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An effort by Stockyard in association with Mantra Consultancy Group

Unstoppable Argumentative Indians 10th May2008 Issue 4


Argumentative Indians
Indian Premier League
Sector Report: Oil&Gas
Corporate Radar
Macro economy
Frying Oil
Guest Column
From Editor’s desk

“ owards…?” has finally crossed its 4th step.

We believe ,day by day, issue by issue, magazine is getting appreciated and accepted by
intellectual readers and our corporate partners.

Towards…? ,is not just meant to be served to only our corporate and business friends…rather
it is meant to spread a bigger massage of inclusiveness and bringing focus of India Inc towards
a larger issue of nation building. For it is if nation prospers, we prosper……
We believe, that India as a nation, as a society and as a cult is fast transforming….As I always
say…this is a nation in the making….up into chapters of History…We have never been evolved
as a nation….that reckons right from Kashmir to Kanyakumari…Assam to Gujarat…

But now….with people in business ….and in knowledge society are fast conforming it into one

It is great to see a thriving nation, full of activities and transformation…..full of energy and

I believe, corporate India has to play a much bigger role….and more so…for the
Young Turks of India…that claims itself to be Unstoppable…..we name it Unstoppable
Indians…..same people ..who can buy businesses 10 times bigger than their own…can
negotiate with Walmarts,Shells Fords and MTNs of the older version of the globe…can take
world on a stride…..

We salute that revolutionary India….but task ahead are much tougher….

For it is to the same India…that has to take the blueprint or the roadmap of New avatar to
remote Bharat version of the same nation…For the same Entrepreneurs…to take their growth
agenda to bigger masses…to left out ones…..Remember was only because these two
nations could coalesce and could take the dream together…that we see all the difference….in
post 1991 era…..

As someone aptly said….each day many people from that side of argumentative,sceptic and
orthodox India are crossing the iron thorn fenced boundaries and entering into this side of
unstoppable, ambitious and dreamy India…….Now it is high time,,,we destroy this old worn-
out walls between these to nations..India and Bharat….to converge in one great nation….
I believe, it is in the interest of Corporate India and also we,,,as part of 350 million+ middle
class to take the initiative and gap this widening divide if at all we want our own success and
prosperity to be sustainable……Gone are the days when rich and poor, haves and have-nots,
stronger and the weaker could stay and survive together……

Definitions are fast being changed….rules of the game are fast being rewritten… is high
time …share your part of responsibility towards..Your nation…your society…your
people…your earth and yourself……

And if you fail to… are doomed to finish…destined to put yourself in the black-books of

We do not want our children to remember ourselves as cowards and selfish...who got an
opportunity to change the lives and fate of millions but dare not to………

With these massages, 4th issue of towards…? …is in your hands….

With love and Affection

Argumentative Indians

Sometimes, to me this country This is some of what happening around…………………

looks hopeless. If you observe China has a special Cyber Army which is getting prepared for a much
things around you little more more sophisticated assault on India. The sustained assault goes back
with the political and military disquiet between the two countries.
closely you will find the nation is
According to a very classified information from Internal affair ministry
getting crippled day by day. and Cyber vigilance departments, Chinese cyber systems are
Before each election, one or progressively, methodically and tactfully intruding and penetrating into
other political group tries to crucial Indian official networks and recruiting their cyber Informers in
spout venoms against one or the the system that can possibly be used to deactivate and dysfunction
crucial systems at the times of conflicts between two countries. These
other group.Mr Raj Thakarey,
attacks are not isolated incidents of something generic or basic as
these days seem to be quite hacking, but far more sophisticated and methodical. The core of these
active against North Indains, assaults is that the Chinese are constantly scanning and mapping
especially Biharis.It is very sad India’s official network. There is already an attempted assaults on NIC
(National Informatics Centre), National Security Council and Ministry of
that, in India, some people are
External Affairs. A quite effort, it is said, is underway to set up defense
being treated as immigrants. We mechanism.
have been hearing about these
things against Indians in South According to the statement of India’s Chief of naval staff, the head of
Indian naval Force, China is deploying number of nuclear submarines
Africa, Europe, Fizi and other
encircling Indian Territory across the Strait of Malacca and Eastern
parts of World, but never regions bordering India. These submarines are equipped with
expected this to happen with sophisticated Submarine ballistic Missiles with nuclear warheads that
Indians in India itself… It seems can penetrate deep into any part of India without easily getting
as if few people have bought the
country and are rulling, or In Baster District of Chhattisgarh state, every second house in tribal
ruining it at their whim, just to areas is infected by malaria. There has been reported death toll of
gain political millage.This trend is more than 100 tribal children from Malaria at the time when malaria is
completely curable. The district health department does not have
very dangerous as it weakens the
enough medicine for people in the area. This is not the sole incidence
basic fabric of India as a nation as this happens everywhere in Country with tribal when our
and may start a vicious cycle of government is busy in giving them reservation while they are deprived
hatred and disunity. There are of even the basic amenities.
issues, numerous issues…some
Our great Health minister is busy enough in banning liquor and
with development, some with smoking on screens and cleaning AIIMS from someone like Docter Venu
lags in it and more importantly Gopal. Alas our minister could have rather paid little attention to the
with its equitable distribution. It fake medicines available in the market and did a little to take care that
proper medical facilities reach to all nooks and corners of the country.
looks that few people like Mr
Arjun Singh are still living in the Agriculture, we all know, in this country is in a pathetic state. Our
mindset of before liberalized beloved Agriculture minister Mr Sarad Pawar has actually joined
quota, reservation and licenceRaj another ministry that is called Cricket Ministry and perhaps has no time
to look after poor state of agriculture.
mindset. Reservation in it most
elementary form itself, attacks
the merit and democratic fabric of nation. The burning question that youth need to ask from all our
grannies that why do you need a reservation even after 50 years of reservation. Is not it a failure of
the system that it could not create enough jobs, opportunities and space for each and every one to
grow? How much more time we need to create a space for every one?
Why we need to squeeze somebody’s opportunity to make room for some one else. Keeping all my
support and empathy to every one in politically, economically and socially backward section, one
need to ask, why we still have those differences? Why we could not create a just an equitable
society in 50 years? Why do we still need reservations? An answer is very obvious…There is some
one who does not wish that you, at all, grow…some one whose very supremacy is at stake if, at all,
you grow up from your age old imposed backwardness and slavery. Remember democracy is the
monarchy where they rule over your mind, giving you false impression that your body is free. For
freedom of the body hardly matters when your mind is slave. And they attack you is from all sides.
These Arjun Singhs ,Raj Thakereys and Sonia Gandhis will never let you be empowered. They will
never let you feel that just being Indian makes you equally eligible than any one else to stake your
claim on anything, anywhere and anytime to whatever is of India to be your. They will never let you
feel that you own India. Rather they will tell you that they are still trying to make India yours and
you should perhaps vote them one more time to power if at all you want your safety in an India
which is not yet yours.

And what are the Advanies, Uma Bhartis, Vinay Katiyars, Prakash Singh Badals, Janrail Singh
Bhinderawalas, Narendra Modies and Imam Bukharis of this country are doing?

Well! they are trying to convince you that your religion is always at war front from other religions.
For it is for them that they are safeguarding your religion, culture, caste, state or language from
those of mine.

And if you observe little more closely, they will always attempt that YOU REMAIN AGAINST ME
ALWAYS .We and YOU may be Bihari –Marathi, North Indian-South Indian, Tamil-Kannadiga, Hindu-
Muslim or any other differentiation. And I have been seeing these hostilities to always aggravate
during election times.

They forget that post election; they leave some open wounds, burnts and stigma of hatred. That
remains teasing forever.

Is not this country just hopeless…?

Now look at this….

Several Suply –Chain issues, that let our over 40% agro produces get spoiled.

Less than 15% people 10th +.

More than 60% people below poverty line.

And if you observe ,you will feel that these are not only people who are creating nuisance at the
political arena , there to be blamed…for there is one more picture…that is equally grimmer.

I, as a young citizen of this great nation and as a representative of 110 billion + people of India, hold
responsible all those who are blocking its prosperity and growth in any way…. Leaders like Madhu
Koda, Prakash Karat and many more are equally responsible for they are the once who got chance at
the helm of affairs but did not do any thing to bring this nation at the path of growth.
Remember growth opportunity foregone is the growth and prosperity denied to all the citizens of
India, which in itself is a crime. It could be one more election time. Elections are around the corner.
Take a new

initiative, grab your leader’s collar and ask them WHAT THEIR AGENDA IS FOR THIS NATION? WHAT
India, sometimes I feel has yet not emerged as a nation in ideology. A nation is not just a politically
sovereign geographical, demographic establishment. Nation is a spirit that binds all its dwellers in
ONENESS where sense of belongingness supersedes all differences and proclaims…WE ARE
ONE...ONE NATION…ONE POWERFUL..EMOTIONAL UNITY…….and I feel, this sense of belongingness
is still missing in all of us.

I know…and so do you…we in India have several issues to be resolved before emerging as a strong
nation and we all at some point or other have felt….that….this nation is hopeless…..simply

But is there a way out….?

I think yes…..there is a way…..

Why do not we start from the point we are at , exactly now…?

Lets start it…..start creating your India..Share it with me…its problems…issues…difficulties…good and
bad things…everything that has its share in this nation….and when I say nation…I mean distant
Kashmir…in deep militancy…..Far north East…in separatist camps……….remote village of Bihar, Orissa
or West Bengal…where no light of development has reached……

And when I say India…I also mean all those affluent people who are busy in extravaganza of IPL 20 –
20 at the time when more than half of nation is fighting its battle against poverty, malnutrition and
ignorance….and exactly at the time when millions of soldiers are facing lethal bullets at their chest
guarding our borders……at the same time when some people are making money selling the coffins
of martyrs of kargil……at the same time when naxalites are slowly and steadily creating a separate
country full of hostilities against your own nation…at the same time when an Adivasi(tribal) is
getting killed in Assam by ULFA….…at the same time when a poor laborers from remote village of
Bihar is being kicked away from Maharashtra to alter on political ambitions of Mr Raj Thakeray……at
the same time when we, in India hold Lakmey fashion week … the same time when Salman khans
charge Rs 50 crore per movie…aat the same time when millions of dollars are being wasted on
cheer-girls…….at the same time when you and me are burning hundreds and thousands on birthday
parties at PVRs and Mc Deys …at the same time when…..there is one boy of around 6-7 years is not
attending basic primary school to work in a garage……at the same time……when India is taking
birth…….and being foetisized in mother’s womb… the same time when someone tries to divide
you ….at the same time……when I and You are just mute spectators…

………at this very moment…i….and …you can rise up …hold each others hand …..and …….create a
strong nation which if free from all slaveries……….at the same time…few Baba Amte….Kiran
Bedis….Anna Hazare….Sandeep Pandeys …..Dalai Lamas…..Rajendra Awasthis ….Mohammad
Unush…..are doing their best to change few lives…..
Indian premier league
IPL: Transition of Cricket from a Gentleman Game to New Business Venture

clearly indicates that IPL is not only offering

In INDIA, Cricket is the only sport which unites plain cricket but ultimate pleasure and live
every generation and creates sensation with its entertainment from which no age group is
thrilling atmosphere. It is played & watched in refraining. This 3 hour game in late evening
almost every part of our diversified society & could be compared to an evening movie show
culture. Huge fans following base had made the which is not that appealing. People wanted a
Indian cricket control body one of the richest change and that had been availed by T 20-20.
among all the sports. As Indian economy is 2ND Like the famous base ball or soccer matches
fastest growing nation with its young between the city clubs in Europe & USA which
population, per capita income is also rising and attract huge crowd and these clubs have big
that makes the huge surge in average name , IPL city based teams are also vying to
disposable income. Now this young generation stand in that famous league. It is too early to be
wanted live entertainment in smaller period said about the sustainability of this format but
and if that comes through their favorite game in short period it seems to be a huge hit.
cricket then nothing can stop popularity of this
game further. Indian corporate also saw the opportunity to
make money out of this energetic game and
Indian cricket league(ICL) headed by Essel hence a lot of money is flowing into the game.
group ( Subhash Chandra) was a similar move to Huge bidding amount by the big corporate and
exploit this opportunity but BCCI saw this as a celebrities (Reliance…..Mukesh Ambani,
threat as a future competitor of the game of Kingfisher…Vijay Mallya, GMR, India cement,
which it had a complete control. So BCCI also SRK, Preity Zinta) for the team franchisees is a
launched Indian premier league (IPL). Both of clear example.
them came with a new but fast version of
cricket that is 20-20 over match. Reason is pretty simple….Money the Financial
Benefits & Marketing Benefits.
ICL is already over with an average show but IPL
started with a big bang and running Some of them are here for money some for
successfully. Cricket frenzy fans are flocking to brand building proposition and few of them for
the stadium and making this tournament a big both. Now who gets what and up to which
hit. One of the biggest surprises had been extent will be interesting to watch. Some of
observed during the earlier IPL matches was the them call it as a calculated gambles….only
strong presence of women and children who future will decide the fate of these franchisees
normally remain away from the matches. This and their owner’s action to be in or out from
this people loving action buzz.
T 20 -20: Future Prospects

As India’s wealth base broadens, consumers will demand and be prepared to pay for more and better
live entertainment opportunities. Watching live sport is a major weekly pastime in the world’s
advanced economies - approximately 400,000 attend Premiership football every weekend in England
generating nearly $5 billion in match day revenues (tickets, premium seating, ground concessions
etc). In recent years international music acts such as the Rolling Stones, Shakira and Black Eyed Peas
have played to packed stadiums in India – the Indian public are starved of high quality entertainment
opportunities. A star studded Twenty20 cricket tournament will help to satisfy this increasing

The chart below clearly indicates the popularity if T 20-20 especially when Indian team is playing in
that. So if we see the revenue side the money from TV Rights, advertisements will keep coming.
Cricket has a big market in India there is not any big competitors of it.ICL could be one of the major
competitor for IPL in coming time. But it all depends upon its accreditation by ICC and capacity to
attract famous foreign & domestic players.T20-20 formats in other countries like England or Australia
could affect mildly in terms of availability of their players. However viewership wise there will not be
any major impact to IPL because Indian cricket viewers are more than the total cricket viewers
around the world.

Sources: IPL Franchisee Prospectus

T 20-20: A Boon or Bane for the Future of the Indian Cricket

Helping Cause to the Cricket:

 Full entertainment to the viewers.

 Young & regional players will get a chance to play with international players. This
would definitely boost their confidence.

 Huge revenue income through this tournament will be spent the development of
better infrastructure like stadium, fitness centers, training centers. The level of local
cricket will improve.

 Shorter version of the game could be more popular in Europe and America when
people prefer short duration games. This would help in increasing cricket fans all
around globe and make it more appealing.
Ugly form of the Cricket:

 As huge money following this game. Already, almost $1.7 billion has been wagered on
the IPL, Real spirit of the game will be lost.

 Players will lose focus on the real on field performance.

 City based team will have their own fan following and that would create regionalism
among the fans and also up to an extent in players.

 Performance of the National team would suffer because the players will get less time to
practice and excess cricket will cause fitness problems to the players.

All the above points are not based on any facts or figures but from the general perception of cricket
analysts and experienced players. Since everybody has their own explanation and justification some
of the readers may not agree on above assessment.

Sports Franchisee Business: A Brief Overview

 Many of the world’s top sports competitions are run on a Franchise basis – NFL, MLB,
NBA, NHL, MLS, Super league, AFL

 The Franchisee enters the league by investing in a Franchisee

 The Franchisee receives a share of the central revenues and has the opportunity to
develop and retain local revenues

 As well as benefitting from a number of realizable assets, the Franchisee is perceived as a

“good corporate citizen”, and receives significant public relations and marketing benefits

 As the league matures the revenues grow and the brand develops, the capital value of
the Franchise grows

 Franchises are traded under terms agreed between the Franchisor and the Franchisee

 The Franchisee’s investment is secured by guaranteed continued participation in the


 Expansion Franchises are awarded in a manner designed to benefit the existing


The valuation of Manchester United is £9 billion. The sheer number of people viewing cricket in India
is much more than soccer viewers there so we can estimate the monetary benefits of this model in
sports (Cricket) in India.
Reasons of the failure of Indian Cricket League(ICL)….

It has been launched by Subhash Chandra in May 2007; ICL is a unique concept in cricket after Zee
was not able to secure rights of the World Cup 2011.

ICL initially had six teams which have now increased to eight (over 200 players). All these
teams were owned by Subhash Chandra unlike the eight teams in IPL owned by different
The investments in ICL are in excess of Rs1bn.

ICL has evolved despite several constraints like unavailability of venues, national-international
cricketers & other professionals associated with ICC. It had a TVR of 1.2. Its revenues till date have
been Rs750mn and are expected to break even in FY09E. Unlike IPL, ICL had not any clear financial
details about its Business model san investors to put their money.

Business Model of the IPL

 8 Franchised City teams will compete –

Franchise numbers will increase over time with founder Franchise’s rights protected.
 The inaugural IPL season which has already started on 18th April will run for 44 days.

 Each Franchise will play each other home and away – 7 guaranteed home matches per
Franchise (Each NFL Franchise has 8 home games).

 The top 4 Franchises in the league will contest the semi finals and the victorious semi finalists
will meet in the Grand Final all over one weekend.

 A total of 59 matches – this creates a total of 177 hours of live “content”.

 The 2 IPL finalists will advance to the new Champions Twenty20 tournament provisionally
scheduled for October 2008.

 Matches will be played to ICC World Twenty20 regulations.

 SONY-WSG has bagged broadcasting rights for 10 years for US$918mn, excluding marketing
for US$108mn.

 The franchise amount collected is US$724mn, with each of the clubs being sold for US$67-
112mn, depending on the city.

 Besides acquiring teams, each of these franchises has spent US$6-7mn on acquiring players
for their teams.
Financial Prospects of IPL
Making it financial viable and low risk game in long term Lalit Modi (BCCI Vice President & IPL
Chairman) the man behind IPL has ensured that a top broadcaster and eight large business houses
will have an equal financial interest in making the IPL a success. At the same time, he has spread the
business risks across three sets of stakeholders—the
broadcaster, the franchises and the BCCI. Like other franchisee
formats IPL has categorized their sources of revenues into two
forms: Central & Local
This is after reducing the
Central share of BCCI from the
Central Revenue. The rest
 Media-
money will be distributed
 Sponsorship equally to all franchisees.

 Official Suppliers


 “Gate”

 Franchise title & shirt sponsorship

 Local sponsorships & Uniform merchandising

 Hospitality and premium seating

 Matchday concessions & Matchday promotions

 Tournament winning prize (Around 12 crore)

 Franchise media platforms e.g. Franchise channels

and websites

Expenses of the Franchisee

 The Franchise fee

 The player salaries and the Franchise executive,

management and coaching salaries

 Marketing Costs to build the brand of the


 Stadium leasing costs & Matchday costs – e.g.

staffing, security under guidelines provided by the

 Franchise offices , administration , travel &

IPL- already a US$2bn property thanks to huge money pouring through media & sponsorships
rights and from franchisee bidding.

First: The Broadcaster

For the $918 million the Sony-WSG (World Sports Group) combine has paid, it will get a minimum of
12,744 ten-second ad spots every year. Sony expects to sell these slots at a card rate of about Rs 2.5-
3 lakh each. Be conservative I have taken only 2.25 lakh for each 10 second ad spots. Advertisers
typically pay a peak value of Rs 3 lakh for a 10-second slot in a test match, Rs 5.15 lakh for a one-day
international and Rs 8 lakh for a top-notch Twenty20 international. At a card rate of Rs 2.25 lakh the
Sony-WSG combine stands to earn Rs 286 crore in advertising revenue in the first year. Still, this is
not a bad first-year return on a Rs 3,672 crore ($918 million) investment made over 10 years.

Cash flows for Sony & WSG

1 2 3 4 5 6 7 8 9 10
Cash 367.2 367.2 367.2 367.2 367.2 440.64 440.64 440.64 440.64 440.64
Cash 285.75 314.33 345.76 380.33 418.37 460.20 506.22 556.85 612.53 673.78

By third year end Break even is on the cards and that may go very especially if there is the promise of
a huge upside if the IPL takes off. "If the tournament does well, the ad rates could well cross Rs 8

Second: The Franchisees

The eight successful franchise bidders. While they have paid anywhere between $67 million
(Emerging Media for Jaipur) and $111.9 million (Reliance for Mumbai), they will also receive about
$75 million over the 10-year period from assured payments coming from the central pool. This is a
rough estimate based on a simple model, though the IPL follows a graded structure. "The IPL business
model has minimal risks. Even if the tournament gets a lukewarm response, the franchises are
assured of covering 60% of their expenses through the central pool fund.

Indian Premier League: Will Franchisee break-even?

The success of the IPL in the long run depends on whether the team owners would be able to
breakeven in the near future. While some of the franchisees have expressed the confidence that they
will break even within two to three years, doubts remain. To diversify their risk some of the
franchisee owners are planning to raise funds though private equity by diluting minority stakes.
Chennai Super Kings, the team owned by India Cements (ICL), has been approached by private equity
Cash flows for Franchisees

Particulars/Years 1 2 3 4 5 6 7 8 9 10
Cash In Flow
Central-Tv Rights 36.7 36.7 36.7 36.7 36.7 44.1 44.1 44.1 44.1 44.1
Central-Sponsor Ships 6.8 6.8 6.8 6.8 6.8 8.9 11.6 15.0 19.5 25.4
Team Sponsorship 14.0 14.0 14.0 16.8 16.8 16.8 20.2 20.2 20.2 20.2
Gate Money 12.0 14.4 17.3 19.0 22.8 27.4 32.8 39.4 47.3 56.8
Shirt Sponsorship 5.0 5.0 5.0 6.5 6.5 6.5 8.8 11.8 16.0 21.6
Stadium Advertisements 7.0 8.4 10.1 12.1 14.5 17.4 20.9 25.1 30.1 36.1
Merchandising 3.0 3.6 4.3 5.2 6.2 7.5 9.0 10.7 12.9 15.5
Total 84.6 89.0 94.2 103.1 110.4 128.5 147.3 166.3 190.0 219.6
Cash Outflow
Franchisee Owning Fee 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0
Players & others Salaries 22.0 22.0 22.0 27.5 27.5 27.5 38.5 38.5 38.5 38.5
Marketing & Branding Costs 12.0 16.8 23.5 32.9 36.2 39.8 43.8 48.2 53.0 58.3
Stadium & Allied Costs 2.0 2.4 2.9 3.5 4.1 5.0 6.0 7.2 8.6 10.3
Team Administrative Costs 7.0 8.4 10.1 12.1 14.5 17.4 20.9 25.1 30.1 36.1
Total 83.0 89.6 98.5 116.0 122.4 129.7 149.2 159.0 170.2 183.3
EBIT 1.6 -0.6 -4.2 -12.8 -12.0 -1.2 -1.9 7.4 19.8 36.3

All the calculations for one franchisee by taking on averages revenues from central & local pool for
8 franchisees

IPL prospectus suggests that these franchisees could command valuation akin to premium brands - a
Price/Sales ratio of 3-5 on an average. These high valuations are in league with English premier
league clubs like Manchester United. If we take a Price to sales of 4, then the Mumbai team, which
went for $112 mn needs to show annual revenues of $28mn, or Rs 110 crore. This would perhaps
need Rs 75-80 crore from local revenues. Any valuation gains may come only when revenues
significantly exceed this. As per my projection this high Price/sales ratio will be only possible after 6-7
years by taking a conservative approach that the present financial condition will at least prevail if not
much better. The cash flow analysis corroborates the point about the low risk of this investment
made by the Franchisee owners. But the towering valuation of $5 bn for every franchisee seems to
be very flattering one.
Third: Role of BCCI

From this exercise, the biggest winner remains BCCI. The way the deal is structured, BCCI seems set
to make almost riskless income of around $1bn from IPL. This income will primarily come from the
$723mn or so that the 8 team owners have bid to own the teams. BCCI will also get a minority share
of TV rights, ranging from 20% in first 2 years, to 40% from year 6 onwards. BCCI will get 40% of
tournament sponsorship money.

BCCI or more specifically the entity IPL that it has set up has largely an advisory role. There is no
particular fixed cost it incurs. IPL is supposed to do things like award commercial rights, two big legs
of which – the TV rights and the team ownership – are done. It also has to set up tournament
schedule, provide umpires and match officials (the franchisee bears the cost).

Compare this with say a consultant or a private equity partnership and you realize how good the deal
is for BCCI. The general partners get a 2% fees and 20-30% of profits. Here BCCI gets 20-40% of net
incomes from TV and tournament rights. Clearly BCCI benefits a lot from its monopolistic hold on the

Concluding Words

When everything goes well, no body complains….remember the subprime crisis…..subprime was
quite successful in its initial phases but when subprime borrowers started defaulting on their
mortgage payments…the castle of financial securities got demolished.

In some ways, IPL is like a castle of cards. Spectators and viewers form the base. At the second level is
the BCCI, using its might in getting big Indian and international players to play in the IPL. At the third
level is the broadcaster, whose $918 million seed money has been leveraged well. At the top of the
deck are the franchises. But the foundation of the castle is India’s cricket-hungry public. If they fill
up the IPL stadiums and stay glued to Sony’s live coverage, the castle will stand. If they stay away, the
castle could come crashing down. If that happens, BCCI will suffer the least, financially at least. Sony-
WSG will take the biggest blow because it is the biggest financial investor in the IPL. And the
franchises may get away with a few millions in losses.

Contributed by


ICFAI Business School, Hyderabad

Sector Report: OIL&GAS
Based on Report by KPMG:

By world standards, India’s current level of energy consumption is very low.

With a target GDP growth rate of 7-8 % and an

estimated energy elasticity of 0.80,energy
requirement is expected to grow at 5.6 –
6.4%.This would mean a 4 times increase in
India’s energy requirement over the next 25

Demand for Oil, comprising of 36% of India’s

primary energy consumption, is expected to grow
both in absolute and percentage terms to 196
MMT in 2011-12 and 250 MMT in 2024-25.

Demand for Oil is expected to rise at an

annual growth rate of 3.6% from 2004 to 2025(250 MTOE).During the same period, domestic
production from existing developed reserves expected to grow at approximately 2.5%.

This gap in demand and supply will catapult India to one of the largest consumers of crude Oil
along with China. India and China, together will account for 35% of the world’s incremental
energy demand.

To address the growing demand-supply gap, the government has stepped up exploration and
production efforts through private participation under the NELP, and has also developed a
more holistic strategy for acquision of equity in Oil abroad.

ONGC Videsh Ltd, the wholly owned subsidiary of ONGC, is now active in 15 countries in Asia
Pacific, Latin America, Middle East, Africa and Russia.

Other Indian companies like RIL, Gujarat State Petroleum Corporation Ltd.(GSPC) and Videocon
are actively seeking Oil and Gas blocks across the globe.

Policy and Regulatory Framework:

The Government has allowed

100% FDI in exploration, creation
of pipeline infrastructure,
refining and in downstream
retailing (subject to a minimum
investment in mid-stream and
upstream sector).

E & P players are entitled to a

100% tax holiday for 7 years,
with respect to profits earned from production of mineral oils.
Investments under NELP:

6 rounds of competitive have already been done, under which, 162 blocks were awarded and
in-place volume estimated at 600 MMT of Oil and Gas have been discovered.

The recent NELP-6 was a success with 165 bids being received from both domestic and
international companies for exploration rights.

DGH (Directorate General of Hydrocarbons) has already announced the 7th round of bidding for
57 blocks.

Salient features of NELP-7:

Upto 100 % foreign participation.

No carried interest by National Oil Companies
Freedom to market in domestic market.
IT holiday for 7 years starting from year of production.
No custom duty on imports required for operations.
Option to amortize exploration and drilling expenditure over a period of 10 years from 1st
commercial production.
Royalty payable to the Government ranges between 5 to 12.5%,based on the type of

India as a refining hub:

Lower construction and cash operating costs.

Strategic location en route of Middle East Crude for East Asian and Pacific-rim markets
Expected world –wide deficit caused by the shut down of small and uneconomical refineries
around the world
The inability of oil majors to invest in refining assets during last decade and significant increase
in the Chinese demand has accentuated the deficit.
There is a planned capacity addition of 80-90 MMTPA of refinery in India in the next 4-5 years
to the existing capacity of around 149 MMTPA.

RIL is constructing a 28 MMTPA refinery at Jamnagar which is expected to be operational during the
financial year 2008-09.

HPCL has entered into a partnership with Mittal Investments, to set up a 9 MMTPA refinery-cum-
petrochemical complex at Bhatinda.

IOCL has planned investments of Rs 230 billion for several refineries.

Significant investments are also planned for up gradation of existing refineries to meet specifications as
per Euro 4 and Euro 3 (implementable by 2010).
India’s Trade of Oil Products:

India’s trade in Petroleum products is driven by sustained increase in refining capacity ,driven by cost
advantage over erstwhile importing countries.Currently,India possesses surplus refining capacity
generating exportable products. Significant proportion of exports is driven by petrochemicals sale by

Building a strategic petroleum reserve:

The Government has taken steps to set up strategic crude oil storage reserves at various locations,
improving the country’s ability to respond to short term supply disruptions.

Per capita consumption of Natural Gas in India is currently amongst the lowest in the world; at
29 cubic meters compared to a world average of around 538 cubic meters. The present share
of natural gas in the energy basket is only 9% compared to a world average of around 24%..

The demand for Natural Gas at about 180 MMSCMD in the country has far outstripped supply
(about 95 MMSCMD).and there has been an increasing trend towards emergence of new
Natural gas demand as well as conversion from existing fuels to Natural gas.

By 2025, India is expected to bat both China and Japan in becoming Asia’s largest Natural Gas
consumer. Demand is expected to be in the range of 350 MMSCMD.The share of NG in fuel mix
is expected to go upto 22% by 2030.

80% of NG demand is met from domestic sources.70% of NG market is made up of the power
and fertilizer sectors.
LNG as a substitute for costlier Naphtha has seen increasing absorption in the domestic market.

The lack of a cross –country gas pipeline to enable transmission, the emphasis on coal as a
preferred fuel for power generation and the gradual emergence of Coal Bed Methane have
made LNG increasingly uncompetitive for power generation in short to medium term.

Coal Bed Methane (CBM) and Underground Coal Gasification Opportunities:

With proven reserves of 765 MTOE and indicated reserves of between 1,260 and 2,340 MTOE, CBM
could be a great opportunity. More than 26 blocks are already awarded so far and more to be taken up
as part of future phase of CBM bidding. Compression of CBM and marketing as CNG could be exploited
in potential industries as a monetization option for stranded gas.

A related exciting technology is that of underground coal gasification. Given India’s large coal reserves,
the UGC technology could potentially produce volumes of multiples of India’s free natural gas reserves.

At least 30 cities are going to adopt city-wide gas coverage by private and public players as
compared to 6 cities today.

Companies in this space:

Oil Drilling
Company Name Equity Gr. Blk Sales NP PATM Rs Rs. P/E P/BV

Jindal Drilling 11.47 56.4 413.23 18.99 5% 211.3 16.6 74.1 5.82

Oil Exploration / Allied Services

Aban Offshore Lt 7.56 1146.99 658.41 168.7 26% 194.9 44.6 78.7 18
Alphageo (India) 5.12 82.45 54.29 7.65 14% 55.5 14.7 38.3 10.14
Asian Oilfield 10.46 8.55 34.78 7.46 21% 50.4 7.1 27.2 3.83
Cairn India 1892.19 0 1.27 -78.82 168.7 0 0 1.49
Dolphin Offshore 9.56 69.79 205.81 14.82 7% 63.8 15.1 16.1 3.81
Hind.Oil Explor. 130.53 159.8 114.51 -25.5 -22% 76.7 0 0 1.88
Interlink Petro 8.1 3.23 0 -0.64 3.4 0 0 5.29
ONGC 2138.87 52038.07 56635.58 15327.87 27% 289.5 66.9 15.5 3.59
Selan Expl. Tech 14.42 12.74 34.46 13.1 38% 39.9 9.1 29 6.62
Shiv-Vani Oil 43.91 375.59 409.45 57.62 14% 141 10.5 54.3 4.04

Gas Distribution

Deep Industries 20 31.9 20.02 6.37 32% 34.9 3.2 43.8 4.01
GAIL (India) 845.65 14932.56 16036.59 2386.25 15% 134.7 26.8 16.7 3.32
Guj. Gas Company 12.83 652.02 1187.89 159.01 13% 85.5 24 11.3 3.16
Indraprastha Gas 140 613.13 622.02 138.18 22% 33.4 9.4 13.2 3.71
Petronet LNG 750 1945.53 6555.31 474.65 7% 21.6 6.3 13.2 3.84
Corporate Radar
Shopper’s Stop:
Leading fashion and lifestyle retail department store Ahmedabad, Jalandhar, Ludhiana, Amritsar,
Shoppers Stop will be investing around Rs 1,500 crore Vijayawada and Mangalore. The high cost of
over the next three years to double its outlets to 48. operation still remains a concern while there was a
Of this, Rs 500 crore will be raised through equity and hype surrounding the business. They will continue to
warrants, Rs 500 crore through internal accruals and focus on premium category and also on luxury and
the rest through debt," Shoppers Stop Managing have high-end brands like Espirit, Mac, Tommy
Director B S Nagesh said in Mumbai.They are planning Hilfiger and Lancome. The company has also launched
to have at least 48 stores by 2011-12 and the present its own in-store radio format and tied-up with music
1.5 million sq ft area of operation of Shoppers Stop content company Blue Frog, which would update
will touch 3.5 million sq ft. The per store area, customers on new fashion, homeware and others. A
currently about 40,000-45,000 sq ft, will be increased Norway-based private equity fund will invest Rs 400
to around 75,000-85,000 sq feet. They are looking at crore (500 million Norwegian kroners) in India's
having bigger formats of Shoppers Stop. The company energy sector that is expanding rapidly to meet the
will get into a number of new Tier-II cities like South Asian country's growing need for power and oil.

Ispat Industries:
Ispat Industries Ltd said on Wednesday it will not hot-rolled coil by 5,000 rupees a tonne in May due to
raise steel prices till June due to pressure from the escalating prices of raw materials such as iron ore and
federal ministry to control prices to rein in inflation. coke.
Earlier, the company had said it will raise prices of
Indian infrastructure specialist IDFC Private Equity is director for investment, Satish Mandhana, said the
raising a new $700 million fund to buy stakes in firms fund would close in the next two to three weeks, with
expected to thrive as the country modernises its rag- around 85 percent of the money coming from abroad
tag power and transport networks. IDFC's managing
.Bajaj Electricals:
Lighting products and appliances maker Bajaj revenues and 40 percent to net profit. The exclusive
Electricals Ltd announced a strategic alliance with alliance in the first phase would sell stoves and
Italy's Nardi Elettrodomestici S.p.a to sell the latter's chimneys, ovens and microwaves in the second
range of premium gas appliances in India. They are phase, and will look for tie-ups for modular kitchens
aiming for a 25 percent market share in the top-end in the last phase. In 2006/07, Bajaj Electricals
segment in a span of three to five years. Bajaj reported net profit of 385.3 million rupees on net
Electricals sold 3.2 million units of appliances in sales of 10.8 billion rupees. Adjusted for inflation, oil
2007/08 translating into revenue of 3.75 billion is now above the $101.70 peak hit in April 1980,
rupees. The unit makes a range of home products according to the International Energy Agency, a year
including food processors, water heaters, irons and after the Iranian revolution.
gas stoves and contributes about 30 percent to
Public sector lender Oriental Bank of Commerce on The bank's board of directors has recommended a
Wednesday announced a net loss of Rs 99.44 crore dividend of 47 per cent for fiscal 2008, it said. OBC
for the quarter ended March 31, 2008. The bank had has posted a net profit of Rs 353.22 crore for the year
reported a profit of Rs 54.86 crore for the fourth ended March 31, a 39 per cent decline as compared
quarter last year. However, total income has to Rs 580.81 crore in the preceding fiscal. Total
increased to Rs 2,071.01 crore for the three-month income has increased to Rs 7,454.84 crore from Rs
period from Rs 1,577.29 crore in the same period last 5,652.91 crore in the previous year.
year, the bank informed the Bombay Stock Exchange.
Sterlite Tech:
Company has received three contracts valued at Rs August 2008. Sterlite was chosen as the sole
296 crore from Power Grid Corporation of India manufacturer and supplier for over 8,300 km of ACSR
(PGCIL) for the supply of power transmission Conductors that would be installed in the 400 kV D/C
conductors. As per PGCIL's requirements, supplies Korba-Birsinghpur-Damoh-Bhopal Transmission Lines
against these contracts would commence from in Madhya Pradesh.

The losses suffered by the corporate clients of State ended fiscal, the situation is not getting worse. Bank
Bank of India on account of currency derivatives could does not have exposure to any sub-prime paper
range between Rs 600 crore and Rs 700 crore in the except this, which it is marking to market. This is not
just ended fiscal, said Mr O.P. Bhatt, Chairman of SBI. exposure to Credit Linked Derivative Notes, but some
While the bank has a fair amount of derivatives investment they made in Fortis Bank. Credit growth in
transactions, it has not done any ‘exotic deals’. SBI fiscal 2008-9 is likely to be around 22 per cent, which
has structured derivative deals only for its customers is roughly the same as that of fiscal 2007-08. He also
and each deal has an underlying clause. In books said that deposit rates are unlikely to rise. The home
there is no provision on this account. SBI will make a loan segment is likely to see growth between 20 per
provision of $10 million (approximately Rs 40 crore) cent and 22 per cent and the bank hopes to maintain
on its marked-to-market losses on account of its top position in the segment. While speculative
exposure to sub-prime paper in its overseas demand for housing loans has slowed down, actual
operations. While the impact will be seen in the demand from first time buyers is still strong.
bank’s bottomline in the fourth quarter of the just
ICICI Bank and its overseas subsidiaries have an financial instruments whose price and value derives
exposure of over $2.2 billion in the credit derivatives from the creditworthiness of the obligations of a third
market. (Credit derivatives are defined as tradable party).

Jindal South West (JSW) Group will invest a whopping Rs 70,000 to Rs 80,000 crore to expand its operations in
steel, power, infrastructure, cement and aluminum sectors. out that of the total investment his Group would
invest about Rs 40,000 crore in steel sector, which includes ramping up production at its Vijaynagar Plant in
Karnataka, while Rs 25,000 crore would be utilised to enlarge its operations in power sector both for captive and
greenfield power plants. Another Rs 10,000 crore would be invested for making forays into the aluminum sectors
and about Rs 5,000 crore for cement and infrastructure sectors. As part of the Group's efforts to establish itself as
a major aluminum player, it was setting up an alumina refinery at a cost of Rs 10,000 crore at Vishakhapatnam
and the first phase of it would be commissioned by 2011. JSW's greenfield steel project in West Bengal would be
operationalised by 2011-12 and the company would begin the construction work for it by October-November.
The entire project will cost about Rs 30,000 crore. The money of all the projects would be met entirely from the
company's internal accruals while the Group would go ahead with an Initial Public Offering to garner about Rs
4,000-5,000 crore from the market for funding its power sector projects. The Group has posted a net profit after
tax after of Rs 270.06 crore for the quarter ended December 31 last year, while its total income was Rs 2878,08
crore during the same period. By 2020, the company was looking at having a total capacity of 30 metric tonnes
from our three plants in Karnataka, West Bengal and the one being planned in Jharkhand.
Macro economy

European Commission has forecasted the growth in the 15 countries sharing the Euro
would slow to 1.7% this year from 2.6 year in 2007 and to 1.5 % in 2009. In February, Commission
had forecasted the growth to be at 1.8% this year, a cut from its earlier forecast of 2.2% in
November 2007. The moderation in growth results from the persisting turmoil in the financial
markets, the marked slowdown in the US and soaring commodity prices, all of which are taking
their toll on global activity. The Commission expects inflation, which hit a record high of 3.6% yoy
in March, to accelerate to 3.2% in the whole of year 2008 from 2.1% in 2007 and to ease to 2.2%
in 2009.Euro appreciated by 13% against Dollar.

Economy Watch: FDI in India

$ billion
2007-08 (April-February) 25.45
2006-07 22.08
2005-06 8.96
2004-05 6.05
2003-04 4.32

FDI investment in India for month of February 2008 has been record $ 8.34 bn—largest in a single
month so far.India continues to remain the most favorable destination for Private equity
investments in Asia(Excluding Japan) in first quarter of 2008.In second quarter of 2007,India
surpassed China in PE investments, intensified with the gap widening between two countries.
India has attracted PE investment worth $ 4 billion in Q1 2008 against China’s $ 570 million.

According to IndusView Advisors, PE investments in India doubled in Q1 2008 compared to the

corresponding period of 2007, due to huge fund flow into real estate and infrastructure. These
two sectors attracted $1.2 billion, 28% of total PE investment, followed by the Power sector (13%,
$ 520 million).

The Finance and Telecom were tied for the 3rd most favorable sector for investment with 8.7% ($
340 million each). The momentum in India is on the rise while it may lower in China after Beijing
Olympic. India was lagging behind China when latter bagged $13 billion against the former’s $ 7
billion. Globally, real estate and infrastructure fund raising by international real estate PE Funds,
has been brisk, with $130 billion raised over last 2 years. The Government’s announcement that
9% of the country’s GDP will be spent on infrastructure by 2012 has created unprecedented
investment opportunity.
Frying Oil
Goldman Sachs Report: Crude Oil
Crude oil may rise to between $ 150 and $ 200 a barrel within 2 years as growth in supply fails to keep
pace with increased demand from developing nations.
US gasoline demand typically climbs going into
the summer season when Americans take to the
highways for vacations. The peak-consumption
period lasts from the Memorial Day weekend in
US service Industry expanded in April, signaling higher
late May to Labor Day in early September.
energy usage.
Monthly fuel sales were the highest during
August in 5 out of last 6 years.
The Institute of Supply Management index of non-
manufacturing businesses, which make up almost 90% of
the economy, grew for the first time since December.
……..And What CEOs of major Oil
China is increasing refining capacity and boosting imports to Companies say?
meet rising demand for the Olympic Games.
Even as oil prices ascended to new highs
China has more than doubled oil usage since November of more than $124 a barrel this week,
2001 (Decade low of $ 16.7 ). many oil and gas industry executives say
they expect the price to fall significantly by
year's end, a new survey shows. Fifty-five
Price forecasts for spot US benchmark WTI crude Oil for percent of 372 petroleum industry
2008 to 2011 are revised as $ 108 ( 2008), $110 (2009) and executives surveyed by KPMG LLP said
they think the price of a barrel of crude
$120 (2010). These figures earlier were at $96, $ 105 and
will drop below $100 by the end of the
$110 respectively. year. Twenty-one percent of respondents
predicted a barrel of oil will end the year
Reasons for current Crude rally: between $101 and $110, while 15 percent
forecast the year-end price to be between
Dispute between the US and Iran over Nuclear issue. $111 and $120 a barrel.
Militant threats in Nigeria (Biggest Oil exporter of Africa).
Nine percent said they expect the price to
close the year where it's been this week _
Venezuela Slump: Production has slumped to about 2.34 above $120 a barrel. Participants included
million barrels a day from almost 3 million barrels a day in executives for major oil companies,
2002.before the President Mr Hugo Chavez, fired almost independent exploration and production
20,000 workers, who had closed the State Oil Company in an outfits and other energy companies.
attempt to overthrow the Government.
Widely watched oil price prognosticator
Iraq issue: Production is yet to reach 2003 levels, as the Goldman Sachs said this week oil prices
country struggles with sectarian fighting and attacks on its could rise to $150 to $200 within two
energy infrastructure. years; others say crude could plummet to
as low as $40 or $50 a barrel during the
same period.
Mexico’s production has fallen below 3 million barrels a day
since October as Petroleos Mexicanos, the state – owned oil
company failed to compensate for a 30 % drop at Cantarell, its largest field, accounting for its 40% production.

OPEC President sees $200 oil possible: Chakib Khelil

In terms of fundamental, stocks are high, demand barrel rises by 4% and vice versa. If dollar
is easing, supply is satisfactory. The prices are strengthens by 10%, it is likely that Oil prices will
high due to the fact of the recession in the United fall by 40%.If the US economic situation improves
States and the economic crisis which has touched from now to the end of the year; it would help
several countries, a situation which has an effect the market to stabilize.
on the devaluation of the $, and therefore, each
time the dollar falls one percent, the price of the
Guest Column
The Journey of the Volunteers of Inclusive Education Campaign of CRY
appointments in schools for taking interviews, and
It all started when the Volunteer Action compiling the report everything was eagerly and
division of Kolkata attempted to look at efficiently completed by the interns as their period
the status of inclusion in the schools of of internship rolled to an end.
the city through the lens of children
Volunteers with Dr. Javed Abedi However the campaign on Inclusive Education did
with disability. Although the
not halt with the exit of the interns, a new group of
discrimination against children with disabilities in
volunteers who were there to stay for a longer
the education system is a cross cutting issue which
period showed interest in joining the child rights
cuts across barriers of class, caste, gender it hardly
movement and education. Coming from varied
ever gets importance in this sector as far as
academic backgrounds like psychology,
inclusive education is concerned.
international relations and law, this group of seven
There was a group of student interns from privileged and enthusiastic youngsters, had very
different academic background predominantly law little grounding on the issue and were quite
who were eager to initiate the campaign on confused on what they were supposed to do. For a
Inclusive education through undertaking a few of them volunteering in an NGO was more to
research study in order to find out the gap do with feeding children, reading them stories and
between the existing realities and the policies that spending time with them. The first time when she
exist. Anchored by Sruti disAbility Rights Centre, was asked what she would like to do Indira
the group endeavored to study literature and promptly answered: “Anything…. I can feed the
materials that were available, in order to build children with disabilities, or help in managing
their own conviction and understanding. Starting them”.
from designing the questionnaires, to seeking
As much as it seemed an impossible task to change their mindset on the discourse of rights based
volunteerism, it was a revelation to note that right after 7 months this very girl was writing an angry
letter to the authorities of a Kolkata based park Swabhumi , demanding them to make the place
accessible as one of her
Volunteer speak :“ I always knew the importance of studying together –
peers in the group bound
disabled and nondisabled children in the same classroom..but did not knw how to
to a wheel chair was make it happen. Implementation of the various laws was pretty vague before i
joined, and only after working here i figure out its real picture.....”- Kingshook
barred access to the park
“There is so much still left to do and I will continue to work hard till the goal is
because of its long flight of reached. Got so much exposure, met new people … I feel that I am not just a
student but also a student with responsibility towards the society.” - Mandeep
eagerly joined the group making it an inclusive
Coming back to the
formation of this group, this Now as this group moves forward with filing PIL s
group of 7 students started in court with demand for 3 % reservations for
their work only with the children with disabilities in all schools, and
report compiled by the addressing press meets, it is interesting to note
previous group of interns. how they keep battling at every point with societal
Volunteers at the press meet
myths that crowd their minds and their own
While they made various
experiences in the process of advocating for the
presentations of the study at different forums, they
rights. The conviction with which they became
continued to struggle with their own conviction and
media spokespersons showed how they
myths about children with disabilities studying in
the mainstream school. themselves were undergoing a spectacular process

As the second phase of the study required them to of transformation.

interview students with disabilities who have been

The group now determined to increase the scale of
part of mainstream education, their apprehension
their advocacy as well as to maintain their
knew no bounds. “How will we communicate with
continuity is in a process of orienting newcomers
them? What questions do we ask them?” But as
in their group and identifying ways of expanding.
they went forward, it not only became an eye
opener for them but they became the best of friends In just a year’s time volunteerism has attained new
as they chatted on phone, went to movies and depth and meaning for these student volunteers
dinners together with these students who in spite of who are not only in the process of building public
being disabled had the opportunity to study in
opinion and influencing policy but also
mainstream schools.
strengthening their own conviction and have
This gave a new turn to the movement as the
identified themselves with the movement and
volunteers realized the importance of their work
issue to such an extent that they are determined
and what change it was going to bring in the long
to see it attaining great height and becoming wide
run. The volunteer group also expanded with the
spread in the country.
some of the interviewees who had disabilities

Want to be a part of the Campaign??

If you want to join this movement or start your own campaign on Inclusive Education in your own city
please feel free to mail us at or for ideas. You can also
call CRY Kolkata office at 03324148030 / 033241480 Or Shampa Sengupta @ 09433174978

Article Contributed by

Diya Deb, CRY Foundation

Re-innovating Indian Culture

Tiger, Elephant, Wild Boar, Snake, and Crocodile

Kalaripayattu - The Orient's treasure trove, a ........ Kalaripayattu laid down the combat code of
gift to the modern world and the mother of all the Cholas, the Cheras and the Pandyas.
martial arts. Legend traces the 3000-year-old art Shrouded in deep mystery and mists of secrecy
form to Sage Parasurama- the master of all Kalaripayattu was taught by the masters in total
martial art forms and credited to be the re- isolation, away from prying eyes.
claimer of Kerala from the Arabian Sea.
Kalaripayattu originated in ancient South India. Following the collapse of the princely states and
Kung- fu, popularized by the monks of the the advent of free India - Kalaripayattu has lost
Shoaling Temple traces its ancestry to Bodhi its significance as a mortal combat code. In a
Dharma - an Indian Buddhist monk and Phoenix-like resurrection, Kalaripayattu is today
Kalaripayattu master. emerging in a new avatar - an ancient art form -
a source of inspiration for self-expression in
Crafted in ancient South India drawing dance forms - both traditional and
inspiration from the raw power and sinuous contemporary, in theatre, in fitness and in
strength of the majestic animal forms - Lion, movies too.
Architectural Design of a Traditional Kalari or battlefield", and payattu - which means to
The art is trained in an enclosure called ‘Kalari’, "exercise in arms or practice".
which is 21 feet by 42 feet. The entrance faces the Martial arts have been in existence on the Indian
east. In the south-west corner is a seven-tiered sub-continent for thousands of years. Long ago,
platform called the "poothara", which houses the animal fighting styles were imitated by pre-
guardian deity of the kalari. These seven steps historic man which was a system for survival. The
symbolise seven abilities each person requires. first weapon used was the stick which was an
They include Vigneswa (Strength), Channiga extension of the arm. Various weapons were later
(patience), Vishnu (commanding power), invented during the Stone and Iron Ages. Even in
Vadugashcha (the posture), Tadaaguru (training), Vedas they have mentioned about martial arts.
Kali (the expression) and Vakasta - purushu Kalaripayattu is one such martial art, Crafted in
(sound). Other deities, most of them incarnations ancient South India and draws inspiration from
of the Bhagavathi or Shiva, are installed in the the raw power, majestic strength and instinctive
corners. fighting techniques of animals like lion, tiger,
elephant, wild boar, crocodile etc.
Origin and Evolution It is significant that some Kalaripayattu masters
Kalaripayattu is perhaps the most ancient martial trace their lineages of practice to "Dhanur Veda"
art in the world. Religions have incorporated and claim that the texts in which their martial
Kalaripayattu into their realm. The origin of techniques are recorded derive from Dhanur
Kalaripayattu is still in the midst of obscurity. Vedic texts. Although the Dhanur Veda means the
Traditional Kalari masters attribute mythological "science of archery," it encompassed all the
stories and legends to the origin of the art. traditional fighting arts. The explicit concern in
Legend traces the 3000-year-old art form to Sage Dhanur Veda texts is not with battlefield
Parasurama- the master of all martial art forms strategies, but rather with training in martial
and credited to be the re-claimer of Kerala from techniques.
the Arabian Sea. The Dhanur Veda opens by cataloging the subject,
At the turn of the 6th century A.D., martial arts stating that there are five training divisions (for
spread from Southern India to China by Daruma warriors on chariots, elephants, horseback,
Bodhidarma - an Indian Buddhist monk and infantry, or wrestling), and five types of weapons
Kalaripayattu master. From China, martial arts to be learned (those projected by machine
have spread to Korea & Japan. Kalaripayattu is [arrows or missiles], those thrown by the hands
derived from the words Kalari - which means [spears], those cast by hands yet retained
"place, threshing floor, [noose], those permanently held in the hands
[sword], and the hands themselves
Most of the final Chapters are brief descriptions the Nair soldiers and Kurichya tribals of
of postures and techniques for wrestling and the Wayanad. The British dreaded the widespread
use of a variety of weapons including noose, Kalari training and objected to the traditional
sword, armors, iron dart, club, battle axe, discus, system of carrying arms by the Nairs. Thus the
and the trident. A short passage near the end of Malabar commissioners found it essential to
the text returns to the larger concerns of warfare unarm the entire region to establish tranquility.
and explains the various uses of war elephants Major Dow's direction in this regard, is note
and men. The text concludes with a description worthy.
of how to appropriately send the well-trained On 20th February 1804, Robert Richards, the
fighter off to war. Principal Collector of Malabar, wrote to Lord
Kalaripayattu reached its pinnacle of glory during William Bentinck, President and General-in
the 100-years-war between the Cholas, Cheras, Council, Fort. St. George, asking permission to
and Pandyas in the early part of the first take action against persons carrying arms, either
millennium. The warring states refined the imposing death penalty or deportation for life.
fighting skills and techniques prevalent in the Lord Bentinck issued an order on 22nd April
area into a martial art form. The art flourished 1804, that those who concealed weapons or
between the 13 and 16 centuries, becoming a disobeyed the orders of the British against
part of the education of youngsters. It was a carrying arms would be condemned to
social custom in Kerala to send all youngsters deportation for life.
above the age of seven to learn Kalari. At the time of the Pazhassi rebellion, British
The inherent beauty of this art form lies in the soldiers raided each and every house of the
harmonious synergy of art, science and rebels to confiscate their arms. The same
medicine. The various movements in Kalari are situation repeated in Travancore at the time of
based on animal movements. Several poses are the revolt orchestrated by Veluthampi, the
named after animals. Hence it is generally Dalawa of Travancore. These developments led
believed to have developed in the jungles when to the slow deterioration of Kalaripayattu. Yet,
hunters observed the fighting techniques of there were a few Kalaripayattu gurus who
various animals. worked selflessly to keep this tradition of martial
The death blow to the Kerala military system and art alive for the future generations by training
Kalaripayattu was dealt by the British. When the youngsters away from the prying eyes of the
Malabar Province was ceded in favor of the British rulers.
British by the treaty of Seringapatam in 1792,
there were a series of revolts in Malabar. The
revolt led by Pazhassi Raja was well supported by
Kalari's influence on other arts
Kalaripayattu has strongly influenced the evolution of several of Kerala's theatre and dance forms,
most prominently Kathakali and Theyyam. Kathakali practitioners are required to train under Kalari
masters to develop various attributes such as fitness, stamina, and martial movements enacted in their
performances. Kalari practitioners claim that Bodhi Dharma, a Buddhist monk who was responsible for
training the Shaolin monks in kung-fu, was in fact a Kalari master.

Resurgence of Kalaripayattu
Following the collapse of the princely states and the advent of free India - Kalaripayattu had lost its
significance as a mortal combat code. Fortunately, Kalaripayattu has successfully survived the steady
and sad decline in popularity. Kalaripayattu now has a compelling global audience and its fame and
glory has won hearts all over.

In a Phoenix like resurrection, Kalaripayattu is today emerging in a new

avatar - an ancient art form - a source of inspiration for self-expression in
dance forms - both traditional and contemporary, in theatre, in fitness and
in movies too.
The training of a student to become a master includes the training in Ayurveda and in locating the vital
points of the body. A Kalari Guru is not only a trained movement artist but also a professional in
Ayurveda, a doctor who treats people of diseases and general ailments. Kalari has developed a
traditional orthopedic system which is widely popular all over the states, especially for the setting of
displaced bones. There are different types of Oils, pastes, herbs etc are used only by kalari masters to
treat muscle and bone injuries.

Kalari Massage
The first stage of the preparation of a warrior and the artiste is based on oil massage known as
Udvarthaizam or Uzhichal. The Ayurvedic tradition of Susrutha says that diseases are afraid of
approaching a body which has been foot-massaged, just like animals in the sight of a lion.

Kalari massage is a traditional massage, performed by the therapist using his hand and feet, applying
appropriate pressure to specific vital parts of the body. It involves a full body massage with medicated
oil and stimulating or massaging the Marma points on the body.
Usually an uzhichil course lasts for fourteen days. At the time of this massage the student has to follow
strict restrictions in his or her daily routines. He should not expose to the sun for a long time should
take only the prescribed food and drinks and should follow strict celibacy.
Massage helps the body to attain a healthy constitution as well as flexibility, nimbleness and
suppleness. Moreover, massage enables proper blood circulation and easy maneuverability of the body
for turning and twisting. Kalari massage not only relieves back pain, stiffness and sports injuries but
also stimulates various bodily organs and systems.

Marma points

Marmas are certain vital points of the body. A marma point is a juncture on the body where two or
more types of tissue meet, such as muscles, veins, ligaments, bones or joints and 'where the Prana is
present'. There are total 108 Marma points in the body in which 64 are considered as kulamarma
(deadly points). These points could be used to heel or to harm. If these points are pierced hard, it could
result in trauma or even death. A kalari masseur uses the Marma points to heal.

More information can be found on;
Kalari Academy of Performing Arts.
#25, V N Plaza, Bazaar Streest, Brigade Cross Road, Bangalore - 560025. India.
Mobile 91-99451 55995 Ph 91-80-41127789
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