Coronavirus scare may deliver ₹5,000 crore blow to advertising

Source: The Hindu Business Line, Mar 21, 2020

NEW DELHI: The Indian advertising industry may suffer a ₹5,000 crore blow in the next three to four months if the Covid-19 outbreak is not contained, according to estimates by media buyers.

More than ₹2,500 crore worth of ad spending is already at stake with the Indian Premier League (IPL) cricket tournament being postponed.

Summer advertising, which pulls in more than ₹2,000 crore of ad spending on tourism, consumer durables, food and beverage, and fast-moving consumer goods, continues to remain at risk.

Media buyers said the effect of activations and below-the-line promotions being cancelled completely could be severe because of product launches being deferred and many categories such as movies, food and travel likely to face a complete washout if the lockdown announced by the government intensifies in view of increasing number of positive cases of Covid-19.

“April to June is a big quarter for the ad industry as it is the onset of the new financial year, IPL is scheduled and summer-specific brands also start advertising. How this quarter pans out is crucial,” said Navin Khemka, chief executive of MediaCom South Asia, a GroupM-owned media agency.

There is more anxiety and less panic but if more businesses get locked down, then panic will be triggered, said Sandeep Goyal, chairman, Mogae Media, a Mumbai-based marketing and communication agency.

“Right now, it is more about postponement with the possibility of business restarting if normalcy returns soon. However, if the current hysteria extends beyond March, the repercussions will be severe,” Goyal said.

The growth for this year has vapourized, experts said. Travel and tourism have been severely impacted and businesses with personal contact such as cab-hailing apps and food delivery are also facing the heat because of the disease transmission fear.

Entertainment, events, sports, retail and restaurant businesses are braving the temporary shutdown in hope that the outbreak will be contained soon.

Anand Bhadkamkar, chief executive, Dentsu Aegis Network India said that

events and activation business has come to a standstill with mall activations and on ground promotions getting postponed.

“It is going to continue for two weeks at least in the metros. Most of the clients are postpoing and pulling back on launches and promotions if situation doesn’t become better it will have ramifications. The ad spend projections are shifting with digital consumption increasing we might be witnessing an uptick in digital ad spends. The economy itself is struggling the clients will cut back on their spends completely therefore next two to three months are critical. This is the evaluating and holding back stage by advertisers but the impact is being felt all across,” he added.

As at home media consumption increases and buying and consumption habits change in the wake of Coronavirus outbreak, it would also be essential for brands to tweak the way they market their products and services. “I feel that at this point in time, marketing is necessary, the messaging needs to be authentic, topical, one that build trust and reassures. Our client Domino’s, for instance, came out with a topical campaign on pizza deliveries untouched by human hands. To me this is brave and responsible marketing. In the times of Covid, marketing needs to be controlled and not viral,” said Vikram Sakhuja group CEO at Madison Media.

Govt mulls up to ₹12,000 cr rescue plan for aviation sector after coronavirus

Source: The Hindu Business Line, Mar 19, 2020

India is planning a rescue package worth as much as $1.6 billion for the aviation sector, which has been battered after the coronavirus outbreak forced countries to close borders and brought air travel to a near-halt, two government sources told Reuters.

The Finance Ministry is considering a proposal that includes the temporary suspension of most taxes levied on the sector, including a deferment of aviation fuel tax, said the sources, who have direct knowledge of the matter.

The rescue package, proposed by India’s civil aviation ministry, is likely to be worth up to ₹10,000-12,000 crore ($1.3-$1.6 billion), the two sources said.

“Taxes could be deferred till the coronavirus spread is contained and the aviation sector can come back to its feet,” one of the sources said, adding that the companies could be permitted to pay the taxes interest-free in the next tax cycle.

The coronavirus has infected over 200,000 people and caused nearly 8,500 deaths in 164 nations, triggering emergency lockdowns and injections of cash unseen since World War Two. In India, more than 150 people have been infected, and three have died.

Governments the world over are scrambling to rescue airlines that have been forced to park planes and cut jobs as the virus puts the brakes on travel. Airlines may need a bailout of more than $200 billion, the International Air Transport Association (IATA) estimates.

The Trump administration, earlier on Wednesday, sought approval from Congress for $50 billion in secured loans to U.S. airlines to address the financial impact during the crisis.

Vistara, a joint venture of Singapore Airlines and India’s Tata Group, and budget carrier GoAir have suspended their international operations. IndiGo, India’s biggest carrier, has cancelled several overseas flights and may be forced to park some planes as domestic air travel also falls.

Global aviation consultancy CAPA’s India unit said that regardless of any fiscal concessions and support the government may offer, most airlines will have to shrink their operations and the more vulnerable carriers may shutdown.

CAPA estimates that Indian airlines, excluding state carrier Air India, will report losses of up to $600 million for the January-March quarter, which could worsen if demand continues to fall. “In the absence of serious and meaningful government intervention, such an outcome could lead to several Indian airlines shutting down operations by May or June due to a lack of cash,” CAPA said in its March 18 report.

RIL projects lift industrial investments to record high at Rs 17.9 trillion

Source: Business Standard, Mar 19, 2020

New Delhi: The gloomy economic and investment climate may be the norm today, but industrial investment data paints a bright picture. Asia’s second richest man, Mukesh Ambani’s 18 big-ticket chemical projects in Gujarat accelerated industrial investments to a record high in 2019.

Reliance Industries’ one and a half dozen chemical manufacturing projects in Vadodara in December contributed to a seven-fold increase in industrial projects in the country. This is in terms of value in 2019 year-on-year, data by the department for promotion of industry and internal trade (DPIIT) showed.

Industrial projects worth Rs 17.9 trillion were shown by DPIIT in 2019 as having been implemented, up from Rs 2.5 trillion in 2018, and Rs 71,396 crore in 2017, the data showed.

This is in sharp contrast to the National Statistical Office’s (NSO) projection of a 0.6 per cent decline in the gross fixed capital formation (GFCF) in 2019-20.

Experts pointed out that the DPIIT data is unlikely to reflect in the national accounts number in its entirety as it only captures balance sheet data. Some companies spread investments over several years or by carrying out trial productions for years.

The number of projects that were shown as having commenced production stood at 1,229 in 2019 against 1,005 in 2018 and 571 in 2017.

At odds with the economic gloom and uncertainty, investment proposals or intentions also touched an 8-year high in 2019. Investment proposals worth Rs 6.79 trillion were recorded in 2019, up 46 per cent from 2018.

Calender year 2010 had seen 4,336 investment intentions worth Rs 17.36 trillion, the highest ever. According to the second advance estimates of national accounts, gross fixed capital formation will decline for the first time in 18 years in 2019-20. It fell by 0.7 per cent in 2002-03. In fact, the share of investment in gross domestic product (GDP), at 27.1 per cent in 2019-20, is over a two-decade low with the share in 1998-99 lower at 25.5 per cent.

In DPIIT data, the chemicals sector contributed about 82 per cent to the industrial investments at Rs 14.7 trillion, suggesting that the jump was essentially on the back of the Reliance Industries’ projects.

It commenced production of chemicals like low-intensity polyethylene, acrylic fibre, poly vinyl chloride and paraxylene.

Gujarat accounted for 84 per cent of total projects in value terms at Rs 15.1 trillion in 2019, against just Rs 31,819 crore in 2018.

“There is no discrepancy in the industrial investments data. It is absolutely correct. There has been a big jump in project implementation and investment intentions in December 2019,” a DPIIT official confirmed to Business Standard.

The data is a compilation of compulsory filing of industrial entrepreneur memorandums for production in industries that were de-licenced.

These industries include fuels, telecommunications, machine tools, fertilisers, drugs and pharmaceuticals, vegetable oil and food processing industry, among others.

Former chief statistician Pronab Sen ruled out emergence of green shoots, looking at the DPIIT data. He said the data trend suggested that spike in project offtake in 2019 in the chemicals sector is essentially proposals dating back to 2008, 2009 or 2010, that are nearing completion now. Chemicals segment saw a five-fold increase in investment intentions in 2008 at Rs 1.5 trillion against Rs 32,749 crore in 2007. Chemicals accounted for 10 per cent of the proposed investment in 2008, against 3.9 per cent in 2007 and 2 per cent in 2009.

“In all of these big projects, the completion is when you declare it as having come into full production,” said Sen.

He added that in order to shore up balance sheets, companies sometimes show these as trial production, until they are ready to show production.

He said the data will show in national accounts data, but in a staggered manner, as investments are in progress. “You won’t see a spike in investment. These are not green shoots. The investment is already taking place and demand-side effect has already happened in the past. Now that you have capitalised it, you only have the supply-side effect,” Sen, who is the country head of International Growth Centre (IGC), said.

Live events industry sustains near Rs 3,000 crore losses

Source: The Economic Times, Mar 19, 2020

MUMBAI: The live events industry, which constitutes events, activation, trade shows and more, is shaken by the coronavirus outbreak as many high-profile events are either cancelled or postponed. The industry’s loss so far has been estimated at around Rs 3,000 crore by the Event and Entertainment Management Association (EEMA), and many organisers are concerned that even after the pandemic is over, it will take a while before brands and audiences start spending money on events.

In the last two months alone, events including IIFA2020, India Gaming Expo, FDCI India Fashion Week, GoaFest, PU Tech, ITB-India, India Fintech Festival, Ultra Festival and META Theatre Awards got cancelled. Also, big-ticket events including Trevor Noah’s ‘Loud & Clear’ and Khalid’s Free City Tour were postponed. Additionally, product launches of Indian and global brands, promotions and activations are getting cancelled or postponed, impacting hotels, event management companies, service providers, catering companies, the infrastructure and technical supply chain and the millions employed by them.

“There is a huge impact on the industry,” Wizcraft International co-founder Sabbas Joseph said. “In the first two month alone, the events industry has lost around Rs 3,000 crore and the number is likely to reach Rs 6,000 crore in the next two months. It’s a major crisis.”
The losses are calculated based on existing projects, contracts, conferences, exhibitions, government programmes and entertainment event cancellations. “The pandemic has put our businesses on pause, forcing an unprecedented loss, impacting livelihood of millions of employed, inability to pay taxes, inability to pay banks and financial institutions to honour commitments, and a challenging time for our vendors and supply chain,” Joseph said.

AAI to raise $300 million via ECBs,to part-fund ₹25,000-cr capex

Source: The Hindu Business Line, Mar 13, 2020

Hyderabad: The Airports Authority of India (AAI) is planning to raise up to $300 million through External Commercial Borrowings (ECBs) in the next financial year as part of its ₹25,000-crore capex.

The funds will be raised to create and strengthen the country’s airport infrastructure.

The State-owned airport operator secured Board approval last month to raise funds through the ECB route, Arvind Singh, Chairman of AAI, said on the sidelines of Wings India 2020 Aviation Show.

From a monopoly situation of managing airports in the country, we now have both public and private operators, with the private sector operators accounting for more than 50 per cent of the total traffic handled in the country.

Given the market potential and the government’s vision to have 100 more airports in the country, AAI is planning to augment capacity from 345 million to 700 million over the next five years. This will be by building new airports, upgrading existing airports and unused airstrips.

In 2020-21, AAI expects to deploy about ₹5,000 crore and plans to fund about 40 per cent through debt. Of the rest, ₹500 crore will be provided by the government for developing smaller airports for regional flights, and through internal accruals, he said.

In the past five years, 48 under-served airports have been operationalised, boosting the regional connectivity that is generating huge traffic and contributing to the overall growth of the aviation sector.

Earlier, during a panel discussion, participants from Airbus, Boeing, Vistara, GMR and Embraer were upbeat on the potential of the aviation sector.

Gavin Eccles, Managing Partner, GE Consulting & Advisory, felt that India needs to build several airports in major cities such as Delhi, Mumbai and Chennai to boost the growth of the aviation.

Facial recognition

Your face could soon be your boarding card when you are catching a flight from Vijayawada, Pune, Varanasi and Kolkata.

These airports, managed by AAI, plan to introduce facial recognition-based boarding for passengers flying through this airport. “The project should get under way by October this year,” Arvind Singh told BusinessLine on the sidelines of Wings India 2020. Trials for facial recognition on domestic passengers were done between July 1 and 31, 2019 at the Hyderabad airport. To be able to use this facility, the passenger has to register with the airport operator — in the case of Hyderabad GVK, Kolkata, Vijayawada and two other airports with the AAI.

Travel industry braces for a ₹8,500-crore hit

Source: The Hindu Business Line, Mar 12, 2020

Mumbai: The travel industry is likely to take a hit of ₹8,500 crore as the government suspended all existing visas on Wednesday due to the outbreak of coronavirus.

The Indian Association of Tour Operators (IATO), the apex body of the travel industry, on Thursday said that while it was a good decision to curtail the situation, it would mean job losses and a slowdown in the travel industry.

On Wednesday, the Indian government suspended “all existing visas, except diplomatic, official, UN/international organizations, employment, project visas” until April 15.

The visa-free travel facility for Overseas Citizen of India (OCI) holders has been suspended until the same date. The curbs go into effect on March 13 at the port of departure. India imposed these stringent travel curbs to the country after the World Health Organization (WHO) declared the coronavirus outbreak a pandemic.

Cascading effect

According to Rajesh Mudgill, Secretary, IATO: “The ban on travel to India for a period of one month will have a cascading economic impact and will lead to job losses in the entire hotel, aviation and travel sector. We estimate that it will lead to direct loss of not less than ₹8,500 crore.” In view of the staggering loss that the entire industry stares at, the apex body requested the government to consider a review of the situation after 10 days.

IATO requested the government to consider giving relief in taxation to the sector as it would help in mitigating the losses suffered.

“The government can consider waiving of GST dues for the period or going forward reducing the rates for next financial year,” said IATO in a statement.

Meanwhile, the Indian travel industry players have started a Twitter campaign called ‘save the travel industry’, urging the government to roll back the Tax Collected at Source (TCS) on outbound travel packages.

The Union Budget this year introduced a change in Section 206C of the IT Act with regards to Tax Collected at Source (TCS), to levy five per cent tax on overseas remittance and sale of outbound packages.

Flights cancelled

Nearly 585 international flights have been cancelled to-and-from India between February 1 and March 6 because of the outbreak of coronavirus. As many as 16 sixteen international airlines have cancelled 492 flights and four private Indian airlines have cancelled 93 flights during this period, according to data available with the Ministry of Civil Aviation.

Sweden’s Ravin Aviation to design, develop 10-seater seaplane in India

Source: The Hindu Business Line, Mar 12, 2020

Hyderabad: Sweden-based Ravin Aviation has outlined plans to develop an India-designed 10-seater multipurpose seaplane.

Nils Pihlblad, Chief Executive Officer and founding partner of Ravin, said: “It is proposed to design the plane and develop two prototypes of the multi-purpose seaplane within three years. Already, part of the design work has been taken up in Ukraine.”

He added that seaplanes have immense potential and, at the moment, there is no aviation player in this space in India. “Backed by the Swedish government, and support extended by the likes of Pratt & Whitney and Honeywell, we believe we are well-positioned to come up with this seaplane and bridge the gap in the market,” he said.

Speaking at Wings India 2020, Pihlblad said the company is in discussions with SAAB Aerospace and some of the former designers who worked with Boeing on the 787 Dreamliner and with Soviet plane-maker Antonov AN-225 on the initial design of the seaplane.

It is proposed to develop two planes — one static and other for testing. As a part of the development plan, Ravin plans to set up an Aircraft Design Bureau in either Hyderabad or Bengaluru, he said.

Most seaplanes are conventional planes that have been modified to serve as seaplanes, said Pihlblad. “Therefore, we want to build an exclusive seaplane for various applications, including passenger movement in places such as Andaman and Nicobar, Maldives and several countries in South-East Asia — (for people) to move from one island to another.

These could also be used for naval patrol and surveillance,” he said. Describing the seaplane, he said: “The SP10M is a multipurpose twin-engined turboprop amphibian that will carry up to 10 passengers plus two pilots. Other configurations will be as VIP, freight transportation and search and rescue operations.”