Companies & Sectors
Creation of a coal regulator is not a panacea for our problems!

Function and powers of the coal regulator need to be specific and clearly stated, in order to prevent disputes arising out of interpretation of the rules laid down

It is gratifying to note the Supreme Court bench, headed Justice RM Lodha has issued orders to the government to come with a law to prevent Central Bureau of Investigation (CBI) work from external influence. CBI has been thus directed not to share its findings with anyone except its own concerned team members, and not to political bosses and other government officials. They expect such a law to be brought in the next 60 days or so, if possible.


Such a move would prevent officials from the Coal Ministry and others from the Prime Minister’s Office (PMO) to make changes in CBI reports in future, as has been hitherto. The CBI affidavit on this matter has brought to bear on the government that it is interfering in the work of CBI.  The new law will surely prevent this.


Effectively, this will make the independence of CBI complete.  However, CBI must also ensure that systems are in place to avoid any loopholes that may lead to "accidental" leakages


What is not clear, however, is how, when and to whom the CBI finally submit its findings (reports) on matters referred to it?  Also, if and when the Law is brought into effect, it will also need to specifically state, who and how matters can be referred to CBI in the first place?


In the meantime, yet another significant move has been made in relation to the issue of Coal Regulator, and the Law Ministry is expected to ready the final draft Bill shortly. No time-frame is mentioned in the press reports.


The Group of Ministers (GoM), headed by Finance Minister P Chidambaram announced that the proposed coal regulator will not have the power to decide the price of coal, as this is best left to the producer, who will be better qualified - in assessing or guaranteeing the caloric value - supply position and other related details.


Here again, the function and powers of the coal regulator need to be specific and clearly stated, in order to prevent disputes arising out of interpretation of the rules laid down.


At the moment, Coal India, being a monopolistic entity can and has been virtually ruling the industry in terms of pricing, issue of license to open or to close mines, but itself depends upon the Ministry of Environment and Forests (MOEF) for clearances for actual mining operation. Practically, in all cases, actual mining operations are then passed on to independent contractors!


Even a brief study of the industry will show that a lot of stumbling blocks are due to clearances that need to be obtained from both state governments and the MOEF, before mining operations can really commence.


The question of out of turn coal allocations made earlier is already under review in terms of cancellation of licenses, details of which are known to one and all.


The crux of the matter is that the country needs power and is sitting on one of the largest deposits of coal in the world, besides being the world's largest producer. There are too many organizations involved in dealing with this issue but with each trying to establish its importance in the process, everything else gets delayed.


Can we think in terms of one totally independent set of qualified people who will untangle the mystery of so many departments, organizations, committees and so on, and come out with a simple workable system?


Finally, for the position of coal regulator, we need to get someone suitable with no blemish. Can we think of someone like Justice Santosh Hegde from Karnataka who was the Lokayukta chief?


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)




4 years ago

Unless the basic mentality of being honest and maintaining the concept of 'Dharma' in all public dealings,all these moves would fail before the cunning and ruthless politicians. Congress being veterans in these shady dealings would win hands down. Others would emulate them since it would mean having a level playing ground ! Only God can help us the citizens.

Will the emergence of ‘Hybrid Consumers’ lead to decline of mid-market segment?

Changes in consumer behaviour in the developed world will have implications on product development and marketing as well as the way consumers shop. Mid-market segment is expected to decline by 10 percentage points from current levels by 2017

The Research and Advisory division of Rabobank International has released an insightful report on consumer behaviour which could have implications on the future of advertising, product development and the way consumers shop in the developed world. According to the report, the emergence of the so called ‘hybrid consumer’ is here to stay. A ‘hybrid consumer’ is one saves money to buy essential and low-value items while at the same time buys premium items. It is the products in the mid-market segment that will get affected as the hybrid consumer does not perceive quality or value in them. Rabobank expects this category of products to decline in the developed world over the next four years or so. The report states: “Rabobank expects the mid-market of standard, non-distinct food products to decline in the coming years as hybrid consumers increasingly opt for either basic, value products or more expensive, higher quality products at the premium end of the product spectrum. While extreme ends of the market are set to grow by high single-digit numbers, we expect the mid-market to decline by one percent to two percent per annum through 2017.”

The share of the market of the value and the premium segments will rise while the mid-market segment will fall. The figure below illustrates this.

Rabobank cites three factors for the emergence of the ‘hybrid consumer’ namely: socio-economic, retail strategies and macro-economic.

One of the significant aspects of changing socio-economic conditions has been women empowerment and the rise of millenials. Women empowerment has significant implications as they increasingly decide household purchases and earn more at work. The 2nd class of consumers, the millenials, are now empowered with social media tools to make more discretionary purchases. Rabobank believes that those born in the 80s and 90s will shape how products of all types are consumed in the next few years.

The second factor for the rise of hybrid consumer is changing nature of retail itself, which is no longer interested in homogeneous products sold through brick & mortar stores. With the rise of the internet and social media (which diminishes cost of marketing), there is onus on differentiation and specialisation. This has given a rise to premium (as well as value) private labels who also do not need expensive real estate sell products. Rabobank states: “In our view, online grocery shopping will mainly be driven by click and collect sales with the shopper picking up their groceries at a local establishment after selecting an d paying for them online.”

The third and final driver leading towards emergence of hybrid-consumers is the challenging macro-economic environment in the devloped world. As purses tighten, consumers trade down heavily on essential goods such as grocery, saving money in the process, and use some of that to buy premium products. This phenomenon has also led to rise in heavy discount stores. The report states: “We believe existing hybrid consumption patterns have been strengthened on the back of the decline in real household incomes, leading to more pronounced dualisation of the market in recent years as consumers make more choices based on budgetary constraints.”

The biggest casuality of this phenomenon, according to Rabobank, is the mid-market segment which is thriving so well in developing markets. Rabobank expects the market share of the mid-market segment to decline from 60% to 50%.

Retailers and marketers who are present in the mid-market segment will have to rethink their strategies by either going up the value chain or the other way. Strategies also include differentiation, shift towards selling and marketing over the internet, precise segmentation of consumers, continued investment in brands as well as domination of entire category that includes both premium and value segment. Rewiring internal processes is also a must, from cost-cutting to consolidation of portfolios to realigning the supply chain.

The chart below shows the implied growth rate of categories in both America and Western Europe.


Centre asks states to procure sugar for ration shops from open market

Following the the partial de-control of sugar sector, the union government would not be able to supply sugar to states at subsidised rates. It however, agreed to pay Rs18.50 per kg to state government for selling sugar at subsidised rates in ration shops

The union government has asked state governments to immediately start buying sugar from the open market to ensure supply to ration cardholders as its stock would be over next month.


Food Minister KV Thomas, in a letter to state chief ministers, said that the centre has allocated sugar quota up to May 2013 and "it is imperative that the states take immediate action for procurement for future requirements."


The minister also asked states to "initiate steps immediately to ensure that the supply of sugar through PDS is not affected during the period of transition and thereafter."


Last month, the Centre has partially decontrolled this sector and mills are no longer obligated to supply sugar to the Centre for the public distribution system (PDS). The union government has scrapped the levy sugar mechanism, under which mills were obligated to supply 10% of their production at a cheaper rate for ration shops.


Now, the state governments are required to procure sugar from the open market through a transparent system. The Indian government will bear the difference between the ex-mill price of Rs32 per kg and retail sugar price of PDS at Rs13.50 per kg.


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