New Models Alter Business Landscape

Taking cue from global trends, Kerala’s business landscape is slated to undergo colossal changes in the new year. Here, we analyse the seven key determinants that are reckoned as prime movers that will bolster the business sector in the state

Published: 05th January 2015 06:11 AM  |   Last Updated: 05th January 2015 06:11 AM   |  A+A-

Startup culture

Of late, the youth in the state seem to have developed a passion for entrepreneurship, which has helped many elevate their stature from being an employee to that of an employer. In 2005, when the first incubator was launched in Kerala, doing business was considered a risky affair. However, in the past decade, the whole business scenario has undergone a whirlwind of changes, with the state becoming a startup hub. Now, officials representing various state governments visit Kerala to study the ‘Startup Revolution’ and to replicate it in their respective states. Though the state accounts for 10 per cent of the country’s unemployed, it had lacked an industry culture. Riding high on the success, the state now nurtures a dream of starting 50 incubators and 10,000 startups by 2025, which is expected to generate around one lakh job opportunities. Apart from Kochi, a Startup Village began functioning in Kozhikode last year. Drawing inspiration from Kerala, Andhra Pradesh has already started a Startup Village and Madhya Pradesh is all set to follow suit.

Crowdfunding

Crowdfunding, a novel way of channelising investment for businesses, is slowly gaining popularity in state. It’s not just startup firms, even filmmakers (Oralpokkam) have started adopting this new method of raising monetary contributions from prospective investors. The startup firms are provided with mentoring, funding (Seed and Angel funds) and access to market. Usually, the gestation period for a startup is four to five years. However, unavailability of fund remains the single largest hurdle for most startups. It’s at this juncture that crowdfunding assumes its importance. In India, so far only 15 firms had raised capital through crowdfunding and three of them are incubated with Kochi Startup Village - RHL Vision (`1.25cr),  MindHelix (`70 lakh) and SectorQube Technologies (`55 lakh).

Food Processing

Kerala, the land of spices and cash crops, has recently realised its true potential and business prospects in the food processing sector. The food processing industry is seen as a potential source for driving the rural economy as it creates a synergy between the consumer, industry and agriculture. Of late, many new food processing units have started mushrooming in the state, especially in the small-scale sector. Experts point out that with innovative products, aided with technology backing, ‘Made in Kerala’ can go anywhere across the globe. It is estimated that the state has the potential to emerge as a food processing hub worth `30,000 crore. The food processing sector in Kerala is currently worth over `5,000 crore, with spices, pickles and marine products being the major food products exported from Kerala. If the  interest shown by the participants at the Global Agro Meet organised by the state government are to be believed, the food processing sector has already started its giant leap towards a glorious future.

Malls/Multiplexes

With the advent of mall and multiplex culture, the consumer mindset has undergone sea change in the past one decade. The increasing footfalls in the shopping malls and multiplexes in the state have prompted several major players to invest in the sector here. It is estimated that the total number of malls in Kerala will be 50 by the year end. The number of  multiplexes have also increased manifold in the state, which is expected to be a big game changer in Kerala. With D-Cinemas promoted by actor Dileep, more such ventures are likely to come up in the near future. Unitech, Prestige and Sobha as also a number of home-grown names - Abad, Malabar, Hilite and Gokulam - are setting up malls in the state. The major players in the multiplex space are Carnival Group, PVR, Cinepolis and Pan Cinemas.

Business Incubators

Business Incubators as a new business model is well-slated to sustain in the future. Business incubators are organisations geared towards speeding up the growth and success of startups and early-stage companies. At present, 15 business incubators are operational in the state and the government and private entities are planning to launch many more. The estimated revenue size of these incubators is `5 crore. Technopark TBI, the first incubator in the state, was started in 2005. If early signs are anything to go by, the ‘incubator’ business is here to stay for the long haul. The major revenue from the incubators is the rent collected from the startup firms. This apart, money can be generated from the fees of lab equipment, video conferencing facility, board room meetings and the interest from seed funds. Incubators can also take stakes in startups and the investment will be profitable once the company becomes successful.

e-commerce Boom

E-COMMERCE-BOOM.jpgThe e-commerce retail in the state recorded a rapid growth of 50-60 per cent in the past three years and is expected to clock further growth this year. The online shopping market is now worth around `500 crore, and is expected to touch `750 crore this year. The major players in the e-commerce segment are Flipkart, Jabong, Amazon, Snapdeal etc. In Kerala, e-commerce penetration is the highest in Palakkad, Tripunithura, Muvattupuzha, Tirur, Manjeri, Perinthalmanna, Kannur, Kollam, Karunagapally and Tiruvalla. Kochi, Thrissur, Kozhikode, Thiruvananthapuram and Kottayam together hold around 65 per cent share of the total e-commerce business in the state. Though the traders are up in arms against e-commerce websites, it seems the people in the age group of 22-45 are not willing to back off from this ‘comfort’ shopping mode.

 Organic Farming

It seems that Keralites have understood that shifting to vegetables and fruits produced through organic farming is the only way to stay healthy. Kerala eyes to become a fully organic state by 2016. Of late, even movies were produced highlighting the importance of going organic. Actors Salimkumar, Sreenivasan and Mammootty have already instilled the seed of organic farming in society. Kasargod district has already switched to organic farming completely. The state government has also decided to involve Kerala Agricultural University and the Agriculture Department to promote processing of agriculture products under the ‘Safe to Eat’ brand. Moving a step forward, Kerala also plans to achieve self-sufficiency in milk production within the next three years, which also is a positive sign.

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