This story first appeared in DNA Money edition on Wednesday, April 24, 2013.
Dish TV, India’s largest direct-to-home service provider, is set to turn net-profit positive this fiscal on the back of subscriber growth and improvement in average revenue per user (Arpu).
The company’s ability to generate good free cash flow will help it achieve this feat.
Suresh A Mahadevan and Varun Ahuja, analysts, UBS Securities India, said in a company note that Dish TV had already generated Rs60 crore of free cash flow (FCF) in the first nine months of fiscal 2013. “We believe the company will continue to generate FCF and expect it to generate FCF of around Rs100 crore in fiscal 2014. Further, we expect the company to turn net income positive from fiscal 2014,” the analysts said.
The said FCF generation coupled with net income breaking even is likely to drive a re-rating.
Dish TV officials couldn’t be reached for a comment.
With Phases I and II of digitisation progressing well, the ensuing phases (III and IV) are being seen by the analysts as very important for Dish TV on two accounts. One, the market size for the balance two phases is substantial with around 80-90 million households. Two, the absence of big multi-system operators (MSOs) in these phases. As a result, Dish TV’s net subscriber base is expected to reach 15.5 million by fiscal 2016, up from 10.5 million as of December 2012.
“Dish TV would emerge as one of the beneficiaries of digitisation given its leadership position in the sector. The recent move by DTH operators to increase the prices of set-top boxes (STBs) and base packages indicates the emergence of pricing power, which bodes well for Dish TV,” the analysts said.
They also expect Dish TV’s revenue to grow at a three-year compounded annual growth rate (CAGR) of 22%. The companys operating profit margins are likely to expand 3.5% by fiscal 2016 as the company benefits from the implementation of digitisation (Phases 3 and 4).
This, the UBS analysts said, is likely to aid subscriber growth and Arpu improvement.
Digitisation is also expected to boost Arpu that is pegged to grow at a CAGR of 9% over the next three years as overall tariffs move up and customers move the tariff curve (higher packages, HD etc). Earlier this month, Dish TV had announced a Rs 20 hike in its base package thus aiding Arpu improvement in fiscal 2014.
“We believe a pick-up in Arpu is the key for a stock re-rating as the improvement would result in higher profitability. The company’s Arpu has grown at a CAGR of 4% over the past three years,” the analysts said.
Follow me on twitter @ashishktiwari.
Thursday 25 April 2013
Mahindra Lifespace plans to close 4-5 land acquisitions
This story first appeared in DNA Money edition on Tuesday, April 23, 2013.
Mahindra Lifespace Developers Ltd is likely to close 4-5 new land deals as it looks to step up on new projects.
The company has signed eight memorandum of understanding (MoUs) for land procurement so far.
Anita Arjundas, managing director and chief executive, Mahindra Lifespace, said, “We have already closed two (of the eight MoUs) in the last quarter and a new one early this month. The balance are in different stages of due diligence and will close them as we go along.” She did not share financial details related to the deals closed.
The company earlier had said it planned to sign in all 10 MoUs. The realtor, which recently raised Rs 500 crore through non-convertible debentures, will utilise the money to close MoUs that are under due diligence stage.
Of the three deals concluded, two are in Mumbai and one in Bangalore.
The Mumbai parcels include three acre Nicomet site on the Andheri-Kurla road with a development potential of 3.6 lakh sq ft and a 14.5 acre site at Boisar for affordable housing with a development potential of 5.5 lakh sq ft.
The 4.5 acre Bangalore parcel is on Bannerghatta Road for 6 lakh sq ft of development.
“For Boisar, we have completed designing and submitting for approvals next month. An architect has been appointed for the Andheri site and we should be signing the first round of design development soon. We haven’t really started on the Bangalore site yet,” said Arjundas.
The company has had a joint development agreement (profit-share) on a five acre mill land near Byculla Zoo in Mumbai. The partners are currently exploring the option of selling the land parcel together and sharing the consideration. Mahindra Lifespace has issued a mandate to Cushman & Wakefield for the sale of the property. The realtor had invested Rs70 crore in this land parcel.
Announcing its financial results, the company posted a 95% increase in its consolidated net profit at Rs82 crore for the quarter ended March 31, mainly on the back of improved sales. Total income during the reporting quarter rose 32% to Rs368 crore.
The company expects to complete five million sq ft development in fiscal 2014 even as it added new land inventory with an estimated development potential of two million sq ft in fiscal 2013.
Follow me on twitter @ashishktiwari.
Mahindra Lifespace Developers Ltd is likely to close 4-5 new land deals as it looks to step up on new projects.
The company has signed eight memorandum of understanding (MoUs) for land procurement so far.
Anita Arjundas, managing director and chief executive, Mahindra Lifespace, said, “We have already closed two (of the eight MoUs) in the last quarter and a new one early this month. The balance are in different stages of due diligence and will close them as we go along.” She did not share financial details related to the deals closed.
The company earlier had said it planned to sign in all 10 MoUs. The realtor, which recently raised Rs 500 crore through non-convertible debentures, will utilise the money to close MoUs that are under due diligence stage.
Of the three deals concluded, two are in Mumbai and one in Bangalore.
The Mumbai parcels include three acre Nicomet site on the Andheri-Kurla road with a development potential of 3.6 lakh sq ft and a 14.5 acre site at Boisar for affordable housing with a development potential of 5.5 lakh sq ft.
The 4.5 acre Bangalore parcel is on Bannerghatta Road for 6 lakh sq ft of development.
“For Boisar, we have completed designing and submitting for approvals next month. An architect has been appointed for the Andheri site and we should be signing the first round of design development soon. We haven’t really started on the Bangalore site yet,” said Arjundas.
The company has had a joint development agreement (profit-share) on a five acre mill land near Byculla Zoo in Mumbai. The partners are currently exploring the option of selling the land parcel together and sharing the consideration. Mahindra Lifespace has issued a mandate to Cushman & Wakefield for the sale of the property. The realtor had invested Rs70 crore in this land parcel.
Announcing its financial results, the company posted a 95% increase in its consolidated net profit at Rs82 crore for the quarter ended March 31, mainly on the back of improved sales. Total income during the reporting quarter rose 32% to Rs368 crore.
The company expects to complete five million sq ft development in fiscal 2014 even as it added new land inventory with an estimated development potential of two million sq ft in fiscal 2013.
Follow me on twitter @ashishktiwari.
Cement firms step up capex as upcycle seen
This story first appeared in DNA Money edition on Tuesday, April 23, 2013.
Cement companies are planning new expansions and going full steam with the ongoing ones despite market concerns of an emerging glut situation on hopes of demand reversal in the future.
UltraTech Ltd, the Aditya Birla group cement firm, is expanding its unit in Rajasthan by 2.9 million tonne at a cost of Rs2,000 crore.
“In this quarter, the board has decided to enhance capacity at Aditya Cement Works in Rajasthan by 2.9 million tonne, including the setting up of two grinding units,” said K C Birla, chief financial officer, UltraTech.
This expansion will be funded through a mix of internal accrual and borrowings. The additional facility is expected to be commissioned by March, 2015.
Similarly, another leading player Shree Cement, which spent Rs800 crore towards capex last year, is increasing its capex to Rs1,000-1,200 crore this year.
Currently, the company is setting up a 4 million tonne per annum (mtpa) clinker plant in North India and corresponding grinding unit, industry sources said.
“Out of this, 2 mtpa will be commissioned in June-July 2013 and the balance in July 2014. This apart, a Rs300 crore grinding unit is coming up in Bihar, which will get operational by July 2014. The company is not holding back any capex and all the investment that has been committed will be met with,” said the source.
Cement sector analysts concur.
V Srinivasan, research analyst-cement, Angel Broking, said, “Any expansion takes a minimum of two years depending on the type of project. We have had a downturn situation for the past three years and are only expecting an upcycle from here. In such a scenario, companies will come up with new capex and I don’t see any cutback.”
On Monday, Reuters had reported that Indian cement companies are planning to slash their capital expenditure over the next 12 months.
In 2011, UltraTech had announced mega capex plans around of Rs11,000 crore, to be spent over the next three years. The plan then included Rs5,600 crore for clinker plants at Chhattisgarh (4.2 mtpa) and Karnataka (5 mtpa) and remaining along with grinding units, bulk packaging terminals and ready- mix concrete plants at various location across India.
Recently, ACC had announced capex of Rs3,300 crore (to be spent over three years) for a new manufacturing (5 mtpa) plant at Jamul in Chhattisgarh. The unit is scheduled to start production in 2015.
Follow me on twitter @ashishktiwari.
Monday 22 April 2013
Hilton enters franchise agreement for DoubleTree with Panchshil Hotels in Chinchwad-Pune
Leading global hospitality company Hilton Worldwide has signed a franchise agreement with Panchshil Hotels Pvt Ltd for an upscale, full-service DoubleTree by Hilton hotel at Chinchwad. Scheduled to open in June 2013, the new hotel featuring 115 guestrooms will also mark Hilton’s first hotel in Pune and will be Hilton's fourth DoubleTree by Hilton branded hotel in the country.
According to Martin Rinck, president-Asia Pacific, Hilton Worldwide, the new hotel at Chinchwad (Pune) will be another significant step in our growth strategy in India as it will represent the company's entry into Pune. “Following on from two great years of growth, when we grew our portfolio to 12 hotels and resorts, we are expanding rapidly in the country and anticipate increasing our presence to 17 hotels by the end of this year,” said Rinck.
John Greenleaf, global head, DoubleTree by Hilton, added that with the launch of fourth hotel in India, Hilton will be well on its way to doubling network in the country this year. "Presently, we have two hotels in Delhi NCR, at Gurgaon and Mayur Vihar, and a resort in Goa. We will open an all-suite hotel in Bangalore and a resort in Jaipur later this year,” said Greenleaf.
Centrally located in Chinchwad, the hotel is strategically situated northwest of Pune, The Pimpri-Chinchwad belt houses more than 50 large and 630 medium-sized companies and 7,000 small manufacturing units including Premier Ltd, Mahindra Navistar, Bajaj Auto, TATA Motors, Kinetic Engineering, Force Motors, DaimlerChrysler, Thermax, Forbes-Marshall and ThyssenKrupp.
Ajay Chordia, chairman and managing director, Panchshil Hotels, said, "The conveniently located hotel will allow excellent connectivity to the Mumbai-Pune National and Express highways and the Pune city centre, airport and railway station. The hotel will also be easily accessible to the Pune-Nashik highway, the arterial road connecting the two cities."
DoubleTree by Hilton Pune-Chinchwad will feature all modern conveniences including internet access, LCD televisions, electronic safes, refrigerated private bars and tea and coffee making facilities. Other facilities at the hotel include three dining outlets, an Executive Lounge, 24-hour business and fitness centres, outdoor rooftop pool and 2,800 square feet of meetings and events space.
Hilton Worldwide currently operates 12 hotels and resorts in India - New Delhi: Hilton Garden Inn New Delhi/Saket, Eros Hotel-Managed by Hilton New Delhi/Nehru Place and Hilton New Delhi/Janakpuri; Gurgaon: Hilton Garden Inn Gurgaon Baani Square and DoubleTree by Hilton Gurgaon-New Delhi NCR; NOIDA: DoubleTree by Hilton New Delhi-Noida-Mayur Vihar and Hilton New Delhi-Noida-Mayur Vihar; Mumbai: Hilton Mumbai International Airport; Chennai: Hilton Chennai; Vadodara: Hampton by Hilton Vadodara-Alkapuri; Goa: DoubleTree by Hilton Goa-Arpora-Baga and Shillim: Hilton Shillim Estate Retreat & Spa.
According to Martin Rinck, president-Asia Pacific, Hilton Worldwide, the new hotel at Chinchwad (Pune) will be another significant step in our growth strategy in India as it will represent the company's entry into Pune. “Following on from two great years of growth, when we grew our portfolio to 12 hotels and resorts, we are expanding rapidly in the country and anticipate increasing our presence to 17 hotels by the end of this year,” said Rinck.
John Greenleaf, global head, DoubleTree by Hilton, added that with the launch of fourth hotel in India, Hilton will be well on its way to doubling network in the country this year. "Presently, we have two hotels in Delhi NCR, at Gurgaon and Mayur Vihar, and a resort in Goa. We will open an all-suite hotel in Bangalore and a resort in Jaipur later this year,” said Greenleaf.
Centrally located in Chinchwad, the hotel is strategically situated northwest of Pune, The Pimpri-Chinchwad belt houses more than 50 large and 630 medium-sized companies and 7,000 small manufacturing units including Premier Ltd, Mahindra Navistar, Bajaj Auto, TATA Motors, Kinetic Engineering, Force Motors, DaimlerChrysler, Thermax, Forbes-Marshall and ThyssenKrupp.
Ajay Chordia, chairman and managing director, Panchshil Hotels, said, "The conveniently located hotel will allow excellent connectivity to the Mumbai-Pune National and Express highways and the Pune city centre, airport and railway station. The hotel will also be easily accessible to the Pune-Nashik highway, the arterial road connecting the two cities."
DoubleTree by Hilton Pune-Chinchwad will feature all modern conveniences including internet access, LCD televisions, electronic safes, refrigerated private bars and tea and coffee making facilities. Other facilities at the hotel include three dining outlets, an Executive Lounge, 24-hour business and fitness centres, outdoor rooftop pool and 2,800 square feet of meetings and events space.
Hilton Worldwide currently operates 12 hotels and resorts in India - New Delhi: Hilton Garden Inn New Delhi/Saket, Eros Hotel-Managed by Hilton New Delhi/Nehru Place and Hilton New Delhi/Janakpuri; Gurgaon: Hilton Garden Inn Gurgaon Baani Square and DoubleTree by Hilton Gurgaon-New Delhi NCR; NOIDA: DoubleTree by Hilton New Delhi-Noida-Mayur Vihar and Hilton New Delhi-Noida-Mayur Vihar; Mumbai: Hilton Mumbai International Airport; Chennai: Hilton Chennai; Vadodara: Hampton by Hilton Vadodara-Alkapuri; Goa: DoubleTree by Hilton Goa-Arpora-Baga and Shillim: Hilton Shillim Estate Retreat & Spa.
Sunday 21 April 2013
Entrepreneur gives loyalty programmes a social spin
Collecting reward points to redeem them for more goodies is a rage among upwardly mobile consumers. Now, a social entrepreneur has taken the concept to the lower echelons of the society, but with a difference.
Armed with the $1 million Hult Prize she won back in 2011, Akanksha Hazari will soon launch the beta version of the award winning concept m.Paani in Mumbai. Currently in the alpha stage, different iterations of its offerings are being tested in two underserved communities in Mumbai and the company is planning to do rural model sometime early 2014.
So what is m.Paani really all about? According to Akanksha Hazari, founder and CEO, m.Paani, the company designs and implements mobile-based loyalty programmes for underserved communities where they can earn more value for their spent.
"Like most people who are part of loyalty programmes they are able to earn points for certain types of spend and behaviour. They can collect and share these points with their families / communities and ultimately redeem them for a life-changing development rewards in multiple areas like education, healthcare, safe drinking water, nutrition, mobility, energy and financial inclusion," said Hazari who is also one of India's top 10 social entrepreneurs and an Echoing Green 2013 semi-finalist.
In simple terms, if someone who doesn't filter their water, and if they do something positive in that arena, m.Paani allows them to earn rewards points -- just like what a loyalty programme does. However, the rewards in this case are not materialistic or consumer rewards but are very impact focused that help people attain a better life.
The concept currently is at design lab stage, which is a 9-12 month pilot where alpha versions of the model are being tested. Different iterations of m.Paani's loyalty models are being tested to find out what works and what doesn't. "At the bottom of the pyramid - bastis and villages - people have never been offered anything like this. They have never interacted with the concept of loyalty points, they haven't even interacted with discounts etc in the same way middle- and high-income class does. That's what we want to change," said Hazari adding that a partnership with one of the biggest telco's in India will be inked son to help roll-out the offerings in India and Africa.
Based on the alpha phase the company will then design the beta service, which will be launched by the end of this summer. The beta pilot will be tested with a maximum of 1,000 users.
"We currently have two pilot communities in Mumbai - Parel and a corner of Dharavi. They are very different in nature and that's the reason why we picked them. We will run the beta service in these pilot communities and based on the beta service we will roll out first in Mumbai and the goal is by the beginning of 2014 to start a parallel rural pilot in Maharashtra," said Hazari. "The rural customer will be very different from the urban customer and so will the rewards be for these markets. Hence we will have a separate rural pilot as against extending the urban model into rural areas," she added.
The company is extensively leveraging technology and using a behavioral sciences approach to design and implement the model in the underserved communities.
"We are very much focused on helping this underserved segment in India, have a partner in their journey and attaining a better life. The reality is that this segment spends a lot of money and often pays a premium for things that not even the middle class has to pay for a premium or above," she said.
Based on her experience spending time with the underserved communities Hazari observed that people in the rural areas pay more for water, higher interest to the extent of 60% on loans (no access to banking system) and a whole lot of basic things.
"They are an extremely important customer at volume for big companies like telcos and FMCGs but they are not rewarded for it. In fact, the m.Paani model was born from this concept of why can't we connect business with impact leveraging technology and data. This customer is actually getting rewarded for being an important customer and that reward is something that's meaningful to them and can help them in their life journey with the things they are struggling with today," she said.
Hazari, a Princeton university graduate with an MBA from the Cambridge university, led the Cambridge team that won the Hult Prize. She was also honoured by former US President Bill Clinton and the Clinton Global Initiative.
Publicis Groupe acquires Neev, launches Razorfish Neev in India
This story first appeared in DNA Money edition on Friday, April 19, 2013.
Publicis Groupe, the world’s third largest communications firm, has acquired Bangalore-based technology services provider Neev as part of its plan to beef up digital presence in India.
Financial details were not disclosed.
Publicis plans to align Neev with Razorfish, a group firm, which is one of the largest interactive marketing and technology companies globally.
Kanika Mathur (pictured), managing director, Razorfish and Digitas India, told dna, “Collaboration of Razorfish’s interactive marketing prowess with Neev’s cutting-edge technology capabilities would play a determinative role in our digital leadership positioning here. With this deal in place, we will now be able to offer India, a state-of-the-art technology that is available globally.”
Neev specialises in eCommerce, SaaS (Software as a Service) and cloud applications across web, social media and mobile. The acquisition marks Razorfish’s launch in India, wherein Neev will help strengthen and scale up Razorfish’s expertise.
“It will be aligned with Razorfish and will operate as Razorfish Neev,” said Mathur without sharing Neev’s billing and market share details since its inception in 2005.
About 220 out of the 250 specialists employed by Neev are pure-play technologists with experience / expertise in leveraging cloud, mobile technologies and promoting innovation.
Saurabh Chandra, CEO, Neev, said the company has a track record for cutting edge product innovation and market firsts in areas of video streaming, e-commerce, data visualisation, including patents in cloud and mobility.
“Working seamlessly with the clients’ teams, we serve a growing list of prominent brands and technology companies, mainly in India and the US. The company has increased revenues on average 45% since 2007,” said Chandra.
While the technology centre and hub of Neev will continue to be in Bangalore, the new entity will have a national presence with offices in Delhi, Mumbai and Pune.
The company plans to increase team strength to 350 by the end of this year and double it in a few years.
Publicis Groupe, the world’s third largest communications firm, has acquired Bangalore-based technology services provider Neev as part of its plan to beef up digital presence in India.
Financial details were not disclosed.
Publicis plans to align Neev with Razorfish, a group firm, which is one of the largest interactive marketing and technology companies globally.
Kanika Mathur (pictured), managing director, Razorfish and Digitas India, told dna, “Collaboration of Razorfish’s interactive marketing prowess with Neev’s cutting-edge technology capabilities would play a determinative role in our digital leadership positioning here. With this deal in place, we will now be able to offer India, a state-of-the-art technology that is available globally.”
Neev specialises in eCommerce, SaaS (Software as a Service) and cloud applications across web, social media and mobile. The acquisition marks Razorfish’s launch in India, wherein Neev will help strengthen and scale up Razorfish’s expertise.
“It will be aligned with Razorfish and will operate as Razorfish Neev,” said Mathur without sharing Neev’s billing and market share details since its inception in 2005.
About 220 out of the 250 specialists employed by Neev are pure-play technologists with experience / expertise in leveraging cloud, mobile technologies and promoting innovation.
Saurabh Chandra, CEO, Neev, said the company has a track record for cutting edge product innovation and market firsts in areas of video streaming, e-commerce, data visualisation, including patents in cloud and mobility.
“Working seamlessly with the clients’ teams, we serve a growing list of prominent brands and technology companies, mainly in India and the US. The company has increased revenues on average 45% since 2007,” said Chandra.
While the technology centre and hub of Neev will continue to be in Bangalore, the new entity will have a national presence with offices in Delhi, Mumbai and Pune.
The company plans to increase team strength to 350 by the end of this year and double it in a few years.
Worldoo locks brands, kids in digital space
This story first appeared in DNA Money edition on Friday, Apr 19, 2013.
Brands like ZeeQ, Cartoon Network and Amar Chitra Katha that focus on kids aged 6-12 years now have a new online destination to engage in a novel way with their target audiences.
Worldoo (www.worldoo.com), an ad-free online hangout, offers edutainment, socialising and networking opportunities for kids. It also lets brands to reach out to them.
Launched by Focus, an advertising and digital media agency, Worldoo aspires to help children-focused brands make a splash in the digital space.
Monish Ghatalia, MD of Focus, said Worldoo can take brands to a large target audience at one go and help sustain such engagement. “Worldoo is much more than just impressions and clicks.”
Live, express and play — that’s what Worldoo encourages kids to do. Popular content — books, comics, movies and games — is a given. Worldoo also provides engaging experiences for kids by way of activities and interactions with other kids and brands.
From desktops and laptops, Worldoo plans to expand to tablets and mobile devices shortly.
And brands seem to welcome this. Aparna Bhosle, head of programming, ZeeQ, said the explosion in digital equipment has transformed broadcasting. But since kids also access alternatives like the digital medium, it becomes imperative for broadcasters to announce their existence via digital initiatives as well.
This is where partnerships with online destinations like Worldoo acquire significance. For example, target audiences can now sample ZeeQ content via Worldoo.
“Technology is central to how kids consume content these days. Multi-platform systems encompassing TV, internet and mobile phone allow greater opportunities to watch favourite shows at any time,” said Bhosle.
Besides ZeeQ, a host of brands, including gamebox, zapak, JeffCorwinConnect, Warner Brothers, Shemaroo, Sony Pictures, Reliance Big Flix, Crossword, Landmark, Dreamland, Champak and Singapore’s tourist destination Sentosa, have already made Worldoo their partner.
According to Juhi Ravindranath, Turner International India’s vice-president of advertising sales in South Asia, Worldoo is “a unique idea” that “promises to create the right brand experience for consumers”.
Brands like ZeeQ, Cartoon Network and Amar Chitra Katha that focus on kids aged 6-12 years now have a new online destination to engage in a novel way with their target audiences.
Worldoo (www.worldoo.com), an ad-free online hangout, offers edutainment, socialising and networking opportunities for kids. It also lets brands to reach out to them.
Launched by Focus, an advertising and digital media agency, Worldoo aspires to help children-focused brands make a splash in the digital space.
Monish Ghatalia, MD of Focus, said Worldoo can take brands to a large target audience at one go and help sustain such engagement. “Worldoo is much more than just impressions and clicks.”
Live, express and play — that’s what Worldoo encourages kids to do. Popular content — books, comics, movies and games — is a given. Worldoo also provides engaging experiences for kids by way of activities and interactions with other kids and brands.
From desktops and laptops, Worldoo plans to expand to tablets and mobile devices shortly.
And brands seem to welcome this. Aparna Bhosle, head of programming, ZeeQ, said the explosion in digital equipment has transformed broadcasting. But since kids also access alternatives like the digital medium, it becomes imperative for broadcasters to announce their existence via digital initiatives as well.
This is where partnerships with online destinations like Worldoo acquire significance. For example, target audiences can now sample ZeeQ content via Worldoo.
“Technology is central to how kids consume content these days. Multi-platform systems encompassing TV, internet and mobile phone allow greater opportunities to watch favourite shows at any time,” said Bhosle.
Besides ZeeQ, a host of brands, including gamebox, zapak, JeffCorwinConnect, Warner Brothers, Shemaroo, Sony Pictures, Reliance Big Flix, Crossword, Landmark, Dreamland, Champak and Singapore’s tourist destination Sentosa, have already made Worldoo their partner.
According to Juhi Ravindranath, Turner International India’s vice-president of advertising sales in South Asia, Worldoo is “a unique idea” that “promises to create the right brand experience for consumers”.
Cement prices crack as fiscal starts
An edited version of this story first appeared in DNA Money edition on Thursday, April 18, 2013,
If March 2013 was very unlike the business month it generally tends to be for the Indian cement industry, April isn't looking any better either.
Lack of demand, delay in government spend pick-up and weak rural demand have lead to correction in cement prices across some key markets in the country. Feedback from cement dealers indicates continued weakness in demand for the April month leading to price correction in most markets to the tune of 3-6%.
According to JP Morgan analysts, the sharpest decline has been witnessed in Western India -- where demand has also been impacted by the drought situation -- and in Southern India driven by sharply lower prices in the key state of Andhra Pradesh (AP).
Confirming the price correction, Pinakin Parekh and Neha Manpuria, research analysts, J P Morgan India Pvt Ltd, said in a note on Tuesday that cement supply discipline is under pressure as demand remains weak. "We are surprised by the quantum of price correction seen in AP, where prices are down below Rs 200 per bag of 50 kg, as some of the new capacities are selling aggressively. The other interesting feedback we have received is that of higher shipments from AP into neighboring states and this highlights AP’s overhang on Southern and Central India. The price correction has been equally sharp in Western India, with prices down sharply in both Gujarat and Maharashtra. Every single market has seen cement price correction in April," the analysts said.
Industry players are of the opinion that government spending should re-start at some point however, the situation will remain weak till then. At the recently conclude ACC Ltd annual general meeting (AGM), Kuldip Kaura, MD & CEO of the company told shareholders that cement growth is not doing good and is less than expected. "There is normally growth in election year but we are yet to see that trend," he'd said.
Echoing the sentiments, JPM analysts said that election led spending should start at some point over the next few months and government spending should also recover from the current very depressed levels. The analysts however expressed concerns over possibilities of rural demand deteriorating thereby taking away some of the government led incremental demand. "The other issue is the drop in cement prices in the interim. Cost trends continue to inch up especially in energy (diesel) and with lower aggregate demand, there is less supply discipline and hence more price competition," the analysts said in the note.
As for the correction trend in cement pricing is concerned, a dealer check in various regions of India by Anand Rathi Shares and Stock Brokers Ltd (ARSSBL) shows that the western region is expected to see further cuts in cement prices.
Anand Rathi research analysts Jaspreet Singh Arora and Manish Valecha said in a note on Wednesday that prices dipped by Rs 20 in Pune, with retail/wholesale prices at around Rs 275/Rs 245 respectively. "With no improvement in demand foreseen and water-shortage issues escalating in summer, further price cuts may be seen in the current quarter. Nagpur has seen no uptick in demand in April, with retail/wholesale prices hovering around Rs 290 / Rs 270. Mumbai retail prices have been static at Rs 310 even as demand is flat month-on-month," said the analysts.
Prices across various pockets in the eastern region either remained flat -- like in Kolkata -- or down Rs 10 in case of Bhubaneshwar. Though realty sector remained strong, slowdown in infrastructure projects led to poor demand. "Retail/wholesale prices in Bhubaneshwar are Rs 340 / Rs 290. Patna has seen prices dropping by Rs 20 in April due to slack demand -- and current retail/wholesale prices are around Rs 305 / Rs 290," the analysts added.
Cement prices in south India were under pressure mainly due to increased influx of material from AP. Despite good demand, Bangalore saw a correction by Rs 15 per bag of 50 kg and the current retail/wholesale prices stood at Rs 310 / Rs 275. Hyderabad (retail price Rs 200) and Visakhapatnam (retail price Rs 210) continued to suffer from a capacity glut and an increase in supply from JPA and JSW. Retail/wholesale prices in Chennai are around Rs 305 / Rs 265 even as demand continues weak.
A northward trend (increase by Rs 10) was witnessed in cement prices in north India where current retail/wholesale rates are around Rs 260/Rs215 respectively. However, prices remained flat in markets like Delhi and Gurgaon despite attempts by manufacturers to raise prices.
If March 2013 was very unlike the business month it generally tends to be for the Indian cement industry, April isn't looking any better either.
Lack of demand, delay in government spend pick-up and weak rural demand have lead to correction in cement prices across some key markets in the country. Feedback from cement dealers indicates continued weakness in demand for the April month leading to price correction in most markets to the tune of 3-6%.
According to JP Morgan analysts, the sharpest decline has been witnessed in Western India -- where demand has also been impacted by the drought situation -- and in Southern India driven by sharply lower prices in the key state of Andhra Pradesh (AP).
Confirming the price correction, Pinakin Parekh and Neha Manpuria, research analysts, J P Morgan India Pvt Ltd, said in a note on Tuesday that cement supply discipline is under pressure as demand remains weak. "We are surprised by the quantum of price correction seen in AP, where prices are down below Rs 200 per bag of 50 kg, as some of the new capacities are selling aggressively. The other interesting feedback we have received is that of higher shipments from AP into neighboring states and this highlights AP’s overhang on Southern and Central India. The price correction has been equally sharp in Western India, with prices down sharply in both Gujarat and Maharashtra. Every single market has seen cement price correction in April," the analysts said.
Industry players are of the opinion that government spending should re-start at some point however, the situation will remain weak till then. At the recently conclude ACC Ltd annual general meeting (AGM), Kuldip Kaura, MD & CEO of the company told shareholders that cement growth is not doing good and is less than expected. "There is normally growth in election year but we are yet to see that trend," he'd said.
Echoing the sentiments, JPM analysts said that election led spending should start at some point over the next few months and government spending should also recover from the current very depressed levels. The analysts however expressed concerns over possibilities of rural demand deteriorating thereby taking away some of the government led incremental demand. "The other issue is the drop in cement prices in the interim. Cost trends continue to inch up especially in energy (diesel) and with lower aggregate demand, there is less supply discipline and hence more price competition," the analysts said in the note.
As for the correction trend in cement pricing is concerned, a dealer check in various regions of India by Anand Rathi Shares and Stock Brokers Ltd (ARSSBL) shows that the western region is expected to see further cuts in cement prices.
Anand Rathi research analysts Jaspreet Singh Arora and Manish Valecha said in a note on Wednesday that prices dipped by Rs 20 in Pune, with retail/wholesale prices at around Rs 275/Rs 245 respectively. "With no improvement in demand foreseen and water-shortage issues escalating in summer, further price cuts may be seen in the current quarter. Nagpur has seen no uptick in demand in April, with retail/wholesale prices hovering around Rs 290 / Rs 270. Mumbai retail prices have been static at Rs 310 even as demand is flat month-on-month," said the analysts.
Prices across various pockets in the eastern region either remained flat -- like in Kolkata -- or down Rs 10 in case of Bhubaneshwar. Though realty sector remained strong, slowdown in infrastructure projects led to poor demand. "Retail/wholesale prices in Bhubaneshwar are Rs 340 / Rs 290. Patna has seen prices dropping by Rs 20 in April due to slack demand -- and current retail/wholesale prices are around Rs 305 / Rs 290," the analysts added.
Cement prices in south India were under pressure mainly due to increased influx of material from AP. Despite good demand, Bangalore saw a correction by Rs 15 per bag of 50 kg and the current retail/wholesale prices stood at Rs 310 / Rs 275. Hyderabad (retail price Rs 200) and Visakhapatnam (retail price Rs 210) continued to suffer from a capacity glut and an increase in supply from JPA and JSW. Retail/wholesale prices in Chennai are around Rs 305 / Rs 265 even as demand continues weak.
A northward trend (increase by Rs 10) was witnessed in cement prices in north India where current retail/wholesale rates are around Rs 260/Rs215 respectively. However, prices remained flat in markets like Delhi and Gurgaon despite attempts by manufacturers to raise prices.
Tuesday 16 April 2013
JK Lakshmi's Chhattisgarh project faces 3-mth delay
This story first appeared in DNA Money edition on Tuesday, April 16, 2013.
A delay of 2-3 months appears inevitable in the launch of JK Lakshmi Cement’s (JKLC) greenfield project at Durg, Chhattisgarh, following violent disruption of project work by irate local villagers seeking employment for all of them earlier this month.
It is learnt only around five locals lost their land due to the project getting located at Durg. Now, the plant may be commissioned by the first quarter of next fiscal, said a Karvy Stock Broking report written after a meeting with top JKLC officials.
The Durg project is expected to expand JKLC’s clinker capacity by 1.8 million metric tonne (mmt) and grinding capacity by 2.7 mmt. JKLC officials could not be reached for a comment.
The Karvy report said JKLC management expects damage caused to the new plant to be around Rs 150 crore. A precise figure will be arrived at over the next few days when equipment manufacturers and surveyors ascertain the actual damage.
There is low probability that such protests may recur, the management said in an analyst guidance.
Rajesh Kumar Ravi, research analyst at Karvy, said such agitations are mostly politically motivated and are part of business risks associated with large greenfield capital expenditure (capex).
“We do not expect any negative impact in our sales volume assumption for FY15E as we have already modelled this capacity to be effective in the second quarter of fiscal 2015 (2QFY15). With the financial damage covered under insurance, the expected loss of up to Rs 150 crore should not impact its near-term cash flow,” said Ravi.
A Religare Institutional Research note last week said JKLC had estimated an initial loss of Rs 250-300 crore when it first filed the first information report with the police. But this was revised down to Rs 120-150 crore on further examination. The insurance company will take around ten days to determine the actual loss.
Follow Ashish K Tiwari on twitter @ashishktiwari
A delay of 2-3 months appears inevitable in the launch of JK Lakshmi Cement’s (JKLC) greenfield project at Durg, Chhattisgarh, following violent disruption of project work by irate local villagers seeking employment for all of them earlier this month.
It is learnt only around five locals lost their land due to the project getting located at Durg. Now, the plant may be commissioned by the first quarter of next fiscal, said a Karvy Stock Broking report written after a meeting with top JKLC officials.
The Durg project is expected to expand JKLC’s clinker capacity by 1.8 million metric tonne (mmt) and grinding capacity by 2.7 mmt. JKLC officials could not be reached for a comment.
The Karvy report said JKLC management expects damage caused to the new plant to be around Rs 150 crore. A precise figure will be arrived at over the next few days when equipment manufacturers and surveyors ascertain the actual damage.
There is low probability that such protests may recur, the management said in an analyst guidance.
Rajesh Kumar Ravi, research analyst at Karvy, said such agitations are mostly politically motivated and are part of business risks associated with large greenfield capital expenditure (capex).
“We do not expect any negative impact in our sales volume assumption for FY15E as we have already modelled this capacity to be effective in the second quarter of fiscal 2015 (2QFY15). With the financial damage covered under insurance, the expected loss of up to Rs 150 crore should not impact its near-term cash flow,” said Ravi.
A Religare Institutional Research note last week said JKLC had estimated an initial loss of Rs 250-300 crore when it first filed the first information report with the police. But this was revised down to Rs 120-150 crore on further examination. The insurance company will take around ten days to determine the actual loss.
Follow Ashish K Tiwari on twitter @ashishktiwari
Broadcasters threaten to snap signals to MSOs
This story first appeared in DNA Money edition on April 5, 2013.
Cable television subscribers may bear the brunt of delays in finalising commercial agreements for Phase II digitisation between broadcasters / aggregators and the multi-system operators (MSOs).
With not much progress happening, some broadcasters may switch off the signals to some MSOs on account of contention over fee amount and piled up dues.
MSOs are large cable operators that distribute channels to local cable operators.
Atul Pande, CEO-sports business, Zee, said that the broadcaster is having issues with Hathway Cable and Datacom Ltd, which is not only refusing to pay them the right fee, but has also not made payments for the last 6-7 months.
"We have no option but to switch off the signal to Hathway or black the screen. Unfortunately, this will lead to a lot of consumer discomfort, but there is no other alternative," said Pande.
As a result, football fans may miss the UEFA Champions League on Hathway network as it faces a blackout of Ten Sports channel, which broadcasts the event.
Despite repeated attempts, Hathway officials did not offer a comment.
Pritesh Mistry, a football analyst, said, "The sporting event has a huge follower base in India and not being able to watch the matches will be very unfortunate thing to happen for the fans."
While commercial agreements between broadcasters and MSOs for Phase I digitisation are being implemented, doing the same for Phase II, which involves digitisation in 38 cities, is turning out to be a huge challenge.
Gaurav Gandhi, chief operating officer, IndiaCast Media Distribution Pvt Ltd, said the delay in commercial deal making for Phase II digitisation is not because of the broadcasters or aggregators.
"There are a few MSOs who are either unwilling to come to the discussion table or are trying their best to let the status quo continue. This is impacting the implementation of Phase II digitisation," he said.
Industry sources said there have been instances of some MSOs trying to use strong arm tactics to pressurise broadcasters in doing deals on lines of the analog regime deals -- both on subscription and carriage.
The MSOs fraternity, however, feels there is no serious disconnect between broadcasters and MSOs over negotiating the deals.
"This is a time for both parties to work together to create a good ecosystem as opposed to behaving like business partners at war. This is first time wherein there is flexibility in terms of options for the customer to choose from. There is real viewership and price to be discovered," said M G Azhar, COO, DEN Networks.
Follow Ashish K Tiwari on twitter@ashishktiwari
Cable television subscribers may bear the brunt of delays in finalising commercial agreements for Phase II digitisation between broadcasters / aggregators and the multi-system operators (MSOs).
With not much progress happening, some broadcasters may switch off the signals to some MSOs on account of contention over fee amount and piled up dues.
MSOs are large cable operators that distribute channels to local cable operators.
Atul Pande, CEO-sports business, Zee, said that the broadcaster is having issues with Hathway Cable and Datacom Ltd, which is not only refusing to pay them the right fee, but has also not made payments for the last 6-7 months.
"We have no option but to switch off the signal to Hathway or black the screen. Unfortunately, this will lead to a lot of consumer discomfort, but there is no other alternative," said Pande.
As a result, football fans may miss the UEFA Champions League on Hathway network as it faces a blackout of Ten Sports channel, which broadcasts the event.
Despite repeated attempts, Hathway officials did not offer a comment.
Pritesh Mistry, a football analyst, said, "The sporting event has a huge follower base in India and not being able to watch the matches will be very unfortunate thing to happen for the fans."
While commercial agreements between broadcasters and MSOs for Phase I digitisation are being implemented, doing the same for Phase II, which involves digitisation in 38 cities, is turning out to be a huge challenge.
Gaurav Gandhi, chief operating officer, IndiaCast Media Distribution Pvt Ltd, said the delay in commercial deal making for Phase II digitisation is not because of the broadcasters or aggregators.
"There are a few MSOs who are either unwilling to come to the discussion table or are trying their best to let the status quo continue. This is impacting the implementation of Phase II digitisation," he said.
Industry sources said there have been instances of some MSOs trying to use strong arm tactics to pressurise broadcasters in doing deals on lines of the analog regime deals -- both on subscription and carriage.
The MSOs fraternity, however, feels there is no serious disconnect between broadcasters and MSOs over negotiating the deals.
"This is a time for both parties to work together to create a good ecosystem as opposed to behaving like business partners at war. This is first time wherein there is flexibility in terms of options for the customer to choose from. There is real viewership and price to be discovered," said M G Azhar, COO, DEN Networks.
Follow Ashish K Tiwari on twitter
Monday 15 April 2013
Maruti Suzuki in talks with RPG Life Sciences to acquire 3.5 acre in Navi Mumbai
Auto major Maruti Suzuki India is in advanced stage of negotiations to acquire leasehold rights of a part of land parcel held by RPG Life Sciences in Navi Mumbai. The auto company said it has entered into a Memorandum of Understanding (MoU) with RPG Life Sciences Ltd through Deed of Assignment (DoA) in respect of land admeasuring 14,148.90 sq mtr (3.5 acre) out of total land admeasuring 48,632 sq mtr (12 acre) - that's 30% of the total land parcel.
When contacted, RPG Group officials did not share further details on the valuations pertaining to the land transaction or for that matter by when do they intend to close the deal. "Maruti Suzuki is currently in the due-diligence stage and any further information can only be disclosed once the deal has been concluded," said the company official.
The land parcel in discussion is situated at Kopar Khairane in the Trans-Thane Creek (TTC) Industrial Area on the Thane-Belapur Road wherein RPG Life Sciences runs a small facility.
Commenting on the possible valuation of this transaction, industry experts said that since the land parcel is largely for commercial use being in the MIDC area, the deal size may not be very huge. Assuming a floor space index (FSI) of 1:1.75 and FSI cost of Rs 600 per square feet (psf) the cost per acre would come around Rs 50 lakh. Based on this back of the envelope calculations the overall deal size would be around Rs 1.75 crore.
"A lot also depends on the marketability and residual tenure of the lease period among other factors that play a key role in the pricing part," said Pankaj Kapoor, founder and managing director, Liases Foras Real Estate Rating & Research Pvt Ltd.
Follow Ashish K Tiwari on twitter @ashishktiwari
Follow Ashish K Tiwari on twitter @ashishktiwari
Sunday 14 April 2013
Buying hotels to demolish and sell as part of real estate play
An interesting observation was made about property appreciation in
relation to hotel assets, at the recently concluded Hotel Investment
Conference South Asia (HICSA) in Mumbai.
Leading hotelier Arun Saraf, MD, Juniper Hotels and MD, Asian Hotels East Ltd (a BSE listed company), said he is considering buying hotels not to run them as hotels because the real estate value is significantly higher than the built hotel. "It makes a lot of sense to demolish the hotel after a particular period and sell it as a land parcel instead as part of your real estate play," he said.
Saraf's current hotel development pipeline comprises nine upscale and mid-market hotels in various cities such as Raipur, Hampi, Lucknow, Sarnath, Guwahati, Ahmedabad, New Delhi, Jaipur, and Thiruvananthapuram. These projects are being developed by two of his companies viz. Juniper Hotels Pvt Ltd and Chartered Hotels Pvt Ltd.
Asset owners are of the opinion that that property appreciation has got no meaning in hotel industry because when the asset owner wants to sell the hotel, it will never be bought on the land or replacement value. "The kind of business being done by the hotel decides its selling price in the market," added Atul Chordia, CMD, Panchshil Realty.
Industry players were also of the view that if the buyer is a pure institutional ownership company, the company is very likely t see some asset reallocation within portfolio in the long term. "And if the allocation gives the company a higher value than what a public or private market offers then it certainly is time to sell the reallocated asset," stressed Ashish Jakhanwala, managing director and CEO, Samhi Hotels Pvt Ltd.
Follow Ashish K Tiwari on twitter @ashishktiwari
Leading hotelier Arun Saraf, MD, Juniper Hotels and MD, Asian Hotels East Ltd (a BSE listed company), said he is considering buying hotels not to run them as hotels because the real estate value is significantly higher than the built hotel. "It makes a lot of sense to demolish the hotel after a particular period and sell it as a land parcel instead as part of your real estate play," he said.
Saraf's current hotel development pipeline comprises nine upscale and mid-market hotels in various cities such as Raipur, Hampi, Lucknow, Sarnath, Guwahati, Ahmedabad, New Delhi, Jaipur, and Thiruvananthapuram. These projects are being developed by two of his companies viz. Juniper Hotels Pvt Ltd and Chartered Hotels Pvt Ltd.
Asset owners are of the opinion that that property appreciation has got no meaning in hotel industry because when the asset owner wants to sell the hotel, it will never be bought on the land or replacement value. "The kind of business being done by the hotel decides its selling price in the market," added Atul Chordia, CMD, Panchshil Realty.
Industry players were also of the view that if the buyer is a pure institutional ownership company, the company is very likely t see some asset reallocation within portfolio in the long term. "And if the allocation gives the company a higher value than what a public or private market offers then it certainly is time to sell the reallocated asset," stressed Ashish Jakhanwala, managing director and CEO, Samhi Hotels Pvt Ltd.
Follow Ashish K Tiwari on twitter @ashishktiwari
Apeejay Surrendra Park Hotels launches new brand
As part of brand expansion plan, Apeejay Surrendra Park Hotels has made a new addition to its portfolio of hospitality offerring. Continuing with its design-led philosophy, the company has launched a new brand in the upscale segment called ‘Zone by The Park’.
Speaking on the sidelines of Hotel Investment Conference South Asia (HICSA) 2013, Priya Paul, chairperson, Apeejay Surrendra Park Hotels Ltd, said, though different from The Park, the company wanted to create a brand that would channel its inimitable spirit.
"Zone will cater to the gap in the Indian hotel market for the burgeoning Indian middle class and international traveller looking for budget travel. The hotels will be priced around the $80 - 100 mark," said Paul.
The new brand will primarily be managed properties and four hotels have been signed already. The hotels are expected to come up at Dehradhun, Raipur, Delhi and Coimbatore. A mix of brownfield and greenfield developments, these properties will ideally have 100 rooms and will be developed at a cost of Rs 40 lakh per room.
The first hotel will be operational by the year end. The company is targeting at having 25 hotels under the new brand in the next five years.
Follow Ashish K Tiwari on twitter @ashishktiwari
Speaking on the sidelines of Hotel Investment Conference South Asia (HICSA) 2013, Priya Paul, chairperson, Apeejay Surrendra Park Hotels Ltd, said, though different from The Park, the company wanted to create a brand that would channel its inimitable spirit.
"Zone will cater to the gap in the Indian hotel market for the burgeoning Indian middle class and international traveller looking for budget travel. The hotels will be priced around the $80 - 100 mark," said Paul.
The new brand will primarily be managed properties and four hotels have been signed already. The hotels are expected to come up at Dehradhun, Raipur, Delhi and Coimbatore. A mix of brownfield and greenfield developments, these properties will ideally have 100 rooms and will be developed at a cost of Rs 40 lakh per room.
The first hotel will be operational by the year end. The company is targeting at having 25 hotels under the new brand in the next five years.
Follow Ashish K Tiwari on twitter @ashishktiwari
FDA probe cloud clobbers Wockhardt
This story first appeared in DNA Money edition on Saturday, Apr 13, 2013.
Wockhardt is understood to be facing issues with the United States Food and Drug Administration (USFDA), which has sought clarifications on its injectables facility in Aurangabad.
A USFDA team inspected the facility last month.
Wockhardt officials did not share details on the clarifications sought, whether Wockhardt has provided the necessary information to the USFDA and the stage the matter is in now.
“It is a routine matter and there is nothing more to disclose on this as yet,” said a company spokesperson.
But the company’s stock has corrected more than 20% in the last 3-4 days. Market sources attributed the decline to concerns expressed by USFDA on the unit.
According to Bhavika Thakker, research analyst, IIFL, the company has been issued FDA 483 letter, which is generally followed by a warning letter if the agency is not satisfied with the responses.
“However, it’s not something to be worried about as the said unit doesn’t contribute more than 3-4% of Wockhardt’s US revenues,” said Thakker.
To be sure, the Aurangabad unit does not manufacture Toprol XL, Flonase or any other high value product.
Whether a warning letter has been issued to Wockhardt as well is not yet known. But even if it were, it would only affect new approvals in injectables and not the current revenue stream, according to analysts.
“We estimate less than 5% impact to earnings, should this facility get a warning letter, assuming no new launch takes place from the same,” said an analyst. “We believe the sell-off is overdone, especially noting there is still no visibility of an adverse USFDA action as well as limited impact from the unit in consideration.”
Going by the analyst, the management believes the issues can be resolved and there would be clarity post the USFDA’s revert on their responses, expected in 3-4 weeks
Follow Ashish K Tiwari on twitter @ashishktiwari
Wockhardt is understood to be facing issues with the United States Food and Drug Administration (USFDA), which has sought clarifications on its injectables facility in Aurangabad.
A USFDA team inspected the facility last month.
Wockhardt officials did not share details on the clarifications sought, whether Wockhardt has provided the necessary information to the USFDA and the stage the matter is in now.
“It is a routine matter and there is nothing more to disclose on this as yet,” said a company spokesperson.
But the company’s stock has corrected more than 20% in the last 3-4 days. Market sources attributed the decline to concerns expressed by USFDA on the unit.
According to Bhavika Thakker, research analyst, IIFL, the company has been issued FDA 483 letter, which is generally followed by a warning letter if the agency is not satisfied with the responses.
“However, it’s not something to be worried about as the said unit doesn’t contribute more than 3-4% of Wockhardt’s US revenues,” said Thakker.
To be sure, the Aurangabad unit does not manufacture Toprol XL, Flonase or any other high value product.
Whether a warning letter has been issued to Wockhardt as well is not yet known. But even if it were, it would only affect new approvals in injectables and not the current revenue stream, according to analysts.
“We estimate less than 5% impact to earnings, should this facility get a warning letter, assuming no new launch takes place from the same,” said an analyst. “We believe the sell-off is overdone, especially noting there is still no visibility of an adverse USFDA action as well as limited impact from the unit in consideration.”
Going by the analyst, the management believes the issues can be resolved and there would be clarity post the USFDA’s revert on their responses, expected in 3-4 weeks
Follow Ashish K Tiwari on twitter @ashishktiwari
Will ad agencies go head to head with IT cos?
This story first appeared in DNA Money edition on Friday, Apr 12, 2013.
IT companies have some serious competition at hand – from advertising agencies.
“We have over 2,000 professionals with skills in web and creative design, content, and front-end development. The designers play an important role in understanding the customers’ brands, and extending their brand values onto the digital channels and experience,” said Sairaj Vaithilingam, assistant vice-president, Cognizant Interactive.
Clearly, the digital space is not just about putting a banner advertisement on a website anymore. Engaging the consumer, developing applications for smart phones have become an integral part of the process. The game could change further as the cost of devices like the iPad and tablets comes down further.
“People earlier did not think that a large set of consumers will transition from desktops to mobile devices and advertisements were never made keeping mobile devices in mind. This is certainly a huge problem for marketers and brand managers. Advertising agencies will thus have to stay ahead of the curve. Their job is never done, as, by the time they've finished, it's already become obsolete,” Bhasin signed off.
IT companies have some serious competition at hand – from advertising agencies.
As ad agencies staff up to deliver
increasingly complex, cutting-edge digital content, they have been
pushing into what has traditionally been the IT players' turf. Going
forward, it isn't entirely unlikely that they will compete for a
piece of the same pie with the likes of TCS, Infosys, Cognizant and
Wipro, feel industry sources.
“The blurring of lines is going to be
a reality, so you might as well be ready for it,” said Madhukar
Kamath, group CEO & MD, DDB Mudra Group.
Ashish Bhasin, CEO -
South East Asia and South Asia and, chairman - India, Aegis Media,
couldn't agree more. “It’s like how the IT majors do tech
development in their areas globally. There is nothing that prevents
advertising companies from doing it as well.”
Aegis Media, for
one, is putting together a large tech team, including the likes of
programmers and net developers.
The agency currently employs 18 people
and plans to at least double that number in the next few months to be
able to efficiently deliver the digital and mobile communication
needs of its existing and future clients.
“If the approach works well, we can
easily look at 200 people in the near future. This team will be doing
just tech and the business vertical will cater to the global market
and not just India,” said Bhasin.
With the digital, social and mobile
space significantly influencing the customer's buying decision,
corporates today are seeking more meaningful – and innovative –
engagement on these platforms.
Ad agencies are therefore required to
offer a better combination of creative minds and effective technology
to deliver the client's message.
“One can conceive and create a great
idea, but delivering it will be impossible if you don’t have an
equally great tech team,” said Bhasin.
But it's not a one-way
street.
Cognizant, for example, has a vertical
called Cognizant Interactive, which, the advertising fraternity
believes, is very close to what they do for meeting the client's
digitial/ mobile advertising and communications needs. The vertical
has three key practices – Web Solutions, eLearning, and User
Documentation.
“We have over 2,000 professionals with skills in web and creative design, content, and front-end development. The designers play an important role in understanding the customers’ brands, and extending their brand values onto the digital channels and experience,” said Sairaj Vaithilingam, assistant vice-president, Cognizant Interactive.
Clearly, the digital space is not just about putting a banner advertisement on a website anymore. Engaging the consumer, developing applications for smart phones have become an integral part of the process. The game could change further as the cost of devices like the iPad and tablets comes down further.
“People earlier did not think that a large set of consumers will transition from desktops to mobile devices and advertisements were never made keeping mobile devices in mind. This is certainly a huge problem for marketers and brand managers. Advertising agencies will thus have to stay ahead of the curve. Their job is never done, as, by the time they've finished, it's already become obsolete,” Bhasin signed off.
Rural demand to lead cement turnaround
This story first appeared in DNA Money edition on Thursday, Apr 11, 2013.
The Indian cement sector is set for a recovery this fiscal on the back of a likely strong growth in rural housing and a pick-up in roads and railways sectors.
Experts are also expecting a margin expansion as demand growth improves to 7% vis-a-vis 5% in fiscal 2013, with housing growing at 8% and infrastructure at 5%.
Anubhav Aggarwal, Kush Shah and Chunky Shah, analysts with Credit Suisse, said in a report on Wednesday that housing constitutes two-third of the cement demand, with rural housing accounting for 40% of the total demand.
“We expect cement demand from housing to grow at an 8% CAGR, with the bulk of growth coming from rural India,” they said.
Mahendra Singhi, executive director, Shree Cement, a manufacturer, said growth in rural housing will certainly have a positive impact on the sector.
“The government’s initiatives in this direction will take at least two quarters to start showing results,” he said.
An ACC spokesperson said India has the largest homeless population in the world and rural housing offered a huge opportunity.
“However, doing affordable housing is also a huge challenge in India. While demand for such housing is tremendous in rural India the question to ask is how will they get money to build those houses,” the spokesperson said.
The Credit Suisse analysts said that rural housing demand is expected to grow at 11%, mainly due to strong rural wage growth (about 18-20%).
“Demand from rural housing is driven by government-supported schemes (15% of demand) and rising rural income (85%). Penetration of pucca houses in rural India is low at 52% (versus 83% for urban). Demand growth last fiscal was impacted with the government spending only 80% of its budget on the rural housing schemes, but we expect a rebound this fiscal with the budget set 70% higher,” the analysts said.
Follow Ashish K Tiwari on twitter @ashishktiwari
The Indian cement sector is set for a recovery this fiscal on the back of a likely strong growth in rural housing and a pick-up in roads and railways sectors.
Experts are also expecting a margin expansion as demand growth improves to 7% vis-a-vis 5% in fiscal 2013, with housing growing at 8% and infrastructure at 5%.
Anubhav Aggarwal, Kush Shah and Chunky Shah, analysts with Credit Suisse, said in a report on Wednesday that housing constitutes two-third of the cement demand, with rural housing accounting for 40% of the total demand.
“We expect cement demand from housing to grow at an 8% CAGR, with the bulk of growth coming from rural India,” they said.
Mahendra Singhi, executive director, Shree Cement, a manufacturer, said growth in rural housing will certainly have a positive impact on the sector.
“The government’s initiatives in this direction will take at least two quarters to start showing results,” he said.
An ACC spokesperson said India has the largest homeless population in the world and rural housing offered a huge opportunity.
“However, doing affordable housing is also a huge challenge in India. While demand for such housing is tremendous in rural India the question to ask is how will they get money to build those houses,” the spokesperson said.
The Credit Suisse analysts said that rural housing demand is expected to grow at 11%, mainly due to strong rural wage growth (about 18-20%).
“Demand from rural housing is driven by government-supported schemes (15% of demand) and rising rural income (85%). Penetration of pucca houses in rural India is low at 52% (versus 83% for urban). Demand growth last fiscal was impacted with the government spending only 80% of its budget on the rural housing schemes, but we expect a rebound this fiscal with the budget set 70% higher,” the analysts said.
Follow Ashish K Tiwari on twitter @ashishktiwari
Hotel conversions picking momentum in Indian hospitality market
This story first appeared in DNA Money edition on Wednesday, Apr 10, 2013.
Hotel conversion – more popularly referred to as flag-hopping – appears to be gaining currency in India as the economic environment makes it harder for new properties to come on stream.
The concept basically involves replacing an existing hotel brand with a new brand. The idea is to leverage the distribution network of the new hotel operator, thereby improving the hotel’s topline and bottomline.
If 2011 saw only one conversion – the Le Royal Meridien at Sahar, Mumbai converted to Hilton Mumbai International Airport Hotel in January – 2012 saw as many as eight. Among these, Hyatt took over five Ista hotels from IHHR Hospitality, while Keys took over three standalone properties, including a Biznotel from Pride Group.
The trend has continued this year.
Just last week, Starwood Hotels & Resorts took over the management of Royal Orchid Central Ahmedabad hotel from SAMHI Hotels Pvt Ltd.
Earlier this year, Boston East India Hotels LLC launched its first property in North Goa under the banner The Sofala 15°74 by Troca Hotels. The hotel, owned by Sun Leisure (India) Pvt Ltd, was earlier operated under The Sol brand.
More conversions are on the way.
Among others, Keys is set to convert two more hotels in the National Capital Region, said Sanjay Sethi, MD & CEO, Keys Hotels.
On its part, ITC Hotels, India’s second largest hospitality chain, is in a very advanced stage of finalising a deal with the owners of the erstwhile upscale hotel Lebua at Dwarka in New Delhi, a source said. “ITC will take over management of this property and operate under one of its own brands (that’s not associated with Starwood),” the source said, adding, the move is in line with ITC’s asset-light expansion strategy.
ITC Hotels did not offer a comment on this. An email remained unanswered at the time of going to print.
Industry officials are gung-ho on the possibilities.
Conversion offers an exciting new growth channel for Starwood, said Nikhil Manchharam, vice-president - acquisitions and development, South Asia, Starwood Hotels & Resorts Worldwide.
Abhijeet Beej Das, president and chief executive officer, Boston East India Hotels, said his company will be primarily looking at conversions to build a portfolio of hotels in India. “We have also introduced a new brand Troca Hotels and will be targeting key gateway cities in India for conversions,” he said.
“The concept has been very popular with franchised hotels. However, with new-built hotels experiencing significant delays, a tweaked version – combination of branding and management contract – of this strategy is being aggressively pursued by hotel chains,” said a top hospitality consultant, who did not want to be named.
Also, in a situation where there is little new supply of hotel rooms, “conversions reduce stress on pricing,” said Sethi.
Among a few other hotel conversions that are likely to be announced soon include Hotel Golden Tulip, Jaipur that will not be branded and managed by Patu Kesawni and Rattan Keswani promoted Carnation Hotels India P Ltd. Similalry, Lebua Hotels & Resrots is set to convert an ancient palace hotel in New Delhi as part of its expansion plans in India.
Follow Ashish K Tiwari on twitter @ashishktiwari
Hotel conversion – more popularly referred to as flag-hopping – appears to be gaining currency in India as the economic environment makes it harder for new properties to come on stream.
The concept basically involves replacing an existing hotel brand with a new brand. The idea is to leverage the distribution network of the new hotel operator, thereby improving the hotel’s topline and bottomline.
If 2011 saw only one conversion – the Le Royal Meridien at Sahar, Mumbai converted to Hilton Mumbai International Airport Hotel in January – 2012 saw as many as eight. Among these, Hyatt took over five Ista hotels from IHHR Hospitality, while Keys took over three standalone properties, including a Biznotel from Pride Group.
The trend has continued this year.
Just last week, Starwood Hotels & Resorts took over the management of Royal Orchid Central Ahmedabad hotel from SAMHI Hotels Pvt Ltd.
Earlier this year, Boston East India Hotels LLC launched its first property in North Goa under the banner The Sofala 15°74 by Troca Hotels. The hotel, owned by Sun Leisure (India) Pvt Ltd, was earlier operated under The Sol brand.
More conversions are on the way.
Among others, Keys is set to convert two more hotels in the National Capital Region, said Sanjay Sethi, MD & CEO, Keys Hotels.
On its part, ITC Hotels, India’s second largest hospitality chain, is in a very advanced stage of finalising a deal with the owners of the erstwhile upscale hotel Lebua at Dwarka in New Delhi, a source said. “ITC will take over management of this property and operate under one of its own brands (that’s not associated with Starwood),” the source said, adding, the move is in line with ITC’s asset-light expansion strategy.
ITC Hotels did not offer a comment on this. An email remained unanswered at the time of going to print.
Industry officials are gung-ho on the possibilities.
Conversion offers an exciting new growth channel for Starwood, said Nikhil Manchharam, vice-president - acquisitions and development, South Asia, Starwood Hotels & Resorts Worldwide.
Abhijeet Beej Das, president and chief executive officer, Boston East India Hotels, said his company will be primarily looking at conversions to build a portfolio of hotels in India. “We have also introduced a new brand Troca Hotels and will be targeting key gateway cities in India for conversions,” he said.
“The concept has been very popular with franchised hotels. However, with new-built hotels experiencing significant delays, a tweaked version – combination of branding and management contract – of this strategy is being aggressively pursued by hotel chains,” said a top hospitality consultant, who did not want to be named.
Also, in a situation where there is little new supply of hotel rooms, “conversions reduce stress on pricing,” said Sethi.
Among a few other hotel conversions that are likely to be announced soon include Hotel Golden Tulip, Jaipur that will not be branded and managed by Patu Kesawni and Rattan Keswani promoted Carnation Hotels India P Ltd. Similalry, Lebua Hotels & Resrots is set to convert an ancient palace hotel in New Delhi as part of its expansion plans in India.
Follow Ashish K Tiwari on twitter @ashishktiwari
DDB Mudra Group foresees double-digit growth this year
This Q&A first appeared in DNA Money edition on Wednesday, Apr 3, 2013.
The acquisition of Mudra Communications by DDB, an Omnicon group company, 15 months ago saw the advertising agency undergo a quick transition. Madhukar Kamath, Group CEO & MD, of the 1,150 people strong DDB Mudra Group, spoke about how the past year was for the company, business post transition, key developments and the outlook. Excerpts from the interview:
On transition
2012 was a very tough year. And we completed a tough job of migration, transition and integration in that year. All this required a great degree of resilience, will power, staying power and determination from the agency.
On completing a year as DDB Mudra Group
It’s been a series of milestones that we have been having in the last few months. The journey so far has been a very exciting for us. We utilised this opportunity to streamline a lot of our offerings and collect them into different areas and brand them independently. So today DDB Mudra Group consists of nine distinct business streams -- eight within DDB Mudra Group and one standalone (Interbrand) – each catering to varied needs of our clients. Today, we are the only integrated marketing services and communications company in the top five in the country.
On business prior to and post acquisition
These are early days. We have streamlined / integrated the entire organisation with the DDB network. We have always had good organic and inorganic growth in business, so that is continuing. What we have seen increasing in the course of last one year is interactions both at the regional and global levels. Being a large integrated group, several Omnicom Group companies are accessing us to work in partnership or to look at India entry strategies.
On India entry strategies for Omnicom companies
I can’t speak on behalf of Omnicon nor am I the spokesperson for these companies. Having said that, talks are at various stages with the Diversified Agency Services (DAS) group of companies that have various agencies such as healthcare, research, experiential, licensing, branding and design consultancies. So 2013 will certainly see more of these DAS companies foraying into the Indian market.
On overall business environment in 2013
Having completed the transition and integration last year, we’ve internally begun the year with the expectation that the tough year will be left behind. So 2013 is certainly a growth year and we are looking at a double-digit growth this year. After being acquired, we cannot share any financial details, market
share or growth percentages.
Follow Ashish K Tiwari on twitter @ashishktiwari
The acquisition of Mudra Communications by DDB, an Omnicon group company, 15 months ago saw the advertising agency undergo a quick transition. Madhukar Kamath, Group CEO & MD, of the 1,150 people strong DDB Mudra Group, spoke about how the past year was for the company, business post transition, key developments and the outlook. Excerpts from the interview:
On transition
2012 was a very tough year. And we completed a tough job of migration, transition and integration in that year. All this required a great degree of resilience, will power, staying power and determination from the agency.
On completing a year as DDB Mudra Group
It’s been a series of milestones that we have been having in the last few months. The journey so far has been a very exciting for us. We utilised this opportunity to streamline a lot of our offerings and collect them into different areas and brand them independently. So today DDB Mudra Group consists of nine distinct business streams -- eight within DDB Mudra Group and one standalone (Interbrand) – each catering to varied needs of our clients. Today, we are the only integrated marketing services and communications company in the top five in the country.
On business prior to and post acquisition
These are early days. We have streamlined / integrated the entire organisation with the DDB network. We have always had good organic and inorganic growth in business, so that is continuing. What we have seen increasing in the course of last one year is interactions both at the regional and global levels. Being a large integrated group, several Omnicom Group companies are accessing us to work in partnership or to look at India entry strategies.
On India entry strategies for Omnicom companies
I can’t speak on behalf of Omnicon nor am I the spokesperson for these companies. Having said that, talks are at various stages with the Diversified Agency Services (DAS) group of companies that have various agencies such as healthcare, research, experiential, licensing, branding and design consultancies. So 2013 will certainly see more of these DAS companies foraying into the Indian market.
On overall business environment in 2013
Having completed the transition and integration last year, we’ve internally begun the year with the expectation that the tough year will be left behind. So 2013 is certainly a growth year and we are looking at a double-digit growth this year. After being acquired, we cannot share any financial details, market
share or growth percentages.
Follow Ashish K Tiwari on twitter @ashishktiwari
Direct-to-home services set to get expensive
This story first appeared in DNA Money edition on Thursday, Mar 28, 2013.
Get ready to pay more for your direct-to-home (DTH) service if you are a monthly subscriber. Leading DTH service provider Dish TV is set to increase tariffs by 10% starting next week. Others are expected to follow suit.
“Yes, we are increasing pack prices across by 10% and the new rates will be applicable from April 4. The company has decided to pass on some part of the service tax component to subscribers and, hence, this decision to increase prices was taken,” said Salil Kapoor, COO, Dish TV.
The hike will be across packs and regions, including south India — price-sensitive market. Dish TV provides services with a basic pack price of Rs155 per month in south India and Rs200/month in the rest of the country. It believes the period after the March 31 deadline for phase two of digitisation offers a good opportunity for price hikes.
Dish TV had increased its set-top box (STB) prices twice in February and with the increase in monthly subscription fees, it expects average revenue per user (Arpu) to touch Rs180 next fiscal — from Rs160 in the quarter ending December.
Experts figure that others will follow suit, though most players are yet to decide on a hike. “I’ve heard about the price hike. We will first need to study the extent of price increase, and take a call based on our analysis and its impact in the market,” said Harit Nagpal, MD & CEO, Tata Sky Ltd.
Reliance Digital TV, too, said it is open to a hike. However, Airtel Digital denied any possibility of a price hike on STBs or subscriber packs.
The Indian DTH industry is a fast growing and highly competitive market with few differentiators in terms of content. Going by industry experts, the last few years have seen subscription prices drop consistently.
“My understanding is that it is a very fluctuating or volatile pricing market. While there have been instances of price hikes in the past, the number of times prices had to be reduced are more than they (prices) have increased,” said Nagpal.
Analysts tracking the DTH space feel any hike in monthly subscription fees will be good for the industry, besides helping add subscribers.
“It validates our thesis that Dish TV/other satellite players are changing focus towards profitable growth rather than only chasing subscriber additions,” Citi Research analysts Surendra Goyal and Aditya Mathur had said in a recent note.
Brokerage Emkay Research said the price hikes are inevitable, despite competition from cable operators. “Arpu increase is inevitable as multi-system operators will not be able to generate anticipated cash-flows at current revenue,” it said in a note.
A Reliance Digital TV spokesperson confirmed the push, saying the industry is heavily burdened with statutory levies (to the extent of around 35%) and the recent decision to increase the customs duty on STBs by 5% has only added to this burden.
Follow Ashish K Tiwari on twitter @ashishktiwari
Get ready to pay more for your direct-to-home (DTH) service if you are a monthly subscriber. Leading DTH service provider Dish TV is set to increase tariffs by 10% starting next week. Others are expected to follow suit.
“Yes, we are increasing pack prices across by 10% and the new rates will be applicable from April 4. The company has decided to pass on some part of the service tax component to subscribers and, hence, this decision to increase prices was taken,” said Salil Kapoor, COO, Dish TV.
The hike will be across packs and regions, including south India — price-sensitive market. Dish TV provides services with a basic pack price of Rs155 per month in south India and Rs200/month in the rest of the country. It believes the period after the March 31 deadline for phase two of digitisation offers a good opportunity for price hikes.
Dish TV had increased its set-top box (STB) prices twice in February and with the increase in monthly subscription fees, it expects average revenue per user (Arpu) to touch Rs180 next fiscal — from Rs160 in the quarter ending December.
Experts figure that others will follow suit, though most players are yet to decide on a hike. “I’ve heard about the price hike. We will first need to study the extent of price increase, and take a call based on our analysis and its impact in the market,” said Harit Nagpal, MD & CEO, Tata Sky Ltd.
Reliance Digital TV, too, said it is open to a hike. However, Airtel Digital denied any possibility of a price hike on STBs or subscriber packs.
The Indian DTH industry is a fast growing and highly competitive market with few differentiators in terms of content. Going by industry experts, the last few years have seen subscription prices drop consistently.
“My understanding is that it is a very fluctuating or volatile pricing market. While there have been instances of price hikes in the past, the number of times prices had to be reduced are more than they (prices) have increased,” said Nagpal.
Analysts tracking the DTH space feel any hike in monthly subscription fees will be good for the industry, besides helping add subscribers.
“It validates our thesis that Dish TV/other satellite players are changing focus towards profitable growth rather than only chasing subscriber additions,” Citi Research analysts Surendra Goyal and Aditya Mathur had said in a recent note.
Brokerage Emkay Research said the price hikes are inevitable, despite competition from cable operators. “Arpu increase is inevitable as multi-system operators will not be able to generate anticipated cash-flows at current revenue,” it said in a note.
A Reliance Digital TV spokesperson confirmed the push, saying the industry is heavily burdened with statutory levies (to the extent of around 35%) and the recent decision to increase the customs duty on STBs by 5% has only added to this burden.
Follow Ashish K Tiwari on twitter @ashishktiwari
Two get the boot for tasteless scam ads
This story first appeared in DNA Money edition on Thursday, Mar 28, 2013.
The controversy over three scam advertisements created by JWT India, part of global advertising major WPP, drew blood on Wednesday. Bobby Pawar (in pic), chief creative officer and managing partner, JWT India, and Simha Vellanki, creative director at Blue Hive, a WPP unit managing the Ford Motors business, have reportedly been given the marching orders.
“After a thorough internal review, we have taken appropriate disciplinary action with those involved, which included the exit of employees at JWT. These were necessary steps owing to the direct accountability of the individuals concerned as we work to ensure that both the right oversight and processes are strictly enforced so that this never happens again,” JWT India said in a media statement without specifying the sacking of the two officials.
Scam ads are typically created by advertising professionals to compete and win creative awards at various events globally. While the Ford Figo campaign was also meant to serve that purpose, the distasteful portrayal of women, coming at a time when India is in the process of putting in place a law to prevent violence against women, has put both the creative agency and the client (Ford Motors) in damage control mode.
Ashish Bhasin, chairman, India and CEO, southeast Asia and south Asia, Aegis Media, said the controversy is a wake-up call for both clients and creative agencies.
Just Without Taste scam ads draw blood.
Josy Paul, chairman and chief creative officer, BBDO India, agrees, as he points out that it is time for a “greater consciousness”. “It’s time to celebrate game-changing ideas so that we realise that you don’t need to do scam ads to become famous or to win recognition.... We don’t want scams to become the face of our industry.”
Expressing regret, JWT India said, “We deeply regret the publishing of posters that were distasteful and contrary to the standards of professionalism and decency at JWT. These were never intended for paid publication, were never requested by our Ford client and should never have been created, let alone uploaded to the Internet. These posters were created by individuals within the agency and did not go through the normal review and oversight process.”
Follow Ashish K Tiwari on twitter @ashishktiwari
The controversy over three scam advertisements created by JWT India, part of global advertising major WPP, drew blood on Wednesday. Bobby Pawar (in pic), chief creative officer and managing partner, JWT India, and Simha Vellanki, creative director at Blue Hive, a WPP unit managing the Ford Motors business, have reportedly been given the marching orders.
“After a thorough internal review, we have taken appropriate disciplinary action with those involved, which included the exit of employees at JWT. These were necessary steps owing to the direct accountability of the individuals concerned as we work to ensure that both the right oversight and processes are strictly enforced so that this never happens again,” JWT India said in a media statement without specifying the sacking of the two officials.
Scam ads are typically created by advertising professionals to compete and win creative awards at various events globally. While the Ford Figo campaign was also meant to serve that purpose, the distasteful portrayal of women, coming at a time when India is in the process of putting in place a law to prevent violence against women, has put both the creative agency and the client (Ford Motors) in damage control mode.
Ashish Bhasin, chairman, India and CEO, southeast Asia and south Asia, Aegis Media, said the controversy is a wake-up call for both clients and creative agencies.
Just Without Taste scam ads draw blood.
Josy Paul, chairman and chief creative officer, BBDO India, agrees, as he points out that it is time for a “greater consciousness”. “It’s time to celebrate game-changing ideas so that we realise that you don’t need to do scam ads to become famous or to win recognition.... We don’t want scams to become the face of our industry.”
Expressing regret, JWT India said, “We deeply regret the publishing of posters that were distasteful and contrary to the standards of professionalism and decency at JWT. These were never intended for paid publication, were never requested by our Ford client and should never have been created, let alone uploaded to the Internet. These posters were created by individuals within the agency and did not go through the normal review and oversight process.”
Follow Ashish K Tiwari on twitter @ashishktiwari
Cement sales damp in peak season
This story first appeared in DNA Money edition on Tuesday, Mar 26, 2013.
Cement companies are grappling with low sales in the middle of peak business season due to feeble demand in most parts of the country.
As a result, they have not been able to take price hikes this month, which is traditionally the period for price hikes.
M Ravinder Reddy, head of marketing for India - Vicat Group and director of marketing at Bharathi Cement, said this March is turning out of to be different than the last few years.
“The primary reason, I’m told, is that the government has stopped payments to control fiscal deficit, as a result of which infra projects have taken a beating. The retail end also hasn’t grown due to drop in consumption. The year-on-year sales for the industry decline for March could be 4-5%,” he said.
The sales data will start flowing in from end of the month.
While firms have hiked prices in February, they could not raise them further this month.
“This time around, we are not seeing a great improvement at all. It’s a flat market scenario for the overall cement sector,” said a senior official at a cement firm.
Mihir Jhaveri and Prateek Kumar, analysts with Religare Institutional Research, said in their report that while January and February witnessed sharp hikes, a cool-off is evident in March as manufacturers reeled under the dual pressure of feeble demand and a poor macroeconomic scenario.
“The all-India average price has been nearly flat month on month in March. Only in fiscal 2002 – when India’s GDP dipped below 4% – did prices witness such pressure, leading to a price decline in March (over February),” the analysts said.
In Gujarat, after correcting Rs10-30 per 50-kg bag in the first fortnight of February, prices have remained stable over the last fortnight. The market, however may remain weak in April and dealers anticipate some moderation in cement prices from current levels.
In Maharashtra, the sand/water shortage has impacted demand. Prices in Mumbai remained stable despite weak demand; however, Pune saw a correction last week after staying stable during the past fortnight.
In Delhi, prices have hovered at Rs275-280 per bag despite several attempts by manufacturers to increase prices.
The Uttar Pradesh and Madhya Pradesh markets saw prices rise to peak by February-end and moderating thereafter by Rs 5-10. While Karnataka saw relatively stable prices, cement companies in Kerala reduced rates by Rs 10 this month. In Chennai, the hike of Rs 5 in February was reversed this month.
Also, dealers expects prices to decline in several parts of the country.
“Dealers attribute a part of the decline to stock clearance by March-ending companies. We estimate the current all-India average price at Rs 300-305 – nearly matching the price in February,” the Religare analysts said, adding the cement share prices may drop 5-6% as monsoon nears.
Follow Ashish K Tiwari on twitter @ashishktiwari
Cement companies are grappling with low sales in the middle of peak business season due to feeble demand in most parts of the country.
As a result, they have not been able to take price hikes this month, which is traditionally the period for price hikes.
M Ravinder Reddy, head of marketing for India - Vicat Group and director of marketing at Bharathi Cement, said this March is turning out of to be different than the last few years.
“The primary reason, I’m told, is that the government has stopped payments to control fiscal deficit, as a result of which infra projects have taken a beating. The retail end also hasn’t grown due to drop in consumption. The year-on-year sales for the industry decline for March could be 4-5%,” he said.
The sales data will start flowing in from end of the month.
While firms have hiked prices in February, they could not raise them further this month.
“This time around, we are not seeing a great improvement at all. It’s a flat market scenario for the overall cement sector,” said a senior official at a cement firm.
Mihir Jhaveri and Prateek Kumar, analysts with Religare Institutional Research, said in their report that while January and February witnessed sharp hikes, a cool-off is evident in March as manufacturers reeled under the dual pressure of feeble demand and a poor macroeconomic scenario.
“The all-India average price has been nearly flat month on month in March. Only in fiscal 2002 – when India’s GDP dipped below 4% – did prices witness such pressure, leading to a price decline in March (over February),” the analysts said.
In Gujarat, after correcting Rs10-30 per 50-kg bag in the first fortnight of February, prices have remained stable over the last fortnight. The market, however may remain weak in April and dealers anticipate some moderation in cement prices from current levels.
In Maharashtra, the sand/water shortage has impacted demand. Prices in Mumbai remained stable despite weak demand; however, Pune saw a correction last week after staying stable during the past fortnight.
In Delhi, prices have hovered at Rs275-280 per bag despite several attempts by manufacturers to increase prices.
The Uttar Pradesh and Madhya Pradesh markets saw prices rise to peak by February-end and moderating thereafter by Rs 5-10. While Karnataka saw relatively stable prices, cement companies in Kerala reduced rates by Rs 10 this month. In Chennai, the hike of Rs 5 in February was reversed this month.
Also, dealers expects prices to decline in several parts of the country.
“Dealers attribute a part of the decline to stock clearance by March-ending companies. We estimate the current all-India average price at Rs 300-305 – nearly matching the price in February,” the Religare analysts said, adding the cement share prices may drop 5-6% as monsoon nears.
Follow Ashish K Tiwari on twitter @ashishktiwari
At Taproot India, client portfolio getting diverse: Agnello Dias
This Q&A first appeared in DNA Money edition on Monday, Mar 25, 2013.
Agnello Dias, co-founder and chief creative officer, Taproot India, one of the most promising creative agencies in India, says 2013 will be an exciting year for his company. In conversation, he spoke about the industry trends and company's plans... Excerpts from the interview:
On key trends in advertising especially on the creative side.
The most striking trend I see in the Indian advertising industry is that there is a great focus on realistic portrayal of people’s lives, emotions, etc as opposed to a fantasy release. This approach is only getting bigger by the day and advertising will become more raw and hardcore like in the real world as compared with advertising earlier, which was very glossy.
Impact on creativity due to increase business pressures
I think the quantity of work some agencies take up is actually much more than is possible to be done in that time and things get rushed, as a result there is less time to execute the work. This leads to creativity suffering and that’s not good for the Indian advertising industry. The fraternity is not taking a note of it and is just carrying on with their approach to business.
On campaigns being currently worked on
Current projects include a few campaigns for Pepsi and 7UP in addition to working on a series of campaigns for clients for the upcoming IPL series.
On billings and growth expected in 2013
I cannot disclose financial details pertaining to billing and growth. Having said that, we are hoping to do some exciting work this year and add new categories to our portfolio of clients. For instance, India’s leading cables and wires company Polycab has recently released their first television commercial (TVC) campaign that was conceptualised by us. Home appliances is another category that we will be involved in.
On rolling out of NourishCo campaign
Yes that has started rolling out but since the product is being initially made available in Tamil Nadu and Andhra Pradesh, the campaign will first break in these two states some time next month and will eventually go national.
On traditional and new media debate
I think that change will certainly happen eventually but India has a very vast and varied mindset unlike the West where it is very homogeneous. So the change will not happen overnight and the upper end will move first, which is already happening. So while it would take one year for the change to take place in a homogeneous mindset market, my understanding is it will take 7-8 years for the entire industry in a market like India.
As for mobile advertising, people who are more technically inclined or technologically friendly would lean towards those products before actual conceptual creativity comes in play. That will be the generation when the technical side of it will be specified and genuine creativity will follow. Like in case of print to television, initially there were not so much of the creative people doing film or television but people who understood the medium better and not necessary creative. Now it has completely moved to creative people actually working in that area.
On sweeping awards year after year
We try and do our best every year and sometimes we do well. At our stage every year is a big year. So there are times when our best works are perceived by everyone in the fraternity as good and sometimes they are not.
On the impact of slowdown on business
When the storm hits the sea, the bigger ships get impacted first. Same is the case with the advertising industry. The larger agencies get impacted first by the slowdown and we are too small in size to get affected.
Follow Ashish K Tiwari on twitter @ashishktiwari
Agnello Dias, co-founder and chief creative officer, Taproot India, one of the most promising creative agencies in India, says 2013 will be an exciting year for his company. In conversation, he spoke about the industry trends and company's plans... Excerpts from the interview:
On key trends in advertising especially on the creative side.
The most striking trend I see in the Indian advertising industry is that there is a great focus on realistic portrayal of people’s lives, emotions, etc as opposed to a fantasy release. This approach is only getting bigger by the day and advertising will become more raw and hardcore like in the real world as compared with advertising earlier, which was very glossy.
Impact on creativity due to increase business pressures
I think the quantity of work some agencies take up is actually much more than is possible to be done in that time and things get rushed, as a result there is less time to execute the work. This leads to creativity suffering and that’s not good for the Indian advertising industry. The fraternity is not taking a note of it and is just carrying on with their approach to business.
On campaigns being currently worked on
Current projects include a few campaigns for Pepsi and 7UP in addition to working on a series of campaigns for clients for the upcoming IPL series.
On billings and growth expected in 2013
I cannot disclose financial details pertaining to billing and growth. Having said that, we are hoping to do some exciting work this year and add new categories to our portfolio of clients. For instance, India’s leading cables and wires company Polycab has recently released their first television commercial (TVC) campaign that was conceptualised by us. Home appliances is another category that we will be involved in.
On rolling out of NourishCo campaign
Yes that has started rolling out but since the product is being initially made available in Tamil Nadu and Andhra Pradesh, the campaign will first break in these two states some time next month and will eventually go national.
On traditional and new media debate
I think that change will certainly happen eventually but India has a very vast and varied mindset unlike the West where it is very homogeneous. So the change will not happen overnight and the upper end will move first, which is already happening. So while it would take one year for the change to take place in a homogeneous mindset market, my understanding is it will take 7-8 years for the entire industry in a market like India.
As for mobile advertising, people who are more technically inclined or technologically friendly would lean towards those products before actual conceptual creativity comes in play. That will be the generation when the technical side of it will be specified and genuine creativity will follow. Like in case of print to television, initially there were not so much of the creative people doing film or television but people who understood the medium better and not necessary creative. Now it has completely moved to creative people actually working in that area.
On sweeping awards year after year
We try and do our best every year and sometimes we do well. At our stage every year is a big year. So there are times when our best works are perceived by everyone in the fraternity as good and sometimes they are not.
On the impact of slowdown on business
When the storm hits the sea, the bigger ships get impacted first. Same is the case with the advertising industry. The larger agencies get impacted first by the slowdown and we are too small in size to get affected.
Follow Ashish K Tiwari on twitter @ashishktiwari
Clients are getting comfortable with smaller ad agencies: Santosh Padhi
This Q&A first appeared in DNA Money edition on Saturday, Mar 23, 2013.
At the recent Adfest 2013 event in Pattaya, Thailand, advertising agency Taproot India (now part of Dentsu India Group) won 11 ‘metals’, the most-awarded among the 33 offices from 16 Asian countries. Santosh Padhi, Taproot’s chief creative officer, feels although success is second nature to the agency, being adjudged the ‘Creative Agency of the Year’ was still 'a big surprise'. Excerpts from the interview:
You reaped a bumper harvest at Adfest 2013.Yes, we bagged 11 metals. That is a huge number for us. We always thought we have a great body of work and will do fairly well at Adfest which applauds Asian work, unlike Cannes and a few other festivals. But we never thought we will be adjudged one of the best offices in Asia. That’s really a big surprise for us and we are all under tremendous pressure now to ensure we are able to retain the market credibility. I think it’s a good pressure to have.
How have things changed at Taproot after Dentsu’s entry?
To be frank, nothing really has changed in the way Taproot is operating. They are doing their own stuff and so are we. The only exception is in the reporting structure, in terms of finances, where we are doing it every quarter now. Dentsu has given us a free hand and the management feels we are running the business fantastically, so there is really no need for them to dictate terms.
Besides, the Dentsu management has assured us of all the support we would need to deliver the best possible results for our clients. While we have been doing well on our own, NourishCo (the Tata Global Beverages and PepsiCo India joint venture) is one incident wherein a joint pitch was made with Dentsu. NourishCo wanted more than a creative thing, so we leveraged on Dentsu’s expertise in other areas like activation, research, so on. I think we will have many more such opportunities to work together in future and deliver something that’s more solid.
One-stop solutions providers are in. Is there enough scope for creative-focused entities now?
There is a need for every sort of service in the industry. While some clients believe in agencies that are an end-to-end service or solutions provider, there are others that believe in going to the specialist agencies for solutions. This approach, in my opinion, is the new-age thinking from the client’s side. From what I see, there is enough business for all formats and clients will choose based on what it is that they are really looking for, in terms of delivery. Clients these days are very matured and know who is delivering what. In fact, clients are getting more and more comfortable with smaller agencies as they know that the guy sitting across the table is also the guy who will be working on the campaign.
Has there been a change in the client’s perception about Taproot now that it’s part of a global advertising giant?
We’d taken our clients into confidence when doing the deal with Dentsu and they knew we’d continue to work and service them the same way as before. So, no significant change in perception there. From Taproot’s perspective, I think we were lucky to get assignments from the likes of Pepsi, Airtel, Marico. But if you want more bigger brands like these in the portfolio, you’d either have to be extremely lucky again and again and again or partner somebody and by default you get the big canvas. One of the reasons we partnered Dentsu is that they have some really big clients who will launch products and brands in the Indian market and we will get to work on their campaigns
Follow Ashish K Tiwari on twitter @ashishktiwari
At the recent Adfest 2013 event in Pattaya, Thailand, advertising agency Taproot India (now part of Dentsu India Group) won 11 ‘metals’, the most-awarded among the 33 offices from 16 Asian countries. Santosh Padhi, Taproot’s chief creative officer, feels although success is second nature to the agency, being adjudged the ‘Creative Agency of the Year’ was still 'a big surprise'. Excerpts from the interview:
You reaped a bumper harvest at Adfest 2013.Yes, we bagged 11 metals. That is a huge number for us. We always thought we have a great body of work and will do fairly well at Adfest which applauds Asian work, unlike Cannes and a few other festivals. But we never thought we will be adjudged one of the best offices in Asia. That’s really a big surprise for us and we are all under tremendous pressure now to ensure we are able to retain the market credibility. I think it’s a good pressure to have.
How have things changed at Taproot after Dentsu’s entry?
To be frank, nothing really has changed in the way Taproot is operating. They are doing their own stuff and so are we. The only exception is in the reporting structure, in terms of finances, where we are doing it every quarter now. Dentsu has given us a free hand and the management feels we are running the business fantastically, so there is really no need for them to dictate terms.
Besides, the Dentsu management has assured us of all the support we would need to deliver the best possible results for our clients. While we have been doing well on our own, NourishCo (the Tata Global Beverages and PepsiCo India joint venture) is one incident wherein a joint pitch was made with Dentsu. NourishCo wanted more than a creative thing, so we leveraged on Dentsu’s expertise in other areas like activation, research, so on. I think we will have many more such opportunities to work together in future and deliver something that’s more solid.
One-stop solutions providers are in. Is there enough scope for creative-focused entities now?
There is a need for every sort of service in the industry. While some clients believe in agencies that are an end-to-end service or solutions provider, there are others that believe in going to the specialist agencies for solutions. This approach, in my opinion, is the new-age thinking from the client’s side. From what I see, there is enough business for all formats and clients will choose based on what it is that they are really looking for, in terms of delivery. Clients these days are very matured and know who is delivering what. In fact, clients are getting more and more comfortable with smaller agencies as they know that the guy sitting across the table is also the guy who will be working on the campaign.
Has there been a change in the client’s perception about Taproot now that it’s part of a global advertising giant?
We’d taken our clients into confidence when doing the deal with Dentsu and they knew we’d continue to work and service them the same way as before. So, no significant change in perception there. From Taproot’s perspective, I think we were lucky to get assignments from the likes of Pepsi, Airtel, Marico. But if you want more bigger brands like these in the portfolio, you’d either have to be extremely lucky again and again and again or partner somebody and by default you get the big canvas. One of the reasons we partnered Dentsu is that they have some really big clients who will launch products and brands in the Indian market and we will get to work on their campaigns
Follow Ashish K Tiwari on twitter @ashishktiwari
Kanakia to exit Ahmedabad hotel
This story first appeared in DNA Money edition on Tuesday, Mar 19, 2013.
The promoters of Kanakia Group have begun the process of divesting their stakes in four hotel projects by putting the upcoming Novotel branded five-star hotel in Ahmedabad on the block.
Private equity firm Sun Apollo, which owns the land on which the project is coming up, will also exit the project. “Offer for sale has been floated in the market for the mixed-use development comprising the hotel and commercial components,” said a source.
Rasesh B Kanakia, chairman of the eponymous group, confirmed the selloff plan. “The hotel, now in the final stage of construction, is expected to get operational by June. We will exit the development at the right price.”
Kanakia has mandated the Indian arm of an international property consultant (IPC) to find a buyer.
Located off the Sarkhej-Gandhinagar highway, the mixed-use development features 176 hotel rooms, eight serviced apartments, food and beverage courts, meeting and banqueting facilities, a business centre and office space spread across two floors.
The hotel will be managed by Accor Group, the international hotel chain.
Kanakia did not share details about the money spent on developing the project. A 2011 environment clearance proposal submitted by the asset holding company, Atithya Inn, had estimated the project cost to be Rs124.44 crore, and said it will feature 235 guest rooms in all and 43 offices.
Typically, prospective buyers look for either a pre-operation or three-year-old hotels that have already settled in the market, said Kanakia. “We are developers. We will build hotels and sell them if the right opportunity comes by.”
Kanakia has one operational hotel (Courtyard by Marriott) in north Mumbai while another three projects are under various stages of development, including an Ibis (location unknown) and a Hyatt Place (Goa).
Kanakia has already sold the Cinemax multiplex chain to PVR earlier this year.
Follow Ashish K Tiwari on twitter @ashishktiwari
The promoters of Kanakia Group have begun the process of divesting their stakes in four hotel projects by putting the upcoming Novotel branded five-star hotel in Ahmedabad on the block.
Private equity firm Sun Apollo, which owns the land on which the project is coming up, will also exit the project. “Offer for sale has been floated in the market for the mixed-use development comprising the hotel and commercial components,” said a source.
Rasesh B Kanakia, chairman of the eponymous group, confirmed the selloff plan. “The hotel, now in the final stage of construction, is expected to get operational by June. We will exit the development at the right price.”
Kanakia has mandated the Indian arm of an international property consultant (IPC) to find a buyer.
Located off the Sarkhej-Gandhinagar highway, the mixed-use development features 176 hotel rooms, eight serviced apartments, food and beverage courts, meeting and banqueting facilities, a business centre and office space spread across two floors.
The hotel will be managed by Accor Group, the international hotel chain.
Kanakia did not share details about the money spent on developing the project. A 2011 environment clearance proposal submitted by the asset holding company, Atithya Inn, had estimated the project cost to be Rs124.44 crore, and said it will feature 235 guest rooms in all and 43 offices.
Typically, prospective buyers look for either a pre-operation or three-year-old hotels that have already settled in the market, said Kanakia. “We are developers. We will build hotels and sell them if the right opportunity comes by.”
Kanakia has one operational hotel (Courtyard by Marriott) in north Mumbai while another three projects are under various stages of development, including an Ibis (location unknown) and a Hyatt Place (Goa).
Kanakia has already sold the Cinemax multiplex chain to PVR earlier this year.
Follow Ashish K Tiwari on twitter @ashishktiwari
'International architects are attracted to India's strengths'
This Q&A first appeared in DNA Money edition on Sunday, Mar 17, 2013.
Starting with designing luxury boutique Blakes Hotel in London, Anouska Hempel, promoter of international design and architectural practice Anouska Hempel Design (AHD), went on to design critically-acclaimed luxury hotels, restaurants, private residences, yachts, retail and products throughout the world.
One of world’s most celebrated designers, Hempel was in Mumbai recently to participate at the India Design Forum 2013. In conversation, she shared views about the design market in India and work AHD is doing for Indian clients. Here are some excerpts...
What are your views on the design market in India?
The market is most extraordinary and going from strength to strength. India is refining and redeveloping itself. A lot of architects from developed economies are attracted to the strengths of India, especially on the commercial level. In fact, I think there are a host of other people coming to India all the time to create things and be influenced by the country.
Are you working on any project in India?
Nothing at the moment sadly.
What about any international project that’s owned by an Indian?
Yes , I am doing a city hotel project in Santiago. This development is owned by an Indian client based out of Jaipur. I’m are also designing their house in Singapore.
Why haven’t you taken up a project in India as yet?
I have been approached from time to time but haven’t had the proper opportunity to conclude anything here. While there are a host of designers doing similar stuff, I don’t and hence, tend to be a risky bet.
What would be your dream project in India?
I’d love to do a boutique hotel with a proper Indian flavour. It could be a certain period like the turn of the century, going back to the Maharaja era or something that gives a museum like quality to my work.
We have had the likes of Giorgio Armani being signed up for landmark developments by Indian companies. Are you considering such associations as well?
Yes, I’ve heard about it. I like such partnerships and I think they do quite well. I am not that commercially structured, so, an Indian company will have to take me on board for their projects and I’d come willingly. I’d really like to do something that’s an important landmark development here.
Follow Ashish K Tiwari on twitter @ashishktiwari
Starting with designing luxury boutique Blakes Hotel in London, Anouska Hempel, promoter of international design and architectural practice Anouska Hempel Design (AHD), went on to design critically-acclaimed luxury hotels, restaurants, private residences, yachts, retail and products throughout the world.
One of world’s most celebrated designers, Hempel was in Mumbai recently to participate at the India Design Forum 2013. In conversation, she shared views about the design market in India and work AHD is doing for Indian clients. Here are some excerpts...
What are your views on the design market in India?
The market is most extraordinary and going from strength to strength. India is refining and redeveloping itself. A lot of architects from developed economies are attracted to the strengths of India, especially on the commercial level. In fact, I think there are a host of other people coming to India all the time to create things and be influenced by the country.
Are you working on any project in India?
Nothing at the moment sadly.
What about any international project that’s owned by an Indian?
Yes , I am doing a city hotel project in Santiago. This development is owned by an Indian client based out of Jaipur. I’m are also designing their house in Singapore.
Why haven’t you taken up a project in India as yet?
I have been approached from time to time but haven’t had the proper opportunity to conclude anything here. While there are a host of designers doing similar stuff, I don’t and hence, tend to be a risky bet.
What would be your dream project in India?
I’d love to do a boutique hotel with a proper Indian flavour. It could be a certain period like the turn of the century, going back to the Maharaja era or something that gives a museum like quality to my work.
We have had the likes of Giorgio Armani being signed up for landmark developments by Indian companies. Are you considering such associations as well?
Yes, I’ve heard about it. I like such partnerships and I think they do quite well. I am not that commercially structured, so, an Indian company will have to take me on board for their projects and I’d come willingly. I’d really like to do something that’s an important landmark development here.
Follow Ashish K Tiwari on twitter @ashishktiwari
GroupM top boss says India is a good short- and long-term bet
This Q&A first appeared in DNA Money edition on Thursday, Mar 14, 2013.
GroupM, WPP's consolidated media investment management operation, has a 40% market share in India and expects a double-digit growth to top that this year, Dominic Proctor, president, GroupM Global, told in an interaction.
It’s been a little over a year since you took over as president. Can you share some highlights?
We have been concentrating mainly on 2-3 things. First of all, we are putting a lot of emphasis behind our digital practice around the world and in India. As the whole business changes from an analogue to digital, it requires a lot of investment in people, technology, infrastructure etc. So we are paying a lot of attention there. On the trading side, we are optimising the clients’ expenditures, finding the right media to spend it on and making sure they are getting value for money. So, ensuring proper return on investment (RoI) is another area of focus. We buy approximately 30% of the global media. This gives us a strong market positioning and we are also working on developing our leadership positioning in some of the other markets globally.
How does India fare in your focus areas?
India is developing and strong market for GroupM with over 40% market share. Of the $90 billion global billings, India contributes around 6%, or $5.6 billion. We are very optimistic, and expect double-digit growth this year as well. Overall, I think India is a good short- and long-term bet.
How do you view the Indian advertising, media and entertainment sectors?
We are very bullish about India. We think that the marketing or media and entertainment (M&E) sector in the country is growing and will continue to grow ahead of the general economy. The government’s general economy forecast is round about 5% growth this year, over 2012, and we think the M&E sector would double in 2013, growing round about 10% in 2013 on a cautious note and I wouldn’t be surprised if the growth exceeded that number.
What is the key challenge for Indian M&E players?
I think, in a financial sense, India is fairly strong and growing ahead of the global averages, which is very great for the media business here. One of the challenges with content in the Indian media business is that it’s quite introspective. By that I mean, if you look at the strength of the film business here it’s wonderfully strong. As a proportion of GDP, it is the strongest in the world. But it is very much focussed in the Indian population or the diaspora. The same is probably true with the music business and sports, which is dominated by cricket.
How is GroupM dealing with challenges of digital media?
We are bringing in talent that’s very focused on the mobile. We have business called Madhouse, which is a joint venture with our Chinese business. And the challenges Madhouse and our agencies have is how to take the vast numbers of hours being spent eyeballing mobile devices but the dollars or rupees haven’t yet followed. So basically the way we tackling it is by investing in the talent to bring the clients to the opportunity.
Does GroupM have any plans to look at inorganic growth in India?
Most of our business growth has been organic / internal, which is in some ways is easier to control and culturally consistent. We certainly have a very open mind to looking at acquisitions. Most often it is a question of pricing and because we are the biggest players in the market, we might not have the need to make expensive acquisitions compared to other who have smaller positions in the market and need to spend often over the top to bolster their resources. While we are very careful about that, we are not closed to the idea of making acquisitions in specialist areas like digital, content, mobile, analytics etc.
Follow Ashish K Tiwari on twitter @ashishktiwari
GroupM, WPP's consolidated media investment management operation, has a 40% market share in India and expects a double-digit growth to top that this year, Dominic Proctor, president, GroupM Global, told in an interaction.
It’s been a little over a year since you took over as president. Can you share some highlights?
We have been concentrating mainly on 2-3 things. First of all, we are putting a lot of emphasis behind our digital practice around the world and in India. As the whole business changes from an analogue to digital, it requires a lot of investment in people, technology, infrastructure etc. So we are paying a lot of attention there. On the trading side, we are optimising the clients’ expenditures, finding the right media to spend it on and making sure they are getting value for money. So, ensuring proper return on investment (RoI) is another area of focus. We buy approximately 30% of the global media. This gives us a strong market positioning and we are also working on developing our leadership positioning in some of the other markets globally.
How does India fare in your focus areas?
India is developing and strong market for GroupM with over 40% market share. Of the $90 billion global billings, India contributes around 6%, or $5.6 billion. We are very optimistic, and expect double-digit growth this year as well. Overall, I think India is a good short- and long-term bet.
How do you view the Indian advertising, media and entertainment sectors?
We are very bullish about India. We think that the marketing or media and entertainment (M&E) sector in the country is growing and will continue to grow ahead of the general economy. The government’s general economy forecast is round about 5% growth this year, over 2012, and we think the M&E sector would double in 2013, growing round about 10% in 2013 on a cautious note and I wouldn’t be surprised if the growth exceeded that number.
What is the key challenge for Indian M&E players?
I think, in a financial sense, India is fairly strong and growing ahead of the global averages, which is very great for the media business here. One of the challenges with content in the Indian media business is that it’s quite introspective. By that I mean, if you look at the strength of the film business here it’s wonderfully strong. As a proportion of GDP, it is the strongest in the world. But it is very much focussed in the Indian population or the diaspora. The same is probably true with the music business and sports, which is dominated by cricket.
How is GroupM dealing with challenges of digital media?
We are bringing in talent that’s very focused on the mobile. We have business called Madhouse, which is a joint venture with our Chinese business. And the challenges Madhouse and our agencies have is how to take the vast numbers of hours being spent eyeballing mobile devices but the dollars or rupees haven’t yet followed. So basically the way we tackling it is by investing in the talent to bring the clients to the opportunity.
Does GroupM have any plans to look at inorganic growth in India?
Most of our business growth has been organic / internal, which is in some ways is easier to control and culturally consistent. We certainly have a very open mind to looking at acquisitions. Most often it is a question of pricing and because we are the biggest players in the market, we might not have the need to make expensive acquisitions compared to other who have smaller positions in the market and need to spend often over the top to bolster their resources. While we are very careful about that, we are not closed to the idea of making acquisitions in specialist areas like digital, content, mobile, analytics etc.
Follow Ashish K Tiwari on twitter @ashishktiwari
Publicis beefs up digital ops with Convonix buy
This story first appeared in DNA Money edition on Tuesday, Mar 12, 2013.
Publicis Groupe, the world’s third-largest communications firm, has acquired Convonix, a marketing and consultancy firm, as part of its plan to beef up its digital presence in India.
The company plans to make more buyouts in the coming months.
Srikant Sastri, country chair, VivaKi India, a Publicis Groupe company, told DNA Money, “We have some more acquisitions in the pipeline. Hopefully, in the next 4-6 weeks we will have more announcements to make. Once completed, these will be aligned with some of our other agencies in the group.”
Last year Publicis acquired four companies – Indigo Consulting, Resultrix, iStrat and MarketGate.
Sastri said, “When we acquired Resultrix in August 2012, the company got aligned to Zenith Optimedia. Similarly, Convonix has now been aligned to Starcom MediaVest Group (SMG). This acquisition makes it a fairly formidable digital operation for SMG now.”
Post acquisition, Convonix will operate as SMG Convonix, with two market-facing brands: SMG Digital and Convonix.
Convonix offers a range of skills in the digital media space including search engine optimisation, search engine marketing, social media marketing, online reputation management, web analytics and conversion rate improvement.
It also recently developed a proprietary in-house brand monitoring and social listening platform called IrisTrack, which enables clients to gather market insight on their products and competitors and also engage customers online to improve their customer service.
Publicis has put together its strategy to build digital leadership about 18 months ago and was looking for both scale and full range of capabilities.
“What really attracted us was Convonix’s scale of 200-odd people breadth of skills/capabilities and quality of people,” said Sastri without disclosing financial details.
Though digital forms only Rs2,000 crore of the Rs30,000 crore Indian media market, the segment is one of the fastest growing at 30-35% annually.
“We have ourselves witnessed 98% growth in the digital space last year, which clearly indicates that it is a high growth market. Clients are increasingly focusing on and diverting a lot of spends in the digital space. We believe this is one area where we will achieve very quick leadership -- that’s an objective we have set for ourselves,” said Sastri.
Publicis has about 800 people in digital operations, largest in the country.
On mobile space, the company feels that mobile is still 18-24 months away from becoming a big part of the marketing spend of its clients.
“All agencies are experimenting and innovating with mobile, but the market is very small right now at Rs150 crore. As a result, it’s way below in terms of priority for clients. The mobile space is certainly going to be important in the future, but currently no one really has a big play here,” said Sastri.
Follow Ashish K Tiwari on twitter @ashishktiwari
Publicis Groupe, the world’s third-largest communications firm, has acquired Convonix, a marketing and consultancy firm, as part of its plan to beef up its digital presence in India.
The company plans to make more buyouts in the coming months.
Srikant Sastri, country chair, VivaKi India, a Publicis Groupe company, told DNA Money, “We have some more acquisitions in the pipeline. Hopefully, in the next 4-6 weeks we will have more announcements to make. Once completed, these will be aligned with some of our other agencies in the group.”
Last year Publicis acquired four companies – Indigo Consulting, Resultrix, iStrat and MarketGate.
Sastri said, “When we acquired Resultrix in August 2012, the company got aligned to Zenith Optimedia. Similarly, Convonix has now been aligned to Starcom MediaVest Group (SMG). This acquisition makes it a fairly formidable digital operation for SMG now.”
Post acquisition, Convonix will operate as SMG Convonix, with two market-facing brands: SMG Digital and Convonix.
Convonix offers a range of skills in the digital media space including search engine optimisation, search engine marketing, social media marketing, online reputation management, web analytics and conversion rate improvement.
It also recently developed a proprietary in-house brand monitoring and social listening platform called IrisTrack, which enables clients to gather market insight on their products and competitors and also engage customers online to improve their customer service.
Publicis has put together its strategy to build digital leadership about 18 months ago and was looking for both scale and full range of capabilities.
“What really attracted us was Convonix’s scale of 200-odd people breadth of skills/capabilities and quality of people,” said Sastri without disclosing financial details.
Though digital forms only Rs2,000 crore of the Rs30,000 crore Indian media market, the segment is one of the fastest growing at 30-35% annually.
“We have ourselves witnessed 98% growth in the digital space last year, which clearly indicates that it is a high growth market. Clients are increasingly focusing on and diverting a lot of spends in the digital space. We believe this is one area where we will achieve very quick leadership -- that’s an objective we have set for ourselves,” said Sastri.
Publicis has about 800 people in digital operations, largest in the country.
On mobile space, the company feels that mobile is still 18-24 months away from becoming a big part of the marketing spend of its clients.
“All agencies are experimenting and innovating with mobile, but the market is very small right now at Rs150 crore. As a result, it’s way below in terms of priority for clients. The mobile space is certainly going to be important in the future, but currently no one really has a big play here,” said Sastri.
Follow Ashish K Tiwari on twitter @ashishktiwari
JWT sees a game-changer in digital space
This Q&A first appeared in DNA Money edition on Monday, Mar 11, 2013.
Colvyn J Harris, chief executive officer, JWT, feels this is the best time for advertising agencies in India and that there is no other place he'd be at this point of time. In conversation, he spoke about the advertising agency's approach to business, organic and inorganic growth and business outlook for 2013. Edited excerpts...
Could you give us a sense of JWT’s business performance in the last few years?
The last three years have been very exciting and the rate of change of our growth has been much greater than it has been in say 2008 to 2009. In fact, I think India business is in a fabulous position when compared with say Europe, the US and the UK. There is no other place I’d rather be at this point of time than where we are currently. Unfortunately, we cannot share specific financial details, but I can tell you that we have had great recovery 2010 onward, clocking double-digit growth on a consistent basis. We have been able to get our growth trajectory in line with expectations and continue to look at a very steady growth in terms of topline.
What factors led to this growth?
While having our eyes on growth, we wanted it to come from certain business elements. This new changed focus as to how we look at our business is where we are seeing growth coming in. In the earlier days it was always the mainstream (print and television) advertising that ruled, however we are now focusing at a full 360 degree, seamless, end-to-end solution delivery to our clients. The approach is to put the brand/idea at the centre and do everything to deliver the idea effectively and efficiently. While the 90:10 ratio (between mainstream and digital) in terms of contribution to business growth still works, we are investing disproportionately in the digital world.
Was acquisition of Hungama part of the disproportionate investment exercise?
We were seeking to change from doing what the company always did to doing something very new. One of the approaches to do things differently was to try and digitise the entire company so that everyone starts to think digital. To bring in the change process we looked at the digital world in our search for a partner, which led to acquisition of Hungama.
We have invested significantly towards giving high quality digital exposure to our employees, and bringing Hungama into the fold is only helping make a significant impact in this space. With this acquisition, we have now created a full digital entity that may not be delivering in terms of revenues for now but it will certainly give us the experience and in-depth understanding of the digital space, thereby making ourselves future-ready. Anywhere in the global world a lot of decisions are being taken based on the digital space and we wanted to be ready to deliver the best for this new media space.
Are there more such opportunities in the pipeline?
Yes, we are looking at various spaces and will definitely pursue it.
Given the changing communications requirement of companies, are you looking to bring in new global intellectual property (IP) into the Indian market?
We have a global game plan in digital. There is a concept called ‘dot JWT’, which is basically a bouquet of large and admired digital companies that we’ve bought around the world. Based on the client’s needs in India, they can technically access the ‘dot JWT’ skills and capabilities in a seamless manner. A paid for service, the technology resides in the cloud and there is nothing stopping us from acquiring, accessing a global team to work on a client’s issue. If the client can dream it we will help deliver that dream.
How are the next 12 months looking like for JWT in terms of business?
While there is some anxiety on meeting the numbers, our ambition is growth and we are bullish about business.
Follow Ashish K Tiwari on twitter @ashishktiwari
Colvyn J Harris, chief executive officer, JWT, feels this is the best time for advertising agencies in India and that there is no other place he'd be at this point of time. In conversation, he spoke about the advertising agency's approach to business, organic and inorganic growth and business outlook for 2013. Edited excerpts...
Could you give us a sense of JWT’s business performance in the last few years?
The last three years have been very exciting and the rate of change of our growth has been much greater than it has been in say 2008 to 2009. In fact, I think India business is in a fabulous position when compared with say Europe, the US and the UK. There is no other place I’d rather be at this point of time than where we are currently. Unfortunately, we cannot share specific financial details, but I can tell you that we have had great recovery 2010 onward, clocking double-digit growth on a consistent basis. We have been able to get our growth trajectory in line with expectations and continue to look at a very steady growth in terms of topline.
What factors led to this growth?
While having our eyes on growth, we wanted it to come from certain business elements. This new changed focus as to how we look at our business is where we are seeing growth coming in. In the earlier days it was always the mainstream (print and television) advertising that ruled, however we are now focusing at a full 360 degree, seamless, end-to-end solution delivery to our clients. The approach is to put the brand/idea at the centre and do everything to deliver the idea effectively and efficiently. While the 90:10 ratio (between mainstream and digital) in terms of contribution to business growth still works, we are investing disproportionately in the digital world.
Was acquisition of Hungama part of the disproportionate investment exercise?
We were seeking to change from doing what the company always did to doing something very new. One of the approaches to do things differently was to try and digitise the entire company so that everyone starts to think digital. To bring in the change process we looked at the digital world in our search for a partner, which led to acquisition of Hungama.
We have invested significantly towards giving high quality digital exposure to our employees, and bringing Hungama into the fold is only helping make a significant impact in this space. With this acquisition, we have now created a full digital entity that may not be delivering in terms of revenues for now but it will certainly give us the experience and in-depth understanding of the digital space, thereby making ourselves future-ready. Anywhere in the global world a lot of decisions are being taken based on the digital space and we wanted to be ready to deliver the best for this new media space.
Are there more such opportunities in the pipeline?
Yes, we are looking at various spaces and will definitely pursue it.
Given the changing communications requirement of companies, are you looking to bring in new global intellectual property (IP) into the Indian market?
We have a global game plan in digital. There is a concept called ‘dot JWT’, which is basically a bouquet of large and admired digital companies that we’ve bought around the world. Based on the client’s needs in India, they can technically access the ‘dot JWT’ skills and capabilities in a seamless manner. A paid for service, the technology resides in the cloud and there is nothing stopping us from acquiring, accessing a global team to work on a client’s issue. If the client can dream it we will help deliver that dream.
How are the next 12 months looking like for JWT in terms of business?
While there is some anxiety on meeting the numbers, our ambition is growth and we are bullish about business.
Follow Ashish K Tiwari on twitter @ashishktiwari
Lintas expects uptick in client spends
This Q&A first appeared in DNA Money edition on Tuesday, Mar 5, 2013.
Joseph George, chief executive officer, Lowe Lintas & Partners, considers himself lucky to have handled a host of clients, categories and brands in the last over two decades. George’s first job was of a planner in 1990 when planning as a function did not exist in most agencies. “I remember, Arvind Sharma (chairman-India Subcontinent at Leo Burnett) was trying to launch something called Consumer Insight Based Strategy and I was among the first planners ever hired. In fact, I first came across the word consumer insight from him,” he reminisces. George spoke about his journey with the company, industry developments and future plans. Excerpts:
Working on Hindustan Unilever account must have been very exciting and insightful for you in terms of the overall business...
Yes it has. I’ve been hands-on with Unilever’s business for almost 18 years. It’s just that in the last couple of years I had to move into a larger role in the agency handling other things as well. While I’ve spent more time on HUL, there have been other interesting companies like Tanishq, Cadbury and, Johnson & Johnson.
After taking over as CEO early 2011, you went aggressively about increasing new business. Is that exercise over?
Not at all. My reason for doing it is very simple. I have been in this industry for long and I know the equity Lintas has in the market place. The equity is a lot larger than size of the company and I want to bridge that gap. We are not there yet, which is why it’s not getting over in a hurry and I will keep adding to it till we reach a certain point. That’s something I’m quite driven by, may be because I’ve been in this system and clearly know the brand’s potential. Many people think that only big clients come to us, that’s incorrect because we have made them big, and there are a few exceptions. You take any of our clients and I’ll be able tell you how many units they were selling before and after they came to us. In fact, most of clients we have started with us.
Brands these days appear to be trying their best to make a connection with the audience and act as catalysts in driving change...
A lot of brands are trying to bring about some positive change or make people think. Some of our communications for Tata Tea, Idea, and the recent Axis Bank commercial are being done to deliver that message of changing things for better. I was telling Balki (R Balakrishnan, chairman and chief creative officer, Lowe Lintas & Partners) the other day, if you look at most ads, they look like running a consumer promotion. He said, what do you mean by that? I said, with every ad we give the consumer something to think about for free. As in, Yeh ad hai... and we just leave a little thought...
In your observation, is this approach by brands a recent phenomenon?
It’s not that people have changed suddenly, but people’s orientation on how you want to proposition a brand has changed. There is a lot of difference when you are buying a brand and buying into a brand. When you buy into a brand, you want to buy everything that the brand stands for and which is why marketers try to infuse that little more about the brand than just the fact that it washes whitest or works the fastest. I see that happening more and more down the line especially with the advent of digital advertising that enables conversation and buzz around a brand. And in today’s competitive environment brands are creating a differentiation by working towards being more meaningful than the other one.
Any specific plans for 2013?
I am hoping that a lot of our clients who were holding back start spending a lot more. Our new business drive will continue with as much passion. We have some plans in our marketing services vertical that should unfold in the due course. We will expand our network by adding an office in the northern region. We will be focusing on some of the new divisions and re-focus on the existing verticals, for example public relations, which is doing well and I think we can do a lot better. We have film production business which should grow significantly as well. 2011 was a good year, 2012 was a bit of a disappointment, but I am hoping 2013 will be a much better year.
Is sports management an area of interest for you?
To me I think that’s the next big thing to happen. I think it offers a huge business potential. Getting into this area is inevitable because money in sports is only going to go up, it is not going to come down.
Follow Ashish K Tiwari on twitter @ashishktiwari
Joseph George, chief executive officer, Lowe Lintas & Partners, considers himself lucky to have handled a host of clients, categories and brands in the last over two decades. George’s first job was of a planner in 1990 when planning as a function did not exist in most agencies. “I remember, Arvind Sharma (chairman-India Subcontinent at Leo Burnett) was trying to launch something called Consumer Insight Based Strategy and I was among the first planners ever hired. In fact, I first came across the word consumer insight from him,” he reminisces. George spoke about his journey with the company, industry developments and future plans. Excerpts:
Working on Hindustan Unilever account must have been very exciting and insightful for you in terms of the overall business...
Yes it has. I’ve been hands-on with Unilever’s business for almost 18 years. It’s just that in the last couple of years I had to move into a larger role in the agency handling other things as well. While I’ve spent more time on HUL, there have been other interesting companies like Tanishq, Cadbury and, Johnson & Johnson.
After taking over as CEO early 2011, you went aggressively about increasing new business. Is that exercise over?
Not at all. My reason for doing it is very simple. I have been in this industry for long and I know the equity Lintas has in the market place. The equity is a lot larger than size of the company and I want to bridge that gap. We are not there yet, which is why it’s not getting over in a hurry and I will keep adding to it till we reach a certain point. That’s something I’m quite driven by, may be because I’ve been in this system and clearly know the brand’s potential. Many people think that only big clients come to us, that’s incorrect because we have made them big, and there are a few exceptions. You take any of our clients and I’ll be able tell you how many units they were selling before and after they came to us. In fact, most of clients we have started with us.
Brands these days appear to be trying their best to make a connection with the audience and act as catalysts in driving change...
A lot of brands are trying to bring about some positive change or make people think. Some of our communications for Tata Tea, Idea, and the recent Axis Bank commercial are being done to deliver that message of changing things for better. I was telling Balki (R Balakrishnan, chairman and chief creative officer, Lowe Lintas & Partners) the other day, if you look at most ads, they look like running a consumer promotion. He said, what do you mean by that? I said, with every ad we give the consumer something to think about for free. As in, Yeh ad hai... and we just leave a little thought...
In your observation, is this approach by brands a recent phenomenon?
It’s not that people have changed suddenly, but people’s orientation on how you want to proposition a brand has changed. There is a lot of difference when you are buying a brand and buying into a brand. When you buy into a brand, you want to buy everything that the brand stands for and which is why marketers try to infuse that little more about the brand than just the fact that it washes whitest or works the fastest. I see that happening more and more down the line especially with the advent of digital advertising that enables conversation and buzz around a brand. And in today’s competitive environment brands are creating a differentiation by working towards being more meaningful than the other one.
Any specific plans for 2013?
I am hoping that a lot of our clients who were holding back start spending a lot more. Our new business drive will continue with as much passion. We have some plans in our marketing services vertical that should unfold in the due course. We will expand our network by adding an office in the northern region. We will be focusing on some of the new divisions and re-focus on the existing verticals, for example public relations, which is doing well and I think we can do a lot better. We have film production business which should grow significantly as well. 2011 was a good year, 2012 was a bit of a disappointment, but I am hoping 2013 will be a much better year.
Is sports management an area of interest for you?
To me I think that’s the next big thing to happen. I think it offers a huge business potential. Getting into this area is inevitable because money in sports is only going to go up, it is not going to come down.
Follow Ashish K Tiwari on twitter @ashishktiwari
Subscribe to:
Posts (Atom)