Wednesday, March 31, 2010

Raktharakshas returns to Trivandrum

The legendary play "Raktharakshas" which dazzled and shocked audiences in the 70s is returning to its home city, Trivandrum, after playing to packed audiences in Chennai and Coimbatore. Touted as the stage-equivalent of Aliens, Avathar and Van Helsing combined, the play is all set to scare city audiences at the SMV School Ground on Manjalikulam Road.

Raktharakshas and Clash of The Titans premiering in the same week, there is a lot of scary things to watch in Trivandrum these days!

Monday, March 29, 2010

Clash of the Titans @ Trivandrum - April 2nd

The Clash of the Titans is releasing in 3D at S.L. Theaters on April 2nd. Watch it!

Saturday, March 27, 2010

Trivandrum gets its own Games Village

Trivandrum is set to get its own snazzy National Games Village along the lines of the much-hyped Commonwealth Games Village in New Delhi. The 35th National Games Secretariat has just called for bids from developers for constructing the Games Village on 16 acres of land on the banks of the scenic Aakulam Lake. 

 The Commonwealth Games Village, New Delhi

Stay tuned for the tender for the 50,000 seater International Cricket Stadium that will be the center piece of the National Games infrastructure and perhaps, the home of the new Kerala IPL team.

Saturday, March 20, 2010

German Jazz performance at the Tagore Theatre

German jazz musician Wolfgang Haffner and his band will be playing today at the Tagore Theatre at 7 PM.  Haffner is an award-winning Jazz musician who will bring a new dimension to the city's music lovers. The concert is organised by Goethe-Zentrum, Trivandrum. After the rocking concert by Black Rust and Shaan's scintillating performance last weekend, Trivandrum is all set to swing to a new tune this Saturday night.

Venue: Tagore Theatre, Vazhuthacaud

Time: 7 PM

Let's jazz it up tonite!

Monday, March 15, 2010

Trivandrum on the F1 Map!

Trivandrum is on the Formula One map! No, we haven't gotten a race track yet, but Technopark-headquartered UST Global has put the city into the world's most high-tech and glamorous sport by becoming a partner of the Virgin Racing team.

UST Global's logo is proudly displayed on the VR_01 race car used by the Virgin Racing team.

Image Courtesy: Virgin Racing

With this, UST Global joins an elite list of global firms with a presence in F1, in which only a few Indian majors like the UB Group and TCS were members till this season. UST has put up a bill-board of their newest brand vehicle opposite the Technopark main gate and I hope that they bring the real deal down to Technopark to show off!

I was rejoicing over Schumi's return to F1 and now I have another reason to celebrate, Trivandrum has its own team! Let's all spare a cheer for Virgin Racing as well!!! Hip...Hip..Hurr- !

Thursday, March 11, 2010

Capitalising on Public Property - A Chance to Save KSITIL

When Finance Minister Thomas Issac spoke of raising resources through innovative avenues like the sale of sand recovered from reservoirs, he may not have thought of yet another promising opportunity that exists or, more likely, he may have chosen not to introduce such a radical route especially as the member of a Leftist Cabinet. Yet it exists already and has the potential to raise thousands of Crores of rupees in the years ahead. And unlike dredging sand, it is likely to have a long term impact on the development of Kerala. And by allocating Rs 20 Crores to KSITIL, he may have set the ball rolling.

It has been well accepted, even by the Honorable Finance Minister, that service industries like IT/ITES and Tourism are the way ahead for Kerala. As a densely populated region, with the lowest usable area / man ratio in India, and with few significant natural/mineral resources, it is unlikely that God's Own Country can host heavy industries such as steel, petroleum & petrochemicals, heavy manufacturing, fertilizers and power plants. Kerala has made significant strides in both industries, being ranked third among States in terms of tourist arrivals and seventh in terms of IT exports.  Its IT hub, Trivandrum, is currently the 8th biggest IT destination in terms of exports. Major companies like Infosys, TCS, Wipro, UST Global, Allianz, RR Donnelly, IBS, E&Y and McKinsey have set up shop in Kerala, most of these in Trivandrum which accounts for about 75% of the industry in the State.

Impressive Asset Portfolio

The Government has developed over 2.5 million sq.ft. of space in Trivandrum (not including the under-construction 1 million sq.f.t Technopark Phase III) and about 1 million sq.ft. in Cochin (including the soon-to-be-inaugurated Athulya MTF). Private developers have added another 2 million sq.ft in Trivandrum and 1 million sq.ft. in Cochin. Another 1 million sq.ft. of space is being added across Kozhikode, Kollam, Alleppey and Thrissur by the Government. Finally, with over 450 acres, the mammoth Technocity project is set to add over 10-12 million sq.ft. over the next 6 to 8 years. All in all, 3.5 million sq.ft. of operation space, 2 million sq.ft of in-development space and over 15 million sq.ft. of in-pipeline space form the impressive kitty of the State Government, probably unmatched by any other State Government and matched only by a handful of leading private developers. This asset portfolio is owned by Technopark, Infopark, Cyber Park and KSITIL, all Government entities. Even when we consider that the Government will have no more than 26% stake in the projects of KSITIL and others under in the PPP model, we are looking at over 5 million sq.ft by 2011 and a whopping 10-12 million sq.ft by 2016-17. To put this in perspective, this is the same amount of area owned by DLF Assets Ltd, DLF's subsidiary which was recently merged with its parent as part of a corporate restructuring process. DAL's total portfolio is spread over about 13.5 million sq.ft (including projects in development) and it has been valued at between Rs 8500 to 10,500 Crores! Even allowing for the fact that the IT space in Kerala has lower lease rentals than those in metro locations, which makes up most of DAL's assets, we are looking at over Rs 6000 Crores of assets with the Government by 2016 with Rs 3000 Crores ready by 2011!!

Finding the Value

Well, working out how much space there is, is in itself a challenging task. Especially so, considering the fact that we are looking at a number of Government organisations and nearly non-existent MIS. Even when we have that figure, how do we work out how much the assets are worth?

Without getting into Finance 101, let me spell out how this is done.

Firstly, real estate assets which generate rentals - such as IT parks, malls, offices and hotels - are valued based on the cumulative value of their rentals and not on their cost of construction or market rates.

So an IT park which earns rentals of Rs 30 per month and hence Rs 360 per annum is capitalised at a rate of between 9 to 11%. This means we assume that between 9 to 11% of the overall value of the asset corresponds to the annual rental, irrespective of the actual life-time of the asset, which could be as long as 30 to 40 years.  This is also called the Net Present Value method of valuation. So the captialised value works out to:

Capital Value = 360/0.09 = Rs 4000 per square feet.

So when the total built-up area is around 10 million sq.ft., we are talking about a cumulative valuation of Rs 40 Billion or Rs 4000 Crores. That is a ball-park figure of what the IT infrastructure assets of the State will be worth in a few years' time. And add to it the value of over 1000 acres of prime land that is also in its possession and we are looking at about Rs 5000 Crores or US$ 1.1 Billion. This could eventually grow to as high Rs 8000 Crores or US$ 2 Billion as more space and land is added. The value is tantalising but the big question is how to unlock it properly.

Getting into the Market - the REIT way

The value of all this asset base can be unlocked only when it is put on the market, either to raise debt or equity. In short, part of the ownership of the assets has to be transferred to private individuals and entities. Before anyone yells "privatization", let's remember that KSITIL was created for the express purpose of owning IT infrastructure assets and to raise capital from the market to fund the development of this infrastructure. So it is not a new-fangled concept t all.

The idea is best demonstrated in the Real Estate Investment Trust or REIT. REITs are corporations, listed or privately held, which exclusively invest in real estate. Their key aim is to own and operate real estate assets, and to distribute the revenue among the share-holders. REITs are perhaps the most common model of real estate ownership and operation and are prevalent across the developed world in markets like the US, Japan, UK, Singapore, Germany and Hong Kong. REITs help to tap the capital markets to raise money for the development of real estate projects in a structured manner and also give even retail investors opportunities to invest in real estate across a portfolio which is diversified in terms of geography, size and clientele, rather than in a single project. Globally, REITs account for as much as US$ 450 Billion of investment. Indian companies like DLF and Unitech are planning to launch REITs for some time now. The Indian regulators don't permit REITs to be traded on our bourses at present but legislation to permit them is in the offing. In the meantime, Indian firms may float REITs in the Singapore market.

Floating a REIT will help the Government raise valuable capital from the market instead of going in for costly commercial debt - it has already borrowed over Rs 600 Crores from banks for ongoing projects. Since the Government intends to retain 51% of any market entity, a future REIT could raise up to Rs 2000 - 2500 Crores by diluting the remaining 49% into the market. By mandating a specific ratio to be owned by FIIs, PSU banks and the general public, the Government can ensure that the ownership of the REIT is never called into question. Indeed, it could eventually dilute its stake further and yet retain complete operational and strategic control. The REIT will pay out its rent-derived profit as dividends each year, which is yet another way of distributing the benefits of the IT revolution to the public. The Government's share of the dividends could be ploughed back into improving IT infrastructure or repatriated to the exchequer.
As I have mentioned about a year ago, KSITIL needs to become a unified entity to own and manage all the IT infrastructure assets in the State. This means that a few years down the line, by 2012 or so, Technopark, its smaller siblings - Infopark and Cyberpark and its even smaller siblings in the other districts will have to be merged into KSITIL to create one integrated asset development and (more importantly) management organisation. And as a REIT, answerable to the media, KSITIL (or Kerala IT REIT - KITREIT) cannot afford to be a one-room, one-employee operations like it continues to be today,more than 2 years since its formation. The organisation needs a professional team of asset managers and financial whiz-kids to take care of its mammoth portfolio, to ensure that its shareholders get a good deal and to ensure that it maximises the development of the IT industry in Kerala.

Well, is anyone listening to this? Sadly, I doubt it but as key decision makers like Dr Issac imbibe global business practices and mould them to the Kerala way of doing things, we can hope that a REIT will be floated in Kerala in the not-too-distant future.

Saturday, March 06, 2010

Rediff: Trivandrum one of the hottest IT Destinations in India

One of India's leading portals published a list of the hottest IT destinations in India and Trivandrum figures FOURTH on the list, after Bangalore, Hyderabad and Chennai.

The article mentions key points like the fact that Trivandrum accounts for about 80% of the IT exports of Kerala and that Technopark is one of the most prominent IT hubs in India. It also mentions that along with IT/ITES, biotechnology and medical care are becoming key sectors in Trivandrum and that the city hosts such world-class institutions as the VSSC, IISST and IISER. The rating comes at a welcome time when Trivandrum has started to market over Rs 10,000 Crores of IT infrastructure at Technopark Phase III and Technocity!

Do look through it and pass it on  to all your friends and anyone interested in knowing more about Trivandrum. Thanks in advance, folks!

Friday, March 05, 2010

Youth Icon 2010

The last time I canvassed votes here was for Shashi Tharoor. This time it is for a less serious campaign but for no less deserving a candidate. Watch and do vote!

To vote for Prithviraj, SMS ICON [space] 3 to 56006789

Meanwhile, on a funnier note, when Manorama News polled its viewers to see if they agree with the CM's remark that the IT sector in Kerala was quite solid sans "Smart" City, the result was a resounding 65% in favor, something which shows that our folks are getting over the hype-games which have been played on them over the last few years, and which would have sent a few shudders down Nonorama's collective spine.