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NBFC licence, startup ambitions: At 70, Kerala’s most famous billionaire is planning his next big moves

Kochouseph Chittilappilly, the founder of the V-Guard empire, believes Kerala’s business environment has worsened in recent years due to trade unionism and the government’s lack of support to industries.

March 03, 2021 / 11:05 PM IST

Kochouseph Chittilappilly, 70, is one of the most well-known businessmen from Kerala. His name is synonymous with his 43-year old company V-Guard, which was launched with a capital of Rs 1 lakh that he borrowed from his father and with the help of two workers.

Four decades later, V-Guard boasts a turnover of nearly Rs 3,000 crore, a total workforce of 3,000 direct employees and diversified sales of products ranging from electronics goods to kitchen appliances.

At 70, Chittilappilly, who has a net worth of Rs 1,700 crore, is in no mood to retire. The billionaire businessman is about to float an NBFC, K Chittilappilly Capital, to fund small entrepreneurs in Kerala.

In a freewheeling chat with Moneycontrol, the 70-year old industrialist spoke about a range of issues including the socio-political environment in Kerala, a perennial bugbear for businesses, which has been thrust into the spotlight after ‘Metro Man’ E Sreedharan  lamented the absence of industries in the state. Edited excerpts:

Could you throw some light on the proposed NBFC plan?


We have been thinking about helping small-scale startups. They may be good in their product but may not have the initial capital. If they get the financial support, they will be in a position to scale up. I’m talking about very small start-ups. With that view, we have applied for an NBFC license. We hope that within a month or two, we will get the permission from the Reserve Bank of India to start operations.

How this NBFC will be different from others?

This NBFC will give loans at concessional rates to MSMEs compared to other financial institutions. This will also participate in equity investments wherever required. The whole idea is to encourage entrepreneurship in Kerala. One thing I can assure--we will not give any loans to gold loans or loans against pledging the property. We are not looking at that type of loans. There are many other players in the state. We will look at sectors with promising ideas. We could look at small loans from Rs 10 lakhs to a maximum of up to Rs one crore.

What will be initial investment?

Initially, around Rs 5 crore. We have already brought in half of that amount. My wife, Sheela Kochouseph, and I will be the promoters and directors of this company and will provide initial funds. This venture will be headed by George Joseph, former Chairman and Managing Director of Syndicate Bank.

Why did you choose an NBFC model?

We considered an AIF (Alternative Investment Fund) model initially. But later we decided we will go for an NBFC after consultation with experts. We already have a section 25 company called K Chittilappilly Foundation. We will be very selective (in choosing borrowers). My intention is that at least the capital should not erode.

In February this year, you sold 40 lakh shares of V-Guard Industries for Rs 90 crore. Will you use that money for the NBFC business?

Yes. That money will be used partly for Chittilappilly Foundation and also for this proposed NBFC operations. It is only a small percentage of the shares we hold in the company.

How do you view the present business environment in Kerala?

In Kerala, we have a saying in Malayalam Shankaran pinneyum thengummel thanne (meaning, things are once again back to where they were). I’m sorry to say that even after five years, there is no improvement in Kerala’s business environment. We are still lagging behind other neighbouring states. In fact, the scenario is getting worse. Kerala’s position in Ease of doing business has slipped further to 28th position from 21st position, according to rankings by the Department of Promotion of Industry and Internal Trade.

Is it a political failure?

For decades, we have talked about socialism and communism here. Whenever we talk about capitalism or investment, there will be objections from different corners. It is almost as if profit is a dirty word. Many a time, the concerned minister or even the Chief Minister may be happy with a certain project to get more investments, but then the party will object and decisions will be reversed.

Could you give an example?

One clear example of this in recent past is the controversy surrounding the deep-sea fishing . I can’t understand what is wrong in deep-sea fishing. All other countries and states are doing this except Kerala. According to me, the ordinary fishermen are not going to lose anything in this project. The company, which entered into an MoU, is planning to bring in new technology and latest fishing methods.

But the controversy is that MoU was signed without concerned ministry’s consent…

Without the ministry’s knowledge, nobody can do anything. Suddenly, all ministers have washed hands off the issue saying this was signed without their knowledge. This happens every time when an issue comes. To save their political face, politicians simply ignore the investors. The poor fellow who invested spending their valuable time, energy and money has become a laughing stock. This isn’t the first time.

About three years ago an NRI investor brought in the idea of seaplane to ease the traffic congestion in Kerala and to promote tourism. Immediately, fishermen started objecting saying it will affect their fishing. And suddenly, the government backed out without even finding a solution or compromise with the opposing parties. According to my knowledge, the same company now successfully operates seaplane in the state of Goa.

So there is no change in the approach to industries?

No. That is evident from the fall in ease of doing business rankings. All other states are improving and far ahead of us.

You have also fought against the trade unionism and particularly the issue of Nokkukooli (translation: gawking wage; meaning: trade unions have to be paid regardless of their participation in a task).

Today, Kerala highly relies on manpower from states like Odisha, West Bengal citing shortage of manpower here. In reality, there is no shortage for employment in Kerala. It is in this context that certain groups of people are resorting to such practices (like nokkukooli). This is nothing but organised looting. This happens when there are enough employment opportunities. A healthy unskilled labourer can earn up to Rs 700 or Rs 800 a day in Kerala if they are willing to work. That being the case, why do a group of people gang up and resort to practices such as this? This is nothing but looting.

Has the state government addressed this issue?

The government was initially not even willing to acknowledge this issue. Later, they showed willingness to attend to this problem and passed a law against Nokkukooli. But, nothing much has changed even today. CPM has CITU, Congress party has INTUC and BJP has BMS unions. All three are equal partners in this practice. The businessmen are isolated by all political parties whenever labour issues arise.

Do you think your efforts to fight against Nokkukooli has gone waste?

Not really. I could create an awareness about this problem in the public and prove that this is looting. At the same time I can tell you that nothing has happened to address this problem of local businessmen. Nokkukooli still exists in Kerala except in very few areas. There is a rule in Kerala that employees require labour card for loading, unloading work. Our employees too have that card. Today, most of such work is mechanized but still the trade unions ask for Nokku kooli. If you go to court against them, they will deny any such demands.

Kerala is at the doorstep of another state-election. What is your expectation?

I have no real expectation that this political attitude will change. Both LDF (Left Democratic Front) and UDF (United Democratic Front) governments, who came to power in successive terms, are responsible for the state’s current pathetic state of affairs. Why Kerala is not developing as an industrial state? Keralites who go to other states become successful entrepreneurs. But, only very few of them have invested in Kerala. These are the facts.

Is political integrity an issue in the state?

Yes. The LDF government came to power highlighting the corruption case involving former finance minister, K M Mani. They created a ruckus in the state assembly on this issue. But, the same party has now accepted K M Mani’s son to their party for their political benefit realizing that their position is weakening. That shows there is clearly a lack of integrity in the political system. In Kerala, all political party leaders, and their family members have prospered. Whoever got political power has developed their personal wealth. Only the state of Kerala has not prospered yet. Why?

Corruption is another serious issue in the state.

In the old days, when I was in college, we used to think that Communist party will never side with corruption. Now, I feel no political party is different when it comes to corruption. Only the degree of corruption differs.

The recent gold smuggling case got national media attention.

Yes. It is clear that those wielding power has misused that power in this particular case. Else, it wouldn’t have happened. Politicians always find a way out passing the blame to officials. Even the deep-sea fishing case is an example of that. Everyone knows everything.

There is a controversy on PSC (public service commission) appointments as well…

We have a strong PSC department. So many youngsters have applied for jobs and are awaiting their appointments. But, politicians always manage to do back-door appointments—first as temporary jobs and later permanent posts. Getting jobs through PSC has become almost impossible. Only those who appease politicians get jobs. That’s why the agitations are happening.

You were one of the early advocates of passive euthanasia. 

Yes. I was only 48 when I started a campaign arguing in favour of passive euthanasia. Now, I’m 70. Courts rejected my plea initially. I have always thought the idea of giving life support to those who do not wish for it is unnecessary. (In March, 2018, the Supreme Court ruled that passive euthanasia is permissible.)

You also fought against the stray dog menace…

For three years, I fought against the stray dog menace. There is a big lobby operating behind it who call them pet lovers. This include celebrities also. They will enjoy non vegetarian food in five star hotels but at the same time they staunchly oppose killing of stray dogs. I have visited many foreign countries. Nowhere have I seen stray dog problem such as in India.

So, how should one address the stray dog problem?

I’m also an animal lover. If you love stray dogs, you should properly shelter them and feed without causing trouble to the general public. India has most number of rabies deaths. This is one of the countries which produces highest quantity of rabies vaccine. Those companies provide crores of rupees worth donations to such organisations (which argue against stray dog killing). These are unpleasant truths. Even today, stray dog related deaths happen. I have given up this battle due to lack of support.

How has the pandemic affected Kerala’s business environment?

Many oraganisations have shut operations due to the pandemic. Small shop owners have suffered the most. May be we have overcome the worst phase of Covid-19 already.

What’s your assessment on the state’s economy?

It is the remittance money sent by NRIs who work hard in other places. But how long can the state continue as a remittance economy is a question. Kerala is now in a debt trap. Now the Government wants to borrow through KIIFBI (Kerala Infrastructure Investment Fund Board). That burden also will ultimately fall on the average malayali taxpayers.

We have seen corporate groups like Kitex –backed Twenty20 fighting local elections in Kerala.  

I support them wholeheartedly. It was around eight years ago Kitex started this outfit. The trigger was the problems they faced from local politicians. It was initially an apolitical front. But, the political opposition from both UDF and LDF prompted them to form a political front. They developed the local panchayath and invested money there. They won the election and offered a development-oriented administration in that gram panchayath. It is worth a case study.  They changed the local body into a model place. Even the adjacent local bodies requested their work subsequently. 

Will Chittilappilly group be willing to make a similar move?

No. We have no such plans. It requires a certain mindset. Kitex Twenty20 is a successful model. We will support them. Not everyone may be in a position to do that. Kitex has majority of their business in exports. But, they would have faced lot of difficulties if their marketing operations were based in Kerala.

How do you look at your entrepreneurial journey so far?

When I started this business, I never thought it will grow in such scale and size. I’m a very happy man.
Dinesh Unnikrishnan
first published: Mar 2, 2021 05:42 pm
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