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Thursday, September 23, 2021

DoT gearing up for another mega spectrum Sale | Economic Times

September 23, 2021 0
DoT gearing up for another mega spectrum Sale | Economic Times
The telecom department has set the ball rolling for another mega spectrum sale by sending a reference to the sector regulator, seeking fresh base prices for the gamut of airwave bands, including key ones like 700 MHz, 3.3-3.6 GHz and the coveted millimeter waves such as 26 GHz and 28 GHz that support 5G technology. The Department of Telecommunications (DoT) has also sought fresh base prices for 4G airwave bands such as 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz, two people aware of the matter said. But with the time usually taken for the consultation process, sources say it may be tough to meet government's auction timeline of January-February, 2022.The reference comes at a time when the government has acknowledged that high spectrum pricing is a prime reason behind the acute financial stress in the debt-laden telecom industry, and is also open to price rationalisation in public interest. In its reference, the department has sought recommendations from Telecom Regulatory Authority of India (Trai) on the terms of reference for the next auction and the quantum of airwaves proposed to be auctioned, one of the persons cited told ET."We have received a detailed reference from DoT about 2-3 days back, seeking our recommendations on spectrum matters and pricing...there are a number of spectrum bands involved, and the Authority is currently examining the reference and will respond to the government," Trai secretary V Raghunandan told ET. Sector analysts expect the potential annual cash flow relief stemming from the four-year moratorium allowed on statutory payouts to give Bharti Airtel and Reliance Jio the financial headroom to participate aggressively in the next spectrum auction. They, though, don't expect Vodafone Idea (Vi) to participate as strongly if it's unable to close its much delayed Rs 25,000-crore fundraise.Another official said that Trai will need to seek additional details from the DoT, before proceeding with its analysis and starting the consultation process.After a DoT reference, Trai conducts a process which includes a four-week period for stakeholders to submit their views after a consultation paper is floated, followed by two weeks for counter comments. Then Trai holds open-house discussions before arriving at its recommendations. The whole process usually takes about four to five months at least.The recommendations are then vetted by DoT's high-powered wing, the Digital Communications Commission (DCC), which may or may not accept the suggestions. A final decision on spectrum pricing is taken by the Cabinet, based on the DCC's recommendations.After that, the DoT issues a Notice Inviting Applications (NIA) which contains the final auction rules, and the sale usually takes place within 45 days from when that document is issued.Industry executives and analysts say that success of the next auction-that will see the debut of 5G airwaves-hinges on the lowering of base price of airwaves. The last recommended base price of Rs 492 crore for a unit of 5G spectrum in the 3.3-3.6 Ghz band has been deemed too expensive by telcos that defeats the business case of rolling out the next-generation technology in India. India's Big 3 telcos-Reliance Jio, Bharti Airtel and Vodafone Idea-have been pushing the government to auction the super-efficient mmWave bands, without which, they claim, 5G services won't be affordable for consumers in India. They have also urged the sector regulator to reset the base price of airwaves in the coveted but pricey 700 Mhz band.

View: Need for automobile Dealers' Protection Act | Economic Times

September 23, 2021 0
View: Need for automobile Dealers' Protection Act | Economic Times
Much anxiety has followed the announcement of Ford India's 'restructuring' announcement on September 9 - ceasing production of its cars and SUVs, and selling vehicles till stocks last. This clearly hints at an exit strategy - something Ford has denied - leaving the future of about 170 Ford dealers, with a combined investment of about ₹2,000 crore, and jobs of about 40,000 employees in the air.It is unfortunate that, so far, there has been no focus on the plight of the dealer in Ford's external representations. Instead, the management has been insisting that dealers first sign a non-disclosure agreement (NDA) before any compensation package is worked out. Such coercive effort is the wrong approach. Up until five months ago, Ford was actually appointing new dealers in India.Unfortunately, this situation is not unique to Ford. There have been multiple and abrupt exits by foreign automobile original equipment manufacturers (OEMs) over the last four years: General Motors (GM) in 2017, MAN Truck and Bus in 2018, United Motors Lohia in 2019 and Harley-Davidson in 2020. The bone of contention is not these companies' decision to exit, but rather the manner of their exit - with little-to-no notice to dealers or customers, leaving both in the lurch.The Indian automobile industry is a ₹8.2 lakh crore industry, and its turnover constitutes 6.4% of overall GDP, 20% of industrial GDP and 35% of manufacturing GDP. It also contributes 15% of total GDP collection, while providing employment, directly and indirectly, to about 3.7 crore individuals. Of this, automobile dealers employ about 45 lakh people, comprising the front-end of this sector.Auto dealerships are capital-intensive businesses, and it takes 4-5 years for dealers to break even. But dealership agreements in India do not have a standardised term, and certain agreements have tenures as low as one year. Also, some OEMs operate only under letters of intent (LoI), which have no legal backing, leaving dealers without recourse in cases of dispute. Due to shorter-duration agreements and uncertain renewal processes, dealers are often unable to generate a decent return on investment, with their problems being further compounded by sudden company exits.The primary enabler for such exits is the lack of balanced contractual arrangements between OEMs and dealers. Most dealerships in India are MSMEs, and their contractual arrangements with these large corporations have historically been tilted in the favour of the latter. What is surprising is that the same OEMs offer much better contracts to their dealers in many international jurisdictions such as the US, under which contracts can be terminated, with repurchase and indemnification obligations clearly spelt out.Poor treatment of dealers is not limited to exits and termination. Indian dealers have little-to-no say in how sales plans are made and targets are set. Tata Motors was recently at the receiving end of the Competition Commission of India's admonishment for sending drafts of stock orders to dealers with instructions to reproduce the order under the dealers' letterheads.Second, the lack of comprehensive repurchase obligations under Indian contracts, where repurchase is only a preferential right for OEMs, creates huge problems for dealers, as they are often stuck with extra stock when OEMs decide to exit the market. Third, dealers are often made party to consumer complaints even though the liability may lie with the OEM, due to lack of clarity in indemnity provisions.Fourth, procurement and selling of accessories (spare parts, aesthetic additions, music systems, etc) and consumables (lubricants, paints, etc) are tightly controlled by OEMs in India, with dealers required to buy such items from either only the OEMs or only through a very short list of vendors. Such undue restrictions increase dealer costs by preventing them from seeking the best deals available in the market. The burden of these costs is ultimately borne by consumers.Many fly-by-night OEMs in the growing electric vehicle (EV) market are exiting frequently, with no adequate legal protections for aggrieved dealers. While Ford's announcement is only the latest manifestation of an old problem, it highlights the urgency to protect the interests of auto dealers and their investments. Steps must be taken towards safeguarding the interests of dealers.GoI should consider the introduction of an automobile Dealers' Protection Act, as suggested by the parliamentary committee on industry in its report, 'Downturn in Automobile Sector: Its Impact and Measures for Revival' Not only will this benefit dealers and consumers, but it will also be vital for the health of the sector at large.Vinkesh Gulati is president, Federation of Automobile Dealers Associations (FADA)

Unconditional access to network likely for power cos | Economic Times

September 23, 2021 0
Unconditional access to network likely for power cos | Economic Times
India is considering an overhaul of its electricity transmission planning to give power companies nationwide unconditional access to the network. The government also proposes to allow states to trade their excess transmission capacities with other states, a senior government official said.At present, generating companies apply for long-term access based on their supply tie-ups, while medium-term and short-term transmission access is acquired within the available margins. Based on the quantum of applications, the power transmission addition is planned.The government now proposes to shift to ‘General Network Access’ (GNA), which seeks to provide right to transmission access and flexibility to all generators and drawing entities, the official said.The move is aimed at encouraging investments in the generation and transmission sectors, while moving towards a predominant market-determined pricing structure.“The GNA will provide transmission access to companies without any riders. Any company registered for transmission access will have the right access to the transmission network without the need to specify the injection point and drawing point,” he said.The Union power ministry is working on GNA rules, which are likely to be issued soon after vetting by the law ministry. While the rules propose to change the electricity transmission planning system, power regulator Central Electricity Regulatory Commission (CERC) would issue the detailed regulations, the official said. Under the proposed GNA, power transmission capacity addition planning will be based on projec tions made by states. GNA capacity of one state will be allowed to be traded with another on mutually agreed terms. The official said power plants will get all India access to the grid. In a major deviation from the present system of taking transmission access, power plants will not have to specify their target beneficiaries, giving complete flexibility in sales.“The rules ensure reliable transmission access to power utilities irrespective of their power purchase contracts or tie-ups. These also empower state power distribution and transmission companies to determine their transmission requirements and build them. Also, states will be able to purchase electricity from short term and medium term contracts and optimise their power purchase costs. The rules will enable the country to develop deeper power markets,” the official said.

How FOPL could help India fight against an epidemic | Economic Times

September 23, 2021 0
How FOPL could help India fight against an epidemic | Economic Times
It took seven years and a pandemic for India’s processed foods industry, consumer groups and the food safety regulator to agree on introducing the front-of-pack labelling (FOPL) that will list contents of fat, sugar and salt in packaged food products. Implementation of such a complementary public health strategy a decade ago could have slowed down India’s rapid ascent on the global diabetes and hypertension charts. Nevertheless, if implemented now, India is slated to join 10 other countries that have mandatory FOPL.Consumers in India are buying processed foods for sheer convenience or novelty value. These products, in turn, are shaping their health and lifestyle — often for the worse. Though it will still take a few quarters before FOPL regulations are implemented, it is an important measure to provide consumers the much-needed information to make an informed choice. Earlier this month, India’s top medical experts urged immediate action on FOPL to address the country’s obesity pandemic and surge in the non-communicable diseases. The introduction of explicit warnings through FOPL is also likely to prompt celebrities to be more conscientious about the products they endorse, and companies to become responsible about what they produce and market.Neither endorser nor consumer seems to be too perturbed about product harmfulness. To be sure, information about ingredients in, say, a drink is provided, although in small, hard-to-read fonts at the back or a side panel of the product. An impactful FOPL communication holds the potential to influence endorsement agreements and consumer choice.With the FOPL regime kicking in, food companies can also be compelled to change tack and launch healthier products. The pandemic has already prompted companies to align themselves with health, hygiene, wellness, immunity and nutrition. From tweaking the marketing or packaging to introducing new lines of products or fortifying foods with the essential dietary supplements, companies have gone the extra mile to woo the consumer. FOPL will add more work on the plate for companies, but it can be worth it.However, changing the product mix and introducing healthier products in the portfolio may not be easy for companies with popular, established and profitable product portfolios. For instance, in May this year, Nestlé, the world’s largest food company, revealed that more than 60% of its international products do not meet ‘recognised definition of health’, and that some of its categories and products will never be healthy, no matter how much the company renovates.Labels need to be universally applied on all processed food products, for all consumers, health-aware or otherwise. The simplicity and impactful design of the labels will increase their effectiveness and produce desired outcomes.Introducing FOPL should be among the series of measures for India’s food safety regulators. Selling of junk food in and around school premises needs to be restrained. Stringent enforcement of the food safety and quality laws is the need of the hour.Last month, the Maharashtra state Food and Drug Administration (FDA) revealed that several leading brands of honey marketed in India had failed to meet quality standards, and had even tested positive for adulterants that could pose health risks. Such instances underscore the need for a strong, active and prompt consumer redressal mechanism.If products are wrongly labelled, do not meet notified standards or are harmful, consumers need access to a prompt, hassle-free and an affordable redressal mechanism. Lack of such a mechanism remains the Achilles heel of food safety regulations in India. Till then, it is a work in progress.

Wednesday, September 22, 2021

Zee-Sony deal to benefits shareholders: R Gopalan | Economic Times

September 22, 2021 0
Zee-Sony deal to benefits shareholders: R Gopalan | Economic Times
The deal has been worked out initially based on certain understanding and certain numbers. During the due diligence period, all synergy issues will be addressed. And then we will have to recommend to our shareholders, and they will have to recommend to their shareholders and both set of shareholders have to agree. It is a process, it will take time, says R Gopalan, Chairman, Zee Entertainment. Can you explain the contours of the deal with Sony and its objectives?Both Zee and Sony have linear area operations in India. Both have got OTT and production studios. There is a whole lot of infrastructure. Now if it is combined, possibly there are areas where their strengths can be taken into account. Obviously the synergy between the two can expand the reach, get an increased market share and may result in more revenues. Obviously that will be a good deal for both set of shareholders. All these factors will be taken into account. We are now going to do a due diligence study within the stipulated time and then we will have to go back to the shareholders with our findings and the shareholders will have to approve it if they think it is a good deal for them. Do you have any concerns about shareholders’ approval considering that one of the large shareholders, Invesco, has had doubts about the board and about the continuation of Mr Goenka. Do you think that this new deal changes the context?I do not know. I do not have a clear answer to what you are saying at this point in time but I can tell you that the market has reacted very enthusiastically to the news and it is a little funny when one says Mr Goenka should not be there and another says yes he should be there for five years. It is probably the perception of the company and who is a good person and has delivered results and increased shareholder value. One needs to see how the shareholders are going to look into all this and then take a call. But do you see any kind of challenge in getting the shareholders on board with this decision?It is too early to say. If the benefits of this particular step is recognised or if in due diligence they turn out to be true, there should not be any issue. The shareholders today have reacted based on the fact that probably the due diligence would be okay. Once those things are identified appropriately and if at that time, the shareholders see value in this merger, they will certainly take what is beneficial to them. It is for them to see how they perceive this deal to be in their interest. Let us see. What about the synergies between the Zee and Sony as they are strong in different spaces but there are some elements of overlap like two OTT platforms -- Zee5 and Sony LIV, two production companies in the movie space. Do you envision some streamlining?These are the matters which certainly will have to come into focus. Obviously the shareholder value has to be increased. These operations must be made more efficient which would mean synergising the operations. A lot of things have to be looked into. The deal has been worked out initially based on certain understanding and certain numbers. During the due diligence period, all these issues will certainly be addressed. And then we will have to recommend to our shareholders, and they will have to recommend to their shareholders and both set of shareholders have to agree. So it is a process, it will take time.ET Now: Would the process and the actual execution have to include rationalising costs including employee costs?R Gopalan: It is too early to say. It is possible that with the existing employees there could be better turnout of events, programmes. The number can get increased which can result in good revenue and therefore the cost of having all of them can also get neutralised or rationalisation can also take place. All I am saying is that it is too early to make a guess. All these things will be looked at in a very proper way so there is maximisation of benefits of the shareholders. What will be the name of the new entity? Will you retain the brand name of Zee or of Sony?Zee is merging with Sony. That is what the deal is.So the brand name of Sony stays and Zee does not?I do not know whether there has been any discussion on that or not. All I can tell you is that there is a merger of Zee with Sony and that will be the correct thing to do. Sony’s name obviously will be there. Let us not jump the gun at this point in time. It is only today we have done the whole thing and I hope there is still time to look into all this.