Bangalore Sweatbox

B'lore grappling with power cuts
Power situation worsens as distribution companies default
Business Standard

Though reservoirs in Karnataka are nearly full owing to copious rains, the entire state, including Bangalore, is grappling with unscheduled power cuts everyday.

The reason: Karnataka Power Transmission Corporation Limited (KPTCL) and five electricity supply companies (Escoms), which purchase power from the Karnataka Power Corporation Ltd (KPCL), have not paid their dues. Besides, transmission and distribution losses are mounting by the day.

The KPCL supplies nearly 60 per cent of the power consumed (4,989 Mw) in the state while the central allocation is 1,070 Mw. However, for the last two months, KPCL has been forced to make intermittent cuts in power supply to the KPTCL and the five Escoms – Bangalore Escom, Mangalore Escom, Gulbarga Escom, Hubli-Dharwad Escom and Chamundeshwari Escom (for Mysore region) -- due to the non-payment of dues.

The non-payment of dues have hit power generation at KPCL's coal-based units. The worst affected is the Raichur Thermal Power Station (RTPS) since cash shortage from the non-payment of dues is affecting coal purchase.

"We supply power to KPTCL and the Escoms at the rate of Rs 1.40 per unit. But they are clearing the dues in installments. If the government does not direct KPTCL and Escoms to clear the dues at the earliest, the situation will only get worse," a top KPCL official told Business Standard.

KPCL earns an annual revenue of Rs 1,600 crore per year, but its dues from KPTCL and the Escoms have reached Rs 2,800 crore. Besides, the dues are increasing every year by Rs 500 crore-Rs 600 crore as the Escoms are able to pay only about 75 per cent of the billed amount.

The dues, which were around Rs 1,555 crore in 2004, grew to Rs 2,102 crore in 2005. Now, it has reached Rs 2,800 crore.

"Till now, we managed our operations by raising loans at low interest rates. But financial institutions have warned us about the increasing dues, which have surpassed the revenue. It might not be possible for us to raise fresh loans. We may have to cut power generation, which will eventually hit the consumers," he pointed out.

Another worrying factor is the increasing transmission and distribution losses. Though the Karnataka government maintains that transmission and distribution losses have been reduced to 27 per cent, in reality, they are much higher.

A recent joint study by Crisil and ICRA revealed that the transmission and distribution losses in Karnataka was between 30 per cent and 40 per cent.

"It is much less in Bangalore as the cables have been laid underground. Power reforms are yet to be implemented in rest of the state," the official pointed out.

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Accident triggers violence on Hosur Road
The Times of India

Bangalore: The traffic jam-stricken Hosur Road had more trouble in store on Wednesday. Vehicles were stranded on Hosur Road and around Electronics City when a road accident turned violent.

Angry locals pelted stones at a private bus and torched it, after it fatally knocked down a woman riding pillion on a motorcycle. Traffic piled up on either side of Electronics City for nearly two hours before the damaged bus were cleared.

Around 2.30 pm, Vimala was returning with her husband, Arun Kumar, residents of Ulsoor, after a cardiac check-up for their child at a hospital off NH-7. A private bus knocked down the vehicle from behind and the woman was run over near Hosa Road junction. Kumar and their child escaped. The driver, however, fled the scene.

Within minutes, irate locals pelted stones at the bus after the passengers got off. Locals shouted slogans against authorities for inaction over regulating traffic on the busy stretch. The situation turned volatile when some miscreants attacked other buses and set fire to the bus that knocked down the two-wheeler. The few cops at the junction stood mute spectators till reinforcements arrived.

The angry mob resisted police from clearing the damaged bus forcing the latter to resort to lathicharge. After the crowd dispersed, it took nearly an hour to tow away the damaged bus.

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The State Government is yet to take a decision on the final alignment of the Byappanahalli-Mahatma Gandhi Road section of the proposed Rs. 6,300-crore Bangalore Metro Rail, work on which is being inaugurated on Saturday by Prime Minister Manmohan Singh.

But Bangalore Metro Rail Corporation Ltd. (BMRC) said the Government was seized of the matter.

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The coffee shop industry is naturally dismayed. “The BMP didn’t give us any time to even gather our defences. They slapped us with a notice and asked us to down shutters immediately. We hold valid licences till 2007. They told us that it was cancelled. Apparently they’ve discovered a ‘new’ law that allows for a setback area for every building, in which one may not carry out any commercial activity through temporary structures. Permanent structures are okay, but not temporary. This is very foxing,” says one spokesperson.

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The itch of the pitch in IT Bangalore
Deccan Herald

Noise pollution in the IT capital of India, Bangalore, is inching towards alarming proportions. The noise levels at some of the major roads and public places in the City are well above the permissible limit, according to Mysore-based All India Institute of Speech and Hearing (AIISH). Same is the situation in Chennai.

With the rise in vehicular traffic, noise pollution has gone up considerably in the cities. In fact, the most alarming levels of noise were heard in hotels where the noise levels reached up to 88 dB.

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BBC News, 13 Jun 06

Child labour -- India's 'cheap commodity'

By Navdip Dhariwal
BBC News, Tamil Nadu

Farm workers toil long hours in the fields in the Indian state of Tamil Nadu for little reward in the intense heat.

But it is often their only means of survival.

Cheap labour is one commodity India has in abundance. Hidden from public view though, is another workforce.

In an isolated spot, miles from the nearest town, is a thriving matchstick industry.
Here inside makeshift straw huts -- and in the small dwellings that neighbour them -- we found some of India's youngest workers.

Rows of exhausted young girls -- up to 20 and as young as five are working alongside their mothers. For 16 hours a day their tiny blistered fingers skillfully turn out matches for export.


Ordered to leave

The toxic smell of sulphur is overwhelming in the windowless room.

Twelve-year-old Sindhu dips the tips of the sticks into hot sulphur. "I start work early but don't finish until late into the night. I get paid less than two dollars a week."

Our presence was clearly not welcome. As we were speaking to the girls the owner came in and ordered us to leave.

Within walking distance are other factories. But again, when we arrived, the youngest workers were quickly led away.

While the factory owner denied he was employing underage workers, almost every single household in this part of Tamil Nadu has one or more children working long hours in appalling conditions.

Campaigners say over 11 million children are forced to work in India.


Exploited

Lighting a fire for a rare family meal, Sarojama gathers her five grandchildren around her.

She has barely been able to feed them, so she was forced to borrow money from a local factory owner. Unable to pay back the loan she sent her young grand-daughter to work. Parimeeta was taken out of school and has been working 12 hour days for two years.

The debt is less than $20.

Campaigners fear that as India's economy continues to boom, children are increasingly being exploited to meet the country's hunger for global success.

In a recent raid in the capital Delhi, police rescued a large number of boys from local sweatshops. Agents had lured them from India's poorest regions, promising the children that they would be taken care of and paid well.

They were found hidden on the top floors of garment factories -- held captive in filthy cramped rooms under lock and key. They painstakingly spent hours applying crystals to garments. Many of the clothes end up being sold in shops in the UK.


Ineffective

These are places the authorities say are difficult to close down.

But Swami Agnivesh of the Bonded Liberation Front says that hundreds of children are kept hidden from public view in the buildings of crammed alleyways. "They are kept in the most appalling conditions and not enough is being done to help them," he said.

India has laws in place to protect children and bans the use of young workers, but they remain pretty ineffective.

The United Nations Children's' Fund says that the sheer volume of children engaged in work is living proof of the world's failure to protect them. That is the reason why the agency's work is focused on building a protective environment which safeguards children from exploitation and abuse.

In Tamil Nadu local charities have helped pay off families' debts so that at least some children can be released from the matchstick factories. Finally freed from the shackles of work, they now have some hope of reliving their childhood.

But it is often a dream that is short-lived. Charity workers admit most of the children are likely to find themselves forced back into a life of bondage.

CHILD LABOUR 2006
218m aged 5-17 in work
126m in hazardous work
Almost 50m work in Africa
122m work in Asia
70% of workers in agriculture
Estimated cost of ending child labour: $760m over 20 years
Source: International Labour Organisation

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Business Week, 5 June 2006

Technology
By Manjeet Kripalani and Peter Burrows

Apple Follows its Instincts Out of India

CEO Steve Jobs may have a soft spot for India, but the economic reality is, building a technical support center there doesn't make sense

Apple Computer (AAPL) CEO Steve Jobs has always had a thing about India. While he was a young technician at game developer Atari (ATAR) in the mid-'70s, Jobs took a break and backpacked around India with a college friend in search of spiritual enlightenment. Not long after returning to the U.S., his more capitalistic instincts primed, he and Steve Wozniak launched Apple in 1976. Today, Jobs is known in India and through much of the rest of the world as an entrepreneur-turned-billionaire and one of the savviest marketing minds on the planet.

He is also a tough-minded executive who knows when to cut and run when the numbers don't add up. That's why Apple has shelved plans to build a sprawling offshore technical support center in Bangalore. Just months ago, there was talk of Apple employing 3,000 workers by 2007 who would handle technical and customer-service support for Macintosh computers and other Apple gear in India and elsewhere. There was even speculation that Jobs would travel to India in the fall to publicize Apple's commitment to the country.

It wasn't meant to be, and a small, newly hired staff of about 30 at Apple's subsidiary in Bangalore was let go recently. (The company will maintain a small sales and marketing arm in the city.) Apple spokesman Steve Dowling would only say the company had "reevaluated our plans" and decided to focus support center activities in other countries.

SOME QUESTIONS. However, another source familiar with the situation said the decision was mostly cost-driven. "India isn't as inexpensive as it used to be," the source said. "The turnover is high, and the competition for good people is strong." The company feels it "can do it more efficiently elsewhere."

Such talk comes amid concerns about the sustainability of India's fast-track economy. True, India's economy grew 9.3% last quarter, and it is still home to the world's largest, fasting-growing offshore outsourcing sector, which generates about $17.3 billion in revenues and employs nearly 700,000 people, according to the McKinsey Global Institute. And Indian outfits such as Infosys (INFY) and Tata are among the best-managed companies in the emerging markets.

Yet India's benchmark stock Sensitive Index, or Sensex, experienced a mini-crash in late May as global investors fled from emerging market stocks (see BW Online, 5/23/06, "India's Market Turns Down the Heat").

INDIAN BRAINPOWER. And India's fabled infrastructure headaches and surprisingly robust wage growth have also raised worries about India's undisputed leadership as a business outsourcing Mecca. Entry-level wages have climbed by as much as 13% annually from 2000 to 2004, while salaries for mid-level managers have registered increases of 30% annually during the same period, to a median of $31,131, according to McKinsey and Nasscom, India's software industry association.

However, while the Apple move certainly will generate plenty of media attention -- "Apple Software Logs Out of India," proclaimed a headline from the Times of India -- it may be a special case. Apple has certainly utilized Indian engineering brainpower in the past. Part of the electronic circuitry that powers the iPod was developed by a research outfit in Hyderabad, for instance.

Yet for the Bangalore operation, Jobs never had any intention of outsourcing any high-end software development and proprietary technology research away from the company's Cupertino headquarters or operations nearby, according to the source familiar with Apple's operations in India.

STRATEGIC TIE-UP. Also, while wages for software engineers and IT project managers have soared, entry level wages for call-center employees are still an affordable $2,500 or so per year. Apple had only a staff about 30 at its Bangalore operation, but "you need economies of scale, say 500," to generate huge savings for a company, says Sunil Mehta, vice-president of Nasscom. Unlike rivals such as IBM-Lenovo, Dell (DELL ), and Hewlett Packard (HPQ ) that have a huge base of personal computer customers, Apple's Mac market share is far lower, undercutting the justification for a huge customer service center on the ground in India.

The Bangalore operation also seemed redundant given that on May 29 Apple announced a strategic tie-up with New Delhi-based HCL Infosystems to provide distribution and after-service care for Apple's phenomenally successful iPod line. HCL has a tremendous distribution and service footprint in the country and has worked successfully with Nokia (NOK), India's dominant mobile phone brand. "We will put Apple products through the same distribution network as we do with Nokia, and offer after sales service for all things related to the iPod including iTunes," says Saurav Adhikari, vice-president for strategy with HCL.

Given all that, the economic rationale to build out an Apple-run Bangalore customer service center looked flimsy. Jobs may have a soft spot for India given his youthful spiritual exploration of the country. But when it comes to running a $13.9 billion enterprise like Apple, his capitalistic instincts are likely to win out every time.

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