Sucheta Dalal :Commodities Sizzle
Sucheta Dalal

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Commodities Sizzle  

Mar 26, 2006

By Sucheta Dalal


As the Sensex sweeps up to 11000, its smallest movement causes media frenzy and every pronouncement of the Securities and Exchange Board of India (Sebi) makes headline news. But consider this. SEBI only regulates the first and fourth largest exchange in the country and although India has 23 stock exchanges, most of them are either defunct or surviving through subsidiaries that are trading members of the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE). The rest of the trading space is occupied by Commodity Exchanges. These include automated, multi-commodity bourses (the second and third largest in terms of daily turnover) and 23 regional, single commodity bourses. In fact, once the Forward Contract Regulation Amendment Bill 2006 is passed by the parliament, the Forward Markets Commission (FMC) will acquire more teeth to regulate the market. FMC Chairman S.Sundareshan is already making plans to permit mutual funds in the commodity markets and introduce weather derivatives. He also wants spot and future prices of the 93 commodities traded in India to be disseminated across mandis and talukas around the country to keep farmers updated on prices.   


Not so ‘hoshiar’

“The lad who grew up in Hoshiarpur didn’t turn out to be so ‘hoshiar’ after all” writes a senior accountant in an email to this writer. The reference is to Jet Airways, whose chief is apparently furious at the new skeletons emerging out of the Air Sahara cupboard after finalising a deal that was based on a high-profile accounting firm’s report. Knowledgeable sources say that the problem is not merely with landing rights and terminal space; the really sticky issues are apparently unaccounted liabilities, irrecoverable advances (some to Sahara group entities) and issues over aircraft lease deals. There is also a large, golden parachute apparently written into the contract of Air Sahara’s CEO Rono Datta. Already, Jet is understood to be negotiating the price down from $450 million to $ 275 million or even lower. Since the smaller aircraft have objected to any move to hand over Sahara’s airport slots to Jet, it is likely to run Sahara as a 100 % subsidiary but either as a budget airline or in the same slot as Kingfisher. Vijay Mallya, who went public with his opinion that Jet Airways has overvalued Air Sahara at $450 million, is probably having the last laugh.


The MRP issue

Meanwhile, another budget airline continues to get into battles with customers. Veeresh Malik, a consumer activist has been involved in a long running battle with Air Deccan over its sale of packaged food and water at well above the Maximum Retail Price (MRP). Malik says that regulations do not permit anyone to charge more than MRP and nobody can refuse to provide a bill. Further, airline certification rules mandate that aircraft have to provide free drinking water to passengers on board. Responding to Malik’s protests, the Air Deccan’s PR official wrote, “I would still maintain that you will have to contact Cafe Coffee Day to get clarifications on pricing and receipts. For on board shopping - you could contact the address mentioned on the coupon. The water available on the aircraft is Potable water - which is of course free of charge”.  Malik however insists that Air Deccan sells bottled water with an MRP of Rs 8 for Rs 20. Last week, this very issue took a rather violent when another passenger, Onkar Singh reportedly got into a fight with the stewardess because a packet of wafers marked Rs 10 was being sold at twice the price and the airline refused to give him a bill either. Things heated up to the point when the pilot called in security officials and it led to the filing of police complaints by both sides.


Hari Sadu

Hari Sadu of the advertisement has caused heartache to 11-year old Hari Bhanot, who was teased mercilessly by his schoolmates. The advertisement depicts a defiant employee expanding the name of his arrogant boss over the phone as - "H for Hitler, A for Arrogant, R for Rascal and I for Idiot". Junior Bhanot was the butt of this joke in his class after the ads were aired on TV. His angry father has slapped a legal notice on demanding withdrawal of the advertisement, a public apology and damages of a whopping Rs one crore for “mental harassment and agony”. Anybody would feel sorry for an 11-year old who is the butt of jokes, but as well as its agency FCB Ulka has clearly dug in its heels for a fight. It has issued a statement that Hari Sadu is a fictional character and the advertisement is meant to be humorous. In fact, the advertisement is indeed funny and in line with a series featuring irreverent employees with loads of attitude. We suspect that the controversy over the defamation notice will only extend Hari Sadu’s screen life since all publicity is usually good publicity. However, the company’s claim that Hari Sadu’s name was “selected after looking at phone books and an extensive Google search” is rather far-fetched, because Hari is very common Indian name. Besides, the advertisement doesn’t expand the surname to make it unique.

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-- Sucheta Dalal