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Ashish Sinha is an experienced business journalist who has covered FMCG, auto, infrastructure, tourism, telecom among several other beats. Ashish has keen interest in the regulatory scenario impacting different sectors. He writes on aviation, railways, post and telegraph, infrastructure, defence, media & entertainment, among a wide variety of other subjects.
Over 60 channels are sitting on their reserve prices fixed before auctions, says Ashish Sinha Despite having conducted 40 rounds of clock auctions that took two full working weeks, over 60 stations (out of 135 stations) across 28 cities (out of 69 cities) have seen zero interest from the 21 pre-qualified bidders even after the 10th day of bidding. The clock auctions are currently underway for the 135 stations across 69 cities where the collective bids have crossed Rs 1,000 crore, almost 2.5 times the reserve prices fixed. Experts pointed to the high reserve prices as one of the main reasons for a lack of interest from the bidders in so many cities where at least one or two stations are available for auctions. Analysts tracking the radio industry also blame the FM-III policy itself which had put a cap on any single FM operator owning more than 15 per cent of the total channels available. “There are several deterrents for the bidders. FM-III may be far away from the success envisaged by the policy makers who got swayed by the telecom spectrum auctions of 2010. FM penetration may just remain confined in only select cities even after three phases and 15 years of private radio operations,” said a senior analyst. Another experts pointed to the high reserve prices in certain towns which have added to the woes of the participating bidders. “Take for example the reserve price of channel in Kozhikode at Rs 7.02 crore. Money can’t be made by anyone even if this is the winning bid. Similar is the plight in Tirupati where the reserve price in Rs 4.5 crore. If only about half the channels are won by operators at the end of this first round of auctions, then the government should review its FM-III policy. No one is here to do charity,” said a technical expert on FM radio stations who advices leading players. According to a media analysts who tracks the radio industry, current bidders have put their money on established markets like Delhi, Mumbai, Bangalore, Chennai, Pune etc. “Compared to a reserve price of Rs 31.42 crore set for the lone channel available in Delhi, today it is worth Rs 144 crore and counting. Mumbai’s reserve price before auctions was Rs 35 crore. Today it is Rs 93 crore and counting. These numbers are very high but bidding is on. Clearly, the focus is on established markets,” the analyst said. Cities like Dhule, Gorakhpur, Gulbarga, Lucknow, Aligarh, and Jhansi are said to be among the 28 towns where the reserve price fixed before the auctions continues to be the price even after 40 rounds of clock auctions where the cumulative bids have crossed Rs 1,000 crore as against the cumulative reserve price of Rs 407 crore. Additionally, the government will get around Rs 1,600 crore as the renewal fees from the existing 245 FM Stations who will also be a part of the third-phase. “Operating FM stations in some cities for the winners may become unviable at the current rates. Creating scarcity and then calling for bidding is clearly a flawed idea which could have been rectified. Had there been 5 channels available in Delhi or Mumbai, things would have been different,” says a senior executive in a leading FM brand.
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The national carrier is still in dire need of cash to carry out its day-to-day operations, says Ashish SinhaThere is good news and bad news for the national carrier Air India. The good news is that the finance ministry on Friday (31 July) sought Parliament's nod for making an additional equity infusion of Rs 800 crore into Air India. This was desperately sought by Air India since December when the civil aviation ministry had submitted its budgetary requirements to the ministry of finance. Sources say if required, the government will seek the approval of the Parliament for another round of equity infusion into Air India but the call will be made before the Winter Session of Parliament. Now the bad news. The infusion of Rs 800 crore in Air India is just around 45 per cent of the total equity infusion sought by the national carrier as part of the annual plan requirements for 2015-16. This means the national carrier is still in dire needs of cash to carry out its day-to-day operations. However, sources in the civil aviation ministry said the government is awaiting the report from SBI Caps which is reviewing the Turn Around Plan (TAP) for Air India. The report is expected during the second or third week of September, said a source in the ministry. “Based upon the recommendations made by SBI Caps and the decision taken by the government thereafter will Air Indi’s fate will be decided,” he said. Air India is currently getting its annual financial support from the central government under the various milestones laid down in TAP which was implemented from 2012 and under which it will continue to receive over Rs 30,000 crore till 2022 depending upon Air India meeting the milestones. Sources told BW Businessworld that the Annual Plan for Air India for 2015-16, submitted to the Civil Aviation ministry last December, stood at Rs 4,982 crore which included a Budgetary Support component of Rs 4,277 crore. However, the Annual Plan for 2015-16 approved by the finance ministry stood at only Rs 3,205 crore which was inclusive of the Budgetary Support of Rs 2,500 crore to Air India. “There was a noticeable cut to the annual plan for the civil aviation ministry that impacted Air India’s finances too,” said an analyst who tracks the aviation sector. The national carrier, in fact, had requested for an equity infusion of Rs 4,277 crores for 2015-16 in line with the recommendations of Turn Around Plan (TAP)/Financial Restructuring Plan (FRP). As against this, the government provided Rs 2,500 crore in the Finance Bill for 2015-16 as equity infusion in Air India thereby leaving a deficit of Rs 1,777 crore. However, as per the government’s statement, the total sanctioned supplementary demand for grant for the civil aviation ministry stood at Rs 820 crore which included an equity infusion of Rs 800 crore into Air India leaving a shortfall of around Rs 1,000 crore. According to a statement submitted in Parliament by Mahesh Sharma, the state minister for civil aviation, Air India has achieved the target set out in TAP, and has made substantial progress in both operational as well as financial areas. In fact, in the last financial year, Air India reduced its losses to Rs 5,547.47 crore, the minister had stated. According to Sharma, since the implementation of TAP/ Financial Restructuring Plan (FRP), the operating loss of the national carrier reduced from Rs 5,138.69 crore in the fiscal 2011-12 to Rs 2,171.40 crore in the year ended March 31, 2015. “Net loss has come down to Rs 5,547.47 crore in 2014-15 from 7,559.74 crore in 2011-12,” Sharma had informed the Parliament. For the record, the loss-making Air India is surviving on a bailout package approved in 2012. The debt of the national carrier is pegged at around Rs 40,000 crore. According to Air India insiders, if the cash deficit continues Air India will face a number of operational as well as financial difficulties such as repayment of the government guaranteed aircraft loans which might result in a “default” situation resulting in the invocation of GOI Guarantee. There could also be delay in the repayment of the interest on NCDs, company executives said. According to the analyst quoted above, continued cash deficits may also result in compulsory borrowings from banks that would come at a higher interest cost adding to Air India’s woes. ashish.sinha@businessworld.in
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The Parliamentary Standing Committee on Finance has come down heavily on the ministry of Corporate Affairs (MCA) for lagging behind in executing crucial projects required for addressing investor grievances and for failing to formulate recruitment guidelines that could cover the shortfall in specialised posts that remain vacant in the Serious Fraud Investigation Office (SFIO), the investigative arm of MCA. The Parliamentary committee, incidentally, is headed by former corporate affairs minister M Veerappa Moily under whose tenure most of the reforms within MCA were initiated. The House panel has representations from across political parties. Its members from Lok Sabha include S.S. Ahluwalia and Kirit Somaiya from the BJP, Saugata Roy (TMC), Bhartruhari Mahtab (BJD) and former Prime Minister Manmohan Singh (Congress) from the Rajya Sabha as some of its members. Taking a serious view of the acute shortage of officers (more than 50 per cent posts vacant) in the Serious Fraud Investigation Office (SFIO), the house panel lamented MCA for its "lackadaisical approach" in realising the full potential of SFIO in unravelling corporate frauds. It said that the three-month deadline to MCA for finalising the recruitment rules for SFIO was missed by the ministry. The Parliamentary panel noted: "The technological capability of SFIO also seems to be falling behind the curve. The Early Warning System, which was propounded as panacea for all corporate frauds at the time of its launch by the ministry, has been dumped by it for want of encouraging results." The panel expressed its unhappiness with the lack of progress shown by the specialised units within the SFIO. "The computer forensics lab set up in Market Research and Analysis Unit (MRAU) of SFIO is yet to show tangible results by way of timely identification and detection of high-tech corporate frauds." Responding to the panels suggestion on recruitment for SFIO, the MCA said that the terms of deputation offered in SFIO were not as attractive as offered by other premier Investigation Agencies like CBI, IB, Enforcement Directorate, NIA and SEBI. "As a result, there is no motivation for officers from various organizations to opt for deputation to SFIO. This issue has now been taken up with the 7th Pay Commission and a strong case has been made out for raising the deputation allowance," it said. Not satisfied with the response, the panel told MCA to finalise the recruitment rules immediately without further delay so that SFIO could have a permanent cadre of officials and lack of manpower would no longer be an issue for its under-performance. The committee noted that MCA in their 'Action Taken Replies' remained silent on the mechanism regarding accountability in case of delays in finalising cases. "The ministry should install a system in this regard and be firm in fixing responsibility where there are delays in finalising cases," the committee told MCA. The Parliamentary committee also pulled up MCA for delaying the setting up of the Investor Education and Protection Fund (IEPF) Authority as required under the new Companies Act. The Parliamentary panel wants the redressal of all investors grievances under IEPF as a single-window system. In its report on demand for grants 2014-15 for MCA, the House panel said that creation of IEPF Authority has taken an "unduly long time". Panel noted that excluding investor grievances from the mandate of IEPF Authority will do “no justice” to the investors' fraternity. The proposed IEPF Authority would be responsible for administration of investor education and protection funds, undertaking investor awareness, refund of unclaimed amounts, distribution of disgorged money and reimbursement of legal expenses under class action suits. "The Ministry should include all investor-related activities including redressal of investor grievances under the ambit of the Authority as it will act as a single window for all investor problems," the report said. The report was submitted to Parliament on Saturday. The house panel urged MCA that the Indian Institute of Corporate Affairs (IICA) should redefine itself rather than just being a training institution. "Considering the amount of investments which has gone into creating such massive infrastructure of the Institute, much more needs to be done," it noted. IICA should not limit its scope by merely becoming a training institution for the probationers of the Indian Corporate Law Service and other officials of MCA, it said rather It should rather redefine its role and pro-actively position itself in the market as a leading research-based institute, which can serve the growing needs of Indian industry in the area of corporate law and practice," it added. ashish.sinha@businessworld.in
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Ashish SinhaExploiting the underutilised bilaterals and taking advantage of the open sky for the SAARC nations can give a fillip to the tourism sector in India, said the Civil Aviation minister Ashok Gajapathi Raju on Thursday (23 July). Sending out a strong message to Indian carriers, the civil aviation minister said domestic airlines, both public and private ones, need to "pull up their socks" with regard to utilisation of bilaterals. "As far as I know, India has lot of unused bilaterals and so just Indian players need to pull up their socks... Of course, foreign carriers are going to ask for more bilaterals," Raju said. A bilateral transport pact or air services agreement, allows flight services between two countries. "A solution is that Indian players start using Indian bilaterals... Almost all the private airlines are also sitting on bilaterals. So, I guess this problem has to be addressed," Raju said. The Minister said he has been requesting airlines to use the bilaterals because if they don't, then India loses out. Raju said that tourism sector needed the Central and State governments to work in harmony with the private sector. He urged the industry to share an actionable paper with his Ministry to take forward the agenda of promoting the sector. The civil aviation minister was speaking at a tourism conference organised by FICCI in partnership with the Ministry of Tourism, Government of India and Tourism Finance Corporation of India (TFCI). Speaking on the occasion, Dr Mahesh Sharma, the minister of State (IC), Tourism ministry said that the highest priority should be accorded to improving India’s perception abroad. As a country, India must be looked at as a congenial and conducive environment by foreign tourists. He added that it was imperative for citizens to cherish the country’s heritage and communicate its richness to visitors. Sharma said that for tourism to thrive it was essential that infrastructure development and regional connectivity went hand-in-hand. Ministries and States need to come on-board for this and issues related to the sector must be resolved within a stipulated timeframe in a single window approach, he added. Speaking on medical tourism, Dr. Sharma said that India has lagged behind in medical tourism despite its competitive pricing of health care delivery. For instance, a heart surgery may cost a person in Europe around Rs. 15-20 lakh but in India the same would cost approximately Rs. 2 lakh. Yet, we have not been able to realize the true potential as the sector remains unorganized, he added. To promote tourist destinations, Dr. Sharma proposed that visual presentations and interactive audio-visual media should be employed to make the experience of visitors to heritage sites and monuments lively and engrossing. He added that social interaction needs to be revived to showcase India’s heritage on the global platform. Dr Jyotsna Suri, President, FICCI, said that foreign tourist arrivals in India in 2014 was 7.7 million with a foreign exchange earning of Rs. 120083 crore. Indian tourism grew at 10.6% while the world tourism at 4.4%. With this projected growth, the country witnesses a void as the infrastructure struggles to cope with the demand in tourism. She added that TIM has been conceptualized with the aim to bridge this gap by bringing together the policy makers and investors on the same platform.
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Despite a healthy increase in revenue from the four airports – Chennai, Kolkata, Ahmedabad and Jaipur – and fearing a start of any fresh protest from airport employee unions, the central government is in no mood to privatise them. Instead, the Civil Aviation Ministry has initiated the process of developing these four airports through public private partnership model, which is moving at a very slow pace, says a senior ministry official. For the record, Minister of State for Civil Aviation Mahesh Sharma has said: "There is no proposal of privatisation of these airports at present." Sharma informed the upper house of Parliament on the first day of the Monsoon session via a written reply. But according to the revenue figures submitted by the ministry, the Chennai airport has generated an average of 21 per cent increase in its revenue from the airports operation in the past two years. For 2013-14, Chennai airport clocked a revenue of Rs 908.32 crore, a jump of 31 per cent over the previous year. For 2014-15 (revised estimates), the airport revenue from Chennai stood at Rs 1,022.80 crore thereby showing a 12 per cent increase over FY13. Similarly, Kolkata airport clocked a revenue of Rs 670 crore for FY15 and Rs 630 crore for FY14. Even the airports of Ahmedabad and Jaipur have reported an increase in their respective revenue for the last two financial years. But the civil aviation ministry has already floated the Request for Qualification (RFQ) for these airports. When specifically asked whether the Airports Authority of India has opposed privatisation, the minister replied in the negative. But only three months ago, the unions at Kolkata airport had threatened to bring all operations to a standstill. The protest was against any move to privatise the Kolkata airport. When the UPA-I government had attempted to privatise the Kolkata airport on similar lines as the Delhi, Hyderabad and the Bangalore airport, the union had blocked the normal operations at the Kolkata airport. Under the Left Front government rule in West Bengal, the then civil aviation minister Praful Patel was forced to abandon plans for the privatisation of both Kolkata and Chennai airports. Instead, the ministry had conceded to allow the Airports Authority of India to redevelop these two airports.
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The Employees’ Provident Fund Organisation (EPFO) is thinking of laying down a few rules that it believes will ensure better security for its depositors when they are old and grey. For one, it is planning to put a stop to 100 per cent withdrawal from the PF account before the age of 58. And as a corollary, it is mulling capping the number of times one can apply for withdrawal.At present, EPFO rules allow depositors to withdraw the entire sum from their PF account if they are not employed for two continuous months. Also, there is no cap on the number of times an employee can withdraw from his PF account.In order to discourage premature withdrawals, the EPFO had recently issued a notification introducing tax deduction at source (TDS) for withdrawals in case of accounts that had a balance in excess of Rs 30,000 and where the employee had been in service for less than 60 months.Now, EPFO, which comes under the Ministry of Labour, says it wants to hold on to at least 25 per cent of the contributions made to the Provident Fund in the name of old age security. According to K.K. Jalan, the central provident fund commissioner, the provision of 100 per cent withdrawal at any time is misused to a large extent. “If we continue allowing 100 per cent withdrawal under various categories, which are generally planned events, it will defeat the purpose of retirement savings,” he says.Perhaps, there is more to it than meets the eye. Of the 13 million claims pending with the EPFO every year, over half are for 100 per cent withdrawal. According to one theory, by allowing only 75 per cent of the corpus to be withdrawn, the number of claims could be brought down to a manageable five million every year.Obviously, the trade union activists are opposed to such an idea. Ashok Singh of the Indian National Trade Union Congress says the money is 100 per cent earned by employees. So if the government takes a decision to cap PF withdrawals, it should increase minimum wages as compensation. “The PF money comes in handy in emergencies. Instead of allowing us to use our own funds, why does the government want us to borrow from banks or moneylenders,” asks Singh.It’s very easy for EPFO to do what it wants; a simple notification is enough for it. It is making a case for capping withdrawals from the PF accounts on two counts. One, the cap will help in maintaining the continuity of the Universal Account Number which is provided to each PF subscriber. Two, it wants PF subscribers to use it as an old-age security and not like a regular savings account. But do we have a say in this? Perhaps not!— Ashish Sinha(This story was published in BW | Businessworld Issue Dated 10-08-2015)
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Host broadcaster Sony India, sponsors like PepsiCo India, Vodafone India and certain key officials within the Board of Control for Cricket in India (BCCI) are in a huddle after two franchisee teams – Rajasthan Royals and Chennai Super Kings – were suspended from the Indian Premiere League (IPL) for two years by a Supreme Court appointed panel as a direct outcome the betting scandal that hit IPL two years ago.On Tuesday the verdict of the Justice Lodha committee was to suspend two of the most successful franchises of the league, Chennai Super Kings and Rajasthan Royals for two years on charges of betting and match-fixing. The co-owners of Chennai Super Kings (Gurunath Meiyappan ) and Rajasthan Royals (Raj Kundra) have been banned from cricket for life.The advertisers, officials related to broadcast of IPL and the media agencies that BW spoke to sounded in unison –the future of IPL, its financial viability, viewership etc will now depend on how BCCI takes course corrective steps. According to experts, a six-team IPL is financially not feasible due to reduced number of matches which in turn leads to reduced on-air advertising slots for the host broadcaster Multi Screen Media that airs the IPL matches on its network of Sony Entertainment Channels.“Two teams less means reduced matches which in turn mean lesser ad slots. That scenario simply means lesser revenue for the host broadcaster. Why will a host broadcaster suffer losses because of problems in the management of two franchisees? BCCI will need to get two more teams or compensate the broadcasters,” said a head of sports marketing firm that handles key IPL players. “There is some degree of uncertainty at the moment. Let’s wait for the BCCI to respond and let’s not get into speculations,” he added.When contacted, a senior sport administrator associated with the BCCI said: “The board has a lot on its plate. It must realise that the IPL is now under a global spotlight because of non-cricketing issues. Creating overnight teams out of thin air may not work every time to suite television interests.”BCCI insiders say in two months or so, the same Justice Lodha committee will come out with concrete suggestions on improving the functioning of the board itself. “Even the board may have to wait before looking into easy short cuts and quick fix solutions like it has done in the past,” said a former state-level cricketer who is familiar with cricket administration matters. Meanwhile, the IPL sponsors are maintaining a brave face. As per PepsiCo India, the title sponsor for IPL, discussions with BCCI will be able to find a solution with regard to the suspension of the two IPL teams. Vodafone India, one of the sponsors for IPL did not react on the day the news of suspension of the two IPL franchisee teams was out."The verdict has just been announced and we are reviewing our position in the matter," Aircel said in a statement on Tuesday.According to Shailendra Singh, Joint Managing Director, Percept Holdings, “T20 as a sport will survive, but the corrupt administration will finally fall apart”. Singh said he hopes that the BCCI will be able to now clean up some of its systems and unfair practices. “Advertisers should renegotiate as the brand IPL has taken severe hit now,” Singh said.Melroy D'Souza, chief operating officer at Professional Management Group believed that the sponsors associated with CSK and RR (like Aircel and Ultra Tech cement) will not suffer because of the manner in which the sponsorship contracts are drafted where payments are linked to team’s participation, etc.Paytm, the mobile wallet firm and a sponsor for IPL 2015 season has decided to adopt a “wait and watch” policy as there are eight more months to go before the start of next IPL season. ashish.sinha@businessworld.in
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The third phase of the auctions of private FM radio in the country may get delayed as news of broadcaster Sun TV Group mulling taking regal recourse against the rejection of its application for FM-III auctions surfaced on Wednesday (15 July) morning. The stocks of Kalanithi Maran’s Sun TV Ltd tumbled by over 4 per cent on Wednesday as the news of an inter-ministerial panel having rejected the Sun Group's application to participate in the next-stage FM radio auctions, surfaced. The markets also anticipated similar fate of 33 channels from Sun TV Group that were denied security clearance by the Union Home Ministry earlier. The Sun TV shares closed on Wednesday at Rs 269.40, down Rs 11.80 from its last closing price of Rs 279.20.Sources said the option of approaching a higher court rests with the Sun TV Group once it officially hears from the government about rejection of its application for the FM radio auctions. “Approaching the court may entail a temporary stay on the FM-III auctions that have already been delayed by over three years since the Cabinet under UPA-II had approved it,” said a media analyst who tracks the radio and television space. According to government sources, the decision to go ahead with the FM auction without the Sun Group was made on Tuesday at the Application Review Meeting consisting of representatives of various ministries. The committee, comprising officials from finance and law ministries and departments of industrial policy and promotion and telecom approved 25 other participants who had applied for the auction.Sources said that the I&B minister Arun Jaitley had had multiple meetings with the Home Minister Rajnath Singh over the issue of security clearance.It should be recalled that the I&B ministry had written to the Home Ministry in March when the later had denied security clearance to the FM channels of the Sun Group. “I&B ministry will have to write a letter to the companies whose applications have been rejected. Its only after the letter is received that any company will take legal recourse,” said an official explaining the procedure going forward. Reports suggest the the I&B ministry had sought the opinion of Attorney General Mukul Rohatgi when MHA had declined to give security clearance to Sun TV Channels. The AG is understood to have advised MHA for granting security clearance as its arguments were not tenable in a court of law. However, the MHA has not changed its stance since. The matter is expected to be settled in a court of law, experts said. ashish.sinha@businessworld.in
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Far away from the land of the rising sun, the fort city of Neemrana houses not one but two Japanese industrial conclaves. A Korean zone is also expected to come up soon. What is ticking for the city?
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At a time when e-commerce biggies like Myntra and Flipkart are going off Web to "app-only" stage, three-year-old Bangalore-based fashion e-commerce venture BreakbounceStreetwear is confident of being as successful in the "offline" marketplace as it is across e-commerce platforms. The company will be branching out into the traditional brick-and-mortar stores shortly. BreakbounceStreetwear is a casual fashion wear brand which will be present nationally across multi-brand outlets and trade partners from 2016 apart from maintaining its presence on the e-commerce websites. "Being available to our customers through the internet, as well as conventional physical retail set-ups, gives us greater reach. Certain customers prefer the convenience of online shopping while others like to physically verify what they are buying," says Sanjeev Mukhija, managing director at BreakbounceStreetwear. Makhija has been in the textiles industry, garment manufacture and garment imports business for over 17 years. BreakbounceStreetwear was launched in 2012 by partnering with leading e-commerce brands like Myntra, Flipkart, Jabong, Snapdeal and Amazon among others. The company claims to have raked in over Rs 35 crore in the last two-year period from online sales. In terms of sales per square-feet per day (SPSFD), the company says it now ranks as one of the top-five casual brands with the highest repeat purchases compared to several other brands which retail on a platform like Myntra. Additionally, it recorded one of the highest clicks-to-conversion ratios, as a fashion brand, on market-places like Flipkart. BreakbounceStreetwear’s product range includes t-shirts, shirts, jackets, hoodies, sweatshirts, chinos, denims, shorts, belts, headgear, wallets, bags and footwear. The brand seeks to balance high-end product finishing and affordable prices, to cater to quality and brand conscious young buyers. The company has identified this aggressive pricing strategy as a factor that places it at par with, if not beyond, other global fashion leaders who retail on the same Indian platforms. "Given the considerable increase in demand, and the fact that consumers are becoming more trend conscious, quality conscious, and experimental, this is the right time to expand our market presence,” says Makhija. The brand’s USP is its Dutch craftsmanship inspired street-wear aesthetic. The confidence of Makhija stems from the projected growth of the menswear market in India over next five years. The menswear market is expected to reach Rs 144,000 Crore mark by 2017. ashish.sinha@businessworld.in
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