Kerala: India’s Most Idyllic State

Kerala is a tourist’s paradise offering a wide variety of attractions from scheduled hill stations to tranquil backwaters and scenic beaches to bustling bazaars.

While discussing the potential of tourism industry in general, the role of local entrepreneurs to tap the untapped segments in this small State of Kerala requires special mention.

This small state can be geographically divided into three regions, the highlands, midlands and lowlands. The highlands slope down towards Western Ghats which rise to an average height of 900 meters with a number of peaks well over 1,800 meters in height. This is an area of plantations predominantly of tea, coffee, rubber, cardamom and other spices. The midlands lying in between comprises of undulating hills and valleys. In this area, intensive cultivation of cashew, coconuts, areca nuts, banana, rice, ginger, pepper, sugarcane etc. is done. The lowlands or the coastal area is made up of river deltas, backwaters and the shore of the Arabian Sea.

The backwaters of Kerala give shape to the specially attractive and economically valuable features of Kerala. The Western boundary of the state is the Arabian Sea and stretches around 600 kms. The biggest backwater is Vembanad lake, which opens out into the Arabian Sea at Cochin.

A large number of tourist centres have been identified right from the Southern tip of the state capital at Thiruvananthapuram to Kasargode in the North. Besides the well known attractions like Kovalam, Thekkady, backwaters etc there are untapped locales like Vandiperiyar, Peerumedu, Nelliampathy etc. to a name few.

In addition, Kerala’s well-developed traditional, medical and healing centers are poised to cater to an emerging market for such treatment in foreign countries.

On the whole these strengths have been well marketed by our Department of Tourism leading to a significant increase in both international and domestic tourist arrivals over the last decade though factors such as increasing law and order problems in some of the Northern states have been a hindrance. Unfortunately, infrastructure has not kept pace particularly in favored destinations like Cochin, Kovalam, Trivandrum, Thekkady etc.

Thus, in many of the identified locations important form the point of view of tourism, facilities created fall short of demand. Travelers complain of non-availability of rooms in places like Thekkady, Munnar, Ernakulam, Trichur, Trivandrum (Kovalam), Guruvayoor to name a few, though no authentic data is readily available for assesing the precise demand gap.

Nonetheless, a shortage of beds is undoubtedly being felt starting with Ernakulam where I have frequently had the experience of my officers being unable to book a hotel room when I plan a trip here at short notice. Of course, there are broader constraints, like the power shortage, scarcity of land in our state, the condition of our roads and deteriorating public infrastructure in our resorts. On these broader issues, many other public agencies are seeking to turn things around and I will confine myself to areas where we can help entrepreneurs with specific schemes in areas allied to the tourism sector.

KFC was set up in 1951 primarily as a state level developmental financial institution for extending credit to small-scale industry. Well before tourism was accorded the status of an industry, KFC has been funding tourism related ventures for decades now.

KFC can help you primarily by extending term loan assistance. As per the regulations in force, the SFC and SIDC can finance up to two-thirds of the estimated project cost for viable projects in tourism and allied sectors. If the project envisaged has star categorization when funded by state level financial institutions, it also qualifies for an interest subsidy amount through Govt. of India at the rate of three percent on interest charges.

SCHEME FOR ASSISTANCE TO TOURISM RELATED ACTIVITIES  

Objectives : To cater to the needs of tourism related activities

ELIGIBILITY

End Use : To meet part cost of arranging for accommodation of the tourists of repute and for arranging for tickets for travel both abroad and within the country by sea, air, rail or other surface transport. Purchase of vehicle can be considered under the existing transport scheme.

Promoters :

A) Should have been engaged in the tourism related area for the last four years . 
B) Should have experience in arranging travel plans for  foreign tourists. 
C) Should have tie up with the tour operators either in the country or abroad. 
D) Should show rising trends in volume of turnover, operating profit and net profits. 
E) Preference shall be given to those wo possess the additional Qualifications in the tourism and travel area and having existing infrastructure. 
F) Project costing upto Rs. 25.00 lakhs 

MAXIMUM LOAN AMOUNT

  For projects costing upto Rs.10.00 lakhs: Upto Rs.10.00 lakhs or upto 75 per cent of the estimated requirements
    whichever is less
  For projects costing above Rs.10.00 lakhs and upto Rs.25.00 lakhs : Upto Rs.10.00 lakhs or upto two -third of the
    estimated requirements, whichever is less..

MINIMUM PROMOTERS CONTRIBUTION

  For projects costing upto Rs.10.00 : 25 per cent of the estimated requirements of the scheme.
  For projects costing above Rs.10.00 lakhs and upto Rs.25.00 lakhs : One third of the requirements of the scheme.

RATE OF INTEREST : 11.5 %

MAXIMUM REPAYMENT PERIOD

 Upto 61 months including a maximum gestation period of 3 months for starting the repayment of principal
    amounts.

  A Charge on the existing assets.
  Collateral cover of value equivalent to one and a half times the loan requirements .
  Personal guarantee of all promoters, shareholders having more then 5% share in the equity and co-obligations
    (if any).

Finance to Hotels, Motels And Tourism Related activities  

Financial assistance under this scheme is made available to Hotels, Motels, and tourism related activities.

Eligibility

  The loan is available for Hotels & Motels to be established, for catering to the needs of tourists,in  places of 
    importance from the point of view of tourism 
  Strategic key location near a City, or a Tourist Spot would be the prime consideration.
  The hotels should be at least a of standard category and should have boarding, lodging and restaurant facilities.
    All rooms should be bath attached.
  The Plan of the Hotel should be approved by the appropriate local authorities
  Minimum margin on security on primary security is 25%

Upper limit of Assistance

Proprietary & Partnership concerns upto  :Rs.200 lakhs

Limited Companies upto :Rs.500 lakhs.

RATE OF INTEREST : 11.5 %

Promoter's Contribution :

The minimum promoter's contribution stipulated is 33.33% of the estimated cost of the project. Assistance is also available to tourism related activities like Health club, Massage center, as part of the hotel complex, Amusement park etc. Apart from the primary security, collateral backing is to be provided depending on the project location and investment of promoters.

Capital Subsidy:

Central Government Capital subsidy of 10% of the term loan for star catagory hotels where approval has been obtained prior to 31.08.04.

1.Star subsidy upto Rs25 lakhs

2.1.Star subsidy upto Rs50 lakhs

3.Star subsidy upto Rs75 lakhs

GENERAL :

The corporation participates in funding the projects in consortium with other lending institutions on mutually agreed terms, upper limit being as given above.

Tourism – Scheme For Modernisation And Upgradations Of Well Run Profit Making Tourist Resorts/Hotels

With a view to extend liberalized assistance exclusively to existing well run profit making Tourist Resorts/Hotels, the Corporation has partially modified the scheme parameters. The terms and conditions of the modified scheme are:-

PURPOSE

The loan shall be used for the developmental activities viz., the modernization and upgradation of existing profit making Tourist Resorts/Hotels.

ELIGIBLE CUSTOMERS

Existing well run profit making Resorts/Hotels are eligible for financing under the scheme.

MAXIMUM ELIGIBILITY

90% of the estimated requirement for the development purpose, subject to a maximum of 50% of the value of the existing assets.  Balance will have to be brought in by the promoters.

SECURITY FOR THE LOAN

Properties of the Resort/Hotel will be the primary security for the loan.  This shall cover 200% of the loan amount.

MINIMUM CONTRIBUTION

The minimum contribution of the promoter shall be 10 %

MODE OF DISBURSEMENT

50% of the Term Loan will be released as advance and balance 50% to  be released after verification of proper utilization of the first disbursement

RATE OF INTEREST : 11.5%

REPAYMENT PERIOD

Maximum of 8 years.

Scheme For Funding For Acquisition Of Existing Hotel/Tourist Resorts

PURPOSE

The loan shall be utilized only for acquisition of well run existing Hotels/Tourist Resorts.

UPPER LIMIT

The upper limit of funding for acquisition would be 66.66% of the assets  being acquired.

ELIGIBLE CUSTOMERS

The acquirer/s should convince the Corporation of the unit’s viability

The acquirer/s should have adequate exposure, experience and expertise in running similar enterprise or should have a good business track record.

SECURITY FOR THE LOAN

Assets taken over.

Corporate guarantee/Personal guarantee of the promoters taking over the assets.

The promoters should have adequate solvency and their liabilities, if any, should be within moderate levels.

Collateral cover : 50% of the Term Loan. In deserving cases this could be relaxed by the Board.

RATE OF INTEREST : 11.5%

REPAYMENT PERIOD

Maximum 6 years including a moratorium upto 6 months to start repayment

SANCTIONING AUTHORITY