Author
Gurbir Singh is an award-winning senior journalist with over 30 years experience. He has worked for BW Businessworld since 2008, and is currently its Executive Editor. His experience ranges from covering 'Operation Bluestar' in 1984 to pioneering coverage of the business of Media & Entertainment and Real Estate for The Economic Times.
Reliance Jio’s fourth generation (4G) telecom rollout plans suffered a setback on Monday when the Bombay High Court restrained the Maharashtra government and the Brihanmumbai Municipal Corporation (BMC) from granting permission for setting up mobile towers on land reserved for open spaces such as playgrounds and parks. The NAGAR Trust, an alliance of NGOs, had challenged a notification issued by the BMC on 14 March, last year, allowing Reliance Jio to use open spaces and public grounds to set up wireless communication towers, the backbone for its 4G network. The amendment to the Development Control Rules (DCR) permits the use of non-buildable reservations such as playgrounds, by carving out 100 square meters or 5 percent of the total area of the open space, whichever is more. Senior advocate Aspi Chinoy, appearing for the NGO alliance, told a bench consisting of chief justice Mohit Shah and Justice Anil Menon that no proper public notice had been given for this amendment. Though the notification bans mobile towers on the premises of schools and hospitals, it had permitted Jio from erecting these towers in public open spaces frequented by children. Ever since Reliance Jio began erecting cell towers in gardens and playgrounds, there has been a wave of resistance in Mumbai. Residents of Bandra recently physically stopped the erection of one such tower in the well-known Almeida Park; a public playground near Ghatkopar also saw resistance from local walkers and students when they saw equipment of a tower being brought in. Though the legal battle is still in its early days, if the interim stay granted by the High Court is confirmed, it will have serious ramifications for Reliance Jio in other parts of the country. The notification seems to have been brought in to please one telecom operator gauging from the hurried way it was promulgated. Jio’s 4G network requires clusters of low-rise towers, and the normal 2G or 3G hoists on tall buildings or rooftops does not work with the 4G system. With the Bombay High Court leaning in favour of the activists, a permanent injunction against Reliance Jio towers in public places in Mumbai is likely to have a cascading effect in other cities and towns as well. What the activists are questioning is: can municipal and government authority bring in ground rules for use of public land that obviously favours one telco? If this is not crony capitalism, then what is? they are asking.
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The home ministry cannot force 33 channels off air based on a few criminal charges faced by the promoters, writes Gurbir Singh THE HAWKS IN the Ministry of Home Affairs (MHA) have created a serious crisis for the media and entertainment industry. Around the first week of June, the MHA turned down ‘security clearance’ for the Kalanithi Maran-promoted Sun Group. This could lead to the south-based broadcaster losing its licence issued by the Ministry of Information & Broadcasting (I&B) and its 33 channels going off air. The MHA’s case is that there are serious criminal cases pending against the Maran brothers —Kalanithi and former telecom minister Dayanidhi Maran — including the Aircel-Maxis investigation and an Enforcement Directorate case of money laundering. On the same grounds, earlier in March, the Sun Group’s 48 FM radio channels were denied security clearance. This has held up the much-awaited auction for the third phase of radio licences, as the I&B ministry has gone into a huddle with the MHA to decide on the status of the Sun Group as radio licence bidders. The radio industry is in a tizzy as the auction for 839 stations for over 200 cities has again gone into cold storage. The MHA has refused to budge despite the I&B ministry, and Arun Jaitley, the I&B minister, clearing the Sun Group. Even attorney general Mukul Rohtagi’s legal opinion in favour of the Sun Network has not moved Rajnath Singh. Worse, till date there is no official communication to the company on the denial of ‘security’ clearance, making it difficult for Sun to go to court. Meanwhile, Sun Network has been battered on the stock market with its stock plummeting from Rs 450 in April to its current Rs 280-285 range. The Sun Group is no fly-by-night operation that started yesterday. Founded in 1993, it is a Rs 2,230 crore company by revenue, and notched up net profits of Rs 750 crore last fiscal. It employs 2,000 people, and is part of the cultural life, especially in the southern states, where its offering on more than 30 channels has become part of the daily fare. There is no denying that there are serious charges, especially against Dayanidhi Maran, who used his baton as telecom minister to force business contracts in exchange for sweet deals for himself and his brother’s business. And punishment should be meted out if the charges are proved. In law, individual promoters and the corporate entity they preside over are separate. The corporation is an amalgam of a wider body of investors serving an even larger community of consumers. Business operations developed over two decades cannot be shut down on account of the illegal actions of one or two persons at the helm. We are witnessing a public display of a divided government. While the I&B ministry has given a go-ahead, the MHA is not moved. Logically, if the licensing authority for broadcasting is the I&B ministry, should not issues of safety and security be also decided by it? Such instances of the left hand working at cross-purposes with the right has put India at the bottom of the ‘ease-of-doing-business’ index. Then there is this whole paranoia about ‘security’ and micro-managing all communication operations. For broadcasting, while channel licenses are given for 10 years by the I&B ministry, the licensing rules require a security clearance from the MHA every three years. This also means submitting and getting the green signal from the MHA for all directors of the broadcasting company’s board. How are companies supposed to run entertainment and news operations under this ‘Big-Brother-is-watching-you’ dispensation? The latest insistence of the home ministry on having the credentials of journalists vetted every year before according ‘accreditation’ is another example of a police-state paranoia. Rajnath Singh is relying on a dusty rule that was not implemented earlier; but perhaps the reason for applying it now is to teach a lesson to the ‘uncontrollable’ news media. (This story was published in BW | Businessworld Issue Dated 27-07-2015)
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The aviation sector in India has never had a smooth flight. It has experienced air pockets ever so often, and most take-offs have been bumpy and landings rough. Yet for the media, as for many of the moguls who own airlines or those who once-upon-a-time did, the airline industry is a fascinating subject. Almost like the dream machine called Bollywood movies, which every starry-eyed industrialist has tried to hop onto and then burnt his fingers.
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Govt wants to open up the economy to foreign chains at our expense, says Kishore BiyaniRetailers and brick-and-mortar chains are up in arms against what they believe is a ‘soft’ policy favouring e-commerce players. They perceive the BJP government intends to create a separate category of e-commerce or electronic retailing which will allow for 100 per cent foreign direct investment (FDI). This will not only mean disturbing the level playing field between retailers and e-commerce, but will also kill the multi-billion organised and unorganised retail industry, it is feared. A strong delegation of retailers led by Future Group, Shoppers Stop and others will be meeting Commerce & Industries minister Nirmala Sitharaman on Wednesday (8 July) in Delhi, where they expect to mount a strident opposition to these new FDI proposals.“It is very clear that the government is determined to bring in 100 per cent FDI for e-tailers. They are just not listening. They want to open up the economy to all these foreign chains at our expense,” Kishore Biyani, CEO of the Rs 22,000-crore retailer Future Group told BW in an exclusive interview. “The government has shut its ears. It is going to be a long-term fight. It seems they have ears only for white skins,” Biyani thundered striding around his large Sobo Central office in Mumbai.He described the differentiation being made for e-Commerce as ‘ridiculous’. “The government wants to create a special category of e-commerce defined as those who use electronic technology for trading. Don’t retailers like us use electronic technology to sell goods as well? Or, don’t e-tailing chains have a huge brick-and-mortar backend? So on what basis is the government favouring e-commerce as a special category?” Biyani asks rhetorically.The Commerce Minister, under pressure from free-trade partner countries to open up e-commerce, has called for a fresh round of consultations on Wednesday with stakeholders representing both e-commerce companies as well as with high street sellers and other retailing chains. Industry bodies such as Ficci and CII are expected to attend, as well as big e-tailers such as Flipkart, Snapdeal and Amazon. The first round of consultations in May proved inconclusive as both traders’ organisations and the Retailers Association of India had boycotted the meeting.Kishore Biyani, however, insists that the meeting called on Wednesday by Sitharaman is only in deference to a Delhi High Court order that has directed the government to give a hearing to the stakeholders, including the retailers who will be adversely affected if the law on FDI is changed. The current norms allow 100 per cent FDI in business-to-business or B2B e-commerce, but not in business-to-consumer or B2C companies that sell directly to consumers. On the other hand, brick-and-mortar retailing is allowed 51 per cent FDI.“The court has taken a dim view of the government’s intent. We will fight it out if we are not given a proper hearing by the government,” Biyani said.He said the e-tailing volumes of the likes of Flipkart and Snapdeal were currently based entirely on heavy discounting. “The thumb rule is: their losses are 30 to 40 per cent of their sale costs.” He said the current e-tailing model was based on the next round of investment, and if that did not come, the promoters would have to pack up.“It is already happening. The promoters of Fab Furnishers have called it a day, leaving the private equity (PE) investors to run the company. That is the next big e-commerce story: the PEs taking over and running companies after the promoters have quit,” Biyani said, adding: “Only the top 2-3 in each category are going to survive.”Giving a parting shot, the Future Group chief said: “The only model that will survive is one that does not sell at a discount. We do both-eTailing and retailing, but we don’t discount. Our costs are 16 percent of sales. The big eTailers cost model is 53 percent of sales. Their only disruption is the money coming in.”The government is under huge pressure to open up the entire e-commerce sector to foreign investment in the free trade pacts it is negotiating with different countries, but the huge community of traders and retailers who have a mass base, are unlikely to keep quiet as they perceive 100 percent FDI as detrimental to their interests.
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The horrific death of 102 persons in Mumbai after drinking contaminated liquor comes as a reminder of the enormity of the problem – the widespread drinking habit among people looking for a cheap kick; and the failure and connivance of the monitoring authorities to stop the illegal brewing and distribution of hooch. It was tragic-comedy indeed with Mumbai treated to a circus of ministers from the same party using the issue to score brownie points and to point fingers at each other. When the matter was raised in the Maharashtra Legislative Assembly recently, Eknath Khadse, the state Excise Minister, faced a volley of attack from the Congress leader Balasaheb Vikhe Patil, who demanded a ban on sale of liquor to end the problem of hooch deaths. Eknath Khadse, instead of admitting the lapses of his department, pointed to the home ministry blaming the failure of the police for the liquor deaths. Now, everyone knows BJP’s Khadse was a chief minister hopeful, and there is no love lost between him and Chief Minister Devendra Fadnavis, who heads the home department. Beyond ministers sniping at each other, a cynical liquor policy is in motion. Despite the failure of Prohibition in the country and in Gujarat, somehow the political class thinks it can stop liquor addiction by banning the brew. Following problems of liquor addiction in the tribal belt, Maharashtra has recently banned liquor sale in the tribal districts of Gadchiroli, Chandrapur and Wardha. Excise minister Khadse’s next target, he announced in the assembly, is Yavatmal and Nagpur districts. Both districts are notorious for farmers’ suicides, and Khadse said a ban would help stem the tide! Gurbir SinghCuriously, the BJP-Shiv Sena policy on liquor is a continuation of the previous Congress-NCP legacy, which made Maharashtra the most ‘excised’ and expensive where booze was concerned. Ajit Pawar, the NCP deputy Chief Minister and then excise minister, spelled out a policy of stepping up excise duty rates as a tool to reduce drinking. In FY2014, he raised excise duty on country liquor by nearly 20 percent and on Indian Made Foreign Liquor (IMFL) by 25 percent. This hardly brought any changes in drinking habits. In that financial year, IMFL sales went up 8 percen t to 1,615 lakh BL, while country liquor fell marginally by 5 percent to 3,211 lakh BL. What the data does not reveal is that a substantial part of the country liquor sales shifted to hooch and with that came all the problems of contamination and death. This year the BJP continued Ajit Pawar’s policy of hiking excise rates on country liquor pushing up the retail price of a 180 ml bottle of from Rs 33 to Rs 45. Strangely, IMFL or the high priced brands were left untouched. While the BJP sarkar will quietly collect another Rs 1,000 crore on country liquor tax, the public justification is that higher prices will bring down drinking. Facts have shown otherwise. The hooch tragedy has once again proved that people just shift to cheaper, more dangerous options. The woods of the Borivali National Park, on the borders of Mumbai are openly festering with hooch-bhattis, and the haftas are routinely paid to the policemen and politicians to protect them. Expectedly, there have been a few raids, and after the brouhaha is over, it will be business as usual. What has to be questioned in the long term is the motive behind the policy to ban sales and hike excise on liquor as a measure to beat the bottle. Either the politicians are plain stupid to think that cultural habits can be controlled with these mechanism. Or, it is a more subtle game is to push brewing underground, which is more lucrative to all concerned.
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The family, fed up with instant coffee and yearning for that addictive aroma of pure, ground coffee at the breakfast table, decided to buy a coffee machine. The young ones did their search and investigation; and one day a Flipkart delivery boy trundled up to the doorstep with a sleek looking ‘Oster’ machine for Rs 10,000. It was a steal! The machine carried a MRP of Rs 15,000, and the best high street retailers like Vijay Sales wouldn’t part with a similar piece for less than Rs 13,000.This coffee machine buy is a small part of the big eTailing success story. Millions of urbanites buy their day-to-day products via these online sites. The eTailing giants — Flipkart, Snapdeal and Amazon — in a short span have ballooned into a huge Rs 40,000-crore industry, weaning away customers from traditional retailers like Big Bazaar, and the mom-and-pop kirana shops.Their mantra is simple and logical — they deliver goods at 20-30 per cent cheaper than their high street counterparts. The eTailers, on the other hand, save on expensive rentals. The model is built on an ‘endless’ and galloping acquisition of the ‘consumer’ as real estate. Discounted pricing brings in waves of new converts, and the investors queue up to pump in money at mind-boggling valuations. These investments are based not on current P&L figures, but on the customer base of these companies. The game, therefore, is to acquire customers at any cost.Yes, it’s all about cash burn, and investors are willing to back them up to burn more to acquire more customers and to build an ecosystem that someday they hope will make profits. But when will that day come? Will the desi eTailers be able to pull out of discounting as long as Amazon with its deep pockets hounds them with better discounts? How long will the investors continue to support this model? Or, will they sell to another set of investors, who are willing to take longer bets, and who will then become victims of a Ponzi cycle? Organised retail had burnt its fingers in the last decade, pumping in over Rs 30,000 crore and chasing the chimera of the 400-million middle-class market. We have short memories — those 400-million purchasers never existed!We must make a distinction. E-commerce, or electronic trading of which eTailing is a small part, is here to stay. It is a $22 billion booming structure and galloping at over 30 per cent every year. The principles of e-commerce — first hooking the customer with great prices and the ease of trading and then slowly upping the prices to ensure decent margins — have been working well. MakeMyTrip for travel and BookMyShow for cinema and entertainment have done well to bring in their commissions once the customer is ensnared. Significantly, the barriers are breaking down too. Brick-and-mortar retailers are creating e-commerce models, while the e-commerce guys are tying up to create touch-and-feel stores.It’s all evolving. But for the eTailers, the last leg of the marathon has gone wrong. Read all about where they are all headed in our cover story authored by senior writers Vishal Krishna and Abraham C. Mathews, who worked over a month searching the marketplace and the lawyers’ corridors.There is interesting variety too in the issue. India has also suffered a long, hot summer and hopefully now the rains will bring some respite. It was a summer that saw for the first time consumption of power go down in rural India, and tractor and FMCG sales fall in villages. Well known writer Paranjoy Guha Thakurta analyses what the crisis of falling purchasing power of agricultural India means for the country’s economy.(This story was published in BW | Businessworld Issue Dated 13-07-2015)
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The Narendra Modi government is sinking deeper into the land acquisition quagmire. On 31 May, the land ordinance was re-promulgated for the third time, after the Congress-dominated Rajya Sabha refused to put its stamp on the Bill. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance had been promulgated first in December 2014 and again on 3 April this year. The Bill has been passed by the Lok Sabha, but persistent opposition and street protests have forced the government to refer it to the Joint Parliamentary Committee (JPC). The government’s stance defies logic. From the point of view of parliamentary strategy, the heavens would not have fallen if the Prime Minister had allowed the previous Land Bill to lapse in May. Once the JPC completes its work, the BJP-led government has the numbers to pass the Bill even if it has to convene a joint session of the two houses of Parliament. So what does the government hope to achieve by keeping alive a controversial policy measure through an ordinance? Will any acquisition of land by corporate groups be initiated under the newly-promulgated ordinance? With shrill protests over the land Bill, it is unlikely that any business entity will risk acquiring land under the terms of the current ordinance. An RTI filed by civil activist Venkatesh Nayak nails the lie that land acquisition is the main hurdle to completion of projects. The government record shows that as of February this year, only 8.2 per cent or 66 of the total 804 projects have been halted due to problems in acquiring land. The bulk of the projects have been on hold for various reasons such as lack of clearances (non-environmental), unfavourable market conditions, lack of funds and lack of promoter interest. In an earlier case of D.C. Wadhwa versus state of Bihar, in 1987, the Supreme Court had found that between 1967 and 1981, the Bihar government had promulgated 256 ordinances that “were kept alive for periods ranging between one and 14 years by re-promulgation from time to time”. Coming down heavily on this practice of governance through ordinance, the court held the practice of repeatedly re-promulgating ordinances as unconstitutional. However, in respect of the powers of the President to promulgate ordinances defined by Article 123 of the Constitution, there is silence on the issue of re-promulgation. Legally it is an open issue, but ethically, the discordant notes are becoming stronger. The previous re-promulgated ordinance in April was challenged by the Delhi Grameen Sabha in the Supreme Court, which gave notice to the government and other parties. With the April ordinance having been replaced, the petition will become redundant, but it is only a matter of time before a fresh legal challenge is mounted. (This story was published in BW | Businessworld Issue Dated 29-06-2015)
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The grizzly spectacle of farmer Gajendra hanging himself from a tree has reinforced all the issues that have been building up against the Land Acquisition Ordinance. Farmers’ suicides, the subject of investigative reporting and surveys, had so far been far away from Delhi in the rural heartlands only. In a strange and accidental way, all the motifs —suicide by impoverished, debt-laden farmers, and the charge that the central government has turned a blind eye — have come to haunt the Modi government.
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A serious debate on the issue of changes in labour laws by BJP-run states sparked off when some of the proposed changes by the Madhya Pradesh (MP) government were rejected. As many as six of the 35 amendments covering 17 labour laws proposed by MP have been declined by the Union labour ministry. Other state governments have also lined up labour reform measures that trade unions are threatening to take to the streets.
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Prime Minister Narendra Modi is a worried man. He normally does not join issue on raging controversies of the day like the ‘Nirbhaya’ film or the litany of politically embarrassing comments emanating from his ministerial colleagues.
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