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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    NABARD recommends Rs100-crore restructuring package for Maharashtra’s wine industry

    Report, made on the instruction of agriculture minister, is being studied by the government; wine producers’ association is optimistic about implementation

    The wine industry in Maharashtra which is reeling under debt, is hopeful of receiving a bailout from the government, following the recommendation of a Rs100-crore restructuring package by the National Bank for Agriculture and Rural Development (NABARD).

    NABARD has made its report on the directions of Union agriculture minister Sharad Pawar and Subodh Kant Sahay, who was then minister for food processing, in the context of the liquidity crunch facing the wine industry.

    Several meetings were held between NABARD officials and state-level bank committees to assess the situation, and the report focuses on the financial requirements of the industry. The All India Wine Producers' Association (AIWPA) is optimistic that the proposed recommendations will be implemented.

    An official source said, "The draft report addressing the restructuring package for the wine industry in Maharashtra has been submitted to the government of India."

    Jagdish Holkar, president, AIWPA, told Moneylife, "We have received the draft report prepared by NABARD on the wine industry in Maharashtra. It is a draft report and everything is under consideration. The proposals mainly address the measures for the sustainability and stability of the industry. Accordingly, our association along with NABARD had asked for a Rs100-crore package of interest subvention at 4% and debt restructuring of the small-size wineries and grape growers. This has been considered in the draft report."

    The association is optimistic over the implementation of proposals made by NABARD. "The wine industry is a forward linkage to agricultural production and prevailing high interest rates are unaffordable for us. Earlier, due to unpaid loans, banks were not ready to provide us fresh loans, but with these recommendations we are hopeful of further loan assistance," Mr Holkar said.

    As per the draft report, working capital loans, term loans, working demand loans and grape growers' loan dues would be part of the interest subvention plan.

    Mr Holkar also told Moneylife that "the state chief minister has spoken to the association and he has assured us that after studying the report the role of state and centre will be decided."

    When contacted for his response over the expected assistance from the government, Subhash Arora, a wine expert who also runs the Indian Wine Academy, said, "Any help from any one to the Maharashtra wine industry is always welcome. But it should be a one-off thing and not be taken time and again."

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    COMMENTS

    Amar Hanmantrao Mane

    9 years ago





    But What is about wine grape grower farmer & farmers Loan

    vijay k ingle

    9 years ago

    till date the nabard is not directly marketing the schemes,all the schems are coming through bankers only.today i am running the agriclinic & agribusiness but till date no any banker has given money for this scheme .the turnover is 6600000 in year 2010-11.is really possible to the common person to set up the winery ? please reply.

    R Balakrishnan

    9 years ago

    Throwing good money after bad. Wine industry is dodo. When will we realise that we cannot make great wine. The Indage and the Sulas, we tolerate or praise simply becos we do not know better.
    The promoters of these units (Indage etc) are worth billions. The cos seem to be in continuous restructuring.

    The grand Expressway robbery: How much toll is IRB allowed to collect and who monitors this?

    From 1st April, those using the Pune-Mumbai Expressway will have to pay increased toll charges, which the IRB has been permitted to increase periodically. In the seven years since it took charge, the company has more than recovered the Rs918 crore it had invested initially, but it will continue to collect the toll for another eight years. So who decided this? And who is responsible to check the implementation?

    While the toll charges for travelling on the Pune-Mumbai Expressway (now called Yashwantrao Chavan Expressway) will increase by from 1st April 18%, that is from Rs140 to Rs165 if you are travelling by car, the total absence of transparency in the toll collection system has again aroused suspicion and anger among commuters. In fact, people from across the country are puzzled as to why toll charges on highways/expressways are increased time and again and why they hardly ever have any authentic information on how much is the annual toll collection of the private agency who has been either awarded the contract on the basis of build-operate-transfer (BOT), or has been given the contract for operation and maintenance of the particular expressway or national highway after it is built.

    In the case of the Pune-Mumbai Expressway, Ideal Road Builders (IRB) was awarded the contract of operation, maintenance and toll collection of the e-way (and NH-IV) for the period between 2004 and 2019. Between April 2004 and September 2010, it has already collected Rs949.45 crore by way of toll. The IRB paid an advance of Rs918 crore at the time of the contract agreement in 2004, to be recovered by it through toll collection by March 2019 when the contract terminates. The amount of recovery would include not only its capital investment and interest on it (the Rs918 crore), but also expenses towards operation and maintenance of the e-way. Funnily, there is no total figure of how much it should recover to ensure that it does not make a loss and that it is assured profits, but IRB has been allowed to keep on collecting toll till the end of its contract, with a hike in the toll charges at a regular interval of three years.

    I used Section 4 of the Right to Information Act (RTI) between Friday, 25th March 2011 and Monday, 28th March 2011 to request for the inspection of files of the contract agreement between the Maharashtra State Road Development Corporation (MSRDC) and IRB, and I also asked for the year-wise data of the amount of toll collected from April 2004 to February 2011. I visited the MSRDC office in Pune for this.

    As per the statement of IRB which it has sent to MSRDC, it has collected Rs949.45 crore up to September 2010. (See table for year-wise collection details.) But what about the authenticity of the toll figures supplied by IRB? Does MSRDC monitor the collections? The MSRDC officials threw their hands up saying that they were not responsible for this. However, I pointed out to them that this was in total contradiction to the information available on their website, www.msrdc.org, under 'duties and responsibilities of its toll monitoring unit' which states that MSRDC is responsible for: monitoring the toll receipts; scrutinizing claims of various toll collecting agencies and put for approval by competent authority; taking action against defaulters as per contract conditions; corresponding with regional offices regarding toll collection work and; giving replies under the Right to Information Act.


    toll collection -

    Worse, as per the contract agreement which I procured during inspection of files on Monday, IRB has been provided with a chart for increment of toll charges, every three years, up to 2019, when its contract terminates. (In fact, MSRDC is to lease out operation and maintenance of the expressway up to 2030. Fresh tenders or renewal of IRB's contract will come up after 2019.) Hence, as per the chart that is a part of the contract document, a car owner who drives on the expressway will have to pay Rs195 between 1 April 2014 and 31 March 2017 and Rs230 from 1 April 2017 to 31st March 2020. (See chart, "Schedule of revision of toll rates on the Pune-Mumbai Expressway") Isn't this arbitrary? Could I see any reference document that allow for these increments? AP Abrol, executive engineer of MSRDC, Pune, explained, "IRB had taken a big risk in investing the initial Rs918 crore, as at that time the expressway was hardly patronised by people, and it almost seemed it would be deserted and MSRDC would incur huge losses. Hence, IRB was given the benefit of the risk factor.'' IRB keeps 100% revenue from the toll charges.


    vinita - expressway - toll rates -

    The ambiguity in the volume and period of toll collection not only for the expressway, but for several national highways across the length and breadth of the country, has led former senior police official SM Mushrif to seek legal intervention, after efforts to procure information under the RTI Act failed. The public interest litigation (PIL) filed by him in 2006 is pending before the Bombay High Court.

    When Mr Mushrif asked through the RTI, about the rule under which toll collection is done, the MSRDC provided him a copy of a central government notification dated 5 May 2005 (issued by the Ministry of Shipping, Road Transport and Highways) that states: "As per Rule 3 of  the National Highways (collection of fees by any person for the use of section of national highways/permanent bridge/temporary bridge on National Highways) nothwithstanding anything contained in the Act'', the agency is "entitled to collect and retain fees at such rate, for services or benefits rendered by him as the central government may by notification in the official gazette, specify having regard to the expenditure involved in building, maintenance, management and operation of such national highway, interest on the capital invested, reasonable return, the volume of traffic and the period of such agreement.'' This rule applies to the highway departments of state governments too.

    Similarly, Mr Mushrif stated that, "as per Rule 6 'verification of fee collection' sub-rule 1: it should be the responsibility of the person (the MSRDC in this case)…to strictly ensure that all fees leviable are levied, collected and correctly maintained. The person shall submit certified audited copies of the statements of fee collection at specified intervals as required under the notification for collection under sub-rule 2 of Rule 3. The auditor shall be appointed by the government. And as per sub-rule 2: The central government shall have the right to check the fee collection at any or at all times through their designated officers.''

    Interestingly, the MSRDC has appointed an independent consultant for monitoring toll collection. However, the engineer of this consultancy company who was present while I was conducting inspection of files told me that, "We monitor everything else, like operation and maintenance, but do not look into the revenue from toll collection.'' Why? Government officials would not like to talk about this aspect, but it reveals favouritism towards this particular private agency.

    A couple of months back, social reformer and activist Anna Hazare threatened to launch an agitation against illegal collection of toll. This was after a high-level committee of PWD chief engineers recommended that 31 out of 165 toll nakas in the state should be abolished as they were set up in blatant violation of norms prescribed by the Centre. Under pressure, the state government closed down 20 of them. For the record, Maharashtra has 165 toll nakas; 28 of which belong to the National Highways Authority of India; 61 belong to the MSRDC and 56 to the Public Works Department.

    Vinita Deshmukh is a senior editor, author and convenor of Pune Metro Jagruti Abhiyaan. She can be reached at [email protected]

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    COMMENTS

    dnyaneshwar

    8 years ago

    hey vinita you are doing a great job.i have been commenting on the same issue on different wesites and forums but there is no result.please keep up the good work.....and the last thing i can say is tolls that have recovered the project cost must be shut down.and other thing the toll amount should be reduced every year instead of increasing it....kiti type cha tax bharaichaa aankhin...

    Pravin M Dali

    9 years ago

    Sir,

    I also obtained contract copy & other information on the basis of CAG,s report,
    where in
    1.satelite monitoring of traffic (Nos of
    vehicles passing through)
    2.Planting of tree alongwith both the
    sides of EX Way
    & other conditions are not followed by the contracor/MSRDC

    3.There is loss of Rs.918/- cr to state by under esitmating of No of traffic & other estmates.

    Pl see CAG,S available on website.
    Make the agency to plant trees not the bushes as it is done at Pune Nasik High way.

    Thanks

    Pravin M Dali.

    Sanjay

    9 years ago

    One way to limit the toll is to decide at teh time of initial contract the - the payback period, the amount to be collected every year & estimated no of vehicles using the toll road. This no. of vehicles should be used to estimate the amount of toll to be collected. So for eg. It was decided based on payback calculation that the toll period is 10 yrs & every year Rs 1Cr is needed & the units paying toll are 1L. So Toll will be Rs 10 per unit. At end of year, if Toll collected is Rs 1.5Cr, then next year, amount to be collected is only Rs 0.5Cr & no of units have increased to 1.25L. So Toll should be reduced to Rs 4. If units are less than Toll can increase. Idea should be the Total Toll collected per year is maintained constant. This will keep Toll rates reasonable & will not allow undue enrichment to the Toll contractor.

    RAKESH DEV

    9 years ago

    it is realy a good job u people are doing by using RTI Act properly for a common cause.

    citizenindia

    9 years ago

    should keep on writing till the rules are tightened. making good roads at what cost? was there a transparent bidding process? you can dictate NPV analysis to a CA and he will certify . all of satyam and reliance books are certified! so much for NPV analysis and certifications. VGF and such rules have been created to provide a window of loot to the bidder. The mumbai pune route was always going to be profitable. one doesnt need to be einstien to get it. just like mahajan knew that 100cr indians need mobiles or one knows that delhi - agra , bangalore mysore etc are profitable . pawar , the biggest VC of india, needs to be dealt with. He has his hands everywher. the day law catches up with him, we'd know law exists in india!

    REPLY

    Prakash

    In Reply to citizenindia 9 years ago

    Your hope in the last sentence will remain a hope forever. Unfortunately for India, Pawar has reached a stage where he is untouchable.

    zubin

    9 years ago

    Please move on, moneylife has been chasing the same story since last 10 years. Please write some fresh stories.

    REPLY

    sucheta Dalal

    In Reply to zubin 9 years ago

    Ha... this should prove that the writer is from IRB. Indeed, i have been writing about the Expressway for the past 10 years, but that includes my stint in the Indian Express.
    Moneylife is just 5 years old.

    As for IRB, i must mention that i have followed this beautiful expressway built by R C Sinha. Over the past few years, under IRB there is nothing but mismanagement. The fence that was built to allow high speed travel has broken in many places and never replaced.
    There are buffaloes endangering traffic and people breaching the boundaries to cross the road. All this causes drivers to lose control and leads to accidents.
    So what is IRB's solution? To extract another Rs 3000 crore for a bypass.
    The lack of monitoring is outrageous. Hats off to Vinita for getting the numbers. We will continue writing even if it upsets you. No question of moving on.

    Vinita Deshmukh

    In Reply to sucheta Dalal 9 years ago

    Zubin: Even after 10 years, the expressway is shoddily maintained with dangerously rising number of accidents. Now, the toll controversy. Hence, much more needs to be written about till the powers-that-be come out of their cosy cocoon from where they are fooling the public and making it pay without getting the basic services that is the right of every commuter. As long as the commuters face inconvenience and are made vulnerable to needless accidents, expressway should be written about as it has relevance in terms of news and vital public issue!

    Sunil

    In Reply to Vinita Deshmukh 9 years ago

    @vinita: Brilliant work to expose vested interests, networked extortion, shared loot and brazen bribery..real face of un-regulated P-P-P !
    Keep up the good work..

    Badri Narayan Baldawa

    9 years ago

    These adhoc increases are without reasons except probably again a bribe to to some authority. Authority signing the increase should be grilled to justify, thus going to the root of the problems, which would mainly be corruption. These type of increases need to be protested till the increases are rolled back and matters should be investigated

    Vivek

    9 years ago

    The author should do an objective IRR / FCFF / NPV analysis before coming out with such reports. If the author is unable to do such analysis, or get hold of such analysis, then the author must do the readers a favour, and refrain from subjecting them to the author's nonsensical reviews.

    REPLY

    shamit shahani

    In Reply to Vivek 9 years ago

    This is a load of rubbish. This showpiece expressway is the only one to allow high speed travel.
    The money is long recovered and IRB gets away with bleeding the people of Mumbai and Pune, because it has all the politicians in its pocket.
    Where is the great Nitin Gadkari who wrote a book and claimed credit for the Expressway?
    Will he justify increase in toll when IRB has already collected so much?
    IF IRB has the honesty, let it introduce smart cards to allow quick movement and better monitoring of the money it makes.
    And let that money go to its shareholders.
    Dont fool people just because you manage to collect awards in return for sponsorships to television channels.

    Vinita Deshmukh

    In Reply to shamit shahani 9 years ago

    Documents procured through RTI show that MSRDC has deliberately looked the other side for seven long years, allowing the IRB to take toll from people without providing proper report card to MSRDC and the latter in turn has not touched the issue of monitoring and auditing toll collection figures. Hence, this issue all about facts than `nonsensical reviews' and such facts do make some people uncomfortable

    Shadi Katyal

    9 years ago

    We have lived with the poorest roads but since those were freeways and damaged only our cars, we didn't complain. Now when we have got a private enterprise who is running these roads and asking for Toll we have nothing but complaints.
    Are the roads not properly maintained and off course in order to expand the company will need funds and with inflation in the nation,why cant private toll roads ask for more fee????
    We need better roads and must calculate the cost of repaing cars or paying few more rupees as toll.

    REPLY

    Prem Bajaj

    In Reply to Shadi Katyal 9 years ago

    As a matter of fact, IRB did not build the road, but instead took the risk much later - after completion and after witnessing the potential of increased traffic. While a toll collector has due right to earn returns on funds invested, and for duties performed - there cannot be an arbitrary value attached to same. In fact the condition of the expressway has not improved in any manner to claim additional charges of upto 18% (or every 3 years). Just by painting lane markers is not any reason to claim upkeep. besides as an infrastructure project - expected returns are calculated over a minimum life of 20-25 years in public interest. As I learn, the entire capital funds are already collected - so where is the ammortisation schedule......thats one way to know how the returns are calculated, over what period of time requiring frequent toll increases, and how was the income stream earned distributed on its books..

    subramaniam s

    In Reply to Shadi Katyal 9 years ago

    Sir, I suggest you check facts. IRB did not build this fantastic road. It was a guy called R C Sinha. I read about him right here in a section called pathbreakers. An amazing man with great achievement.
    IRB is only extorting money and bribing politicians. You please read about Sinha and dont wrongly give credit to someone else. A google search of this site would help.

    Atul Kumthekar

    9 years ago

    Anna Hazare may not be too wrong.

    Narendra Doshi

    9 years ago

    It is well known (Courtsey Moneylife's previous research articles when its share price was manipulated over almost one year) that IRB is a politically very well backed company. One should not hence get surprised at the outcome of the RTI facts. All the same, THIS is not what should continue for the future, endlessly.
    Also, we had several murder, loot cases especially of IT employees on the same highway. Does this also form part of operation & maintenance or NOT? Whether ANY sort of COMPENSATION has come to the individuals or their families is not known ?
    A brilliant exposure by Vinita .

    H V Kumar

    9 years ago

    Only public activism and transparency can help contain this loot by private contractors running toll roads and charging extortionist tolls under the garb of anti-public interest government policies. regardless of capital cost recovery and actual costs of operation. How can public infrastructure be priced through a tendering method where Govt makes maximum profits and not the other way round - public pays least costs? Why is there no toll tariff regulatory commission? Why are the MSRDC toll regimes so different from the NHAI ones? What should the public do to fight just extortion?

    Babubhai Vaghela Ahmedabad 9427608632

    9 years ago

    Following may answer the query as Gazette Notification of 1997 that allowed Toll Tax on Perpetuity basis is removed. Please upload on Ministry of Road Transport & Highways Website - Removal of Perpetuity Clause - Extraordinary Gazette Notification Part II - Section 3 - Sub-Section (I) dated 12th January 2011..
    http://groups.google.com/group/riseindia...

    JANAK S KESHRIYA

    9 years ago

    its a great highway robbery by these people & most interesting part is government is supporting this kind of robberyyyyyyyyyyy

    Rahul

    9 years ago

    This is regards to widening of Pune-Satara highway from 4 lanes to 6 lanes along with service lanes. I understand the budget for this is Rs.1600 Cr. The contract has been awarded to Reliance Infrastructure.
    Even before starting the work, which should have commenced by June 2010 the tolls have increased and another increase is expected by April 1st 2011.
    Till date no work on this entire stretch has started.
    Also, just by adding just 2 lanes for 110 kms, how did the budget of Rs. 1600 cr was arrived, when entire 6 lane Mumbai-Pune expressway in concrete was built with a budget of Rs. 800 cr.
    Reliance has always been known to be corrupt and they have zero experience in building highways, how was this contract even awarded to them?
    Dear Vinita madam, this is a major issue than the Pune-Mumbai expressway, hope you look into it and investigate the matter as it is under implementation and results can be beneficial to everyone.

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