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
A content writing, editing and content development professional, I work with some of the leading businesses houses, multinational companies, business, investment advisory, media and communications firms. Projects undertaken include thought leadership articles, people stories, marketing features, opinionated pieces, content for internal communications, microsite and intranet platforms, and newsletters for internal circulation among others.
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Sunday, 14 April 2013
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
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