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Monday,
June 9, 2003, Chandigarh, India
  
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Cheap
Chinese toys flood market Children
love designs, parents price Huda’s
loot and scoot FIIs net
buyers in equities |
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Pidilite
unveils new range of art materials
Bullish
trend may continue
CAS:
consumers should form groups
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Cheap Chinese toys flood market I
was about to buy an expensive branded electronic game for my nephew in a toy shop in up-market Greater Kailash in South Delhi. My wife suggested we first explore more middle-class Lajpat Nagar. It proved sensible. We procured a similar unbranded Chinese product, and saved a few hundred rupees on the purchase! This Chinese product is now my nephew’s favourite toy. It compares well in quality with higher-priced branded games. Thanks to cheap Chinese imports, children and their parents are rejoicing at plummeting toy prices — especially in the past two years. But India’s toy manufacturers are in serious trouble, and with them two million workers. Innumerable toy-manufacturing units have shut down after the flood of cheap toys from China. “Our industry is facing a major crisis,” moaned Mr Vishnu Swaroop Agarwal, President of the Toy Association of India. “More than 50 per cent of Indian toy manufacturers have now turned into importers and distributors of imported toys.” A recent study by the PHDCII added there was a strong likelihood India’s toy manufacturers would, sooner rather than later, turn into toy importers. Plastic or stuffed Chinese toys are cheaper and rich in variety. It is hard to compete with them. India’s toy production is around Rs 550 crore in the organised sector, and Rs 1,250 crore in the unorganised sector. The global toy market is estimated at Rs 3,50,000 crore. The Indian toy retail industry is only Rs 1500 crore. Nearly 60 per cent of India’s toy industry is located in and around Delhi, and 30 per cent in the Mumbai region. The rest is scattered through Saharanpur and Moradabad in Uttar Pradesh, Mysore, and Jammu and Kashmir. But all of it is in serious trouble. The threat is less from the import of branded toys than cheaper, better quality, unbranded ones clandestinely pushed into the Indian market from China, Taiwan and South Korea. These offer tremendous variety, duplicating designs from the US and Europe. Unbranded toys do not adhere to guidelines — such as weights and measures — mandatory for indigenous toy companies. Many do not print the addresses of manufacturers/importers, the maximum retail price (MRP) or manufacture date, making it impossible to check under-invoicing and dumping. The April 2001 removal of Quantitative Restrictions under the WTO regime also made impossible the monitoring of alleged toy dumping by some countries, particularly China. The Toy Association of India (TAI) suggested more attention to quality, infrastructure and cost to meet the external challenge posed to the toy industry. The TAI along with the Government of India and UNIDO launched a National Programme in 2000 to cater to two major clusters in Delhi and Mumbai. These two clusters account for almost 90 per cent of small and tiny toy units in the country. Under this programme, over 100 acres were allotted for setting up a “toy city” at Noida. The idea was to provide all assistance and guidance to Indian manufacturers to make toys of international standard that could compete in the global market. Recent reports suggest that the project is not progressing well. With a majority of manufacturers finding it easier to become distributors of imported toys, the idea seemed doomed from the beginning. What is needed today is a strategy to boost the morale of the remaining manufacturers in India. This would call for rationalisation of the tax structure, a sincere effort to improve the industry’s infrastructure and quality of toys. Without government incentives and support, this primarily small-scale industry would wither away and die, and with it the livelihood of so many from the weaker sections of society. Grassroots Feature Network
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Children love designs, parents price CHANDIGARH: The Chinese manufacturers are slowly making inroads in the Indian market. Like some other consumer products, the Indian toys are now out from the shelves of shopkeepers. The inexpensive Chinese toys have replaced them fully. The Indian middle class, which used to think Leo and other branded toys out of their range, are now buying these Chinese toys. The wholesaler and retailers here claim that at least 80 per cent of the toys market has been taken over by the Chinese producers. They say the Indian manufacturers who initially tried to face them by lowering their price and
focusing on quality, are now selling the Chinese toys themselves. A large number of Indian manufacturers have already closed their units. Mr Rajiv Kumar Kurera of Jagdamba Traders, said, ‘‘The Chinese are offering a large variety of battery operated toys at less than half the price of Indian toys. One could purchase a big toy car ‘Next Power’ for just Rs 80 that would not be available for even Rs 250 from the local
manufacturers. A simple mobile toy which would be sold by Indian manufacturer for Rs 20 to Rs 25 per piece would be sold for just Rs 10 to Rs 12 by their Chinese counterparts.’’ He said in fact, there is no competition at all. The quality of plastic toys is so good that Indian counterparts cannot even dream off. He felt that unlike other goods the toys market was price sensitive where the parents would buy cheaper product feeling that child would ultimately break it. So the quality was not an issue. The Chinese, he added, had always been sensitive towards market demands and had been customising their products to meet the requirements. “For instance, they started flooding the Indian markets not just with cute little dolls, but ones that would sing hit numbers from Bollywood blockbusters. Mr Pradeep Sharma, another leading trader in sector market, claimed that sector 22 market has developed as a large scale whole sale market of Chinese toys in the region. It is now catering to the needs of about 300 local retailers besides retailers from the surrounding towns. He said, supply from China is arranged by some big dealers in the Industrial area and from Delhi. The traders claimed that the entry of the Chinese toys since early 2000 has totally changed the domestic market. Ms Rajita Basu, who had come to the market to buy toys for her daughter claimed that the school children were asking for these toys due to additional features and better look. Mr Sharma said the reason behind the phenomenal success of these toys is not hard to comprehend. The goods are inexpensive, within reach of a common man. They look attractive and are “durable” also. Little wonder, displayed in the shelves are Baby toys, telephones, scooter, dancing dolls, metal fighter, roadster car, batman, and spiderman. He said, ‘‘The demand for these toys is increasing at an exponential rate. The low price of toys have helped expand the market to the semi-urban and rural areas as well.’’ Regarding competition from Indian manufacturers, Mr Sunil Bansal, another trader said,‘‘ Some of the Indian producers have cut down their costs as well. But given the higher labour and input costs, high rate of taxation and transport costs, they would not be able to survive for too long. Only a small portion of the upper segment is buying their products now.’’
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Huda’s loot and scoot Haryana Urban Development Authority (Huda) was created, way back in the seventies, with a laudable aim to provide housing sites on easy terms. It cut hundreds of sectors in big, medium and small towns, all over the state, and sold lakhs of plots to the prospective house-builders. But over the years, Huda deviated from its declared aim, turned a Nelson’s eye to the public woes and adopted a lackadaisical policy in a flurry to loot and scoot the unwary plot-holders in contravention of the statutory obligations. The Huda Act, put on the Statute Book in 1977, envisaged that this premier housing agency in the public sector would work on “no profit, no loss” basis. Obviously, public welfare was its primary objective. Instead it has since gone “commercial” to the detriment of public interest. For instance, Section 17 of the Huda Act provides that if a plot-holder does not construct his house within a stipulated period (two or three years), the plot can be resumed by Huda and money refunded. But in contravention of the Huda Act, the authorities that be decided to levy an extension fee at the rate of Rs 75 per square metre per year on the vacant plots. In this way Huda has been collecting crores of rupees every year from the plot-holders by way of extension fee on the vacant plots. Since the plot-holders did not fear resumption proceedings under Section 17 of the Act, they preferred not to construct the plots and retained them for speculation purpose. This eventually led to the soaring of the property rates, besides hampering the growth and development of the Urban Estates. The Realtors also cashed on the situation, and artificially increased the property rates by booking the vacant plots for speculation. Yet another draconian policy, being practised by Huda, is proliferating public anguish. Here is a case in point. Shubh Kumar, a resident of Sukhdev Vihar, Delhi, was allotted plot No. 1950, measuring 160 sq. metres in Sector 65 in Faridabad at the rate of Rs 1,679 per sq. metre, to be paid in six equated yearly instalments. Mr Kumar paid the first instalment of Rs 27,110 on December 13, 2000. Subsequently, Huda increased the price by Rs 1,422 per sq. metre (the total price adding up to Rs 3101 per sq. metre), following the enhanced compensation paid to the land owners. Mr Kumar deposited the second instalment of Rs 40,663 on November 26, 2001. Again, on March 7, 2003, he was asked to pay an additional amount of about Rs 2.30 lakh. Unable to pay such a hefty price, much above the prevailing land price in a developed sector in Faridabad. Shubh Kumar surrendered his plot to Huda, and requested for the refund of Rs 67,773, he had paid. But strangely enough, Huda refunded only 16,098 to him, deducting Rs 51,675 under said draconian rule. This is certainly an outright loot. This is not a case in isolation. Thousands of plot-holders in Haryana in general, and in Faridabad in particular, have been fleeced thus of crores of rupees by Huda. As per the administrative policy presently obtained, Huda deducted 10 per cent of the total amount, and refunded the balance 90 per cent to one who surrendered his plot. Accordingly, Mr Shubh Kumar should have been refunded over Rs 60,000 instead of Rs 16,098. Obviously, Huda arbitrarily calculated 10 per cent of the total cost of the plot, roughly Rs 5 lakh, at the rate of Rs 3,101 per sq. metre, though not paid by the plot-holder. And this has been done in spite of the fact that there has been no semblance of development in Sectors 64 and 65. Even the interest was pocketed by Huda. In a significant order, passed a couple of years ago, the Punjab and Haryana High Court had directed that
HUDA or PUDA could not charge interest or penalise the plot-holders unless it fulfilled its obligation of fully developing the sector as promised. Huda has been acting arbitrarily in spite of the High Court orders and the statutory provisions and extorting money from the plot-holders on one pretext or the other. There is no gainsaying the fact the Huda has expanded into a Leviathan of an organisation. It has become too unwieldy to keep a check on rampant corruption and dismal functioning. Bhrashtachr has become a sishtachar. For every errand, be it the possession of a plot, approval of the building plan, or procuring the completion/occupation certificate, the plot-holder has to shell out ‘speed money’. The motto in a Huda office is “aye ho to kya laye ho; jao gey to kya deke jayo ge”. Notwithstanding a swarm of Law Officers, Huda invariably loses cases of enhanced compensation filed by the land owners. The reasons are obvious. For decades, the plot-holders are subjected to repeated doses of enhanced price and penal interest. Before housing facilities are provided to the public at large, Huda needs to set its own house in order, and act lawfully and transparently.
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FIIs net buyers in equities
Mumbai, June 8 Mutual funds netted inflows at Rs 7.89 crore in the equity market while remaining net sellers in debt at Rs 86.25 crore during the period under review, according to data available with SEBI
here. PTI
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Pidilite unveils new range of art materials Chandigarh, June 8 He said the company was encouraging ladies and children to learn art, painting and craft with the aid of educational kits costing in the range of Rs 49 to Rs 200. For this, he said, “We have launched a series of 6 educational books and 6 sets of VCDs on glass, fabric and acrylic painting and sticker making besides candle making kits.” He claimed that the company had more than 50 per cent share in the Rs 50 crore annual domestic market of these hobby products. Mr Bhupesh Malhotra, Regional Sales Manager of the company claimed that this educational aids and kits would help the educational institutions to teach modern art to their students. The company was also providing financial and material aid, he said, to the NGOs and individuals engaged in the teaching of hobby arts. About 100 hobby teachers from different institutions and about 50 dealers attended the programme. Ms Priyanka Singh, Centre Head, National Institute of Fashion Design also attended the function.
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Bullish trend may continue Arrival of the monsoon in the northeast and even a part of south, a firm trend in the US markets and sustained buying by foreign institutional investors (FIIs) has led the recovery in the Indian bourses. The Bombay Stock Exchange Sensitive Index (Sensex) closed at its 15 week high of 3,303.24, gaining close to 3.8 per cent, for the last week. The S&P CNX Nifty index gained 39.60 to close the week at 1,046.40. There was broad-based buying in the markets. Blue-chip stocks led the rally, with pivotals like Infosys Technologies. Hindustan Lever, Reliance Industries, ITC, Hero Honda, State Bank of India, Telco, Dr Reddy’s Laboratories and Ranbaxy Laboratories adding gains in the indices. FMCG The biggest beneficiary of a normal monsoon would be the FMCG sector. Most of the GMCG
companies derive a part their revenues from rural India which is largely agrarian. The monsoon plays a big role in determining the fortunes of this vast section of agriculture-dependent Indian populace and, thereby rural demand. Hindustan Lever Ltd (HLL) is going to be the major gainer. It derives nearly half of its revenue from the rural markets. HLL, is already on a recovery trail, gained 2.6 per cent more for the week to Rs 161.80 Gillette, another FMCG stock, still looks good for a long-term investment. The valuations of the company’s stock are rich and likely to remain so, given the undisputed market leadership and near-term growth prospects of its sector.
Maruti-IPO Maruti Udyog Ltd has fixed a floor price of Rs 115 per share for its initial public offering (IPO) to divest the government’s 25 per cent equity stake in the auto major through the book building route. The IPO is slated to open on June 12 and close on June 19. The current offer is for the sale of 7,22,43,300 equity shares of face value Rs 5 each. This offer will constitute 25 per cent of fully diluted post offer paid up capital of the company. The IPO at the minimum share price of Rs 115 appears expensive on its current earnings of Rs 5.1 per share. However, taking a futuristic view — the benefits expected from reduction in costs and productivity — improvement will result in a sharp earning jump over the next few years. Therefore investor can subscribe to this issue with a long-term perspective.
Forecast The undertone of the market remains optimistic on account of steady inflows from FTIs and hopes of a normal monsoon this year. The sensex, which closed at 3303, faces a strong resistance at 3318. A break out above 3318 will take the Sensex close to 3500 levels. However, the rally in the market has been too rapid and one should book profit in stocks at every rise. In the nutshell, temporary corrections notwithstanding, the market will remain in the bullish grip in the next month or so.
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CAS: consumers should form groups The developments in the last one week on the CAS (Conditional Access System) front show that consumer resistance to CAS (particularly the way it was being implemented) has had a positive effect. It has forced the union government to take several steps that would make CAS acceptable to consumers. Besides cutting the import duty on the set-top boxes (STB) that would be required to view the pay channels and thereby bringing down their price, the government has got the Multi-system operators (MSO) and cable operators to offer them on reasonable rent. They will of course collect a refundable deposit (government should ensure that they pay interest on the deposit). The government has also announced that now 70 free to air channels would be available to consumers for Rs 72 (plus entertainment and service tax). Free to air channels do not require a set-top-box. The government has also asked the broadcasters to declare the channels that are paid and their price, by June15 so that consumers can decide whether or not to opt for a set-top box. The government is also issuing a notification to ensure that consumers have a real choice in terms of pay channels. If properly implemented, CAS should allow consumers who would like to opt for the set-top-box, the choice of picking only those pay channels that they want at reasonable prices and making their own bouquets. In other words, CAS should force broadcasters to unbundle their bouquets and give the consumer the choice of picking individual channels. Whether this becomes a reality depends on how the government goes about enforcing this. Consumer resistance to any move that does not give them real choice is equally important. According to the Ministry of Information and Broadcasting, efforts are also being made to ensure that the set-top-boxes strictly conform to the quality standards formulated by the Bureau of Indian Standards . The government will also ensure that MSOs /cable operators take responsibility for the after-sales service of the STBs and consumers who surrender the box will get back their deposits without any delay. The government should also ensure that cable operators charge for only one connection per household. Since every TV set needs its own set top box, households with additional sets (who would not like to buy another set-top-box) should receive at least free-to-air channels without extra charge. However in the present CAS regime, the government has not provided for a complaint redress mechanism to deal with consumer complaints against cable operators, MSOs and broadcasters and this is a very big lacuna. A consumer complaint resolution mechanism would not only help in resolving innumerable complaints that are bound to arise during the implementation of CAS, but other cable television related disputes too. So this is a demand that consumers should raise with the government. The government has also failed to address the issue of quality or performance standards for cable operators/MSOs. Today, one of the biggest problems that consumers in India face vis-à-vis cable operators/MSOs is the poor quality of service. In fact a recent survey conducted by a consumer organization-Consumer Unity and Trust Society- in Kolkata, Mumbai, New Delhi, Jaipur, Bangalore and Chennai, showed that 54 per cent of cable TV subscribers were dissatisfied with the quality of service rendered by cable operators. But unfortunately, neither the Cable Television Networks (Regulation) Act, 1995, nor the Amendment Act talks of the quality of service that ought to be provided to consumers. There is another problem that consumers in India face- in most localities, only one operator provides cable service and in the absence of competition, consumers are at the mercy of the cable operator, who, they often complain, does not redress their complaints, does not even give receipts for money received, or deposits collected. There is also no effective mechanism to prevent restrictive, monopolistic and other anti-consumer practices by cable operators, MSOs and broadcasters. The ideal way of introducing CAS would have been through an independent regulator, with a clear mandate to empower the consumer, involve them in all decision-making processes , protect their interests and ensure that they have a fair deal in respect of quality, price and choice. In the absence of a regulator, consumer groups, particularly residents associations will have to play a crucial role in ensuring that their interests are protected. Today, in a bid to break consumer resistance, the government is making all possible efforts to make CAS consumer friendly. But in order to ensure that it continues to do so, consumers should come together, form associations and play a crucial role in decision making- be it with regard to the price at which cable operators provide free to air channels, the rent on STBs, their after-sales-service, or the cost of a pay channel. From July 14, the government is introducing CAS in the four metros. I must say that those who do not live in the four metros enjoy a certain advantage because by the time it is introduced in their cities, towns and villages, the teething problems would have been overcome, making the transition to the CAS regime, smooth. And who knows, by then, a regulator would also be in place!
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