Technology, Green Energy - Making waves the Wave energy

The prospects for wave power have risen and fallen, appropriately enough, for years. But now the technology finally seems to be making headway. Not only is the world's first commercial wave farm due to be switched on and connected to the electricity grid in Portugal this summer—but an even newer type of wave-power generator could drastically reduce the cost of extracting energy from the sea. As you may be aware of that Wave power refers to the energy of ocean surface waves. Though often co-mingled, wave power is distinct from the diurnal flux of tidal power and the steady gyre of ocean currents.

Wave power first attracted interest in the 1970s, when Stephen Salter of the University of Edinburgh devised a device that converted the motion of waves into electricity. The potential is vast: a report published earlier this year by the Carbon Trust, an organisation set up by the British government to help meet its targets for reducing greenhouse-gas emissions, concluded that 20% of Britain's electricity could be provided by wave and tidal power. This is four times more than previous estimates, and means that marine energy alone could enable Britain to reach its emissions-reduction targets. In America, meanwhile, the Department of Energy's National Renewable Energy Laboratory has estimated that the use of wave power on the east coast could provide 10-25 times more electricity than the total wind potential of the Great Plains.

Given this potential, why is it that so far, not a single commercial wave-power generator is in operation? “The biggest problem with wave-power generators is that they are relatively expensive. Most produce electricity at a cost of between 18-36 cents per kilowatt hour (kWh), whereas electricity produced from natural gas costs around 8 cents/kWh. One reason for the expense of wave power is the need to make the equipment impervious to storm damage and corrosion. Of the countless wave-power concepts invented over the years, most have been heavily over-engineered to reduce the chances of breakdown at sea. This reduces their efficiency, increasing the cost per kWh and preventing wave power from making progress.

But now things seem to be changing. Near Póvoa de Varzim, off the northern coast of Portugal, three 150-metre-long articulated snake-like pontoons, called Pelamis Wave Energy Converters, are in the final stages of being hooked up to the country's national grid, says Andrew Scott of Ocean Power Delivery, the firm behind them. Each one has three power-converter modules distributed along its length, which transform the flexing motion at the snake's joints into electricity as the snakes are buffeted by the waves. The three snakes are the first stage of a planned 24-megawatt wave-power farm, which will be capable of providing 15,000 households with power. The Pelamis's design avoids the trade-off between resilience and efficiency by switching to a higher-efficiency mode in calm seas.

But the new device, called the Snapper, increases efficiency still further. Electrical generators tend to work most efficiently when a small force is applied at high speed—which is just the opposite of what wave power provides says the inventor of Snapper. This invention works much like a typical linear generator, in which a magnet is moved up and down inside coils of wire, inducing electrical currents in the process. But there is a crucial difference: alongside the coils are a second set of magnets of alternating polarity. These prevent the central magnet from moving up and down smoothly. Instead, magnetic forces repeatedly halt its motion, so that it moves up and down in a jerky fashion. The resulting series of short, rapid movements is more suitable for generating electricity than a slow, smooth movement. Early tests suggest that it could be as much as ten times more efficient than existing wave generators. Having spent years floundering in the water, could wave power finally be ready to make a splash?. Only time will tell.

Special Export Zone ( SEZ). Business proposition or land grabbing opportunity

On the face of it, setting up a special economic zone (SEZ) seems to be the hottest business to get into. At last count, 263 companies had received formal approvals to set up SEZs, and another 169 had been granted in-principle clearance by the government. Reliance Industries is pumping in Rs 30,000 crore into two SEZs in Maharashtra and another Rs 40,000 crore into a third in Haryana; DLF is investing over Rs 31,000 crore in four units in Amritsar, Ambala, Ludhiana and Gurgaon; and the DS group has a Rs 12,000-crore plan for two SEZs in Haryana and Himachal Pradesh. Others such as Bharat Forge, Videocon, Suzlon, etc., are investing over Rs 1,000 crore each in SEZs in places such as Pune and Mangalore.

Together, they hope to buy, develop and lease out over 300,000 hectares of land. These SEZs will house factories, IT parks, office space, warehouses, residential apartments and malls. A few may morph into cities. All that will call for a cumulative investment of Rs 3,30,000 crore (based on a bare minimum of Rs 138 per sq. ft needed to buy and develop the land). Some, like infrastructure consulting firm Feedback Ventures, put the figure at Rs 5,50,000 crore. That is the equivalent of pumping 10-17 per cent of India’s GDP into one grand realty development plan: corporate India’s biggest investment rush, at least on paper. But amidst all that hype, one fundamental question has been lost: Can SEZs be a viable, profitable and sustainable business venture? Can they earn a decent return on the thousands of crores about to be invested?

The world over, the majority of successful SEZs have been built with government capital. There are few precedents of private capital building economic zones or earning returns out of them. Of course, hundreds of private companies have invested billions of dollars in building their factories and offices within SEZs. That is different. What we are talking about here is the money needed to set up and maintain an SEZ. So far, money for that has largely come from governments.

Dubai’s Jebel Ali Free Zone, one of the world’s most successful zones and home to over 5,000 businesses, is perhaps the best example. In the 1980s, Dubai’s ruler, the late Sheikh Rashid bin Saeed Al Maktoum, pumped in $3 billion in a port in Jebel Ali. It later became the Jebel Ali Free Zone and much of the initial investment (worth $9 billion at current prices) was virtually written off before the zone was handed over to the Jebel Ali Free Zone Authority (JAFZA) for management.

Today, JAFZA is a commercial organisation. But it is financially supported by the Dubai government, its sole owner. JAFZA’s mandate is to attract investments, create jobs, and promote trade and industry. Profits, and a reasonable rate of return on the capital invested, are only secondary objectives. Moreover, it has almost unlimited access to cheap capital, funded through the government’s oil revenues. Finally, the Dubai government’s tax largesse makes India’s fiscal incentives pale in comparison. For units within SEZs, Dubai offers a complete 50-year corporate and personal income tax holiday (India offers a 100 per cent tax waiver only for five years). JAFZA is one of the world’s most successful zones from an investment promotion perspective, but perhaps not from a return on capital point of view. After two decades of operations, profits have just crossed $100 million.

Similarly, China’s successful SEZs were initially capitalised with government money. These were then leveraged for bank lending (again encouraged by the government). Mostly, the government set up and funded the SEZs. Their mandate was not profit, but investment promotion. They were to be more like development agencies than profitable corporations. Some obvious conclusions can be drawn from the global experience so far. SEZs are great for countries seeking to promote investments; they are great for companies seeking world-class infrastructure and big tax breaks; but companies that set up SEZs don’t make much profits. But India is a completely different story. Largely, it is private capital that is waiting to build SEZs. But private capital comes at a cost. So, what kind of returns can India’s SEZ builders expect?

As of now, there is only one balance sheet in India where you could expect to find some answers — that of Mahindra World City Developers, the Mahindra Gesco subsidiary that set up the 1,400-acre Mahindra World City SEZ near Chennai in 2002. It carries accumulated losses of Rs 35.4 crore on a net worth of Rs 138.5 crore — that is the price to pay in the early stages of an SEZ business. Things are improving, though — revenues grew from Rs 36.7 crore in FY05 to Rs 86.89 crore in FY06. The operational losses of Rs 4.09 crore (FY06) have since given way to an EBIDTA (earnings before interest, depreciation, tax and amortisation) of Rs 11.87 crore (FY06). It reported Rs 2.14 crore net profit last year, but this was drained away by the dividend that was paid on preference shares. It is yet to show positive earnings per share. This is the paradox. The Mahindra experience, and that of SEZs worldwide, clearly show that this is a tough business. Yet, there is a mad rush to acquire SEZ clearances and buy thousands of hectares of land.

Most seem to believe there is truckloads of money to be made. The suspicion, though, is that many are hoping to build land banks and cash in on rising property prices. All the players are expecting returns far greater than what Mahindra World City or even JAFZA have managed so far. Reliance expects good returns: revenues of over Rs 1,000 crore when about 90 per cent of the first phase of the project is sold out; a loss of over Rs 80 crore in the first year, but annual profits of over Rs 300 crore in a few years; and an internal rate of return (IRR) of 16 per cent on the first phase investment of about Rs 4,000 crore. Of course, these are only unofficial estimates, and their veracity is questionable. But it does give some indication of what large groups expect from their SEZ investments.

Broadly, there are four phases in the life of an SEZ. The first, and the most difficult, is the ‘development’ phase. This is when the promoter starts leasing out the land after acquiring and developing it. Already, there is a huge cost — both financial and political — associated with land acquisition. Only a few projects have received large pockets of land from the government. The rest must buy land on their own. Land costs are soaring, and legal and procedural delays, and social and political opposition are wrecking project schedules.

Once the land is acquired, the commitment to developing is where the serious SEZ promoters stand out from those merely looking for quick profits. That is because land development calls for big, upfront capital investments. To begin with, roughly 40 per cent of the land acquired is not saleable. The government dictates that at least 25 per cent should be reserved for open spaces. This apart, some land will also be lost due to geographical factors — there may be small hills, water bodies, etc. Roads could take up at least another 12.5 per cent of the land. “The moment an SEZ promoter acquires the land, he loses almost half of it. Only half the land will be saleable.

“If it takes $82 million (Rs 370 crore) to acquire 1,000 hectares, it will take another $250 million (Rs 1,125 crore) to develop it, For example, it costs roughly Rs 1.4 crore to lay a kilometre of two-laned road. And that is only the beginning. More needs to be done to match what Shenzhen or JAFZA has to offer. “A 2,000-MW power plant will cost Rs 8,000 crore; a desalination plant will cost Rs 800 crore; an airport with just one runway will cost Rs 150 crore-200 crore; a port with only one jetty and two berths will cost Rs 500 crore.

Reliance had initially started off with a Rs 25,000-crore budget for its SEZs in Maharashtra. Soon, it realised that it had to build a dam in order to meet the water requirements of the one million people who will eventually live there. It also felt the need for a second port in Rewas. It also figured that the initial plan for a 1,600-MW power plant was inadequate and has now opted for a 2,000-MW plant. The result: the project cost has escalated to Rs 30,000 crore.

The rough benchmark is an investment of around Rs 1.2 crore per acre. Now, most of these investments have to be made upfront. Unless you build the infrastructure and offer it on tap from day one, companies will not come and invest. Obviously, these have to be factored into the cost of land when it is leased out. Here is the problem: in the development phase of an SEZ, customers will not be willing to pay a premium on land. “When we set up Mahindra World City, prospective tenants would walk in and ask why we were charging so much when the adjacent land was so cheap.

In the development phase, SEZs suck up huge amounts of capital. And most of the capital has to come as equity from the promoters. This can be tricky. Now, with the RBI asking banks to treat SEZ projects as real estate, loans will be even harder to get. Moreover, cost of such debt has also risen. “As a result of higher provisioning norms (that real estate projects demand), cost of bank credit to SEZs could increase by 1-2 per cent. “Besides, real estate projects are not permitted to go for external commercial borrowings (where the cost of debt is cheaper — only 5-6 per cent plus the currency risk).Only the serious players will have the capital to make the investments this phase will demand. However, this phase will also see the most land speculation. The less serious players, pursuing realty arbitrage, will have a field day parcelling out the land and selling it.

Just one minor clarification: SEZ promoters cannot sell the land, they can only lease it. However, 30- to 60-year lease agreements can be structured smartly to work around this constraint. Here, up to 95 per cent of the land cost is paid upfront as a deposit, and a nominal lease rental is paid over the tenure. From a cash flow point of view, this is as good as a sale.

If an SEZ reaches this stage, co-developers could contribute 20-30 per cent of the project cost, and internal accruals (primarily in the form of advances from prospective occupants) could bring in 40 per cent. Revenues from the project are good enough to start servicing the debt. Further borrowing becomes easier and promoters can tap into innovative debt instruments. Securitising future lease rentals is one option. At this stage the SEZ also earns forex income. So, it can borrow cheap dollar funds — at least 300 basis points lower than domestic rates — from offshore banking units (OBUs). (The RBI has allowed OBUs to be set up in SEZs. OBUs can borrow cheaply from international sources, and lend to units located in the SEZ and SEZ developers. Repayments must be in dollars, eliminating currency risks and costs associated with hedging the same.) Still, promoters are unlikely to earn returns in this phase.

The third payback phase is when the real money starts flowing in. But it could take eight years for an SEZ to reach this phase. By now, the SEZ should have a strong brand equity and have several success stories among the units operating there. The ‘cluster effect’ would have started to kick in. Companies will be queuing up to buy land and will be willing to pay a huge premium for it. The project will generate enough returns to foot any further investments.

Now comes the industry’s worst kept business secret: the more land the SEZ promoter has at this stage, the bigger his windfall. The land could be selling at 20-30 times the cost of acquisition and development. And whatever land is acquired has to be acquired now, before the actual development begins. Later, prices will shoot up. Hence, the current rush to build up huge land banks running into thousands of hectares. There is one economic philosophy that the SEZ business runs on — the more land you buy, the more capital you pump into it, and the longer you hold on to both, the greater your return.

SEZ builders must have the capacity to inject the capital early and wait for returns — it takes a minimum of eight years to take the project into the payback stage. “Relative appreciation of land value has to be higher than the holding cost of capital. If you can achieve this, you are making

This is where the serious players will score over the speculators. Their returns will be far higher than those who parcelled out the land earlier. “IRRs of 35 per cent are not unheard of. The average IRR could be 20-25 per cent. After this, the final annuity phase becomes easy. Here, the SEZ generates a steady stream of income and needs minimum management. Utilities and facilities management are, perhaps, the only requirements.

To understand an SEZ business, take the balance sheet of a realty company and merge it with that of a municipal corporation. Realty companies buy land, develop it, and sell or lease it. Municipal corporations provide infrastructure and utilities for a fee — generally a combination of user charges and subsidies through tax revenues. An SEZ must do both. Initially, land lease will dominate revenues, but with time, utility, maintenance and administrative charges will account for a larger chunk. Beyond the 10th year, an SEZ balance sheet will be similar to that of a municipal corporation.

Unfortunately, many SEZ builders see this more as a grand realty development opportunity than as an infrastructure business — buy, build, sell. That model may bring profits in the short to medium term, but is unlikely to help the nation’s objectives of investment and export promotion. On the contrary, they could wreck India’s SEZ dreams by increasing competition and affecting the profitability of the serious players. They may also leave investors with bitter experiences or may simply unproductively lock up land. “Large numbers of SEZs will limit the success of all zones. It is prudent to believe that only a few zones near metros will be successful. The rest will be a drain.

Experts believe that there is a huge amount of excess capacity building up in the SEZ space. For example, in the NCR-Rajasthan belt, there are 24 SEZs coming up in 53,000 hectares of land. Is there enough room for all of them? Sure, much of this capacity could be used up by hordes of domestic companies not caring much for sophisticated infrastructure, but hungry for the tax breaks that SEZ status will bring. Still, the excess supply is unlikely to go away. If all the 300,000 hectares are indeed developed, roughly 225,000 acres of industrial plots will be created. To fill this, an investment of Rs 45,00,000 crore will be required. However, in the past five years the entire Indian industry has seen combined investment (government, private and foreign) of only 7 per cent of that amount. Obviously, there are bound to be many casualties among India’s SEZ builders, both big and small.

source- BW

Arranged Marriages

Guys Prospective :

Finished your studies, landed a job, and settled down? Like most other guys, "marrying" will probably be the next thing on your agenda. But, the dynamics of an arranged marriage have changed. Find out what the realities of this age-old tradition are, for a new generation.

New avatars

"Nowadays, parents simply suggest the person they feel is suitable for their son or daughter. Only if their child approves (after interacting with him or her), do things move ahead. Also, children are now increasingly taking the initiative to find their own partners. The number of people putting up their profiles at matrimonial sites is a case in point.

What are you looking for?

Who you will marry is one of the most important decisions you will make. Some questions that crop up include: What sort of a girl do I marry? Will she adjust to my family? How can I decide just by meeting her a few times? When should I marry? What if I make the wrong choice?

"Take a pen and paper and list the attributes you are looking for in a girl. For example, educational achievements, profession, appearance (looks, height, weight), etc. You might not find the 'perfect' girl, but you will have a fair idea of what you are looking for.The key to choosing the right partner is to look for a person with a good character too, not simply a good personality. Qualities to look out for include maturity and responsibility, a positive attitude toward life, commitment to the relationship, emotional openness, integrity and high self-esteem.

"Many men go for beauty when looking for a suitable bride. Sure, looks are important, but that should not be the most important criterion. Later on in life, it is her maturity and behaviour that will make all the difference.

In arranged marriages, family support also plays a major role in ensuring a successful marriage. This is where compatibility of social status, family values and caste/religion may come in. "If she is going to live with your parents in a joint family set-up, it would be wise to take a few inputs from family members as well.

Tell your parents

The selection process is tough on every one involved in it. In arranged marriages, the involvement of family and society is pretty high. Clearly define some minimum criteria for selection in terms of education, physical appearance, social status, family values, future career plans, etc., so your parents don't waste their time. "It would be unfair to meet a girl three to four times only to change your mind, as it can have repercussions for her too. You should have your criteria ready. Be clear about what you are looking for, so you meet fewer people.

People often prefer partners from the same profession for better understanding. "For example, doctors sometimes prefer doctors for reasons that include being able to start a clinic together, etc. Also, the partner is better able to understand the working hours and professional difficulties. Thus, if you are looking for a specific match, convey it to your parents.

Background research

It is important for you and/or your parents to check the educational and family background of a prospective partner. This can be done via a reference check, a visit to the workplace (or institute, if she's studying), through relatives, etc. The same process is used when the girl is abroad, but it is definitely more difficult. For one, a personal visit may not be possible and you have to rely on other sources for information. If you have friends/family abroad or living in proximity to the prospective bride, request them to meet her and check things out.

You can also perform an employer verification, check the visa status, request a medical test, etc. Also, communicate regularly through emails, phone, chat, etc. to know her better and get an insight into her lifestyle.

A meeting of minds

As we all know, it is difficult to judge a person based on a few meetings. How, then, do you select a life partner??. "This is where you need to take additional help of other mediums of communication like phone, email, chat, etc.

Whenever you do meet, relax and be yourself. Keep an open mind and don't hesitate to discuss important issues. Wear something that you look good and feel comfortable in. Try meeting away from the usual crowd of relatives, at some neutral place like a coffee shop, so you can interact without being influenced by others. Above all, trust your gut feeling.

Ask away!

Those days are long gone when youngsters getting married hardly knew anything about each other. Now you can ask just about anything and no one is supposed to take offence. "If you have questions that may seem uncomfortable but deal with the reality of today's social situation, or if you have doubts, by all means ask! Because NOT asking a question may ultimately prove to be a bigger mistake than asking.

Here are some aspects that could be looked into once you get on familiar terrain.

General questions

• Are you ready for marriage?
• How would you describe yourself?
• How do you like to spend your free time?
• How do you feel about smoking and/or drinking?
• What are you looking for in a spouse?
• How much time do you need to decide?
• What are your preferences, in terms of food?
• What are your pet peeves?
• How do you act when you get upset?
• How do you feel about pets?
• What is your family like?

Professional queries

• What career path do you plan on taking?
• How ambitious are you?
• How much time do you spend at work?
• How do you plan to balance work and family life?

Previous relationships

Today, a lot of young people may already have had a previous relationship. "Though having had a relationship is neither uncommon nor something to be ashamed of, people sometimes bring some 'baggage' -- emotional and / or health-related -- from the previous relationship. Of course, this applies to both men and women. Now, a woman should be equally cautious if a guy tells her he has had relationships previously, and should look for signs of any serious issues.

Medical check-up?

"Yes, you and your partner should get one."It's not as if you can't ask the girl to be tested, but there is a degree of reluctance in asking, as it is a very delicate situation and people may feel insulted if not outraged. However, if tactfully handled, most people would respond favourably. "What you can do is tell the girl (and / or her parents) that, like you, they too are probably aware of the increasing incidence of HIV and may be experiencing some apprehension about it. Moreover, a blood test can also check for thalassemia and Rh factor.

It's your call

Do remember, all said and done, it is your marriage and your life that is at stake. After you get married, you and your wife are the ones who will face the music. Don't marry a girl just because your parents or friends asked you to do so. "Once you marry, if things don't work out and you end up saying, 'It's only because of my parents that I married you', then your marriage is destined for disaster.

Girls Prospective :

Many of the things mentioned above remains same few additional ones

Background research

Although researching the boy's background might seem painstaking, it is very important. The difficulty of researching goes up a notch when the boy is abroad, especially if you don't have any friends/relatives to help you out there. Thus, it would be wise to make discreet inquiries outside with the help of relatives and friends, with respect to his job, family background, age, education, habits, financial condition, medical history, lifestyle, etc.

Is he the one?

Finally, there should be mutual consent and understanding from both sides; only then can a marriage can be sustained. "It is important that you like your prospective partner enough to marry him. Good arranged marriages occur when the parents support and help their children find life partners.


compiled from Rediff