Mumbai: The Securities and Exchange Board of India (Sebi), the capital market regulator, today lifted restrictions on broad-based institutions, such as insurance companies and mutual funds, subscribing to preferential issues of companies. The decision was taken at its board meeting in New Delhi today.
According to earlier regulations, these institutions were not allowed to participate in preferential allotments if they had sold holdings in the issuer companies in the preceding six months. Further, on allotment, they were required to lock in their entire pre-preferential holdings in such companies for a period of six months from the date of preferential allotment.
Both these restrictions have now been lifted. “It has been decided to exempt insurance companies and mutual funds, which are broad-based investment vehicles representing public at large, from regulations related to sale and lock-in of their pre-preferential shareholding in issuer companies,” Sebi said in a release. However, the lock-in on shares allotted in the preferential issue, will remain unchanged.
Peerless Mutual Fund MD & CEO Akshay Gupta said: “The move will benefit some of the larger asset management companies (AMCs) that already have significant holdings in companies and want to increase those further through preferential allotments. At present, not many AMCs participate in preferential allotments.”
Quantum Mutual Fund Chief Executive Officer Jimmy Patel added: “The move to ease preferential allotment norms will help promoters more than AMCs, as their investor base will increase. Mutual fund houses will now be able to invest in companies, even if they had sold shares in the companies in the past six months.”
Other key decisions
Amendment to MF Advertisement Code: To provide more flexibility to mutual fund houses, Sebi has decided to amended the advertising code to make it principle-based. “The definition of advertisement shall be broadened to include all forms of communication that may influence investment decisions of any investor,” the regulator said.
“Under the current advertisement code, there are many restrictions. More than 40 per cent of the ad space gets wasted on disclaimers and information that investors don’t even read. I hope the new code would give us more flexibility and reduce the disclaimers, so that we can advertise our products properly,” said Gupta.
PMS investment limit increased: The market regulator has increased the minimum investment amount under portfolio management services from Rs 5 lakh to Rs 25 lakh. Further, portfolio managers have been asked to ensure segregation of holdings in individual demat accounts in respect of unlisted securities, too.
“Raising the PMS limit was long overdue. The move will benefit the mutual fund industry. As portfolio managers, who have better incentive structures, used to lure relatively small high networth individuals (HNIs) away from mutual fund houses. This will bring back a lot of investors to mutual funds,” said Patel.
Reservation for holders of convertible debt securities: Sebi has clarified that reservations to convertible debt holders in rights and bonus issues shall only be available to compulsorily convertible debt holders.
Success in my Habit
Thursday, February 9, 2012
RBI allows pvt banks to conduct govt business
Mumbai: The Reserve Bank of India (RBI) has decided to allow all private sector banks to undertake Central and state government business, which is still a forte of public sector banks and three large private players, ICICI Bank, HDFC Bank and Axis Bank.
Banks earn a fee while working as an agent of the central bank for collecting revenues as well as disbursing the payments under various schemes. At present, the three private banks are allowed to undertake government business in a limited way but RBI now said all the private lenders will be treated at par with their public sector counterparts.
“It has been decided that all private sector banks will now be considered eligible to handle any Central or state government business (where RBI pays agency commission) at par with public sector banks,” RBI said in a notification.
According to the regulator the move is aimed to enhance the quality of customer service in Government business through more competition, improving customer convenience by increasing the number of customer service outlets and broad basing the revenue collection and payments mechanism of governments.
RBI said those banks interested to handle government business need to be appointed as agents of RBI. For this purpose, it said government may work out the arrangement with the bank and send the proposal to the Controller General of Accounts (CGA) for examination. The CGA, in turn, will forward the recommendation the central bank and then RBI will formally appoint a bank as an agency bank.
Banks earn a fee while working as an agent of the central bank for collecting revenues as well as disbursing the payments under various schemes. At present, the three private banks are allowed to undertake government business in a limited way but RBI now said all the private lenders will be treated at par with their public sector counterparts.
“It has been decided that all private sector banks will now be considered eligible to handle any Central or state government business (where RBI pays agency commission) at par with public sector banks,” RBI said in a notification.
According to the regulator the move is aimed to enhance the quality of customer service in Government business through more competition, improving customer convenience by increasing the number of customer service outlets and broad basing the revenue collection and payments mechanism of governments.
RBI said those banks interested to handle government business need to be appointed as agents of RBI. For this purpose, it said government may work out the arrangement with the bank and send the proposal to the Controller General of Accounts (CGA) for examination. The CGA, in turn, will forward the recommendation the central bank and then RBI will formally appoint a bank as an agency bank.
Monday, February 6, 2012
Sunday, February 5, 2012
Saturday, February 4, 2012
Kobelco Cranes starts commercial production at Sri City
HYDERABAD, FEB. 2:
Japanese major Kobelco Hydraulic Crawler Cranes has started its commercial production at Sri City in Chittoor district of Andhra Pradesh.
Kobelco Cranes is the second Japanese investment at Sri City after Kobelco Construction. Sri City is a private-sector Special Economic Zone (SEZ) spread over 7,000 acres.
This is the first production facility outside Japan and the first foreign company to own a facility in India that specialises in the manufacturing of complete Crawler Cranes, according to a press release.
Kobelco started their construction in March 2011 and had become operational from November 2011.
It is spread over 40,000 sq mt and would produce 90 units comprising 100-tonne, 150-tonne and 250-tonne class cranes during 2012 with the capacity of the Indian plant at 100 units/year.
The company is planning to achieve 35 per cent of localisation in 2012, and increase it to 50 per cent in the near future.
“The Indian plant would soon cater to the markets in the neighbouring countries and would help us sustain and increase our market share in the growing construction equipment market in India,” said Mr Sin suke Izumi, President and Director, Kobelco Cranes India.
“The local manufacturing of cranes would reduce the cost of the cranes and will be made available in the price range of Rs 2.5 crore to Rs 10 crore.
"The company expects to acquire a market share of 20 per cent by 2015,” said Mr Isavo aide, Director, Kobelco Cranes, Global Operations .
“We are positive that the success of Kobelco in Sri City will attract more Japanese companies into Sri City, where 12 companies are already present,” said Mr Ravindra Sannareddy, Managing Director.
Japanese major Kobelco Hydraulic Crawler Cranes has started its commercial production at Sri City in Chittoor district of Andhra Pradesh.
Kobelco Cranes is the second Japanese investment at Sri City after Kobelco Construction. Sri City is a private-sector Special Economic Zone (SEZ) spread over 7,000 acres.
This is the first production facility outside Japan and the first foreign company to own a facility in India that specialises in the manufacturing of complete Crawler Cranes, according to a press release.
Kobelco started their construction in March 2011 and had become operational from November 2011.
It is spread over 40,000 sq mt and would produce 90 units comprising 100-tonne, 150-tonne and 250-tonne class cranes during 2012 with the capacity of the Indian plant at 100 units/year.
The company is planning to achieve 35 per cent of localisation in 2012, and increase it to 50 per cent in the near future.
“The Indian plant would soon cater to the markets in the neighbouring countries and would help us sustain and increase our market share in the growing construction equipment market in India,” said Mr Sin suke Izumi, President and Director, Kobelco Cranes India.
“The local manufacturing of cranes would reduce the cost of the cranes and will be made available in the price range of Rs 2.5 crore to Rs 10 crore.
"The company expects to acquire a market share of 20 per cent by 2015,” said Mr Isavo aide, Director, Kobelco Cranes, Global Operations .
“We are positive that the success of Kobelco in Sri City will attract more Japanese companies into Sri City, where 12 companies are already present,” said Mr Ravindra Sannareddy, Managing Director.
Agni to infuse $10 m in e-commerce space
NEW DELHI, FEB 3:
Property broking major, Agni Property, today announced a total investment of $10 million in the financial year 2012.
“Private equity firms like Helion Venture Capital and Foundation Capital have already invested $4 million in the company. They will on the whole invest $10 million in expanding its operations in the financial year 2012,” said Mr Samarjeet Singh, Founder, Agni Property.
The funds will be used for furthering the firms’ foray into e-commerce space and the Goldmine project.
Goldmine project
Goldmine is a dynamic pricing system, of the likes of online hotel and airline booking, which positions every sellable unit of real estate on the basis of comfort, luxury, market demand and availability.
Name change
Agni Property also announced the name change from Agni Property to IndiaHomes.
“The motive behind the name change is to stress on our pan-India footprint. Besides it is also a more internet friendly name and today’s consumer is as internet savvy as one can get,” said Mr Singh.
Rebranding exercise
The company is looking to spend close to $1 million on the rebranding exercise. IndiaHomes target 300-400 per cent growth in the financial year 2011-12 and a net transaction fee of Rs 25 crore.
Commenting on market sentiment, Mr Singh said: “So far the sentiments in the real estate sector have been on the negative side owing to interest rates and the rising EMIs. At present the RBI is looking to reverse its monetary policy stance. This would encourage the fence sitters to transact in real estate. The third quarter of 2012 should be a good quarter.”
“Close to 1.2 lakh customers come to the threshold of buying affordable housing every month. So there is a lot of latent demand,” he added.
Speaking on the Draft Real Estate (Regulation and Development Bill) 2011, Mr Singh said: “It will be a game changer leading to three to four times more growth in the industry. The customers will again begin to trust the real estate developers and there will be more transparency.”
The company is also planning to set up new offices in Ahemdabad, Pune, Chennai and Hyderabad. Headcount for the firm will go up from 300 to 500 by the end of this fiscal.
IndiaHomes has already shortlisted two to three companies for technical partnerships for customer life-cycle management.
Keywords: Agni Property, Helion Venture Capital, Foundation Capital, e-commerce space, Goldmine project, real estate, customers, name change, IndiaHomes,
Property broking major, Agni Property, today announced a total investment of $10 million in the financial year 2012.
“Private equity firms like Helion Venture Capital and Foundation Capital have already invested $4 million in the company. They will on the whole invest $10 million in expanding its operations in the financial year 2012,” said Mr Samarjeet Singh, Founder, Agni Property.
The funds will be used for furthering the firms’ foray into e-commerce space and the Goldmine project.
Goldmine project
Goldmine is a dynamic pricing system, of the likes of online hotel and airline booking, which positions every sellable unit of real estate on the basis of comfort, luxury, market demand and availability.
Name change
Agni Property also announced the name change from Agni Property to IndiaHomes.
“The motive behind the name change is to stress on our pan-India footprint. Besides it is also a more internet friendly name and today’s consumer is as internet savvy as one can get,” said Mr Singh.
Rebranding exercise
The company is looking to spend close to $1 million on the rebranding exercise. IndiaHomes target 300-400 per cent growth in the financial year 2011-12 and a net transaction fee of Rs 25 crore.
Commenting on market sentiment, Mr Singh said: “So far the sentiments in the real estate sector have been on the negative side owing to interest rates and the rising EMIs. At present the RBI is looking to reverse its monetary policy stance. This would encourage the fence sitters to transact in real estate. The third quarter of 2012 should be a good quarter.”
“Close to 1.2 lakh customers come to the threshold of buying affordable housing every month. So there is a lot of latent demand,” he added.
Speaking on the Draft Real Estate (Regulation and Development Bill) 2011, Mr Singh said: “It will be a game changer leading to three to four times more growth in the industry. The customers will again begin to trust the real estate developers and there will be more transparency.”
The company is also planning to set up new offices in Ahemdabad, Pune, Chennai and Hyderabad. Headcount for the firm will go up from 300 to 500 by the end of this fiscal.
IndiaHomes has already shortlisted two to three companies for technical partnerships for customer life-cycle management.
Keywords: Agni Property, Helion Venture Capital, Foundation Capital, e-commerce space, Goldmine project, real estate, customers, name change, IndiaHomes,
P&G to lay off 1,600 non-manufacturing staff to cut costs
HOUSTON, FEB 4:
As part of cost-cutting due to flat market shares and growing investor pressure, Procter & Gamble Co plans to eliminate about 1,600 “overhead” or non- manufacturing jobs — including some in marketing — banking on digital marketing to help contain long-term media spending.
The plan was announced by executives at the company’s earnings conference. Reality appears to have finally dawned at Procter & Gamble, the world’s largest marketer, whose $10 billion annual ad budget has hurt the company’s margins.
Earlier this month, P&G announced that it would outsource in-store merchandising work covering about 2,700 employees, most of them part-time, to brokerage firms and expand a programme put in place for some categories two years ago.
That reduction affects about 3 per cent of P&G’s non-manufacturing workforce of about 50,000.
The Chief Financial Officer, Mr Jon Moeller, said P&G would rely on a combination of attrition, “selective hiring” and restructuring to get to the reductions, which will result in $240 million in annual savings, in line with what P&G typically generates through annual restructuring spending.
Meanwhile, social networking site Facebook has claimed it managed to boost sales of a Procter & Gamble deodorant, underlining its growing significance in the retail industry.
As part of its IPO filing this week, Facebook highlighted a case study involving women’s deodorant, ‘Secret’, saying a dedicated page related to anti-bullying helped boost sales of the brand by 9 per cent.
P&G chose to advertise on the site to generate awareness for the ‘Mean Stinks’ campaign and selected a female audience likely to be receptive to the campaign.
The sales growth was reported in the first 26 weeks after the campaign was launched in the US, Facebook claims.
This claim has led to a trend in which more companies will move their advertising dollars from the traditional to the digital media for convenience, more exposure and ease of usage.
According to a marketing expert at Washington University in St Louis, Procter & Gamble is banking on digital marketing to help contain media spending in the long-term.
Company CEO Mr Bob McDonald said he expects its advertising costs to moderate as it moves into the digital arena, citing the billions of free impressions generated by Internet-only ad campaigns, like P&G’s Old Spice commercials in recent years.
“With the advent of digital ad tracking software and digital ad shops like Google, companies are able to track the effects of digital ads in real time in a fine-grained manner,” said Seethu Seetharaman, PhD, the Patrick W McGinnis Professor of Marketing at Olin Business School.
“Companies can quickly monitor who is clicking on an ad, with whom they are sharing the link to the ad and what that second person is then doing,” he said.
As part of cost-cutting due to flat market shares and growing investor pressure, Procter & Gamble Co plans to eliminate about 1,600 “overhead” or non- manufacturing jobs — including some in marketing — banking on digital marketing to help contain long-term media spending.
The plan was announced by executives at the company’s earnings conference. Reality appears to have finally dawned at Procter & Gamble, the world’s largest marketer, whose $10 billion annual ad budget has hurt the company’s margins.
Earlier this month, P&G announced that it would outsource in-store merchandising work covering about 2,700 employees, most of them part-time, to brokerage firms and expand a programme put in place for some categories two years ago.
That reduction affects about 3 per cent of P&G’s non-manufacturing workforce of about 50,000.
The Chief Financial Officer, Mr Jon Moeller, said P&G would rely on a combination of attrition, “selective hiring” and restructuring to get to the reductions, which will result in $240 million in annual savings, in line with what P&G typically generates through annual restructuring spending.
Meanwhile, social networking site Facebook has claimed it managed to boost sales of a Procter & Gamble deodorant, underlining its growing significance in the retail industry.
As part of its IPO filing this week, Facebook highlighted a case study involving women’s deodorant, ‘Secret’, saying a dedicated page related to anti-bullying helped boost sales of the brand by 9 per cent.
P&G chose to advertise on the site to generate awareness for the ‘Mean Stinks’ campaign and selected a female audience likely to be receptive to the campaign.
The sales growth was reported in the first 26 weeks after the campaign was launched in the US, Facebook claims.
This claim has led to a trend in which more companies will move their advertising dollars from the traditional to the digital media for convenience, more exposure and ease of usage.
According to a marketing expert at Washington University in St Louis, Procter & Gamble is banking on digital marketing to help contain media spending in the long-term.
Company CEO Mr Bob McDonald said he expects its advertising costs to moderate as it moves into the digital arena, citing the billions of free impressions generated by Internet-only ad campaigns, like P&G’s Old Spice commercials in recent years.
“With the advent of digital ad tracking software and digital ad shops like Google, companies are able to track the effects of digital ads in real time in a fine-grained manner,” said Seethu Seetharaman, PhD, the Patrick W McGinnis Professor of Marketing at Olin Business School.
“Companies can quickly monitor who is clicking on an ad, with whom they are sharing the link to the ad and what that second person is then doing,” he said.
Piramal picks 5.5% more in Vodafone India for Rs 3,000-cr
MUMBAI, FEB 4:
The cash-rich Piramal Healthcare has agreed to purchase an additional 5.5 per cent of the issued equity share capital of Vodafone India Ltd from ETHL Communications Holdings Ltd for a cash consideration of approximately Rs 3,007 crore (approximately £385 million).
This takes Piramal Helathcare’s total shareholding in VIL to approximately 11 per cent.
The transaction follows the settlement between Vodafone and Essar over the sale of Essar’s approximately 33 per cent stake in VIL, announced in July 2011, and the purchase by Piramal of approximately 5.5 per cent of the issued share capital of VIL from Essar in August 2011, for over Rs 2,800 crore.
In 2010, Piramal Healthcare had sold its domestic formulations business for Rs 17,000 crore.
The Vodafone transaction contemplates various exit mechanisms for Piramal, including both participation in a potential initial public offering of VIL and a sale of its stake to Vodafone, the company said.
The cash-rich Piramal Healthcare has agreed to purchase an additional 5.5 per cent of the issued equity share capital of Vodafone India Ltd from ETHL Communications Holdings Ltd for a cash consideration of approximately Rs 3,007 crore (approximately £385 million).
This takes Piramal Helathcare’s total shareholding in VIL to approximately 11 per cent.
The transaction follows the settlement between Vodafone and Essar over the sale of Essar’s approximately 33 per cent stake in VIL, announced in July 2011, and the purchase by Piramal of approximately 5.5 per cent of the issued share capital of VIL from Essar in August 2011, for over Rs 2,800 crore.
In 2010, Piramal Healthcare had sold its domestic formulations business for Rs 17,000 crore.
The Vodafone transaction contemplates various exit mechanisms for Piramal, including both participation in a potential initial public offering of VIL and a sale of its stake to Vodafone, the company said.
Maruti Suzuki yet to firm up land requirement for Gujarat plant
The country's largest car-maker Maruti Suzuki is yet to firm up the land requirement for its proposed new manufacturing plant in Gujarat.
"We do have plans to go to Gujarat and preliminary talks have been already held with the state government. But nothing has been decided on when and how much land will be acquired there," Managing Executive Officer (Engineering) of Maruti Suzuki I V Rao told reporters here today.
He said that the idea behind the Gujarat plant was to serve export markets through the Mundra port.
"The matter has not been placed before the board for approval yet," Rao said at the launch of new Swift Dzire sedan here.
Rao said the Gujarat idea was floated in May, 2011, when the industry was growing at a healthy rate of 18 per cent.
But with the slowdown in car sales subsequently, no progress had been made in this regard, he said.
With SIAM predicting annual growth of 10 per cent in the automobile segment next few years, the Gurgaon and Manesar plants would suffice to meet the demand.
Post completion of the third plant at Manesar, Maruti's annual production capacity would touch 1.75 million units.
He said that steps were also being taken to reduce the waiting period for diesel cars by increasing production.
"We do have plans to go to Gujarat and preliminary talks have been already held with the state government. But nothing has been decided on when and how much land will be acquired there," Managing Executive Officer (Engineering) of Maruti Suzuki I V Rao told reporters here today.
He said that the idea behind the Gujarat plant was to serve export markets through the Mundra port.
"The matter has not been placed before the board for approval yet," Rao said at the launch of new Swift Dzire sedan here.
Rao said the Gujarat idea was floated in May, 2011, when the industry was growing at a healthy rate of 18 per cent.
But with the slowdown in car sales subsequently, no progress had been made in this regard, he said.
With SIAM predicting annual growth of 10 per cent in the automobile segment next few years, the Gurgaon and Manesar plants would suffice to meet the demand.
Post completion of the third plant at Manesar, Maruti's annual production capacity would touch 1.75 million units.
He said that steps were also being taken to reduce the waiting period for diesel cars by increasing production.
Samsung slashes dealer margins, LG to follow suit
KOLKATA | NEW DELHI: Electronics and consumer durables makers are cutting dealer margins or rolling back schemes for retailers to protect their profitability as costs increase due to higher input prices and weaker rupee - a move that some retailers say will make their business unviable.
While Samsung India has slashed dealer margins by 3-6% across categories, market leader LG India will follow suit within 10 days as makers of televisions and refrigerators stare into a tough year because their sales have slowed and consumer sentiment remains low, two senior industry officials said.
"We have to correct imbalances to stay afloat," one of them said on condition of anonymity.
LG India VP-Marketing L K Gupta and Samsung spokesman refused to comment for the story. The two Korean firms together account for more than 45% of the country's consumer durables market estimated at 40,000-45,000 crore.
Consumer durables and electronic makers are battling rising prices of raw materials such as copper and aluminium as well as higher import costs due to a weakening rupee. They wouldn't want to increase prices further because sales have slumped after Diwali with November-December being the hardest months. Japanese firm Panasonic said it may consider margin cuts if things get worse.
"So far we have not reduced trade partners' margins or rolled back schemes. But if costs go up further, there is a possibility that we might," Panasonic India Director (Sales and Marketing) Manish Sharma said. "We will review everything in the coming fiscal," he added.
Panasonic raised prices by 4-5% last month to deal with higher costs. Other such as Philips India and Hitachi too increased prices in January, but not enough to protect their profitability.
"The overall effect of input costs and the like on the end product has been as much as 15-20% for the companies," said KS Raman, director of India's largest durables retailer Next Retail. "The impact has been loaded onto customers only partially."
RETAILERS WORRIED
A Kolkata-based retailer, on condition of anonymity, claimed that certain companies including Godrej and Whirpool have rolled back certain schemes they offered earlier.
Typically, schemes offered by companies include discounts on bulk buying for dealers, and annual tie-ups wherein dealers or retailers surpassing certain targets get extra discounts.
"If you factor these in, our margins have gone down that way as well. It's just that companies like Samsung have been more direct," said the retailer.
Nitesh Giria, director of South Indian durable chain Girias, which has 25 outlets across Tamil Nadu and Karnataka, said it will be hard to survive if margins are cut.
"We operate on 2-3% net margin and our overheads are high. If this (low margins) continues our business will become unviable," Giria said.
Retailers said brands such as Hitachi and Whirlpool now insist that trade partners can sell their product only at the market operating price, or MOP, which means there is no room for double discounting.
"This seems to be a precursor to margin cuts, since in this way, we can maintain the same profitability levels as before and generate a higher turnover because of the increased product prices," Pulkit Baid, promoter of Kolkata's leading high street durable outlet Great Eastern Technocity, said.
When contacted, however, several companies, including Akai India, Philips India and Godrej, denied margin cuts.
"We are not in favour of cutting trade margins to support profitability...If there is pressure on margins, we operate through lean management or if it is not possible, then we pass it on to customers," said Kamal Nandi, Godrej Appliances vice-president (sales and marketing).
While Samsung India has slashed dealer margins by 3-6% across categories, market leader LG India will follow suit within 10 days as makers of televisions and refrigerators stare into a tough year because their sales have slowed and consumer sentiment remains low, two senior industry officials said.
"We have to correct imbalances to stay afloat," one of them said on condition of anonymity.
LG India VP-Marketing L K Gupta and Samsung spokesman refused to comment for the story. The two Korean firms together account for more than 45% of the country's consumer durables market estimated at 40,000-45,000 crore.
Consumer durables and electronic makers are battling rising prices of raw materials such as copper and aluminium as well as higher import costs due to a weakening rupee. They wouldn't want to increase prices further because sales have slumped after Diwali with November-December being the hardest months. Japanese firm Panasonic said it may consider margin cuts if things get worse.
"So far we have not reduced trade partners' margins or rolled back schemes. But if costs go up further, there is a possibility that we might," Panasonic India Director (Sales and Marketing) Manish Sharma said. "We will review everything in the coming fiscal," he added.
Panasonic raised prices by 4-5% last month to deal with higher costs. Other such as Philips India and Hitachi too increased prices in January, but not enough to protect their profitability.
"The overall effect of input costs and the like on the end product has been as much as 15-20% for the companies," said KS Raman, director of India's largest durables retailer Next Retail. "The impact has been loaded onto customers only partially."
RETAILERS WORRIED
A Kolkata-based retailer, on condition of anonymity, claimed that certain companies including Godrej and Whirpool have rolled back certain schemes they offered earlier.
Typically, schemes offered by companies include discounts on bulk buying for dealers, and annual tie-ups wherein dealers or retailers surpassing certain targets get extra discounts.
"If you factor these in, our margins have gone down that way as well. It's just that companies like Samsung have been more direct," said the retailer.
Nitesh Giria, director of South Indian durable chain Girias, which has 25 outlets across Tamil Nadu and Karnataka, said it will be hard to survive if margins are cut.
"We operate on 2-3% net margin and our overheads are high. If this (low margins) continues our business will become unviable," Giria said.
Retailers said brands such as Hitachi and Whirlpool now insist that trade partners can sell their product only at the market operating price, or MOP, which means there is no room for double discounting.
"This seems to be a precursor to margin cuts, since in this way, we can maintain the same profitability levels as before and generate a higher turnover because of the increased product prices," Pulkit Baid, promoter of Kolkata's leading high street durable outlet Great Eastern Technocity, said.
When contacted, however, several companies, including Akai India, Philips India and Godrej, denied margin cuts.
"We are not in favour of cutting trade margins to support profitability...If there is pressure on margins, we operate through lean management or if it is not possible, then we pass it on to customers," said Kamal Nandi, Godrej Appliances vice-president (sales and marketing).
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