Keltron: The chips are down

Nambiar: the centre of controversyWhen Mohanan, a young Keralite working in the United Arab Emirates, was preparing for his annual holiday in Kerala, he was flooded with the usual requests from home for foreign goodies. His younger brother asked for an electronic calculator of the latest type.The patriotic Mohanan decided to teach his brother a lesson. After he landed in India he bought a calculator manufactured by the Kerala State Electronics Development Corporation (Keltron), and gave it to his brother after delivering a homily on "buying Indian." But the brother had the last laugh: on close scrutiny he discovered that the instrument bore the legend "Made in Hong Kong."When this was brought to the company's attention, instructions were issued to sales outlets throughout the country to erase the tell-tale markings. The sales manager protested against this unethical practice and was promptly relieved of his portfolio. The calculators were successfully withdrawn from the market.Earlier, C. Bhujangaswamy, collector of Customs and Central Excise, Cochin, had confiscated two separate consignments of pocket calculator components imported by Keltron from a Taiwan firm against a valid import licence for calculator chips only. The components were in ready-to-assemble form, complete with plastic covers and instruction manuals. Keltron lawyers pleaded with the collector to clear the consignment, for which there was a valid licence, and asked for the remaining components to be passed under Open General Licence.Had the two consignments not arrived by the same flight, the chances were that the components would have been cleared under the two separate bills of entry. Import of complete kits of pocket calculators are banned under No 664 of Appendix 3 of the Import Trade Control policy of the Government of India. Considering that Keltron was a state Government undertaking, the collector took a "lenient view" and allowed Keltron to redeem the goods on payment of a Rs 15,000 fine. The accountant-general's office in Trivandrum, however, accused Keltron of a "wilful attempt to bypass the import policy of the Government of India."Procedural Error: K. P. P. Nambiar - chairman and managing director of Keltron and a recepient of the Republic Day award given by the Invention Promotion Board for his "pioneering contribution to the indigenous development of electronic calculators", was on the defensive when asked about the palming off of foreign-made calculators as indigenous products and the violation of import rules. Nambiar said that in Keltron's nation-wide network of sales outlets, only 11 calculators were found to bear the "Made in Hong Kong" legend which he attributed to a mix-up and not to any wilful act on the part of the company. Regarding the import of complete calculator kits Nambiar said that it had been allowed in the past and the practice was still continued by small-scale industries, especially in the north. Several large companies with well-known brand names, including Keltron, had been marketing these calculators throughout India. Keltron placed two purchase orders for calculator parts with Taiwan's Logi Tech Inc under two import licences, taking advantage of the Government of India's policy of permitting import of components up to a value of Rs 3 lakh by the small-scale sector. He said there was only a procedural error on the part of Keltron and no wilful attempt to bypass the official import policy as charged in the letter from the account-general's office. "Keltron will take all necessary care in following the procedural requirements in future," Nambiar said.Obviously, the absence of such care isn't a new phenomenon in Keltron's working which has evoked a curious mixture of approval and the strongest possible criticism. Nambiar's Republic Day award contrasts sharply with a sheaf of allegations made against him and Keltron on his home territory. The Finance Department of the Kerala Government has, in fact, called for a committee to probe Keltron's working and a demand was recently made in the state Cabinet for an inquiry into the style and functioning of its chief executive. Alleges M.V. Raghavan, a Communist Party of India-Marxist (CPI-M) member of the Kerala Assembly: "Certain vested interests in the ruling party are shielding a group of officers and politicians who have made Keltron a hot bed of corruption, nepotism and sheer waste of the tax-payers' money."Mixed Record: While that might be an extreme view, Keltron's record is a mixed one. Kerala was the first state in India to establish an electronics development corporation. While Keltron's example has been followed by other states, its own future hangs in the balance as labour unrest has forced four out of its 12 subsidiary and associate companies to close down with the possibility of others following suit. The financial position of the units presents a rather grim picture.While most of the companies are running up heavy losses. Keltron's Research and Development centre, on which the Government had so far spent nearly Rs 3 crore, has not generated any new technology worth its name or made any worthwhile contribution in the manufacture of components. Fabrication of radios and calculators and assembling of TV sets, which together accounted for two-thirds of Keltron's Rs 10 crore turn over last year, require no R & D back-up.More than anything else, it is the man at the helm of Keltron's affairs who has been the centre of controversy. Nambiar, a product of London's Imperial College of Science and Technology, joined Keltron as the first chairman and managing director on June 1, 1973. The Kerala Government simultaneously took an unusual step and made him a secretary in the Department of Industries, so that he could short-circuit the normal channels of bureaucracy and exercise unfettered autonomy. Thus, Keltron took upon itself to earmark Rs 90 lakh in its 1981-82 budget for a Rs 4 crore instrumentation plant, start construction work and book orders worth Rs 17 crore even before the Kerala Government cleared the scheme. The state's coffers were also placed at his disposal to usher in the promised "electronics revolution." In addition Nambiar was given a free hand, bypassing normal government guidelines, in the recruitment of staff.To an extent, his success was undeniable. Within the short span of seven years, the corporation took effective steps for the rapid development of the electronic industry in the state and started implementing several projects through 12 new companies promoted by it. All the units were set up in rural areas, mostly in industrially backward districts. More than 100 ancillary and small-scale units also came up with Keltron support, providing employment for about 10,000 people besides the 3,000-odd employees of the corporation and its 12 subsidiary companies.Personal Drive: The company achieved an enviable range of products. The product range includes aluminium electrolytic capacitors, piezo-electric crystals, carbon film resistors, colour TV delay lines, ceramic capacitors, loudspeakers, power transistors. silicon rectifiers and diodes, thermistors and varislers, hard ferrites. TV receivers and systems, calculators, business machines and other digital electronic products, power supply systems, 16 mm cine projectors, a range of transistor radios, voltage stabilisers, electromagnetic counters and special equipment and systems for defence.A Keltron pocket calculator (left) and desk calculator: a mixed recordNambiar introduced for the first time the concept of all women village cooperative societies for the manufacture of radios and printed circuit boards, thereby taking the industry into several villages in Kerala. Already 22 societies have been formed, four of them with the support of the Central Social Welfare Board.If Nambiar favoured one half of the population over the other half in creating employment opportunities, it could not be held against him for Kerala has more women than men. But the criticism of nepotism and favouritism is not without substance. His own brother occupies a key post in one of the Cannanore units of Keltron. A number of his former colleagues have found cushy berths. Nambiar's wife Saroj handles the corporation's publicity budget - Rs 23.4 lakh in the 1979-80 balance sheet - through a Trivandrum-based advertisement agency.The total sales turnover of Keltron rose from Rs 95 lakh in 1974-75 to Rs 5.5 crore in 1978-79 and Rs 10.25 crore in 1979-80. The turnover for 1980-81, according to Nambiar, was expected to cross Rs 20 crore. As per the projected plan, with all the projects being speedily implemented, the total turnover of Keltron would touch Rs 100 crore by 1984, he added.None of this, evidently, impresses some official circles. The Finance Department of the Kerala Government, in a confidential note submitted to the chief minister, industry minister and the finance minister, had cautioned against pumping money into Keltron and called for the appointment of a committee to inquire into the working of its various units and the financial viability of the corporation itself. The note pointed out that till March 31, 1979, the corporation and its subsidiary companies had incurred a loss of Rs 196 lakh and that Keltron was able to survive only because of lavish grants of Government money.Controversial Agreements: Speaking about financial losses. Nambiar said that Keltron was a development organisation and the efficiency of such an organisation could not be assessed by the aggregate of the losses or profits made by its units. Another major factor which affected the performance of the corporation was the lopsided policy of import of finished goods at a lower rate of custom duty and the levy of substantially higher rate for the import of raw materials required for the finished products. For instance, the present import duty on etched aluminium foil is 120 per cent whereas the duty on finished capacitors, readily allowed to be imported, is only 45 percent.Some of Keltron's collaboration agreements have also proved to be controversial. The collaboration with the Belgian concern Sprague Electro Mag for the Keltron Component Complex Ltd in Cannanore district is believed to have eventually come to roost. The colour TV delay line unit, also in Cannanore, is another instance where the Sprague agreement is said to have recoiled. The accord in both cases contained clauses whereby the collaborator could back out of the export guarantee given on the products by paying a stipulated amount as compensation. That is exactly what Sprague Electro Mag has done to Keltron by paying SI 75,000 (Rs 14 lakh) and $275,000 (Rs 22 lakh) for backing out of the buy-back arrangements. While there is no internal market for these products, the European market, for which Keltron set up these units, is flooded with these same items from Taiwan and South Korea at a much lower rate.Keltron's most prestigious collaboration arrangement has been for its instrumentation project being established at Aroor in Alleppey district. The French firm, Controle Bailey SA, has deputed its instrumentation engineer, Jacob Mathai, a French citizen of Indian origin, to implement the project. In course of time, Mathai became a Keltron employee with tax-free emoluments for his services as a expatriate technical advisor. This was done with Government of India approval on condition that he should not be entrusted with any other job handled by an Indian. Nevertheless, Mathai, who was absorbed into the unfolding set-up purely for his technical expertise, was for a while entrusted with the additional charge of marketing.Disregarding Norms: Nambiar's independence has created a piquant situation for both the Kerala Government and Keltron. During the current wage revision negotiations that preceded the strike in four of its units in Trivandrum district, the industry and labour ministers laid down certain norms under which each employee would get a minimum raise of Rs 100 and a maximum of Rs 140 in his gross emoluments. In utter disregard, Nambiar reached an agreement with the Cannanore based units under which every employee, irrespective of his grade, would get an increment of Rs 120 a month. Though this prevented the strike from spreading there, state Industry Minister P. C. Chacko told India Today that he could not be a party to any agreement entered into over the head of the Government.He had reasons to take such a firm step, for earlier, in another state-owned undertaking the chief executive offered the employees a bonus of 40 per cent to buy industrial peace, which brought in its wake a series of demands from other state-owned industries. Chacko asserted that Nambiar would be placed under suspension if he proceeded with implementing the Cannanore accord. Evidently, Keltron's affairs are coming to a boil.Published By: AtMigration Published On: Nov 22, 2013 11:14 IST--- ENDS ---

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Keltron: The chips are down

Earlier, C. Bhujangaswamy, collector of Customs and Central Excise, Cochin, had confiscated two separate consignments of pocket calculator components imported by Keltron from a Taiwan firm against a valid import licence for calculator chips only.

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