Deepak Kapoor, Chairman, PwC India
Though the rate of growth varies widely depending on the sector and size of the industry, margins have been squeezed in most sectors, says Deepak Kapoor at the PwC-BS CEO Summit 2013.
Rajeev Chopra, CEO, Philips Electronics
While nominal growth has remained steady over the years, high inflation is bringing down real growth, says Rajeev Chopra.
Aditya Ghosh, President and Executive Director, Indigo
While Indian CEOs have not had to face challenges their global counterparts have, they had to deal with issues unique to their own economy, says Aditya Ghosh
Abdul Majeed, Leader, Automotive, PwC India
The light vehicle market in India seems to be running out of steam as the sluggish economy, high interest rates, high fuel prices continued to be a bugbear for automakers. Consumer spending has reduced amid declining sales that slumped 22.51% in March, the biggest fall in more than 12 years and the fifth consecutive monthly slide. Overall, domestic passenger vehicles sales declined by (-) 13.01% in March 2013 over the same month last year. Utility vehicles (UVs), yet again, have come up trumps with a resounding growth of 52.20% y-o-y, selling 553,660 units in the domestic market during the last fiscal.
Traditionally, auto companies offer discounts only from October to December each year or in the last quarter of every year. Then, during January to March or in the first quarter of the following year, these discounts are withdrawn. The story this fiscal year is however an exception as auto companies were forced to continue with discounts to lure customers to showrooms. The real impact of the slowdown is likely to be felt more at the bottom of the pyramid for people who buy smaller cars as the demand for entry-level compact cars has dropped significantly.
The government’s recent decision to hike excise duty on sports utility vehicles (SUVs) and imported cars from 27 to 30% in the 2013-14 Union Budget is likely to further increase the divide between SUVs, hatchbacks and sedans in the market. Key factors triggering the demand for UVs are higher seating capacity, versatility, car-like comfort and attractive price points. For example, this is more evident in the strategy adopted by Fiat India. From plans of entering the entry-level car space, the Italian carmaker now wants to introduce multiple UVs, including products from its marquee brand Jeep.
With subdued demand unlikely to ease in the next six months, automakers could either correct their inventory by reducing production at their manufacturing facilities or clear existing stock with their dealers with heavy discounts. While these developments may strain the margins of stakeholders in the near term (until H1 2014), the long-term projections in the Indian market (beyond 2015) promise strong growth.
Dhiraj Mathur, Leader, Education, PwC India
In a recent judgement, the Supreme Court held that private colleges affiliated to universities do not fall under the definition of ‘technical institution’ as defined under the AICTE Act and are hence not required to seek AICTE approval for running courses.
The judgement came in the backdrop of appeals filed by the Association of Management of Private Colleges in Tamil Nadu. It clarified that colleges affiliated to universities need to run courses under the control of such universities. Therefore, affiliated colleges are part of them and the exclusion of ‘university’ in the definition of ‘technical institution’ as defined in the AICTE Act must be extended to the affiliated colleges. The Supreme Court also concluded that MCA courses fall within the definition of technical education and AICTE must play an advisory role in order to ensure proper conduct of its courses.
MBA courses however were excluded from being technical courses and there is no requirement for obtaining AICTE approval for running an MBA course. In addition, the apex court stated that the amended regulation wherein the words MCA and MBA were inserted in the AICTE Regulations had not been placed before Parliament, which is mandatory as per the provisions of the AICTE Act. Therefore, not placing the amended regulations on the floor of the Houses of Parliament vitiates the amended Regulations in law.
The judgement has faced mixed reactions from the industry. On one hand, it could reduce the impact of AICTE in preventing the entry of fly-by-night operators, as standalone management schools can be set up without any approval or accreditation. There are approximately 4,000 management institutions and 1,600 institutions running MCA programmes in the country which could mean that thousands of students may suffer if unfair practices start proliferating post the implementation of the judgement.
On the other hand, it will compel the government to bring clarity through legislation. Hopefully, they will not forget to present it to Parliament this time!
Bharti Gupta Ramola, Markets Leader, PwC India
The survey results indicate that Indian CEOs are more hopeful of growth than their global prospects, says Bharti.
Smita Jha, Leader, Entertainment and Media, PwC India
From a handful released every year to over a 1,000 a year, from silent movies to ‘talkies’ and high-quality sound effects, from black-and-white films to blockbusters in rich colour and lavish visual effects, the Indian film industry has traversed a long way in the last 100 years.
Technological advancements aside, even the genre of films over the last 100 years has changed significantly. A large part of that is attributable to the growth of multiplexes across the country. No longer are films made only for ‘mass’ appeal where business economics require catering to an audience of ~800 people in a theatre. Today, niche and small-budget films are also profitable since the audience size per screen (per show) in multiplexes can be just over 200.
The economics and profitability of film theatres, especially multiplexes, have also improved as multiple screens in the same premises have resulted in a multi-fold increase in the inventory of shows when compared with the earlier norm of four shows per day in a single screen at one location. Multiplexes have also positioned themselves as family entertainment centres and revenues from food and beverages now account for a large proportion.
Manifold increase in the inventory of film shows is also encouraging a greater number of films to be produced, especially in the small-budget niche category. Release windows are also becoming shorter such that some movies are available for viewing on television and home video in a couple of weeks of theatre release. These ancillary revenue streams are also helping film producers reduce their dependence on box office collections.
Another revolution taking place behind the scenes is the digital distribution of movies whereby a film is distributed via satellite direct to theatres. This allows theatres located in remote areas of India to receive films for release on the same day as the rest of the country. This not only attracts audiences in remote parts of India on the first day of the release but also helps curb piracy to a great extent. Slashing of prices by some home video companies is further helping curb piracy.
Developments such as these have completely changed the face of the Indian film industry. Watch this space for the next boom in its journey.
Deepak Kapoor, Chairman, PwC India
CEOs need to look beyond jugaad to achieve sustainable growth in the future, says Deepak in his inaugural address at the PwC-BS CEO Summit 2013.
Rahul Mitra, Executive Director, and Shyamal Mukherjee, Joint Tax Leader, PwC India
Both taxpayers and revenue officers must refrain from litigating on mere interpretation in transfer pricing matters, says Rahul.
Nitin Karve, Executive Director, PwC India
There are several inconsistencies in the Indian tax laws, which lead to excessive taxation and in some cases double taxation, says Nitin.
The opinions expressed in the blogs are personal.
