Bihar Poll: Pollsters, Media Falter Again

The one exit poll that got it right, Axis Ad-Print Media which forecast 169-183 for the Grand Alliance, was never aired as its channel partner, CNN-IBN, was too mortified to broadcast results so severely slanted against the BJP

Advertising Biggies Zero In

The advertising industry, being a ‘fellow traveller’ to the producers of goods and services, will generally reflect the economy’s health. When there is rapid corporate growth, advertising spends will be high to aid that process. When industry is in a mode of consolidation or slowdown, ad spends will be the first hit of cost-cutting. The Indian advertising industry has grown at a healthy 10-15 per cent annual average over the last 10 years; but in 2008 and 2009 — the worst slowdown years — growth pulled back to a snail’s crawl of 8.1 per cent and 3.5 per cent, respectively

‘Myntra Will Turn Profitable In 18 Months’

Flipkart’s chief of commerce sees the ‘mobile-only’ strategy as the future of retailing, as mobile provides better search and geopositioning and exact recommendations

Media Monitor: Who Is The Real Owner? An Interaction With Subhash Chandra - Part 1

BARC Edges Out TAM, Now Sole TV Audience Measurement Agency

TAM India will continue to exist and provide its non-TV ratings services, writes Gurbir SinghTAM Media, the television audience measurement company that has been dominating the market for over a decade and a half, has finally blinked. After initially attempting to take on the recently set up Broadcast Audience Research Council (BARC), it has now agreed to merge its network of Peoplemeter panels to BARC, and exit the TV eyeball monitoring game.  In a formal statement BARC India, set up by broadcasters, advertising agencies and advertisers, said it was forming a new meter management company along with TAM India, to merge the meters of the two groups. The company will run the meter operations and will supply raw data to BARC India. “Meters will be deployed based on BARC’s sample design and the ratings will be computed and disseminated through BARC India’s software,” the statement added.  TAM Media, a joint venture set up by two media giants – Kantar Media and A C Nielsen – had been the dominant player in the television ratings business since 2002 when it gobbled up a domestic ratings agency called INTAM, promoted by ORG-Marg chairman Titoo Ahluwalia.  In the interim years, there have been challengers to TAM Media, but none could stay on as they could not garner sufficient number of subscribers. However, over a decade, television networks and other stake holders had steadily voiced their concern at TAM Media’s lack of sufficient sample size – sometimes less than 5,000 homes – that produced skewed data. Since eyeballs measurement was the predominant basis on which advertising agencies, on behalf of their advertiser clients, parked their money, the voices of dissent grew over the years.  The television advertisement market that sustains TV networks is worth nearly Rs 18,000 crore, and almost 80 percent of the revenue generated by TV companies is from advertisements. Faulty viewership data thus has a debilitating effect on the revenue flow of these companies.    To correct this scenario, the various stakeholders – the broadcasters, advertisers and ad agencies – came together around 3 years ago to launch an industry initiative – BARC India – that vowed to seed a large sample size of audience measurement meters, and provide robust data to the industry. BARC India formally launched its own data services about 6 months ago. Initially, TAM Media, thought it would ride out the competition. However, since most of the subscribers – the TV channels and the ad agencies – were participants in BARC, they discontinued their TAM subscriptions. Ultimately, the older agency, starved of subscription revenue, had to throw in the towel.  This was expected as was predicted in older columns by the writer. In a tight market of few players, it is difficult for two measurement currencies to coexist. This was proved when, after years of competition between TAM Media and ORG-Marg’s INTAM rating system, the latter has to give way to TAM, who then clearly was the one with better resources. More than a decade later, the cycle of life has turned a full circle, with TAM Media now giving way to BARC India, the one with greater industry support.  “This ratings data will be the sole trading currency for the country, giving advertisers, broadcasters and agencies accurate and quality measurement,” the new victor BARC India said in its statement.  The new meter company being formed will hold the meter assets and panel management operations of the present BARC India and TAM India panels. These will be jointly owned by BARC India, Nielsen and Kantar with management control resting with BARC India.   BARC claimed the meter measurement company will have 34,000 meters pan-India, and it will supply raw data to BARC, which will use its own statistical processes and sampling design. Meanwhile, TAM India will continue to exist and provide its non-TV ratings services. These include AdEx - Advertising Expenditure for TV, Print, and Radio; RAM - Radio Audience Measurement; Eikona, a PR Audit service; and TAM Sports Measurement and S-Group Consulting.  Punit Goenka, Chairman of BARC India said: “This partnership is a big step forward. The technology and methodological prowess of BARC combined with the extra meters and the field force will definitely help the industry progress.” For TAM Media’s two promoters, Kantar and A C Nielsen, they are happy to atleast hang on to the Indian market albeit as junior partners. Says Eric Salama, CEO of Kantar: “We are happy to cooperate with BARC India to be able to provide clarity and a large single sample for the industry and to keep India as a key market for us.”   Gurbir@businessworld.inTwitter: @gurbir110 

Goldman Sachs Invests $150 Million In Piramal Realty

In tandem with this investment, Piramal Realty announced it will launch a unique buy-back guarantee called ‘Piramal Assurance, Gurbir Singh writesGlobal investment bank Goldman Sachs will invest US$ 150 million (Rs 900 crore) for an undisclosed minority stake in Piramal Realty, the real estate development arm of the Piramal Group. The funds will be used to expand Piramal Realty’s current real estate portfolio and acquire prime properties in and around Mumbai, the company said in a statement.  Anand Piramal, Executive Director of the Piramal Group, said: “As one of the leading investors in global real estate, Goldman Sachs has helped develop some of the world’s finest buildings, such as 15 Central Park West in New York and 16 Colleyers Quay in Singapore.  Their experience and expertise will help us to build world-class projects in India.” In tandem with this investment, Piramal Realty announced it will launch a unique buy-back guarantee called ‘Piramal Assurance.’ Under the scheme, the company will offer to buy back any residential unit from a customer at a 5 percent discount to the market value until possession should a buyer not be satisfied with the product.   This is expected to help the company rope in early buyers at the time of launch of its projects, and provide a hedge in case prices move southwards. Stung by delayed and incomplete housing projects, new customers are wary of buying into projects which are just starting or at early stages of construction. However, in the present recessionary scenario it is not known whether the carrot of an exit at 5 percent below market rate will be attractive enough to rope in buyers.  Anand Piramal commented, "Our ‘Assurance’ will reduce the financial risk of purchase and provide peace of mind for customers, who will know that their investment is safe and liquid. This also will set high performance expectations for our team and will compel us to keep our customers happy and at the centre of our business." Founded in 2011, Piramal Realty claims to have over 10 million square feet of commercial and residential projects under development in prime areas of Mumbai, such as Byculla, BKC, Mulund, Thane and Worli. In the next few months, Piramal Realty will launch Piramal Vaikunth in Thane, a mixed-use complex designed by well-known firm, HOK. The project will feature high-rises, townhouses, a spiritual learning centre, and retail outlets all spread over 34 acres. Goldman Sachs since 2006 has deployed more than U$2.5 billion in India.  Globally, Goldman Sachs is one of the largest real estate investors in the world and has invested approximately $43 billion in the sector.  Working with numerous renowned developers, such as Hines, Lincoln Property and Zeckendorf Development, Goldman Sachs has been involved in various landmark developments around the world, including 56 Leonard Street and MoMA Expansion Tower (53W53) in New York.  

Searching For A Home

Owning a home that is comfortable and close to work is the dream of every Indian. Unfortunately, it remains a dream for most part of his life. Much of what a middle-class man is worth is assessed in the home he has. It is the subject matter of discussion on daily commutes on the Metro; much like the British discuss the weather. If the lucky ones manage to buy a house by the time they are 45, a new cycle, a new plot begins to see if a small flat can be got for the son-now-reaching-marriageable age. It is an endless struggle.  Owning a home is essentially an urban problem. For the village or the small town dweller, a functional home has never been an insurmountable problem. Not as big as his richer cousins in cities who have to slave and save for an apartment as the total salary of 30 years of work!And things are getting worse. A recent survey by property brokers Jones Lang LaSalle showed that the average size of the already squeezed Mumbai apartment had shrunk by 26 per cent over the last five years. In Bangalore, Kolkata and Chennai people had resigned themselves to living in 22 to 24 per cent smaller flats. Isn’t it really a trick played by the builders to make prices seem more affordable?It was therefore good, futuristic thinking on the part of the Narendra Modi government to seize on building ‘100 Smart Cities’ and ‘Housing for All by 2022’. It is a situation begging for something to be done. Pent up demand for urban homes is close to 16 million units. The periphery of cities is expanding in a reckless, unplanned manner, while the old, inner portions are crumbling and adding to the misery of the millions. That is why the vision of new, ‘smart’ cities has electrified the nation’s imagination; and everyone is talking of going the ‘smart’ way.For finance minister Arun Jaitley, who pulled the ‘100 Smart Cities’ rabbit out of his budget basket last year, the ‘smart’ nomenclature was probably borrowed from his ‘smart’ phone. Actually that is what it is!The ‘Smart City’ concept originated in Europe as a technology marvel to give people a seamless, hassle-free life; a city where homes, transportation and communication systems had been synchronised to perfection to growing human needs. It also meant building brand new cities from the first brick.In India, no one knows what a ‘smart city’ is. The PM, when he was Gujarat’s chief minister, kicked off the Gujarat International Finance Tec-City (GIFT) on 900 acres of land, near Gandhinagar, as a new-age ‘Smart’ City. But realism has dawned. The wild plans of building spanking, new cities in the middle of a desert at a cost of trillions of dollars has now given way to raising the level of existing Indian cities, providing them with affordable homes, mass, rapid transport systems and drains and water treatment plants.Similarly, there is confusion on what is an ‘affordable’ home. Builders describe it as anything less than Rs 50 lakh. In Mumbai, it is difficult to find a hovel for less than a crore. Probably the right definition is anything that stretches from Rs 5 lakh to Rs 20 lakh, depending on how much you earn and where you live.Cities indeed must be beautiful, and with an awesome skyline, but they must also be inclusive. They are the new engines of growth, but they must provide a roof and comfort to the millions who made the roads and built those spanking glass edifices. As the Prime Minister’s Office works overtime to choose the first 20 cities that will go ‘smart’, BW Businessworld brings to you a Collector’s Edition that unravels the government’s plans. Also read the spectrum of housing experts and corporate realtors giving you a critique of where we are going wrong.And as Independence Day nears, is there a better celebration than making ‘Roti, Kapda aur Makaan’ a national, fundamental right?(This story was published in BW | Businessworld Issue Dated 24-08-2015)

A Dream To Chase

The Modi government’s three missions are bold and ambitious, but without the participation of stakeholders on the ground, they will remain a sloganBy Gurbir SinghWhen Finance Minister Arun Jaitley unveiled the NDA government’s policy for the development of smart cities in his May 2014 Budget allocating Rs 7,060 crore as seed capital, there was both awe and scepticism. There was awe because no other government had looked at urban development with such a long-term vision, and scepticism as the announcement came more as a slogan, with funds not enough to even see 100 smart cities through the drawing board.Over the last year, if there were any doubts about the seriousness of intent on the smart cities and housing projects, it has evaporated with Prime Minister Narendra Modi announcing three key missions — the Smart Cities mission, the conversion of the Jawaharlal Nehru National Renewal Urban Mission to the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and the Housing for All mission. The Housing for All by 2022 — a pet project of Modi — envisages a humongous deployment of Rs 4 lakh crore over the next decade to build 20 million homes. The Smart City and AMRUT projects will see an investment of Rs 48,000 crore and Rs 50,000 crore, respectively over the next five years.In the 67 years of India’s independence India never before has there been such a huge deployment to give the nation a roof. “India’s poor can’t be left to their fate. We are sitting together to discuss how to improve life in cities. Had we recognised the importance of urbanisation 25-30 years ago, we would have been at par with developed countries and cities,” said the Prime Minister when announcing the three missions.Moving beyond the announcements and policy statements, the government has got down to work in right earnest. The first task has been to choose the 100 ‘smart’ cities that will be covered by the mission. States have been told to select their short lists based on four parameters — existing service levels, ability to self-finance, robustness of existing institutions and past track record. The urban development ministry will do its own due-diligence based on these lists and select the most deserving 20 cities for funding in the first phase. BIG DEAL: The cost of land is as much as 50-90 per cent of most realty projectsAMRUT, which is focusing to  improve and create municipal and transport infrastructure in towns and cities, is aiming to cover 500 urban agglomerations in the first phase, and then gradually bring the rest of the 4,041 towns and cities under its ambit over the next decade. The outlay for an individual city or town under both the AMRUT and Smart City schemes is Rs 100 crore each; and when rolled out, the three missions are expected to cover 40 per cent of India’s population.Daunting TaskIn the debate on the government’s urbanisation policy, an important shift in perception has been missed. Slowly but surely, the government thinking has accepted the fact that the growth of cities is not negative. It is finally being accepted that cities breed intense economic activity and become the engines of growth. They also foster a more liberal culture and are the melting pots of diverse communities. The three urban missions are part of the preparation for the future. A McKinsey Global Institute study released in 2011 predicted the urban population in cities will rise from 340 million in 2008 to 590 million by 2030, accounting for 40 per cent of India’s total population.However, the high migration and unplanned growth of cities have made them cesspools of deprivation and poverty. Today, Indian cities are eyesores where a majority live in slums and commute in animal-like conditions. The Union Ministry of Housing & Urban Poverty Alleviation in 2011 estimated the shortage of homes in the country at 24.7 million. Monitor Deloitte, a consultancy specifically working on the private affordable housing segment, says the realistic and active demand for potential buyers of homes is a humongous 15.1 million.‘Homelessness’ of its urban population is a condition that every government has fought a losing battle with. The population of slum dwellers in India has increased from 52.37 million in 2001 to 65. 5 million in 2011, housing and poverty alleviation minister M. Venkaiah Naidu told the Lok Sabha a year ago.Aware of the looming crisis, various states have launched slum removal programmes and mass housing schemes at affordable prices.  Maharashtra, for instance, has experimented with Slum Rehabilitation Scheme, launched in 1995 ironically by a Shiv Sena government that aimed to provide 4 million people homes in five years. After nearly 20 years of its existence, only 1.6 lakh persons found homes under the scheme. Worse, only around 200 projects of the 1,500 sanctioned under the scheme were completed. Delhi’s experience of relocating slum dwellers in trans-Yamuna camps has met a similar fate.Though figures are often disputed, the World Bank and 2011 Census data show that nearly 60 per cent of Mumbai or 9 million out of a population of 14.3 million live in slums or shanties. India-wide, the slum population had risen to 17.4 per cent from 15 per cent in the 2001 Census of India’s urban population.Challenges AboundPeople do not live in slums out of choice. They move into shanties when they cannot afford anything better. How else do you explain a situation where there are lakhs of unoccupied and unsold flats in Mumbai, Noida and Gurgaon even as millions are scouring to find an affordable piece of real estate? The fact is the home and residential property market is out of reach for an overwhelming majority. The latest half-yearly survey by broking house Knight Frank India says India is facing the worst depression in the home-buying market for the last five years. The all-India unsold inventory stands at over 7 lakh units; and this would take over three  years to exhaust. There is no pick-up even though prices are flat or falling in most cities. How will there be sales when the prices are bloated in the first place?Shishir Baijal, CMD, Knight Frank comments: “While sales dropped by 20 per cent during January-June 2015 compared to the same period last year, new residential units coming into the market fell by 45 per cent. And, we do not see any improvement until 2015-end in sales.” So how does the government deliver affordable homes to the people? What are the challenges ahead?Without a doubt, the biggest bottleneck for growth of affordable housing in availability of land. The cost of land accounts between 50-90 per cent of most realty projects. At current market rates for urban land, there is no hope of building and delivering ‘affordable’ housing in the below Rs 20- lakh-per-unit range. The government will have to work as an aggregator and custodian of this basic commodity. However, with the land acquisition Bill going nowhere, how does the government get the land to build new cities and affordable housing stock?Second, the government has to step in as a lead agency for construction and sale of affordable housing. The current scenario in the residential housing market is dominated by private builders, some of them with dodgy backgrounds. Their focus is not on affordable housing, but on the luxury segment that gives them higher margins. The role of state agencies like the Delhi Development Authority (DDA) and the Mahar-ashtra Housing & Area Development Authority (MHADA) has been reducing over the years and is today marginal. They contribute less than 20 per cent of new units per year. They have to play a bigger role. There needs to be a significant growth in rental housing too, which is crucial if first-time city dwellers are not to suffer the fate of shanty towns on the edge of the city. This can only be done if state governments and the Centre reverse the policy of leaving housing to the private sector, and step in aggressively as providers of affordable units.Finally, where is the money going to come from? What is required by conservative estimates is $5 trillion over the next decade. The government contribution is a drop in the ocean, just seed capital to get the ball rolling. If the urbanisation juggernaut has to move forward, the government has to tap the debt markets, get private-public partnerships going, seek equity investment, raise money through focused urban development taxes and develop a slew of innovative and project-specific business models.All this will only move if the regulatory mechanism is clear from the start. “Foreign investors’ response to the Smart Cities programme is yet lukewarm, because they don’t know yet what the fine print is, what they are getting into,” says Sunil Rohokale, CEO, ASK Group. So far, there is little evidence of a detailed regulatory road map; the sooner it comes, the faster will investors loosen their purse strings.There is obviously a lot of work to be done to transform these dreams of a new Urban India into reality. Any dithering on the government’s part will mean these grandiose plans will become just a few more slogans.   gurbir1@gmail.com(This story was published in BW | Businessworld Issue Dated 24-08-2015)

Narendra Modi's First Big Reverse

It is indeed a climbdown by the BJP-led government on the amendments to the Land Acquisition Bill. By agreeing to green-flag clauses that require consent from families affected, and the precondition of social impact assessment, is a big blow to the reforms programme of the Modi government. What has not sunk in widely is that the capitulation is the first big defeat suffered by Prime Minister Narendra Modi. Narendra Modi had made the bringing in of crucial changes in the Land Acquisition Act (the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013) his personal agenda as part of his government’s ease-of-doing-business-in-India programme. The BJP had taken the support of corporate groups and, in the run up to the elections, had pledged that the bottlenecks to acquire land would be removed as part of the quid pro quo if voted to power. At the first hint of opposition, Prime Minister Modi had batted on the front foot against his Congress detractors dedicating one of his weekend ‘Maan Ki Baat’ radio addresses exclusively to why the Congress Land Act needed to be jettisoned. Later, as the Opposition got more strident, Modi took an under-the-radar position.  Gurbir SinghThe enthusiasm with which the BJP government has tried to dump the Congress legislation has the Modi stamp all over it. The battle over the Land Bill has been long and hard, and has been documented extensively by Businessworld. Starting December, last year, the BJP has not been able to pass the amendments because of the sustained opposition of the Congress in the Rajya Sabha where the latter still commands a majority. The government’s earlier strategy was to push the changes through by promulgating the amendments as an Ordinance, not once but three times.  But this rule by Ordinance could not go on forever. Changes in the Land Acquisition Bill had to be legislated. The BJP then toyed with the idea of a Joint Session of Parliament, where because of the two-thirds majority in the Lok Sabha, it would have won the vote. However, perception gained ground that the NDA government was ‘pro-corporate’ and ‘anti-farmer’. Rahul Gandhi’s taunts of ‘Soot-Boot Ke Sarkar’ seemed to ring a sympathetic bell among the rural masses. The BJP position became worse when allies of the NDA, the Akali Dal, the Shiv Sena, and even some arms of the RSS like the Bhartiya Kisan Sangh and the Swadeshi Jagran Manch, opposed the amendments.  To diffuse the Parliamentary opposition, the Union government agreed to set up in May a 30-member Joint Committee of Parliament headed by BJP’s Lok Sabha MP, S.S.Ahluwalia. The Committee was charged with suggesting changes to the amendments and making it more palatable. It was to give its report on the first day of the Monsoon Session of Parliament. In a parallel move, Finance Minister Arun Jaitley hinted that the government would allow the Land Ordinance to lapse and lob the ball to the states. With land being a state subject, the government considered using BJP-ruled states as the laboratory for bringing in appropriate legislation to make land acquisition easier. This was the first hint that the government had blinked on the Land Bill.  The main bones of contention have been: first, the attempt by the BJP through an amendment to jettison the requirement in the 2013 Act for 70 percent consent of the landholders in public-private projects and 80 percent in the case of private projects; second, the NDA bill exempted the 5 categories of projects – defence, rural infrastructure, affordable housing, industrial corridors and infrastructure projects – from undertaking environment assessment.  The Joint Parliamentary Committee, that has been the platform for this fight for the last two months, extended its life till August 3, and the BJP finally gave in. The new recommendations of the Committee will now suggest that six of the nine contentious amendments to the bill that had been brought in by Ordinance should be allowed to lapse.  The Congress is seriously celebrating. After the mauling at the hustings and the several exposures of coal gate and other scams, it can now turn claim the support of farmers. BJP spokespersons are playing down the Land Bill fiasco, dubbing it as a ‘Peoples victory’. Whichever way one looks at it, land acquisition for development and corporate growth will become more difficult, and Prime Minister Modi will soon be hearing from India Inc about ‘broken promises’. 

A Bottleneck For Growth

Like many others, I too was taken in by the swanky exteriors and glib talk of many a foreign, private bank. In 1992, soon after the historic economic reforms kicked in, many made a beeline for opening accounts in Standard Chartered, HSBC Bank and so on. I remember, to keep the ‘chaff’ out, these banks first demanded a minimum balance of Rs 25,000 for savings accounts. After a hue and cry was raised, they brought it down to Rs 10,000. For small professionals, even that was too much, and some of us, tail between our legs, went back to the old state-run banks where the requirement was just Rs 500. The intent was obvious. The foreign banks were not here to serve the poor. They wanted to keep those accounts out and target the high net worth and the big borrowers. Rural India was even further away. That task of cranking up the villages fell on the state-run banks. The ‘socialistic’ history of banking in India will always be an overhang to be reckoned with. The Nehru government nationalised the Imperial Bank of India in 1955, and the behemoth, SBI, was founded. There were three waves of nationalisation thereafter, and by 1980 we had 27 state-run banks covering around 90 per cent of the bank branches in the country. Today, despite liberalisation and foreign banks coming in, state-owned banks are still big. They account for 76 per cent of the advances, 77 per cent of the deposits and 82 per cent of the branches. More important, the professed goals of nationalisation — to break the monopoly of a few, to include the masses in the banking system and to fund priority sectors — is still the governing philosophy.  The big problem they now face though is they don’t have enough money to lend. Even finance minister Arun Jaitley in his 2014 Budget speech admitted these banks needed a float of Rs 2.4 lakh crore. The impact of slow credit growth is both direct and crippling. Failure to recapitalise banks slows growth and is detrimental to everything the Prime Minister and his government are trying to put in place. Meanwhile, the government is facing the ignominy of breaching the Basel III accord, a global, voluntary regulatory framework that has prescribed bank capital adequacy norms.  The government is aware of the problem. Finance secretary Rajiv Mehrishi said a few weeks ago the government will inject Rs 18,000 crore this fiscal, and around Rs 36,000 crore next year. A recent report by global investment and research outfit Jefferies estimates that these banks can raise around Rs 50,000 crore if they sell their non-core assets. This is chicken feed in relation to what is required.  So what are the options? A report by a panel headed by former Axis Bank CEO P. J. Nayak, submitted last year in May, suggested that New Delhi privatise national banks by lowering its stake to less than 50 per cent. In the alternative, the government should stop meddling and allow banks to function autonomously. They now take orders, often contradictory, from two masters — the RBI and the finance ministry. While privatising or lowering the government equity in banks will raise the funds to recapitalise banks, it is a political pill that is difficult to swallow. How will the government be able to launch its ‘social inclusion’ programmes like the Pradhan Mantri Jan Dhan Yojana? The lakhs of unionised employees of state-run banks too are all set for rebellion! An option is to lower government equity to 33 per cent and allow it to hold a ‘golden’ veto. Understand the full picture of this mega banking snarl penned by deputy editor Raghu Mohan.  That is not all. Our offering this fortnight also includes a hard-hitting story by associate editor Joe C. Mathew revealing that despite all the talk about ‘Make In India’, 70 per cent of the medical devices market has been grabbed by foreign players, leaving the ‘locals’ with low-end products. Also, don’t miss the story about the government getting tough on the menace of mobile call drops by special correspondent Neeraj Thakur and all you wanted to know about Uber but were afraid to ask by senior editor Mala Bhargava. (This story was published in BW | Businessworld Issue Dated 10-08-2015)