Three ICE ministries hotly oppose move to cut jobs
Darjeeling cuppa overflows with political woes
Ad firms scent windfall
HDFC Bank weighs overseas flotation
Cadila inks marketing pact with US firm
Rating boost for Birla firm
Indian guru chants new management mantra

 
 
THREE ICE MINISTRIES HOTLY OPPOSE MOVE TO CUT JOBS 
 
 
FROM M RAJENDRAN
 
New Delhi, April 14: 
The three ministries of the ICE age—communications, information & broadcasting (I&B) and information technology—have decided to jointly oppose any move to cut flab in their departments.

The review committee on convergence, headed by Fali. S.Nariman and consisting of secretaries of various ministries, is likely to take up the issue of shedding surplus staff in the three ministries next week to improve their efficiencies. This is one of the recommendations of the convergence committee.

Though communications minister Ram Vilas Paswan has hinted at reorganising and restructuring the department of telecommunications (DoT), he has ruled out any cut in jobs. Information & broadcasting minister Sushma Swaraj is more adamant and she is totally opposed to the corporatisation move, leave alone reduction in staff strength.

Sources in the telecom ministry said, “She (Sushma Swaraj) has refused to privatise or corporatise any of her departments or reduce the additional staff in her ministry. It is a contentious issue and the discussion at next week’s meeting is bound to be stormy.”

The Geethakrishnan committee report on expenditure reforms had also suggested down sizing of the I&B ministry, including scrapping of departments on field publicity and audio visual publicity.

Information technology minister Pramod Mahajan has also vehemently opposed any move to merge the three ministries to form a convergence ministry. Sources said the IT ministry is also likely to be asked to restructure to meet the needs of the convergence era.

“The ministry of information technology does not have much flab but then it also does not have any major role in policy making compared to DoT and the I&B ministry. However, it would also need to be restructured to improve efficiency,” sources said.

The issue of spectrum allocation of is also a major problem and will be aggravated when a composite licence is to be issued. This has been a major problem faced by all companies operating in telecom, IT and I& B sectors.

The draft on Convergence Bill has recommended the formation of an autonomous commission under the central government to replace the current Wireless Planning Commission which is under DoT.

Though the convergence draft had aimed to cut down the powers of the three ICE ministries, strong opposition from the ministers had left this vital issue unresolved.

The review committee will also stress the need for continuous mutual consultation to ensure that no single ministry gets overriding powers nor create conditions that are inimical to the growth of convergence without in any way compromising the country’s basic security requirements.

The final draft is likely to be placed for the approval of the Union Cabinet by the first week of May and will be introduced in the next session of Parliament.

   

 
 
DARJEELING CUPPA OVERFLOWS WITH POLITICAL WOES 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, April 14: 
With no end in sight to the indefinite strike called by the Gorkha National Liberation Front (GNLF), the Darjeeling tea gardens are facing the prospect of closure.

The strike has crippled the movement of tea to the auctions and worried planters, saddled with premium quality first flush leaves at the gardens, are seriously planning to close the gardens. Along with the planters, the 55,000-odd workers may also have to bear the brunt of GNLF action. Their wages and ration may be stopped.

R.K. Dixit, chairman of Darjeeling Planters’ Association said: “Due to the indefinite strike called by the GNLF we cannot send out premium first flush teas to the Calcutta auctions. They are piling up in the gardens. We are losing valuable revenue.”

This is creating a tremendous pressure on the cash flow of the gardens. The planters are reviewing the situation. If it continues for few days more they may be forced to close the gardens, he added.

The supply of coal and oil at the factories have also come to a standstill. These are required for processing teas. “The situation is worsening day-by-day,” Dixit said.

The GNLF move is also likely to effect the overall annual revenue of the tea industry because the profit made from the sale of the first and second flush teas determine a garden’s performance for the year. The post second flush crop is almost always sold at losses of varying degrees.

Therefore, April is a crucial month as the first flush tea is harvested during this month. This is also the season when the workers earn extra money.

The fixed task ensures them daily wages. They get additional money for the leaf plucked above the task. This extra money is further reflected in their bonus and wages during the earned leave period.

To add to the existing political woes, drought at the beginning of the season has hit hard the production of Darjeeling tea, said Dixit. The total production of Darjeeling tea is hovering around 9-10 million kg.

After a period of dormancy in the winter months, the spring teas with light clear liquor and mild astringency to the palate are a delicacy. The infused leaf has a prominent lime greenish brightness and a floral scent. “These earn good revenue for the industry,” the planters said.

   

 
 
AD FIRMS SCENT WINDFALL 
 
 
FROM RAJA GHOSHAL & SHASWATI GHOSH
 
New Delhi, April 14: 
The lifting of quantitative restrictions from April 1 has given rise to expectations that a plethora of consumer durables and non-durables will hit the Indian market soon. But what will it mean in terms of the strategies adopted by the incoming brands?

Is it all going to lead to a big spurt in advertising where even domestic brands will have to increase adspend to gain a share of the consumer’s mindspace? Does it mean a good time ahead for the Rs 800 crore Indian ad industry?

Navroz Dhondy, CEO Percept Advertising, certainly thinks so, especially as far as FMCG products are concerned.

“Brands that that are going to come in will need to create an awareness and need for their product. They are bound to advertise, especially in categories where volumes are large,” he said, adding, “as a corollary to that, local brands will also need to pump up promotional activity.”

Dhondy feels that adspends will be even higher for brands where the product category itself is not established and consumers need to be educated.

Citing wine as a classic example, he says with its availability, consumers will have to be educated about its nuances through ads.

Sreekant Khandekar, director, agencyfaqs (an advertising portal) however, feels that in food and beverages, it is the premium and niche players who are going to come up. “In the initial phase, I do not foresee them doing a lot of advertising,” he says.

To begin with, these brands will try to put their distribution and marketing chains in place, and may look for tieups with retail stores, he said.

However, industry perception is that the new entrants in the consumer durables sector won’t lead to an increase in adspend by existing brands, though the latter may hike adspend owing to the sluggish market.

Suresh Khanna, secretary general, Consumer Electronics and TV Manufacturers Association (CETMA), says most leading multinational white goods brands have already set up base here. “With the opening up of the market, it is the cheap brands who will come, more trying to sell on the virtue of cost advantage,” he said. “I do not see these brands going in for big advertising, which will increase their overhead costs. Non durables are more likely to see a surfeit of unbranded products,” he added.

However, Dhondy said even cheap products will need to communicate their products to the precise target group.

Ajay Kapila, vice president sales and marketing, LG Electronics Ltd, said: “We have increased our budget in advertising and promotion from Rs 80 crore to Rs 100 crore, but this is only due to the critical time the industry is going through.”

Ruchika Batra, a Samsung representative, held a similar view. According to her, as all important global brands are already in the market, cheap goods will never be able to make a dent in the premium white goods sector.

   

 
 
HDFC BANK WEIGHS OVERSEAS FLOTATION 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 14: 
HDFC Bank, the leading private sector bank, may tap international capital markets. It is also planning to raise its authorised capital to Rs 450 crore from the present Rs 300 crore.

A decision to this effect was taken at the meeting of the board of directors held today. Though senior bank officials were unavailable for comments, sources close to the bank said that the financial institution is yet to decide whether the additional capital will be raised through offering shares in the domestic market or approach the global markets.

HDFC Bank is second following ICICI Bank, which had in the previous year, listed at the New York Stock Exchange. Also in the queue is Hyderabad-based Global Trust Bank which may go for an international listing after the adoption of GAAP accounting practices.

Meanwhile, HDFC Bank today reported a 75 per cent rise in net profit to Rs 210.1 crore for the year ended March 31, 2001. During the year, total income increased by 79 per cent from Rs 805.2 crore to Rs 1,445 crore. Deposits grew by 38 per cent to Rs 11,658 crore from Rs 8,428 crore.

The bank said that its focus on providing the retail customers superior products and services at affordable prices generated returns with savings account deposits increasing by 69 per cent from Rs 1,125 crore to Rs 1,903 crore. The bank’s total customer assets, including, advances, commercial paper, corporate debentures increased from Rs 4,710 crore to Rs 7,182 crore. The total balance sheet size grew by 33 per cent from Rs 11,731 crore to Rs 15,617 crore, it added.

During the year, the bank’s net worth stood at Rs 913 crore and its capital adequacy ratio was placed at 11.1 per cent. Along with increasing the number of branches to 131, the bank expanded its retail loan products to include car loans, personal loans and consumer durable loans.

   

 
 
CADILA INKS MARKETING PACT WITH US FIRM 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 14: 
Cadila Pharmaceuticals Ltd, with a Rs 550 crore turnover, has signed a joint venture agreement with Nature’s Way Products Inc, an arm of the US-based Murdock Madaus Schwabe, to introduce natural healthcare products in the country. “We have entered into a joint venture agreement with Murdock Madaus Schwabe of the US for a two-way manufacturing and distribution of herbal products,” said I A Modi, chairman of Cadila Pharmaceutical Ltd.

Modi said the company has also entered into a marketing tie-up with Parry’s Nutraceuticals, a Murugappa group company, to market its products in south India while Creepers Marrs would cater to north India. The 10 new products available over the counter, include, Aphroherb which is an aphrodisiac, Rekallex to enhance memory, Tensil which is a stress buster, Hepasave for liver disorder and alcoholic side affects.

The Ahmedabad-based company, which has a US Food and Drug Administration approved plant for manufacturing its herbal product line, is targeting a sales turnover of over Rs 50 crore from this range. The herbal market in India is about Rs 300 crore and growing at 25 per cent, said Modi.

Cadila Pharma with operations in 43 countries has chalked out an export plan to garner a major share of the $ 65 billion global generic herbal market.

Elaborating on the company’s research plans, Modi said the company had entered into a long-term relationship with the US-based Mallinckrodt Inc for research and manufacturing.

   

 
 
RATING BOOST FOR BIRLA FIRM 
 
 
BY A STAFF REPORTER
 
Calcutta, April 14: 
Icra has assigned ‘highest safety in the short term’ rating to the Rs 10-crore commercial paper (CP) issue of Essel Mining and Industries. It assigned the rating even as it expressed doubts on several of Essel’s business amid reports that it did so because of the company’s A V Birla group lineage.

A small and closely held company compared with the size of A.V. Birla group, Essel Mining is engaged in iron ore mining, ferro chemicals and packaging.

AV Birla group chief Kumar Mangalam Birla had, at one point of time, sought to divest Essel, whose activities were out of sync with the core businesses of the company.

The A1+ rating indicates highest safety in the short term, but there are several riders.

   

 
 
INDIAN GURU CHANTS NEW MANAGEMENT MANTRA 
 
 
FROM SHASHWATI GHOSH
 
New Delhi, April 14: 
Delhi-based management expert Arindam Chaudhuri has developed ‘theory I management,’ a management solution typical for the Indian corporate problems. Chaudhuri opened Planman Consulting, a wing of the Indian Institute of Planning & Management (IIPM). While providing consultancy and addressing the problems of the Indian corporate sector, he developed this theory.

According to Chaudhuri, the theory will empower India to “beat America in the next 25 years”. “The greatest problems threatening India is unemployment and poverty,” he says. He wants to combat these two issues through happy capitalism and not through a profit organisation only. Theory I says that entrepreneurs can just break-even and devote the rest of their corporate energy to serve the country. Chaudhuri says: “In a poor country like ours if we take out abnormal profit from the company, then the product’s popularity gets killed. By keeping prices low we increase the volume sales.”

In the present economic scenario, an entrepreneur can expect maximum 10 to 15 per cent growth. However, it can be increased to 1,000 per cent by enhancing the consumer purchasing power. Bigger market will also lead to greater FDI inflow, he said. Chaudhuri says, for instance, a small loan of Rs 125 can make a lot of difference to the calorie intake of a rural family. Such non-profit activities expand the market by bringing in professionalism, creativity and initiative.

   
 

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