., are being evaluate the current status of tech - abled products and services. increasingly offered by these nology adoption by the banks in Today, almost every PSB is in a banks. For a record, there are cur - India, the trend and opportunities, hurry to be ahead of others in rently more than 16,000 ATMs and the challenges ahead. terms of adopting and launching across the country and 17 million Internet connections with around 30 million users.

Trends and progress Technology has enabled the banks to conceptualize, deliver, manage and integrate their prod - ucts in line with the customers’ needs. A range of services is now being provided to both retail and corporate customers covering dif - ferent financial products, sweep- in/sweep-out facilities, channel financing, straight through pro - cessing, etc., to name a few. The multi-channel banking has ac - quired new dimensions, which in - clude third party payments, such as utility bills, through different channels including ATMs (the new ATM technologies come with nearly 150 types of offerings), mobile banking, etc. Further ex - tension of RTGS (Real Time Gross Settlement) in scope and new services using the latest tech - width and the introduction of the A technology-led growth nology platform, including mobile cheque truncation systems should While the foreign banks operat - banking, Internet banking, CBS, raise the customer expectation bar ing in India made the beginning, etc. In fact, keeping in view the even higher. The day is not far off the new private sector banks ag - large branch network of these when the banks would be viewed

FEBRUARY 2014 I Industrial View I 52 FEBRUARY 2014 I Industrial View I 53 more as technology companies of - a period of time. There is, realis - fering banking products and serv - tically speaking, no single bank - ices! ing solution available to take care While bank branches would of the enterprise-wide require - continue to function, they would ments like SAP in the manufac - reorient themselves as relationship turing sector. In such centers rather than routine bank - circumstances, the option seems ing service providers. More tech - to be to go for the best-of-the- nology spends are expected in the breed solutions. As the lifecycle near future on areas such as imple - One of the major of the technological products is mentation of large data centre, ex - becoming shorter, banks have to pansion of CBS, Business challenges had been consider the costs of huge invest - Continuity Plan (BCP) / Disaster the requirement to ments made in the hardware and Recovery Plan (DRP) installa - integrate several software visa-visa their expected tions, IT Security, Electronic Data benefits Unfortunately, the re - Interchange (EDI), Storage solu - applications sponse of the customers to the tions such as Storage Area Net - developed on varied services offered through the new work (SAN)/ Network Access platforms for catering channels, can be fickle. For exam - Storage (NAS) to take care of the ple, as per a survey conducted hundreds of terabytes of electronic to different services sometime ago by C-Fore for Out - data being generated, cheque trun - over a period of time look Money in the four metros cation solutions, compliance to and Bangalore, 63 per cent of the regulatory standards like Basel III respondents used ATMs while 80 implementation (CRM) solutions, per cent went to branches. The data warehouse & data mining utilization of tele/net banking was tools, channel integration, global just around six per cent. The in - treasury, performance monitoring sufficient penetration may be at - tools, etc. Another area where tributable to the lack of technology could play a signifi - awareness, fear, need for person - cant role would be M&As (merg - tion kiosks with local language alized services, unrealistic expec - ers and acquisitions) wherein and voice facility, call centers, e- tations and in some cases (like banks with techno-synergy can marketing of products and serv - need for java-enabled mobile combine/amalgamate straight ices through the bank’s payment handsets), and upgradation cost of away. An example of the same is gateways, etc., this can be nar - equipments with the customer. All the acquisition of Global Trust rowed down further. these point to the need for appro - Bank by the Oriental Bank of priate publicity and education ex - Commerce in 2004. Challenges ercise. Further, the new It is pertinent to note that, on an While development in technol - dispensations should be carefully average, IT constitutes about 20 ogy has opened up new windows planned to prevent channel canni - per cent of the total expenditure of opportunities for the banks, balization unless otherwise they of the banks. Today, major oppor - they have also brought along a benefit in the long run. tunities lay in the outreach to rural whole set of challenges to deal Security is a major issue in a centers through financial inclu - with. One of the major challenges technology-based, networked en - sion, which could bridge the dig - had been the requirement to inte - vironment. As per a study con - ital divide between India and grate several applications devel - ducted by the Research Bharat (rural India). With the ad - oped on varied platforms for International, 81 per cent of the vent of biometric ATMs, informa - catering to different services over surveyed business units agreed

FEBRUARY 2014 I Industrial View I 54 that information/data is a key business asset and 86 per cent perceived impact of crisis caused by failure of systems, etc., as drastic. An insecure system can expose a bank to serious opera - tional, regulatory and reputational risks. While some frauds may re - quire computer expertise, most losses are caused by simple meth - ods like identify theft through so - cial engineering. An analysis of computer-related frauds leads one to the conclusion that most com - puter criminals are employees of the same organization. Bugs in system or application software also cause insecure environment. While it may be difficult to alto - gether avoid the limitations caused by the system software, proper support agreement with the application vendor and through user acceptance testing should limit the bug menace.

The rule of 20/80! In the banking industry, technol - ogy adoption has graduated from being viewed as a Cost Centre to a Profit Centre. The line between IT and non-IT functions has got increasingly blurred. The person - nel with technical expertise have to know the business and the busi - ness personnel should be familiar investments, IT Governance has fiting the customers and, in the well with the technology environ - become the norm of the day. process, help it sustain its very ment. Thankfully, it is already being growth and survival. This needs The limited security-oriented practiced by the top managements to be considered against the fact perspective of information tech - of the banks in some form several that nearly 70 per cent of all cus - nology has given way to wide IT-related subjects finding place tomer defections are a result of areas such as value for invest - in the agenda of most Board low quality customer service. ment, performance measurement meetings. After all, it is estimated that it etc. As more and more Indian It would be an understatement costs 5 times more to acquire new banks are moving towards cen - to say that adoption of innovative customers than to retain the exist - tralization and beginning to offer technology would enable a bank ing ones and that about 20 per innovatively packaged multi- to perform its business in an or - cent of the customers contribute channel products involving huge derly and effective manner, bene - to 80 per cent of the profits.

FEBRUARY 2014 I Industrial View I 55 No semblance of normality in near future

Industrial View Bureau committee. “Even after consenting with the tate Level Bankers’ Com - decisions of SLIIC and SLIIC sub- mittee (SLBC) meeting, committee, during the meetings, Sheld on January 25 in Hy - the banks are not honouring them,” derabad, thoroughly discussed the he lamented. problems faced by small and According to him, the third gen - medium enterprises (SME) in the eration entrepreneurs are worse hit context of many hardships prevail - by the political uncertainty and ing in Andhra Pradesh. Represent - Power crisis persisting for the last ing the problems of the SMEs on four years in the state. He urged behalf of Federation of Small and the bankers to be discriminative Medium Entrepreneurs – AP, its between good and bad defaulters. the representations made by president APK Reddy found no “Though the accounts have FSME- AP and withheld the re - semblance of normality in near fu - been classified as NPAs by the covery proceedings against some ture. banks, they are not willful default - defaulters. In December, Bank is - “The SMEs are reeling under ers but they were forced to become sued possession notice to an entre - pressure and it is time for banks to defaulter due to the conditions be - preneur- Vanaja Electrical come to their rescue,” he re - yond their control. Due to stringent Appliances Pvt. Ltd. Acting on the marked, while speaking in SLBC. NPA norms and subsequent invo - notice, FSME-AP requested to Referring to the recent measures cation of SARFAESI act / filing withhold the recovery proceedings announced by the RBI, which court cases resulted blocking of till the commissioned report on were aimed at providing relief to funds to both entrepreneurs and techno-economic viability (TEV) small units by easing access to banks,” he said. is received. bank credit, he requested the inter - Representing the woes of his “It was agreed in the earlier sub - vention of Government of India community in the SLBC meeting, committee meeting. But, the bank and Finance department to advise APK Reddy called upon the issued a Possession notice, con - the banks to consider re-phasing of bankers to keep in mind - the trary to the resolutions made dur - MSME loans in the state of plight of about 7.00 lakh families ing the SLIIC sub-committee Andhra Pradesh. of the entrepreneurs and 40.00 meeting. I, on behalf of FSME, ap - He took serious exception on lakh families of their employees in pealed the bank in SLBC meet - non- implementation of the deci - the State. ing,” APK Reddy told Industrial sions of SLIIC and SLIIC sub- Meanwhile, SLBC considered View.

FEBRUARY 2014 I Industrial View I 56 The representative of Vanaja ceedings till TEV report, contains bank not to initiate coercive ac - Electrical Appliances Pvt. Ltd details from the history of the sec - tion. It further informed that claim also appealed Andhra Bank, the tor concerned, the machinery and application for sanction of Invest - lead bank in SLBC, to reschedule space required along with their ment subsidy is under verification its overdrawn Cash Credit limit, capacities, working capital re - process by the Commissioner of besides withdrawing the SAR - quired to the potential challenges, Industries. SLBC resolved it FEASI notices. is finished. while advising the entrepreneur to Acting on the request of Another major issue dealt dur - be in touch with both the commit - FSME-AP and also on the de - ing SLBC meeting was of GUV tee and also Commissioner of In - faulting party, bank authorities Food Products of Rangareddy dis - dustries for early resolution of the agreed to withhold the legal pro - trict. The defaulter requested the issue.

FEBRUARY 2014 I Industrial View I 57 Steering Committee of FSME- AP

A Good Samaritan!

FEBRUARY 2014 I Industrial View I 58 Industrial View Bureau ing committee. To keep its functioning and focus qualitatively dif - pecial Steering Committee, constituted by ferent from other groups and to get the information Federation of Small and Medium Entrepre - reached to the members containing Trade Inquiries/ Sneurs of Andhra Pradesh (FSME- AP), has ini - Business opportunities, Market/ country Reports, tiated an in teractive session with the Chairman and changes in rules/ regulations, technology etc, FSME Managing Director of Andhra Bank, C VR Rajendran constituted the special steering committee. Instead of on February 4, in Katriya Hotel- Hyderabad. being governed by ‘demands’ of the sector, Steering The session, which will start at 2 PM and lasts for 4 committee is concerned about the ‘needs’ of the sector. hours, would be another endeavor of the steering com - Continuous flow of information is directed to the mem - mittee to ensure that the interests of the SMEs are taken bers through e-mail as well as postal. into account in all legislation that has an impact on Small businesses are still struggling to obtain fi - them. nance despite lending under a flagship RBI initiative. Driven by FSME- AP, which is aimed to assist SMEs Steering committee also noticed that as much as 90 per build the capabilities to respond to changing external cent of SMEs are self-financed. They require finance environment and exploit new opportunities by becom - and also working capital. But, SMEs are at receiving ing market centric, steering committee was successful end. In the scenario, to boost the morale of the SMEs, in playing a key role in preparing a 14- point formula particularly the customers of Andhra Bank, the lead to Reserve Bank of India (RBI). bank in SLBC, steering committee sought the new dy - Coordinating with the then Commissioner of Indus - namic leader, Sri C VR Rajendran, the Chairman and tries, Karikal Valaven, the 14- point formula was pre - Managing Director, Andhra Bank, for an interactive pared. Since the empowerment and the capacity session. building of the members of FSME and other SMEs is After taking the reins of Andhra Bank as the CMD, the main objective of FSME, the 14-point formula was Sri C VR Rajendran in a recent statement promised to drafted. However, RBI set aside the recommendations. provide timely and adequate credit to SMEs for the fi - The Micro, Small and Medium Enterprises na ncial year- 2013-14. It was also announced that (MSMEs), which is been accepted as the engine of eco - Andhra Bank's SME lending for the financial year nomic growth and for promoting equitable Develop - 2013-14 is expected to post a 25 per cent growth and ment, have been in doldrums. Despite its agility and the sector would continue to be a priority area in the fu - dynamism, the sector, which showed admirable inno - ture as well. Steering committee of FSME- AP and vativeness and adaptability, failed to survive the recent CMD of Andhra Bank are like-minded in understanding economic downturn and recession, along with the po - that the success of SMEs in any country depends on the litical imbroglio of Andhra Pradesh. partnership between the banks and the entrepreneurs. Alarmed over this, many industrial associations have Therefore, the CMD of Andhra Bank, Sri Rajendran, been pleading with the government to provide incentive who is immensely concerned of the woes of SMEs and packages and recommend for rehabilitation by the fi - he is committed to lend a helping hand to bail out ailing nancial institutions to tide over the crisis. Moved by the SMEs to a possible extent, is so benevolent to accept sad plight of the MSME sector, Federation of Small and our invitation to take part in the interactive session with Medium Entrepreneur (FSME-AP) took up the cudgels the Small Medium Entrepreneurs, who have been as - and started a campaign to transform the ailing sector sociated with Andhra Bank. into a vibrant segment with a revitalization plan. Speaking to Industrial View on behalf of the Steer - Like a dedicated and committed solider, APK ing Committee, APK Reddy called upon the SMEs to Reddy, President, FSME-AP, took the initiative and make use of this opportunity to get their doubts clari - brought all associations under one umbrella, working fied, problems represented and woes addressed. He with zeal and zest for the past decade. The group met also requested the fellow SMEs to get their represen - regional and central industrial departments and had tations ready in the form of memorandums well in ad - given the representations but all such efforts proved fu - vance for a smooth redrassal in the session in Katriya tile. It was the moment that gives birth to special steer - Hotel & Towers, Hyderabad on February 4.

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