Companies & Sectors
ASSOCHAM forecast of wine industry growth exaggerated, says wine expert

The industry body has estimated a growth of 35% by 2012 which has been contested as based on conflicting and unrealistic figures

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has forecast that the wine industry is likely to grow at around 35% by 2012, but industry experts think this expectation is exaggerated and is based on wrong figures for the past couple of years.

Subhash Arora, a wine expert who also runs the Indian Wine Academy, told Moneylife, "The ASSOCHAM report is nothing but a conflicting, confusing and confounding report." He said, "The figures are conflicting with unrealistic and unlikely growth rate projection with a very pessimistic estimate for 2008."

The ASSOCHAM report, titled "Emerging Industry trends in Indian Wine Market", states that the Indian wine market (in value terms) stood at Rs800 crore as of 2008 and is likely to touch the Rs2,700 crore mark by the end of 2012. It also says that wine consumption in India is likely to reach around 14.7 million litres (in volume terms) by the end of 2012, from around 4.6 million litres in 2008, thus registering a growth of 35%.

Mr Arora, writes on his website Delwine: "There seems to be a basic lacuna in the figures. Whatever the figures for 2008 that have been assumed, 2009 was a disaster and 2010 barely reached the level of 2009. The current year has shown buoyancy and 30-35% annual increase is most likely in 2011 and 2012. But if the figures of 2010 are assumed to be close to 2008, it would be far-fetched to expect an almost three and a half times growth during the next two years."

"The report on sales value also does not clarify whether the figures are first point sales by the producers and importers and whether they include customs duty, excise duty, VAT and other government taxes, or (whether) they are estimates based simply on the MRP of wine sold, or are ex-factory prices," Mr Arora explains.

According to the ASSOCHAM report, "around 65% of the total volume of wine consumed in India is produced locally in states like Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu and the Punjab, as these regions are booming with a number of wineries." But Mr Arora points out that "the study fails to name Goa, which produces over 200,000 cases (1.8 million litres) of low-end fortified wine, a majority of which is consumed within Goa."

DS Rawal, general secretary of ASSOCHAM, while releasing the report said, "Favourable government policies, suitable tax structures, rising disposable income and a growth in the tourism sector are certain reasons for the burgeoning Indian wine market. Besides, the rapidly changing lifestyle and drinking habits of people (many from the middle and higher middle classes no longer prefer hard drinks) especially the younger lot, are paving the way for growth of the wine industry.

Mr Arora, who only prefers wine over anything else, jokingly says, "It is the most profound statement that people from the middle and higher middle classes no longer prefer hard drinks. If that is the case, we would be consuming over 50 million cases, not litres, annually. Such a category of people is very minuscule, though it has added to the growth of the wine industry. But to say such a thing is a purely wishful statement and a distant dream."

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TRAI to float paper on mobile value-added services in April

In January this year, the telecom regulator had sought views of mobile operators on growth opportunities in value-added services, including policy framework and support infrastructure to usher in inclusive growth

New Delhi: The Telecom Regulatory Authority of India (TRAI) today said it will bring out a consultation paper on mobile value-added services (MVAS) next month and will give its recommendations by the end of June, reports PTI.

“TRAI will come out with a consultation paper on MVAS in April and by the end of June, TRAI will give recommendations on value-added services,” TRAI chairman JS Sarma said at a FICCI event here.

In January this year, the telecom regulator had sought views of mobile operators on growth opportunities in value-added services, including policy framework and support infrastructure to usher in inclusive growth.

TRAI, in association with industry body Assocham, had also released a study paper, titled ‘Mobile Value-Added Services (MVAS)—A vehicle to usher in inclusive growth and bridge the digital divide’ on which TRAI had sought comments from various service operators in February this year.

Besides, Mr Sarma said the recommendations on equipment manufacturing policy will be out by the end of this week.

TRAI had in January this year floated a consultation paper on the telecom infrastructure policy, and which after taking in stakeholders’ views, closed on 21st February.

The authority had started the process for coming up with recommendations on encouraging telecom equipment manufacturing in the country from 6 May 2010.

Mr Sarma added that the recommendations on ‘green telecom’ will come out next week. The recommendations will deliberate on ways to check carbon emissions, promote energy-efficient technologies and manage e-waste in view of rapid growth in the sector.
 

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Oil firms push Air India for roadmap on repayment of past dues

State-owned oil marketing companies have put Air India on cash-and-carry since December. Air India buys jet fuel worth Rs18.5 crore per day from the three state oil firms, but it pays only Rs13.5 crore. However, Air India sought discounts similar to the ones given to private airlines

State-owned oil marketing companies have put Air India on cash-and-carry since December. Air India buys jet fuel worth Rs18.5 crore per day from the three state oil firms, but it pays only Rs13.5 crore. However, Air India sought discounts similar to the ones given to private airlines

New Delhi: State-run oil firms have demanded that cash-strapped Air India set up a roadmap to clear over Rs2,400 crore in past fuel bills and make upfront payment for all future purchases of aviation turbine fuel (ATF), reports PTI.

Air India has defaulted on payment of about Rs2,000 crore in jet fuel bills since last year and the total outstanding now amounts to over Rs2,400 crore after including Rs400 crore in interest, industry officials said.

“Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation already incur huge losses on selling petrol, diesel, domestic LPG and kerosene way below their production cost and to expect them to sell ATF at subsidised rates is not acceptable,” an official said.

Oil firms have put Air India on cash-and-carry since December. Air India buys jet fuel worth Rs18.5 crore per day from the three state oil firms, but it pays only Rs13.5 crore. This led the oil firms to threaten to stop supplies of ATF beyond what Air India pays for.

At a meeting called by cabinet secretary KM Chandrasekhar last week to resolve the payment impasse, Air India sought discounts similar to the ones given to private airlines.

Oil companies give a Rs1,600-Rs1,800 per kilolitre (kl) discount to private airlines on promise of assured payment.

After adding finance charges for a 90-day credit period, the discount comes to Rs3,600 per kl.

“Even if this discount is stretched to Rs5,000 per kl, the Rs18.5 crore per day fuel bill will not become Rs13.5 crore. After including some more concessions, the fuel bill at best will come down to Rs17 crore a day, a far-cry from the Rs13.5 crore paying capacity of Air India,” he said.

Officials said Air India was discussing only the payments for future ATF purchases and there was no word on how the state carrier will clear the past outstanding.

“Air India talks of getting the same discounts as private airlines, but does it know that ATF purchases by airlines such as Jet Airways and Kingfisher Airlines are covered by a bank guarantee?” an official asked.

Both Jet Airways and Kingfisher have brought down their outstanding to manageable levels and have provided bank guarantees to cover against any default.

IOC, HPCL and BPCL sell petrol, which the government had freed from its control in June last year, at a discount of about Rs4.50 a litre to its imported cost. In addition, they sell diesel at a loss of Rs15.79 a litre or Rs283 crore per day.

Furthermore, the three retailers are losing Rs24.74 per litre of kerosene and Rs297.80 per 14.2-kg LPG cylinder.

The three firms are losing a cumulative Rs432 crore in revenue every day on selling diesel, domestic LPG and kerosene below cost, officials said, adding that for the full fiscal, the three are projected to lose Rs78,061 crore in revenues.
 

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COMMENTS

Shadi Katyal

6 years ago

This is the beauty of being PSU as all oil and Air India re chips of sme block. If AirIndia was buying from private oil companies, it would have been shut down long ago which will come sooner or later as all 4 parties cannot keep showing losses. We are used to such losses as their is no accountability being PSU,
One has to ask simple one question that how come private air industry is making profit while AirIndia is loosing Crores every day and so how is she going to pay the oil bill?
Now we have another problem of not fully qualifide pilots and thus safety of paying public has been compromised.Air India doesn't have foreign traveling passengers as compared to all foreign carriers carrying Indian such passengers because of lack of courtesy and service. It is India CHALTA HAI BHAI

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