Economy & Nation   Exclusive
Dredging and deepening Indian ports: What ails Kochi?

The reduced drafts available due to lack of dredging in the Hooghly River Port system there for all to see, and the recent mishandling of the growth of ports and dredging on the Malabar coast is making matters worse
 

The recent face-off between Cochin Port Trust and Mercator bringing all channel and related deepening dredging in Kochi Harbour to a grinding halt drives yet another nail into the economic security of India with far-reaching consequences well beyond just the Arabian Sea that land-bound policy makers in Delhi do not seem to want to understand.
 

Last Friday, the Union government-controlled Cochin Port served a notice to Mercator giving the Mumbai-based firm 14 days to resume work. If Cochin Port Trust terminates Mercator’s contract, it will have to find another contractor to complete the rest of the work. While Cochin Port said that Mercator could not complete half of the targeted work even a year after it started. On the other hand, Mercator claimed that it has already done three to four times that quantity (of 2 million cubic metres) and spent more than the contract value already.

What is the real reason behind this specific episode as well as the larger issue on a national basis is what this short essay tries to bring out.

1) Specifically in context with Kochi Harbour, the realities, issues, difficulties and problems in trying to deepen the channel as well as waters around the berths have long been known, and the lack of tangible benefits render this an exercise in futility. This has been known for over two decades, and not just because of the report from Cochin Refineries/Kochi Refineries/BPCL, either.

2) Globally, for more than a few very sensible reasons, operational cargo ports now move away from the traditional habitats which supported their evolution in the first case. Those who do not learn from this simple truth are destined to see their cities collapse in due course. The expansion or formation of a new deep-water port in Kerala should have been at any other location—not Kochi. The reasons are—environmental as far as the existing habitats are concerned, deeper natural options available, easier rail and road connectivity, total fresh start and better accountability without going into legacy problems.

3) Further specifically in context with the way dredging is being done at Kochi Harbour—and I have first-hand knowledge on this—the issue here is more to do with faulty procedures followed down the line and total lack of operational supervision by the Cochin Port Trust. I could write a book on the subject—but very briefly, the same sub-contractors, the same dredgers and the same people on those dredgers do a wonderful job at some other locations in India (both private and public sector) but here off Kochi, the odds are stacked against anybody succeeding. Could it be because the existing powers that be don't want dredging to succeed off Kochi?

3) So why would some vested interests not want Kochi to grow, or even retain existing levels, as a major port? Good question—and to understand that, one has to also understand the politics behind why said vested interests are more keen to see UAE and Sri Lankan ports go from strength to strength. Look deeper behind the private player involved, look at the way politics in Kerala moves, and the answers on why the odds are stacked against Kochi being a major player as a port are clear to see—but it is the people of India who keep footing the bill.

4) On the larger issue of national importance—Kochi is home to some extremely important Indian Navy, Indian Coast Guard, satellite monitoring, as well as other national security assets. Their access to the open sea is being hindered due to the existing situation being worsened. The shipyard and now the new terminals have created problems for the naval airbase near the harbour. Placing a private terminal right in the middle of all this, where security clearance has been and continues to be an issue, is like placing the consular office of an enemy country in the middle of a military ops room.

What could be a possible solution in the present scenario, given that so much has already been spent?

To answer that, a basic understanding of dredging would help, as well as going back to the point already raised—the same dredging assets perform brilliantly elsewhere.

In this particular case, the Cochin Port Trust sub-contracted dredging on the basis of a target depth to be achieved and also provided a time-line. In an ideal world, a sub-contractor does a due diligence, re-checks the data provided to agree on a starting point (datum), bids for the work, the winner/winners reach an agreement with the authorities, and then completes the task. Surveys are conducted with all relevant parties present, along with independent third-party surveyors, and the payments are made.

Till a few years ago, the reality of this depended on the checks and balances as well as personal integrities of the people from the ports. Of course, in some cases, there was blatant cheating. Siltation will happen. Nature will be the easiest entity to blame, and there will always be a convenient storm, typhoon, cyclone or tsunami, after which the whole cycle starts again.But some interesting changes have taken place:

1) The typical dredging scams could not be carried out with private ports, which is one reason you do not read about dredging or channel depth problems with private ports in India. They know how to get their money’s worth.
2) Scientific methods to perform independent surveys using fairly low-cost sonar equipment mounted on simple boats or even satellite information on real depths dredged is now easily available—especially to third parties tasked with re-confirming work done.
3) Some public sector ports have honest managements. Some don’t. Kochi’s maritime authorities and Cochin Port Trust have shown their true colours in the Enrica Lexie episode—do you expect anything better in dredging?

At the end of the day, however, it is the tax-payer who suffers. Seaports in other states like Gujarat and Andhra Pradesh continue to race ahead, Tamil Nadu is not far behind.

In the specific case of Kochi, however, it is the importance of the maritime defence aspect which needs to be re-considered. The earlier dredging in Kochi is brought under the Indian Navy, the better—after all, the same dredgers and same people onboard have done a wonderful job at Seabird-I, Karwar.

(Veeresh Malik had a long career in the Merchant Navy, which he left in 1983. He has qualifications in ship-broking and chartering, loves to travel, and has been in print and electronic media for over two decades. After starting and selling a couple of companies, is now back to his first love-writing.)

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COMMENTS

Prakash

7 years ago

Looking at your reference to Hoogly River Port and various conspiracy theories, I presume that you have spent too much time with Mamata Di at Kolkata.

Dredging is just digging a hole is sea/river bed. It is different from digging hole on shore, which has to be physically filled back. But in sea/river/harbour, the hole gradually gets filled on its own which is called siltation or sedimentation. Depending on the studies and planning, the hole may get filled in fully or partly in 2 years, 3 years or more. If the above not done properly, the hole may be filled in no time. The same is happening in Vallarpadam.

I had mentioned 8 months before in your another article on D P World alleged scam that the dredging problem is purely technical and result of shoddy planning and ignorance. I am repeating the same below for other's benefit:

As a avid watcher of major dredging and port projects in India, I can assure you that more than any financial scam, Vallarpadam ICTT mess is due to shoddy planning and no foresight.

"There were many study reports available on the silting pattern in the Kochi harbour. Difficulties in maintaining deeper dredged levels could have been easily identified at the planning stage itself. Now after the ICTT is inagurated, Kochi Port has formed a team to study this aspect. SInce Maintenance Dredging is in the scope of the Port, they will never be able to make any net profit from this PPP project. Moreover, DP World will also claim for idling charges on account of delay in maintenance dredging. Anyway, completion of the ongoing Capital Dredging is itself doubtful".

I have mentioned in "Skyscapercity" forum a short term and long term solution as below:

No dredging company (including DCI) will be able to complete the dredging in ICTT basin upto 16 m as the silting is continuous and heavy during the SW monsoon up to end of September.

"Best short term option for CoPT is to maintain the draft as per the shipping schedule at ICTT. It is alleged that unless Cabotage rules are changed mother ships will anyway not call at ICTT. The ships calling at ICTT hardly requires 10 m. Then what is the point in dredging to 16 m!!!

The long term option is construction of a breakwater or similar structure to prevent siltation in the basin. Since this will have adverse impact elsewhere, the work shall be carried out only after proper investigations and modelling studies."

Regarding Vizhinjam, I have strong doubts on the viability due to its proximity to Colombo. The OD points of India's EXIM is mostly from north western and NCR regions on the west coast. They are almost at equal distance from Vizhinjam & Colombo.

VK Bhavadasan

7 years ago


The Vallarpadam Paradox
Some 8 years back I had written to Cochin Port Trust, DPA and IPA stating that Cochin is not at all suitable port for developing an ICTT. While planing our own ports in Gujarat I had studied all ports in India and some ports abroad. The reason I shall explain.
Shipping Trend:
The first generation ships were small in size and gradually grown in size and the different generation ships are as below.
Container Ships
1st Generation 1,700 TEU 8.5m
2nd Generation 2,305
3rd Generation 3,220
4th Generation 4,848 13.5m
5th Generation 7,598 14.5m
6th Generation 10,000 to 15,000
How many ports in India can take the following ships?
The dimensions of some container ships.
Suez-max
Draught (m) - 17.00
Draught + 10% clearance (m) - 18.74
TEU. - 11,989
DT. - 212,194
Sovereign Maersk
Draught (m) - 14.00
Draught + 10% clearance (m) - 15.40
TEU. - 8,400.
DT. - 142,500
Malacca-max.
Draught (m) - 21.00
Draught + 10% clearance - (m) 23.10
TEU. - 18,154
DT - 313,371
Feature of Cochin Port:
Approach Channel (Outer channel)
Length: 10000 mtrs. Depth: 11.7 mtrs. Width: 200 mtrs.
Inner channels (Ernakulam channel)
Length: 4720 mtrs. Depth: 10.7 mtrs. Width: 244 mtrs
Mattancherry channel
Length: 4080 mtrs. Depth: 9.14 mtrs Width: 244 mtrs

Cochin (Vallarpadam), perhaps, has no comparison with any of the ports in India. Cochin is a confluent of 6 rivers (about 30% of freshet discharge being from Periyar only). During the monsoon, the influx of freshet discharge from the Muvattupuzha, the Pampa, the Manimala, the Meenachil and the Achenkovil rivers from the south and Periyar from the north bring substantial quantities of sediments into the estuarine system in addition to the littoral drift runnig acrose the mouth . During the lean months, the tidal current controls the sedimentation processes in the estuarine system. This leads to the sedimentation problem in the entrance channel becoming critical. The Cochin Port, though it is called a natural port due to its position in the sheltered backwaters, has to adopt artificial means to develop shipping channel. Hence for small ships it is an all weather port and for larger ships it is not so.

A typical phenomenon of any estuary is that the salt-water wedge would move upstream and velocities in the outer channel would drop particularly at the bed as a result of deepening the channel. This would result in increasing the rate of siltation in the outer channel by about 100% from the existing value.

The siltation in inner channel and turning circle and harbour area will be more.
During southwest monsoon, the estuary is virtually converted into a freshwater basin. This may need an additional depth of 2% for shipping channel and basin.

‘At Cochin the wave climate is governed by the southwest monsoon when wave action can be strong with prevailing wave directions from northwest to southwest. Deep water (15m) wave observations in the past indicate the significant wave heights of 4m, 2m, and 1m at the water depths of 10m, 5m and 2m respectively, the predominant wave direction being west and wave period 9 secs’. When the significant wave height (Hs) is 4mts at the mouth, the maximum wave height (Hm) will be 7.12 mts, so what is the depth of water required for a ship drawing a draught of 14.5mts, while cruising considering Squatting, heaving and pitching?

The influx of freshet discharge from the Muvattupuzha, the Pampa, the Manimala, the Meenachil and the Achenkovil Rivers from the south and Periyar from the north bring substantial quantities of sediments into the estuarine system. During the lean months, the tidal forcing controls the sedimentation processes in the estuarine system. This leads to the sedimentation problem in the entrance channel becoming critical.
The channel is, about 450 m wide at Cochin. The depth of the estuary varies considerably. While the shipping channels are maintained at a depth of 10–13 m, the major portion of the estuary has a depth range of 2–7 m. Water from two major rivers viz., Periyar and Muvattupuzha drain into this estuary. During southwest monsoon, the estuary is virtually converted into a freshwater basin.

Committee on Tidal Hydraulics, U.S. Army Corps of Engineers, Washington, DC. Conducted Case studies of Cochin Port 1960 ies. The finding is reproduced which is gathered from U.S. Army Corps of Engineers Web. Page. (The report must available with CPT.)
“Experiments conducted in a saline water model indicated that the salt-water wedge would move upstream and velocities in the outer channel would drop particularly at the bed as a result of deepening the channel from 9.7 to 13.7 m (32 to 45 ft). This would result in increasing the rate of siltation in the outer channel from the existing value of 1.5 million cu m (2 million cu yd) to an anticipated value of 3.8 million cu m (5 million cu yd) per annum.”

The success and failure of dredging depends greatly on the location, the geological, bathymetrical, geographical and marine / river / estuary condition. There are location where one succeed in dredging there are location where you fail. All locations are not similar and each location has different condition. One cannot generalize it quoting another elsewhere in Europe and USA. Hooghly with its shifting course, sandbar formation and silting is not comparable with Rhine, Elbe, Scheldt, or Yangtze. Perhaps Cochin is the only port in the world, which is a confluent point of 6 rivers. In some document I have seen Cochin being described as ‘LAGOON’ port but it is not so. It is not a lagoon port like New Mangalore; you know It. You know also why New Mangalore was developed instead of Karwar. Cochin is an estuarine port. In the earlier years when constructed, 60 years back, the problem was not severely affected because the ship size were small about 10,000 DWT and 15,000 DWT (second generation) i.e. less than the present handy size.
For argument’s sake let us immagin that the depth at berth is dredged to 18 mts. Does anyone expect that 14 km channel can be maintained for taking a 4th genration container ship?
So gentleman Cochin can never be a ICTT. You can just keep a board and work like any other feeder port calling small ships. It would have been wise to develop Vizhinjam instead.

VK Bhavadasan,
Retired Chief Engineer (Civil) Gujarat Maritime Board, Ahmedabad, Gujarat.



REPLY

malq

In Reply to VK Bhavadasan 7 years ago

Brilliantly placed here, Mr. Bhavadasan, and thank you. Really grateful to you for adding value to this article, and I shall forward it to some people who will, hopefully, be able to act on this even now.

Two more points, if you could add your views - what would the ideal dumping grounds be, even for maintenance dredging, and would the existing damage due to dredging which has already caused the beach to vanish near the chinese nets as well as the island opposite, be reversible?

rgds/VM

Mohandas

7 years ago

Veeteshji, highly useful article. Will provide you with more information on this soon

REPLY

malq

In Reply to Mohandas 7 years ago

Grateful.

http://www.lawker.in/2011/12/board-of-tr...

rgds.VM

Guptan Veemboor

7 years ago

Sir, My brother was working with Gujarat Maritime Board ( I think it is called so) looking after small ports and has retired as chief Engineer of GMB. We used to discuss these general things of interest. He has told me that Kochi port cannot be dredged as the silt deposit coming annually is very high and it is not economically viable to go on dredging. He has been recommending that Vizhinjam is the ideal place to be a deep sea port. He had gone through a lot of data for arguing in favour of Vizhinjam. I have sent this link to him and told him to put his comments.
Regards,
Guptan

Janarddan

7 years ago

This is what is called a paid article.


Some people can earn money like this for SOME time.

There are port projects which have no takers and the only thing the "verbal promoters" of such projects do is to pay "merchants" like the one above to write some nonsense like the one above.
Once the "promoter" runs out of money merchants stop writing too.
Till then such "projects" will "exist" much like the nonsense above - only on paper (or web) .

REPLY

malq

In Reply to Janarddan 7 years ago

Dear Janarddan, thank you for writing in, but I can not make out what you say or mean in your post.

It may be my fault, this lack of understanding, so could you please articulate this better, grateful, and humbly submitted.

rgds/VM

Economy & Nation   Exclusive
Kumar Birla’s Living Media investment is a bet on a sunset sector

Kumar Mangalam Birla’s investments in “sunrise” sectors over the last decade have been garments, retailing, telecom, financial services and software. All these have fetched very poor returns. Now comes his investment in the messy, unprofitable and sunset media sector
 

Kumar Mangalam Birla has just bought a 27.5% stake in the Living Media group which publishes a clutch of magazines such as India Today, Business Today, Cosmopolitan and so on. The group also runs channels like TV Today, Aaj Tak and has a printing press called Thomson Press. The acquisition was done through Kumar Birla’s private investment company. While announcing the stake buy, Kumar Birla said “The media sector is a sunrise sector from an investment point of view. I believe that Living Media India offers one of the best opportunities for growth and value creation.” Both these are questionable. If you look at the balance sheets of all but a few of the largest companies, the media looks like a sunset sector and Living Media not exactly in the pink of health.

Mercifully, shareholders of Indian Rayon and Aditya Birla Nuvo have been spared of this adventurism. Aroon Purie, a chartered accountant who controls the India Today group, has so far kept Living Media and Thomson Press private, and has publicly listed only TV Today.

According to the data we have of 2010, Living Media made a loss of Rs12 crore for March that year. In fact, all except some English publications like the Times of India, Hindustan Times and the leading regional publications (like Malayam Manorama or Ananda Bazar Patrika) are losing money—as are top TV channels like NDTV and TV18.

If Mr Birla genuinely believes that media is a sunrise business, the question is how many times will Mr Birla get carried away by trying to invest in so-called sunrise sectors?

Kumar Birla has been dreaming of sunrise sectors for over a decade now—ever since he inherited the old fashioned metals, cement and textiles businesses when his father Aditya Birla passed away in 1995. He entered the telecom business (Idea Telecom), financial services (Birla Sunlife Mutual Fund and Birla Sunlife Insurance), sold stock the broking business and later bought again (Apollo Sindhoori) and took over the garments business of Madura Coats, paying Rs235 crore to acquire Van Heusen, Louis Phillipe, Allen Solly, Peter England and started a retailing business.

Among the sunrise businesses he had identified in 2001, was software. In June 2001 Indian Rayon bought 50.35% controlling stake from France’s Groupe Bull in PSI Data Systems (PSI) at a price of Rs186.80 per share in cash—costing Rs71 crore.  Commenting on the deal, at time, Kumar Mangalam Birla had said “This strategic foray into the technology sector is part of a well-crafted plan to enhance value for Indian Rayon shareholders, through significant rise in growth and earnings. Our aspiration is to attain a leadership position in this sector.” While spending Indian Rayon’s money in buying PSI and Madura garments, Kumar Birla had also declared that the company has undergone a major change in profile by getting into businesses in which “knowledge and branding are key”. That sounded like a powerful wish but was it grounded in reality? In June 2003, Mr Birla even went into the low-margin business of call centres by buying Transworks. The outcome? PSI Data got delisted in March 2009, after destroying 60% of shareholders’ wealth over eight years. Madura Garments hardly makes any money consistently.

The fact is, like the media Mr Birla is willing to fund now, all these businesses—garments, software, IT services, financial services and retailing, telecom— were also described as sunrise businesses and were claimed to be value creating. None of these have delivered return on capital that justified investments in them. Mr Birla’s attempt to make over the commodity-oriented group, through an entry into the glamorous businesses has added to the group’s profile but not much to its bottomline. All these new-gen businesses are limping because they need focused and innovative entrepreneurship while Mr Birla’s principal strength is access to capital.

Possibly chastened by the financial outcome of these dubious forays, Mr Birla has decided not to use public-listed companies to finance his media wish. In that sense, his private investment in Living Media marks a departure from his earlier adventures. He will be a passive and personal investor in an unlisted company. That doesn’t answer a key question: Will he again be throwing good money after bad having fallen for glamour? That depends on how well he understands the media business.

The economics of the media business in India is completely been vitiated over the past decade or so. It is not a business where the more efficient thrive. It is not a business which is delivering improved quality of products and services to masses. Indeed, many of the better media companies are financially crippled today because the competition for advertising revenues is too intense. So, why doesn’t the supply of media products and companies shrink?  Because poor quality media companies are not pushed to the wall and do not go out of business. Their losses are supported by politicians and businessmen for their own vested interests. Why have three new daily newspapers sprung up in a poor state like West Bengal over the last two years? If there was ever a sunset business, it is media, especially the print part, which is core of Living Media. And Aroon Purie has publicly stated that the promise of digital media is overblown. Kumar Mangalam Birla seems to have not only got carried away once again in his quest for sunrise sector but this investment is surely one of his worst.

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COMMENTS

sanujkr

7 years ago

ear sucheta

will you only invest in companies which are Profitable, then why did you start Money Life, as a Non profitable organisation and trying to empower investors..

you should understand Media is not just for making profit or Money, they have a social responsibilty , by doing this resposibly and honestly, everybody cant make Money. Mr.Birla Put money into INDIA TODAY Group not for getting dividends. its his responsibilty to support an indepentant media house to survive in the longrun...group

Shibaji Dash

7 years ago

The Committee on Corporate Governance was constituted a decade or so ago under the Chairmanship of KMB. The report was submitted.At that time the name KMB sort of spelt magic. Today, sadly, it does not.Some of the reasons are embedded in the views expressed so far. One wonders why the health care sector which has only two major players with limited share of this promising niche market did not tickle the imagination of KMB.

REPLY

nagesh kini

In Reply to Shibaji Dash 7 years ago

Are Birla's not major stakeholders in health care with Bombay Hospital?

Nagesh Kini

7 years ago

Narayan Murthy of Infosys also got on the board of NDTV and exit too?

Sonali

7 years ago

I think, this is one of the best analysis of how best one can waste money. thanks ML for highlighting the poor vision of KMB. The typical born with a silver spoon, and their cronies like Manali think like they knew everything and they are the wisest. Unfortunately, when it comes to balance sheets, they have been proved ingorant all the time. Isnt it time for the likes of KMB and Manali to take a break. Grow up...

jayesh Shah

7 years ago

I agree... I was idly glancing through the comments and remembered that this is not the first time Birla had lost money. In fact there was something in Birla Money.
Here is a link: http://new.moneylife.in/article/aditya-b...

And I found it in moneycontrol as well - so you were not alone in trashing him
http://www.moneycontrol.com/news/feature...

Hemant

7 years ago

I was not surprised abt this move of Mr Birla.He has habit of doing this often.Initially he written off 100 cr investment made in carbon project then the famous MRBPL sell @ Rs:2/= to ONGC.So still investors go for his companies,they deserve to loose.

Sharad

7 years ago

Excellent facts and analysis

IT professional

7 years ago

Birla IT foray as Birla Consultancy Service (renamed Birla Technologies) was disaster. PSI was dud acquisition.

Manali Rohinesh

7 years ago

A well argued article..but if Mr Birla had offered MoneyLife his cash..would you have turned him down? You have one magazine which is mostly read online by readers like me, who chose to read you in the first place! India Today has everything from Harvard Business Review to Reader's Digest to one of the best current news magazines in the country. So, while they can't point to a healthy balancesheet at the moment, they have still been around longer than MoneyLife. So, when MoneyLife completes 30+ years in good health and then gets a little vital cash infusion, due to wear and tear, no one would grudge it that.

As for whether it makes business sense or not, well a lot of businesses run on debts and loans and refinancing. What are banks there for? They certainly don't only survive on peddling loans and products to me!!

REPLY

shanta kulkarni

In Reply to Manali Rohinesh 7 years ago

What is your point, if any?

Or are you not getting the fact that this is about Kumar Birla not about living media...

Manali Rohinesh

In Reply to shanta kulkarni 7 years ago

It's about Kumar Birla's investment in Living Media and my point is 'It's his money and others would have been happy to take it too'. Wasn't that clear to you? And to emphasize it a little more clearly...other media companies with less pull and products out there would love to be in Living Media's place.

rakesh

In Reply to Manali Rohinesh 7 years ago

Sure.
And so kumar birla will throw it?
Did you understand the point of the piece?
its not about living media, about birla.

Manali

In Reply to rakesh 7 years ago

Even Apple and Google have miscalculated and made investments in dud products/projects. It's good to know they weren't listening to you because they must have learnt something along the way. So, if money is thrown away..it must be because the owner of that money saw some value in what he was investing in - and it's surprising that you don't seem to get that.

And I'm entitled to my opinion..just like the way some of you are parroting each other. So, don't try to correct my viewpoint because I don't care about yours. My comments were my takeaway from this 'piece'.

rakesh

In Reply to Manali 7 years ago

"if money is thrown away..it must be because the owner of that money saw some value in what he was investing in"
That is the whole point. What is that value, in case you know it?
Please enlighten us and the Moneylife writer. You seem to be much smarter

sachin rao

In Reply to rakesh 7 years ago

Looks like this Manali person has a problem with Moneylife ... hard to believe she is on a business/finance/ personal finance website and does not realise that your analysis is not about likes and dislikes and whether people would be happy to get Birla's money -- but about Kumar Birla's judgement.

He he... did moneylife offend her in some manner?
I wonder why all of us are taking her seriously - me included. Just tempted to join the debate, I guess :-)

Ravi Shyam

7 years ago

Since its inception Moneylife has stayed focussed on issues that matter and helping its readers get sensitised to the realities that surround us. While investors interest and welfare has been its core thrust,this article armed with irrefutable facts brings out the case that this investment is one of due negligence and certainly not of due deligence!

REPLY

prakash

In Reply to Ravi Shyam 7 years ago

Couldn't agree more.

Economy & Nation   Exclusive
TV Today investors over-react to Kumar Birla’s investment in Living Media group?

The Aditya Birla Group has invested 27.5% stake in Living Media India, a holding company of TV Today Network, for an undisclosed sum. Will this change the business model of TV Today?

TV Today Network (TV Today), a media company, owned by Aroon Purie’s Living Media India (Living Media), has hit the upper circuit of 20%, to close at Rs64.80, on news that the Aditya Birla Group would be investing in 27.5% of Living Media. 

According to the Bombay Stock Exchange (BSE) filing, Aroon Purie, chairman of the India Today Group, said, “I am delighted to partner with the Aditya Birla Group to aggressively address the current and future potential of the Indian media business, which is at a tipping point. The Aditya Birla Group with its strong leadership, global footprint, diversified business interests and its shared values of integrity, commitment and social responsibility is a perfect fit with the India Today Group.”

However, it seems the market may have over-reacted too much by pushing TV Today up. The market seems to have made the assumption that investment in Living Media will somehow change the business model of TV Today. Living Media still holds a 57.11% majority stake in TV Today and this capital infusion from the Birlas is unlikely to affect the listed company, TV Today, in a significant way. Besides, TV Today and Living Media are two entirely different business models. It is even entirely possible that none of the capital infused will find its way to TV Today.

In fact, according to Economic Times (Kumar Mangalam Birla buys 27.5% stake in Living Media Group), Living Media may use the capital to launch a tabloid. If this is the case, what has the investment got to do with TV Today? 

According to the same filing with the BSE, Kumar Mangalam Birla quoted, “the media sector is a sunrise sector from an investment point of view. I believe that Living Media India offers one of the best opportunities for growth and value creation.” According to media sources, the Aditya Birla Group has invested over Rs350 crore to buy the stake.

TV Today makes money but not much. Its revenues have stagnated over the past five quarters and its return on net worth is a pathetic 4%.

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