Heat and dust for greater mileagee
Dow shadow over local markets
Senior HM official on way out
OECF nod for Bhel power deal

 
 
HEAT AND DUST FOR GREATER MILEAGEE 
 
 
BY M RAJENDRAN AND NITHYA SUBRAMANIAN
 
 
When Saatchi & Saatchi decided that it had reached the end of the road with Hyundai Motors India (HMIL), tongues in the fiercely competitive auto industry wagged that it gave up the account because of the heat and dust kicked up by the pejorative campaigns against rival Daewoo.

The agency denied any link between the two, but there is little doubt that clean, competitive, and often credible, car advertisements are fast being turned into weapons aimed at competitors.

The cloak-and-dagger style of these campaigns are not new, but till now, they had been restricted to the cola clashes and toothpaste tiffs. However, the past few weeks have seen ad wars among car companies degenerate into ugly street brawls.

So, what’s changed? In an industry where too many cars are chasing too few customers, Ford fired the first salvo in a campaign which said ‘’Exchange your small car for a josh machine.’ Hyundai retaliated with ‘Santro ends Ikon’s josh.’

Later, Hyundai’s ads compared various cars with its Santro. Some of these were ‘Car for car, Santro is the best-seller’, ‘Santro vs Matiz’; contrasts were also made with Ikon and Indica.

Then came the dirtiest of them all. Hyundai dealers led an assault on Daewoo in an ad which had an acrid punchline: Kar aapke ghar, kampani sarak par (car at home and company on the streets). It was meant to mock the Daewoo group’s financial woes, and the fact global car giants such as GM and Ford were vying to take over the debt-bloated chaebol.

A livid Daewoo has threatened to move the courts against the chain of ‘misleading advertisements’. Hyundai has already been restrained from inserting the ad by the MRTPC. “We will be going by the legal advice on filing a case against Hyundai. Let’s see what our legal experts say,” says S.G. Awasthi, Daewoo India chairman on the possibility of a suit. Daewoo also wants the commission to rule on another campaign in which Hyundai claims Santro is superior to Matiz on several technical counts. On Thursday, Hyundai was given a week’s time by the MRTPC to reply to Daewoo’s interim relief plea. A no-holds-barred battle between the two car majors will help neither, and an out of court settlement may be an option. But the growing competitive pressures mean both will try to win a agreement they can sell as a triumph.

Like Daewoo, Ford too had contemplated going to the MRTPC and the Advertising Standards Council of Indian (ASCI).

Sanjay Garg, client servicing director, Enterprise Nexus, the agency which handles Matiz, says: “While comparing Santro with Matiz, the facts were misrepresented by Hyundai. This is wrong. Certain ethical standards have to be maintained.”

Advertising for automobiles has so far been very conservative with companies mainly focusing on either the features or the values that a car stood for. “Cola wars are fizzling out, giving way to car clashes,” say professionals in the ad industry. The reason is the market is overcrowded, forcing companies to up the ante in the way they sell themselves.

The race to the top is getting tougher with a different brand becoming the numero uno brand every month. Sales of Telco’s Indica, for instance, zoomed past Santro in March, giving it the second slot after Maruti’s Zen. Also, there are several overlapping segments that blur each other. “With so many models, there is no large difference in prices,” says Garg.

“Competition in the car industry been mainly at the dealers’ level. But now, they have started washing dirty linen in public,” said Navroze Dhondy, chief executive, Percept Advertising, the agency which handles Honda City’s account.

Experts, however, say aggressive advertising will be seen more in the lower end of the price spectrum. “For example, Lancer will not indulge in competitive advertising because its brand has an image which must be kept in mind while conceiving a campaign,” says Anisha Motwani, associate branch director, Mudra Advertising.    


 
 
DOW SHADOW OVER LOCAL MARKETS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 16 
Circuit filters are expected to play a major role on premier stock bourses when they open for trading today.

The frantic Friday — as many in the US where the Nasdaq and Dow Jones call the day’s crash — is expected to cast its long shadow on the Indian stock markets when they resume work after an extended weekend.

Share prices of leading technology stocks and select pivotals are likely to be frozen at the eight percent lower price band in reaction to Friday’s record 617 point slump on Wall Street and the 355 point rout on the Nasdaq. The drubbing has sent the high-tech exchange reeling 1279 points, or more than 25 per cent off its March 10 high of 5048.60.

Says Ajit Ambani, a BSE corporate member: “Share prices of leading technology stocks are likely to open at freeze levels and stay there for most of Monday.”

Incidentally, the Indian markets closed last week after shedding more than Rs 40,000 crore. The market capitalisation of all stocks listed on the Bombay Stock Exchange (BSE) is now pegged at Rs 8,74,643 crore.

Several reasons were adduced for the fall in the all-new sensex, which is now tilted heavily towards tech stocks after Zee Telefilms and Satyam were included in it. One of the culprits for weak sentiment was the price fixed for the Reliance buyback. However, unconfirmed market rumours have it that the management may review the repurchase rate, now pegged at Rs 303.

Tushar Shah of KBS securities is pessimistic about a turnaround in the sensex in the short term. “High volatility has pushed investors from the market. Traded volumes are expected to low, as shares will be frozen at their eight percent lower-bands,” he says.    


 
 
SENIOR HM OFFICIAL ON WAY OUT 
 
 
BY AMIT CHAKRABORTY
 
Calcutta, April 16 
Hindustan Motors’ executive vice-president R. Santhanam is believed to have quit, apparently due to differences over the move to convert the company’s automobile factories to ‘garages’ for reconditioning imported cars.

Santhanam was not available at his Chennai residence for comment and company officials said he had gone on a vacation. Company sources said an official announcement on Santhanam’s resignation and subsequent rearrangement of portfolios might be made within a couple of days.

It is understood that C.K. Rao, vice-president marketing, may be given additional responsibility of the Lancer plant at Thiruvallur near Chennai while executive director Shankar Narayanan would devote more time to the Uttarpara plant.    


 
 
OECF NOD FOR BHEL POWER DEAL 
 
 
BY RENU M R KAKKAR
 
Calcutta, April 16 
The OECF, now known as the Japanese Bank of International Co-operation, has advanced Rs 25 crore to the consortium led by Bhel to set up the two sub-stations (lot 3 and 4) in the over Rs 850 crore state Transmission System Improvement Project.

The Japanese Bank for International Co-operation has given the nod for work to begin on the controversial Rs 350 crore contract for lot 3 and 4, despite the fact that the West Bengal State Electricity Board (WBSEB) is still locked in a court case with Siemens. The outcome of the case will determine the final award of the contract.

Bhel has bagged the award despite the fact that Siemens was the lowest bidder. With JBIC rejecting the Siemens’ bid, the company took the WBSEB to court.

The decision to begin work has been taken due to the possibility of theft of the transmission cables put in place by the two RPG group companies (who bagged lot 1& 2 contracts), as the lines are still unconnected to sub stations.

A JBIC team visited the city last week and held discussions with the board chairman and secretary over the fate of the TSIP and the Purulia Pump Storage Project.

The team has advised the WBSEB to appeal in a higher court if the local court’s verdict is clearly a deviation of contract clauses or international law. It also met senior state government officials to review six projects in different sectors in Bengal. The projects are TSIP, Purulia Pump Storage Teesta Canal Fall (already over), Pollution Control Board project, a transport department project and the four flyover projects in the city.    

 

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