Showing posts with label Vedanta. Show all posts
Showing posts with label Vedanta. Show all posts

Tehelka : In pursuit of happiness

By: Geeta Rao on 1st May 2012

From biscuit makers to life insurance to mining companies, brands are determined to make fortunes by faking the language of happiness

IN A SIMPLER advertising world, less obfuscated by political correctness and social posturing, happiness was a cigar called Hamlet. The communication had an algebraic simplicity to it i.e., — x (life going awry) + y (lighting up a Hamlet)= happiness. The average reader may not have heard of this iconic British commercial but India’s advertising fraternity would certainly know of it.

Happiness, advertising’s biggest cliché has been used by every entity who gives us a chance to be happy with their products and services. Coca-Cola has been uncorking happiness for quite some time and a recent commercial shows us a delightful happiness factory, should we doubt for a moment that happiness were manufactured elsewhere.

Hyundai is happiness, claims the Korean auto maker.
Britannia is celebrating 25 years of happiness, thankfully limiting it to 25 years of its Good Day biscuit.

This is what we do in advertising. We are the great foragers — hunting and tracking human insights, values, cultural codes, trends, social mores, and popular culture and interweaving them with complex hierarchies of motivations and emotions to sell products and services and build brands. We co-opt the rhetoric of revolution, feminism, George Orwell and the teachings of Gandhi to create ads that sell.

But with this fabulous mother lode of information and research we don’t change society or bring revolution. As long as consumers recognise the transactional nature of adverting and communication, everyone is happy. Consumers are hardwired to cut out the hype. The grey areas are lobbying and PR, where the real motives of selling are often masked in editorial content or advertising that does not look like advertising, breaking that transparent buyer-seller relationship.

Vedanta has continued this happiness trajectory in a campaign (now off air) ‘a cross between PR and advertising’ that tells us how young children and families in villages are finding happiness thanks to Vedanta’s initiatives. Five hundred and fifty villages was the number being talked about.

In my opinion, taking any nation-building mantle in communication should be left to God and governments — not to corporations. Even the Bhutanese government with its happiness index has to turn a blind eye (or at least not mention it in advertising) to the disturbing number of country liquor shops that dot every village in the denizen’s pursuit of happiness. In actual fact, National Rural Employment Guarantee Act (NREGA), a government of India initiative, may have brought more happiness into the lives of little girls like Binno and their families than Vedanta.

Like many readers, I have followed Arundathi Roy’s strong writing on the mining cartels in Odisha in a magazine and Amnesty’s reportage from there and it is difficult to be unaware of Vedanta’s involvement in the development vs displacement issues that dog the government. And there are environmentalists’ reports on red oxide effluents contaminating the areas where tribals live, but I will stick to the communication. As Vedanta discovered, happiness as a platform can be counterproductive if one does not treat the environment (pun unintended) correctly. In this case the social and political one.

Their advertising has drawn considerable flak from activists, but their strategy is what needs close examination. How did Vedanta assume that by speaking of sustainable integrated communities and happy little girls (Binno being one of them) in Rajasthan, they could turn attention away from tribal communities in Odisha? These little Binnos are not human carbon credits — the more Binnos they talked about the more likely they were to draw activists’ attention to what they were not talking about.


Vedanta has continued this happiness trajectory in a campaign (now off air ) a cross between PR and advertising that tells us how young children and families in villages are finding happiness thanks to the company.

Britannia is celebrating 25 years of happiness, thankfully limiting it to 25 years of its Good Day biscuit’s existence.

Hyundai is happiness personified, claims the Korean auto maker.

In the time of social networks and consumer activism, which is growing more aggressive in India, how did Vedanta assume its rather obvious attempt at ‘green washing’ would work? In a post-Anna Hazare environment, it was either very naïve or very arrogant of Vedanta to assume no one would notice the disconnect!

On the other hand, the activists and liberals who launched a strong social media campaign against Vedanta’s communication took the softest targets to vent their ire on. To take on the advertising agency is equivalent to killing the messenger — the agency has no power and withdrawing ads will not change anything at the ground level. Asking filmmaker Shyam Benegal or actor Gul Panag to step down from committees sponsored by Vedanta seems a battle won, but it does not have any impact on the real issue.

If the cause is so strong, the activists need a much more powerful strategy to take on the government or the company directly. Often activist campaigns fizzle out because their strategies are not thought through and scattered while corporations focused on brand building are much more single minded.

Sometimes issues fizzle out. Nike was embroiled in a sweatshop controversy in Asia in the ’90s now long forgotten. Coke dealt with a groundwater depletion and contamination issue in India not so long ago. For many years Unilever was the focus of criticism from women’s groups and feminist groups for selling fairness creams — now fairness has become a mainstream grooming concern for men as well. It is likely that Vedanta and its red-oxide pond will be forgotten as other issues become more important.

But moving on, the question is what do you do if you are an advertising agency and you are asked to create corporate communication for a brand? Most agencies have clear-cut positions on political advertising and advertising for religious groups. Some may stretch it to liquor and tobacco products. Now, should we think about blood diamonds before we sign on a jewellery brand? Should we ask about fair trade practices before taking on a luxury clothing brand? Should we ask questions about shadow political investors before signing on a real estate business or look at track records in Mexico, China or other parts of Asia when multinationals come knocking on our door? Should we refuse the tender system for selecting agencies on big government projects?

It could open a Pandora’s Box — advertising agencies might end up becoming mini-investigative agencies. In the final analysis, they may succeed in creating greater happiness all around.

The author is an advertising and media professional, specialising in policy influences on consumer lifestyles. The views expressed are her own.

Business Standard : With ~40 k- cr tax at stake, Fin Min firm on I-T amendments

Published on 28th April 2012

Pressure from various quarters notwithstanding, the government is sticking to its guns on retrospective amendments to the Income Tax Act, as it eyes ~35,000-40,000 crore tax realization from deals similar to the $11-billion Vodafone Hutchison deal in 2007.

Finance ministry officials said if the government did not opt for the amendments, those who had paid tax in such deals would ask for refunds.

The merger and acquisition deals pending in courts include the $150-million Idea Cellular AT&T deal, the GE’s $500-mn deal with Genpact, the $981 million Mitusi - Vedanta Sesa Goa deal, the SAB Miler- Fosters deal and the $770-mn Sanofi Aventis- Shanta Boitech deal.

Though officials said other deals were also being investigated, they refused to divulge the details.
According to the Income Tax Department’s estimates, deals similar to the Vodafone Hutchison one would yield ~35,000-40,000 crore. Officials, however, said these were rough calculations.

In the $6-billion Cairn India deal between Cairn Plc and Vedanta, the parties concerned have already made an arrangement to pay capital gains tax to the government. In fact, London-based Cairn Plc has already paid more than $500 million to the Indian government.

In the recent Max New York Life deal, Japan’s MS&AD Insurance Group withheld tax while acquiring 26 per cent stake in the company for ~2,731 crore.

New York Life Insurance Company said the capital gains should not be subject to tax in India, as it held the shares in the life insurance joint venture with Max India through a holding company in Mauritius. However, it has allowed the Japanese company to withhold the tax as a precaution, and would file for a refund with the tax department later.

Meanwhile, officials claimed retrospective amendments would not impact foreign direct investment in India, as investors do not look at only taxes, but the overall economic environment.

Vodafone, however, does not agree. A source in Vodafone said even as tax rates may not be minutely assessed while investing, the certainty of tax laws and the policy environment what certainly looked at.

He also contested the finance ministry’s view that retrospective amendments to income tax laws were not being carried out in India alone, but in the UK as well In the Barclays deal, the UK government had amended a tax law in 2009 to clarify certain assistance given to companies in distress would not qualify as tax deductions. But when Barclays continued to avail of that exemption, UK authorities clarified the company would have to pay tax for these for the period when the tax laws were first clarified.

"It was not as if the law was amended with retrospective effect, as is being done in India. In no other country is it done after a court verdict and that too, with a retrospective effect. You cannot change the rule of the game in between," the source said.

At a meeting between Finance Minister Pranab Mukherjee and his UK counterpart George Osborne, Mukherjee had mentioned the UK’s move to amend its tax law a day before Mukherjee presented the Budget in Parliament. Osborne had told Mukherjee investors were anxious, as India proposed to amend the Income Tax Act retrospectively. VODAFONE- TYPE DEALS IN COURTS:

|Idea Cellular-AT&T’s $150-mn deal pending in Bombay HC |GE- Genpact $500-mn deal pending in Delhi HC | Mitsui- Vedanta $981-mn Sesa Goa deal pending in Goa HC |SAB Miller-Fosters 2006 deal pending in Bombay HC |Sanofi Aventis-Shantha Biotech $770-mn deal pending in Bombay HC.

Economic Times : After Vodafone, taxmen to go snapping at many past deals involving Indian assets

By: Deepshikha Sikarwar and Vinay Pandey on 10 MAY, 2012

The income-tax authorities will pursue all targeted cases that concern overseas transactions involving Indian assets, said a senior finance ministry official, making it clear the intent of retrospective tax was not merely to penalise Vodafone, and the exemptions announced by the finance minister earlier this week will not benefit most of the deals being investigated.

The controversy over the retrospective amendment to law that will allow the government to tax past overseas transactions involving Indian assets has so far centred around the multi-billion dollar demand on the Vodafone-Hutchison transaction.

But the stage is now set for a showdown between tax authorities and other affected companies, which are exploring legal options to challenge the constitutional validity of the amendment.
Finance ministry officials said the deals under the scanner include SABMiller's acquisition of Foster's India, Vedanta Group's purchase of a majority stake in Sesa Goa through the acquisition of Finsider International, and General Atlantic and Oak Hill Partners' buyout of GE's 60% stake in Genpact. In all these transactions, tax notices had been served, they said.

Sanofi Aventis' acquisition of Shantha Biotech will not be subject to the retrospective amendment, but will be covered by the Double Taxation Avoidance Treaty (DTAA) India has with France, said an official.

The income-tax department has prepared a list of all cases where it believes the retrospective amendment could have an impact.

Financial Express : Vedanta, Vodafone, Victory

By : Sunil Jain Posted on 08th May, 2012

India’s current account deficit may be at a historical high of over 4% of GDP, making the country critically dependent upon foreign flows in a never-before manner, but finance minister Pranab Mukherjee is made of sterner stuff. Instead of going soft on the tax demands from the likes of Vodafone ($5 billion from Vodafone and $2.5 billion from others like SABMiller and AT&T), he’s made peace with the FII community (see accompanying edit, FII versus FDI). For now, the dividends have been huge—his decision to give FIIs relief by putting off GAAR for a year resulted in a 400 point hike in the Sensex from the day’s lows, brought about by the dramatically heightened tension in the eurozone following the French and Greek election results.

While there was some confusion over whether Vodafone had indeed got relief when the FM said the ‘retrospective clarificatory amendments … will not be used to reopen any cases where assessment orders have already been finalized’, tax officials are quite clear—Vodafone, like SABMiller and others, is an ongoing case. And while some believe the Supreme Court verdict on it had ‘closed’ the case as it were, clause V of Explanatory Memorandum F in the Finance Bill makes it pretty clear it is the taxman who will decide what is ‘open’ and what is ‘closed’—Clause V, or the validation clause, says it ‘shall operate notwithstanding anything contained in any judgment, decree or order of any Court or Tribunal or any Authority’.

But before you rush to condemn the finance minister as someone who is ruining India’s chances with foreign investors—after rising to $41.9 billion in FY09, FDI flows fell each subsequent year and rose to FY09 levels only in FY12—it’s a good idea to keep a few things in mind. First, the FM is not the only one playing the heavy with foreign investors—indeed, the Cabinet as a whole passed his budget. Two, if he has to find the funds to pay for all the Rights (to Eduction, to Work, to Food, etc), you can’t expect him to give up $7.5 billion easily. Three, given few have ever been able to take on a government, the government has always emerged the victor while arm-twisting investors—it’s true investors can walk away or not come in, but that’s in the future and no one can really quantify investment not coming in as easily as you can the tax not collected!

Take Cairn-Vedanta. Though the government really didn’t have a leg to stand on, it refused to give permission to Cairn to sell its India assets to Vedanta until the former agreed to its concessions. These involved getting Cairn to release the state-owned ONGC from its obligations. In earlier decades, when no big oil firms were interested in coming to India, the government had got ONGC to agree to pay all royalties and cess on oil finds on behalf of foreign firms—in return, ONGC got to be an equity partner. This worked fine but when Cairn found lots of oil, ONGC found it was bleeding since the royalty/cess payments exceeded its share in profits. While this was hardly Cairn’s fault since it had an iron-clad contract, the government refused to let it sell—Cairn then took a $3.5 billion hit by agreeing to share royalty/cess payments and by virtue of the fact Vedanta bought 60% of this, it took a $2.1 billion hit. Though the finance ministry was part of the arm-twisting, the main role was that of the petroleum ministry.

In the ongoing saga of Qualcomm which paid $1 billion in a government auction in June 2010, the main actor is/was the telecom ministry. It never gave Qualcomm its licence for nearly two years—Qualcomm got this only after the matter was incessantly raised by the media but even then, the ministry managed to delay matters by slapping all manner on penalties on its JV partner. Though some of the demands looked positively flaky, Qualcomm paid R410 crore of the JV partner’s dues (a year’s delay itself costs it R500 crore based on a 10% interest rate) and got its licence on March 7. That’s a worthless piece of paper without spectrum which Qualcomm still hasn’t got and chances are Qualcomm’s spectrum usage licence will be shortened from 20 years to 18 even though it is not to blame for the delay in getting the licence!

The telecom ministry’s arm-twisting, sadly, is not restricted to Qualcomm and it isn’t restricted to A Raja either. Under Kapil Sibal, the ministry has backtracked on a written commitment to allow intra-circle roaming in 3G spectrum and leading telcos face the possibility of large fines. If this wasn’t bad enough, the telecom regulator has jacked up spectrum costs 11 times at least and delayed the chances of telcos getting meaningful chunks of fresh spectrum for years. Theoretically, the firms can go to court, and they will, but each one knows the futility of it all. They have not just the Qualcomm example in front of them, when they won their case against ‘limited mobility’ firms like Reliance Infocomm at the TDSAT in 2003, the government simply refused to implement the order and, with Trai help, just changed the law! Ditto for ITC which won its tax case in the Supreme Court.
Which brings us to the Vodafone case where, though Vodafone officials deny them, there is a strong buzz about an impending settlement. While the original tax demand was for $2 billion, once the penalties are thrown in, this goes up to over $5 billion. At some point, Vodafone’s management, and shareholders, would certainly want to weigh the chances of winning a $5 billion claim against the government and still being able to run a profitable business in India against perhaps settling at $2 billion—as per the buzz, the government would waive the penalties in the interests of getting a settlement; and think of how, after having done it in badly on the 3G roaming and now on auction fees, the government is in a position to grant it ‘concessions’ here! As Theodore Roosevelt once said, "If you’ve got them by the balls, their hearts and minds will follow."

The only thing that can save Vodafone now is Sonia Gandhi deciding to move Pranab Mukherjee sideways to Rashtrapati Bhavan.