For a long time, telecom consumers needed clarity on whether they would need to go in for the lengthy process of arbitration to settle a dispute with a service provider. However, a recent judgement delivered by a consumer court makes it clear that users can go to consumer forums to settle their grievances
Telephone users may no longer need to go through the lengthy process of arbitration to settle a problem with a service provider. They can now directly approach the consumer courts. A recent judgement given by the consumer disputes redressal forum in Mumbai has upheld the maintainability of telecom cases in consumer forums, while taking into consideration the issues arising out of a recent Supreme Court judgment.
In a judgement dated 31 December 2009, SP Mahajan, president, consumer disputes redressal forum, central Mumbai district and SS Patil, member, ruled that complaints regarding telephone services can be filed before the consumer forum and need not be referred to arbitration.
“The order of the central Mumbai district forum comes as a major relief to telephone users all over the country and would help consumers to seek redress from consumer courts rather than be thrown to the mercy of arbitrators,” said Achintya Mukherjee, honorary joint secretary, Bombay Telephone Users’ Association.
The forum heard a case filed by the Consumer Welfare Association (CWA) against Bharti Airtel Ltd for disconnecting the phone of the complainant and compelling him to make payment for a disputed bill.
The forum raised the point whether a telecom complaint was maintainable in the consumer courts in light of the Supreme Court’s judgement in the case of the general manager (telecom) versus M Krishnan. In this case, the court held that Section 7-B of the Indian Telegraph Act 1885 provides a special remedy for a dispute between a telegraph authority and the user by an arbitrator appointed by the Union government. As such, the consumer forum would have no jurisdiction on such a dispute.
However, the forum concurred with the view of the complainant that the Indian Telegraph Act spoke of disputes between the ‘telegraph authority’ and subscribers.
“The current telecom service providers—whether government or private—are not covered under that definition and are not telegraph authorities, they are merely licensees,” said well-known consumer activist, Jehangir Gai.
Consumer advocacy groups (CAGs) all over the country have been agitated over the lack of clarity on the part of the Union government stand on whether consumer courts were barred from taking up telecom cases by the judgement of the Supreme Court.
BTUA on behalf of the CAGs had sought the stand of the Telecom Regulatory Authority of India (TRAI), the consumer affairs department and the Union government on the matter. BTUA has been told that the opinions of the Attorney General of India and the ministry of justice have been sought.
Telecom consumer cases include dropped calls, over-charging of customers, unwanted value-added charges and false calls. These cases involve mobile providers, internet service providers, broadband service providers, DTH operators, cable TV operators and landline service providers.
Organized retail is just 5% of the total retail business in India compared to more than 20% in China and 80% in US of the overall market, pointing to a huge potential for growth
Is organised retail coming back with a bang? A quick check at some of the malls shows that footfalls have increased dramatically. According to a recent research report by Goldman Sachs, one of the most dominant themes of 2010 is that urbanisation will lead to rapid spread of organised retailing. Goldman estimates that 100 million people will move to cities in this decade, and a whopping 650 million may urbanise by 2050. Urban households are on the rise, especially in the middle-income category which is growing at 14%; the high income category recorded a 24.1% CAGR (Compounded Annual Growth Rate) between the years FY06-FY10. Organised retail is 5% of the retail business in India compared to more than 20% in China and 80% in the US of the overall market, pointing to a huge potential for growth.
An important factor for the revival in fortunes of malls is that rentals have come down after the financial crisis. Rentals formed 40% of total costs. Landlords are now more open to revenue-sharing in rental agreements, as reported by Moneylife Digital earlier (see here).
The macro picture is supported by micro details. Aditya Birla Retail Ltd (ABRL), India’s second biggest supermarket operator, is planning to start three additional megastores over the next three months at Mumbai, National Capital Region and Hyderabad.
“We are completely astounded by the footfalls in some of our hyper-markets in Bengaluru and Indore which have out-performed the competition. In the next three months, we have three more hyper-markets coming up at Thane, NCR (Rohini) and Hyderabad (Saroornagar),” Thomas Varghese, chief executive, Aditya Birla Retail Ltd, told Moneylife.
“We plan to put up 6-10 hyper-markets within this financial year and our aim is to put up 10-12 hyper-markets every year. Currently, we have five hyper markets,” he added. ABRL is planning to ramp up its total mall area to 10 million sq ft over the next five-six years.
Meanwhile, Shopper’s Stop plans to add six-eight new stores in 2010, adding 400,000 sq ft, for Rs100 crore. It plans to add up 15 new supermarkets in the next three years. Currently, it has 28 stores spanning across 1.8 million sq ft. The Future Group is also planning to add 10-12 new stores for Rs400 crore with an addition of 30 million sq ft compared to 13 million sq ft currently. Spencer’s Retail is hoping to add at least 12 large-sized formats in 2010 for Rs100 crore. The Wal-Mart and Bharti Retail joint venture has plans to open 10-15 hypermarkets by 2015. It launched its first store in May 2009.
According to Goldman Sachs, urban consumers are moving from basic necessities to more discretionary goods like durables, education, fuel, medical and clothing in the year recording a growth of 14% on a CAGR basis between the years FY00-FY07. The report predicts that wage growth in 2010 is likely to be one of the highest in India, supporting consumption demand which has increased from 6% in 2009 to more than 9% in 2010 compared to just 3% y-o-y (year on year) growth in Singapore.
Rural Electrification Corp Ltd (REC) is planning a follow-on public issue to raise funds. P Uma Shankar, CMD, REC, speaks to Moneylife’s Amritha Pillay about the company’s quarterly results and future plans
Amritha Pillay (ML): During the third quarter, your net profit rose by 49% to Rs474 crore. What were the factors responsible for this performance?
P Uma Shankar (PUS): The results have been good for two reasons—our disbursements have been really good and we also managed to keep borrowing costs down. During the third quarter, disbursements have gone up by 20% from the corresponding period last year. Therefore, good volumes and spread were the reasons for this performance.
ML: You mentioned that disbursements have gone up by 20%, resulting in good volumes. Since REC is a state-run entity, do you think it would have helped you in winning more projects from the government as private players were less privileged?
PUS: No, our being a state-run company didn’t figure in our winning more projects. In fact, there are more state-run power entities than private players. Over the past two years, we have been winning power projects that were sanctioned later. These power projects help us to boost our project pipeline and now it is maturing resulting in good volumes. Also, since we have been funding power projects for a long time, the experience and expertise we gained is no match for other players in the industry. Based on the projects in the pipeline, we will have more power projects coming up for disbursements over the next few quarters.
ML: REC is planning to buy stakes in coal mines and also in merchant power plants. But your main business has been transmission and distribution (T&D) and power finance. So what is the reason for this diversification?
PUS: No doubt, T&D is still our main business but since the past six to seven years, we started taking interest in large-scale power generation projects. In June 2002, REC’s mandate was expanded to all generation projects without limit on size or location from 25MW capacity. After studying T&D and power generation, we found out that you need to have a good recovery mechanism in place before financing such projects in order to minimise the risks.
Also, since we are soon coming out with a follow-on-public offer, I will not comment on the stake buying issue.
ML: What are the new, emerging trends in the power business? What does the future hold for this business in India?
PUS: So far, state-run utilities have been installing transmission lines, but I expect more private companies entering into this segment. Recently, the Indian government had asked REC to identify private bidders for constructing two transmission projects, and we did the job. We expect an increase in this kind of activity in the future. This type of arrangement also gives us another stream of revenue. Apart from recovering the project cost, we can also levy a success fee.
The kind of momentum we are witnessing in the power sector will help us to grow further. In addition, our two subsidiaries in the T&D segment will also help us to collect other fee-based revenues.