Sucheta Dalal :Fiat and Tendulkar's Ferrari (18 August 2003)
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal


You are here: Home » Column Topics » Indian Express - Cheques & Balances » Fiat and Tendulkar's Ferrari (18 August 2003)
                       Previous           Next

Fiat and Tendulkar's Ferrari (18 August 2003)  

Fiat and Ferrari had little in common with cricket until they tied up with the Indian superstar Sachin Tendulkar. In less than a year, Fiat’s lavish ‘gift’ has landed the adored cricketer in one of the worst controversies of his astonishingly successful career.

And unless the issue is settled by the courts through a precedent setting judgement, that strikes down arbitrary duty exemption, the line between purely commercial deals and artistic/sporting achievement will remain permanently blurred and frequently exploited. The story so far is that Fiat organised an event where the Formula One legend Michael Schumacher presented our maestro with a Ferrari 360-Modeno.

The ‘gift’ was ostensibly to mark Tendulkar’s equalling of Don Bradman’s record of 29 centuries.

Although a significant achievement, it is below Sunil Gavaskar’s record of 34 centuries and nobody gave Gavaskar a Ferrari. But then, Tendulkar had just become brand ambassador for Fiat India’s Palio and was basking in the hysteria over his 100th test appearance.

So, the publicity over his fantastic ‘gift’ had a nice rub-off on Fiat its Indian outfit. Sachin, whose brand value is estimated at Rs 20 crore a year, then sought a duty waiver of approximately Rs 1.6 crore on the Ferrari and Pramod Mahajan hastened to oblige by recommending it to the finance ministry.

The mantriji cleared the recommendation double-quick, ignoring the commercial aspects of the deal. He forgot that even life-saving drugs are not exempted from duty by his ministry. There was much outrage and a PIL was filed, but both cricketer and the government remained silent. Interestingly, hundreds of Sachin’s adoring fans dashed off letters expressing the touching belief that he would voluntarily pay up the duty.

Here is a tiny sample: Rajat says: “Sachin must refuse the offer of duty exemption by Pramod Mahajan. Sachin is not one who simply accept anything which he doesn’t deserve — As an ardent Sachin fan I am confident he will do it soon.” Kaustubh Khanolkar says: “I think Sachin has slipped just this once. Hope he is honest enough to admit going over the edge.” M.S. Reddy from Bangalore writes: “Though I am diehard fan of Sachin, I oppose this waiver-definitely I would not mind contributing a little from my pocket, but not waiver.” Radhika writes: “There must be a limit to the blind adulation one bestows on somebody. I guess it would be much more graceful on the part of Sachin if he could oppose the duty exemption himself rather than cash in on the mass hysteria (or adulation??) of his fans.” Sachin did no such thing. He probably hoped that in the months before the Ferrari actually arrived, the controversy would be forgotten.

But photographs of Sachin zipping away in his beautiful red machine rekindled public anger. It provoked the R.K. Laxman cartoon, which has a man blessing his son with the words, “may you become a super-player and may the finance minister exempt all your income from soft drinks, toilet soaps, toothpaste from tax”.

Clearly, a good cartoon is worth a thousand words; and Justice Vikramjit Sen of the Delhi High Court was so incensed at the government’s act of “profligacy” at a time when the union sports ministry complained of financial difficulty in increasing the value of Arjuna Awards, that he issued suo moto notices to various departments.

The immediate impact was that Fiat agreed to pay up duty on Sachin’s Ferrari. Isn’t that interesting? Controversy is the worst thing that can happen to a brand and Fiat had to kill the furore immediately. It is another matter that the company should have known that its ‘gift’ would require duty waiver.

As the Americans would say — its about the money, honey. A simple commercial deal dressed up as a gift. The mistake-probably an honest one-was in believing that Sachin-mania was strong enough to prevent controversy. And Fiat was partly correct. Many Sachin fans, although a minority, argue that in a country beset by corruption and misuse of political power, the duty waiver is a small price to pay for all pride and happiness that Sachin creates for Indians.

However, the episode establishes that the finance ministry is unable to distinguish between a ‘gift’ and an ‘award’ and the courts need to get involved. Sachin’s supporters have compared the Audi that Ravi Shastri won in Australia with Sachin’s Ferrari. But there is a big difference. The Audi was the prize for the Champion of Champions and announced at the very beginning of the championship. Shastri won it; it wasn’t a gift of appreciation by a particularly generous fan. And Shastri had no commercial relationship with the car maker. It is anybody’s guess whether Fiat’s headline-grabbing gift would have been forthcoming, if Sachin wasn’t associated with its brand.

Fiat has had a fuddy-duddy image in India and an immediate association with the matchbox like cars made by Premier Automobiles. The publicity over the Ferrari was perfect for an image change. Instead of examining the commercial angle to the deal, the government continues to argue (in Bombay High Court) that the duty waiver is “in public interest”.

Hopefully, the courts will put an end to the pernicious misuse of discretionary power by the government and extend its ruling to the gift of flats, land and government agencies/dealerships to celebrities, artists and politicians’ kin, with no accountability whatsoever.

Fiat’s decision to pay the duty raises another interesting question. Sudhir Badami, a reader says, “if Fiat pays the duty on behalf of Sachin, wouldn’t it be bundled with the value of the car and become part of his income? Would he then have to pay tax on it”? No one is suggesting Sachin should be taxed on the duty, but the question underlines the need for better clarity. A larger issue raised is the need for a celebrity to work at preserving his/her brand value. The Ferrari episode has certainly tarnished Sachin’s halo a little. And it comes on top of his endorsement of the shady finance company, Home Trade, which duped investors when it folded up; and the questions about his continued endorsement of Pepsi after the pesticide controversy. Sachin will probably maintain a studied silence again and flick off the controversy with some scintillating cricket.

Then all will be forgiven and forgotten. But lesser icons will not find the masses so forgiving. Sachin too would do well not to take his fans for granted and pay some attention to his ethical equity.

-- Sucheta Dalal