Gurgaon drives Haryana’s growth graph

Gurgaon is the leading contributor towards Haryana's economic development, say industry experts.

According to information provided by research firms such as the Associated Chambers of Commerce and Industry of India

(ASSOCHAM) and CRISIL Research, the city accounted for 23% of the total tax worth Rs 8,044 cr realised from 1.7 lakh assesses under the Haryana VAT Act 2003 during 2009-10. Gurgaon also accounted for 7% of the total tax realised under the Central Sales Tax Act 1956 with a share of Rs 285 cr of the total Rs 4,063 cr.

"Gurgaon accounts for a sizeable proportion of the total number of large, medium and small units operating throughout Haryana, total investment made in these units and employment generated by these units, thereby making the city as one of India's fastest growing commercial hubs," said D.S. Rawat, secretary general of ASSOCHAM.

According to an analysis done by ASSOCHAM, Gurgaon also accounted for 15% of the total tax collected under the Passenger and Goods Tax Act 1952 with a share of about Rs 51.88 cr.

Over 2.93 lakh people were employed in Haryana's organised private sector in 2009-10 and Gurgaon accounted for about 30% of the total workforce with over 86,200 workers.

Experts believe that by the end of this decade, Gurgaon will develop as an international financial platform to serve India's growing needs and increase its voice in global financial markets. High infrastructural growth with vast pool of IT and ITeS industries, investor-friendly policies, and highly skilled IT labour force will help the city prosper.

Sprawling shopping malls, skyscrapers comprising commercial and residential complexes together with modern infrastructure are also some factors contributing to Gurgaon's growth.

"Gurgaon accounts for a significant share of 52% of NCR's upcoming commercial office space. The percentage of planned commercial office space supply coming up in other parts in NCR will be Greater Noida with 18%, Noida with 16%, New Delhi with 6%, Faridabad with 5% and Ghaziabad with 3%," said Sudhir K. Nair, head customised research, from CRISIL Research.

Haryana also attracted 73 Foreign Direct Investment (FDI) projects worth about Rs 9,500 cr between April 2005 and December 2010 and Gurgaon accounted for about 80% of this FDI with a share of 38 projects worth over Rs 7,300 cr.

23 October 2011 in The Sunday Guardian.

Hermes sari flops in India

Even the richest Indians are reluctant to purchase for Diwali the new line of Hermes saris priced between Rs 4-10 lakh. The French luxury brand has managed to sell only six of its 28 limited edition saris launched a month ago. The saris are available exclusively at Hermes' Mumbai store. When correspondents from this newspaper visited Hermes' stores at the Horniman Circle in Mumbai and at the Oberoi Hotel in New Delhi, where orders are taken for the saris, they found them empty.

Hermes is not the only high-end foreign brand that is staring at a bleak Diwali. Other high-end brands such as Dior, Louis Vuitton, Boggi Milano and Steve Madden, with products ranging between Rs 7,000 and Rs 1 lakh are not doing great business. A visit to their showrooms in malls such as DLF Emporio, Ambience and Select City Walk in New Delhi during peak evening hours showed that they were fairly empty. Customers were not splurging the way they would normally do during Diwali.

When contacted by this newspaper, the companies refused to disclose their sales figures for the season by saying that their figures will be available when this quarter ends, that is the end of December. Their cumulative Asia figures excluding Japan are available till August. But these numbers do not quote Indian sales anywhere.

Off the record, shop assistants in many of these stores admitted that sales had not picked up. "You can see for yourself. The mall is empty," said one salesman at DLF Emporio.

Even stores belonging to high-street brands such as Paris Hilton, DKNY, Zara, Mango, Aldo and Guess, with products ranging between Rs 3,000 and Rs 50,000 were relatively empty when compared to other stores.

Will "Indianising" their products help these high-end brands capture the market? "I am not convinced that international companies will be able to attract more buyers by 'Indianising' their products. For example, we already have a successful jewellery and luxury domestic market, which cannot be replaced by foreign brands," said Abheek Singhi, retail analyst with Boston Consulting Group.

Status symbol is not enough to bring in customers. "These brands make their line of clothing and jewellery for the elite. But at the same time, an elite Indian customer is also looking for products that offer visible value, which is missing (in these products)," said Sonal Khare, merchandiser with Impulse India.

Indian designers welcome the new entrants, but believe that they will experience slow growth. "These brands have a 0.01% clientele, which is only helping them build their brand name but not helping them grow. I agree that the real market belongs to the masses, but luxury brands do not cater to them," said Anju Modi, a Delhi-based designer.

According to a recent study by CII-A.T. Kearney, the luxury market is expected to reach a value of $5.8 billion by 2015. It has witnessed a growth of 20% in 2011 compared to 2010. But experts say that this projection seems ambitious as the key challenge of reaching the target consumer has not been tackled. "High-end brands cater to a very niche market, which comprises only 2-5% of the elite class in India. We do expect a 20-25% growth rate for luxury brands. But they do not sell in India as much as they do in China," said Abheek Singhi.

Purnendu Kumar, retail analyst with Technopak India said, "Today, luxury goods are a necessity for the affluent segment in India, with a marked shift in mindset. But 20 million people buying from high-end stores does not account for even 5% of the Indian population."

The other big challenge for the Guccis and Versaces of the world is that they cannot set up mono brand outlets because of the 51% cap on FDI in single brand in retail.

Poor infrastructure is another big dampener for luxury brands. One DLF Emporio in New Delhi is nowhere close the umpteen stylish malls and high streets in China. "With taxes on luxury goods above 35% in India as opposed to just a 15% levy in China, the Indian luxury consumer would normally pick up the same product from abroad than here," said an official from the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

(With inputs from Mamta Sen in Mumbai)

23 October 2011 in The Sunday Guardian.

Shops expect Diwali surge in chic brands

International garments and accessories brands are expecting a 30% surge in sales during this festive season. Experts say that India has become the most "happening" place for foreign brands.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) said that ad spends in TV and press will be up by 45% during 2011 compared to festive 2010. This will surge sales by 30-40% for foreign brands that offer home and electronic appliances, automobiles, textiles, gems and jewellery, luxury products and home essentials.

"During this festive season, especially Diwali, foreign brands are expected to register almost 30-40% of their yearly sales. Most of the international brands operate at a gross margin of 60%. Tommy Hilfiger, Marks and Spencer, Levis are some brands that have opened Indian offices which has paved a growth path for international brands. Close to 20 million people are buying products from foreign brands at the premium they offer," said Purnendu Kumar, retail analyst with Technopak, a consulting firm.

International players are happy with the way sales have increased since the last week of September.

"Diwali sales this time has picked up after the traditional shraddh period from 28 September. The one month period will contribute in excess of 10% of the year's revenue for the second quarter. Profits double for our retail segment for this period which account for more than the year's average profits," said Sooraj Bhatt brand head of Allen Solly India.

"Consumers splurge during festival season and retail growth will be one of the best during Diwali. Louis Philippe expects a minimum 12-14% of overall sales to come during this Diwali. Profits during this season will be the best as sales will come from full price merchandise," said Jacob John brand head Louis Philippe India.

"Considering it is the festive season and people indulge in exchanging gifts or buying new items for themselves, sales are bound to spurt. We expect 25% of annual sales during Diwali season for Police watches," said Haresh Chainani, managing director, Ganga Watches, which has a franchise of Police in India.

Even online portals say that International brands are attracting more people. "We have a 50-50 profit ratio for foreign and ethnic brands. We provide foreign brands which are not easily available in stores. This helps in building a strong customer base. However, during Diwali we see a surge in sales for home essentials and decor," said Trivikram Thakore, head marketing, Fashion and You, a luxury fashion portal and Deals and You.

16 October 2011 in The Sunday Guardian.

Industry calls for a reliable public transport

Travelling by buses and metro will help control traffic and pollution in the country, says the Associated Chambers of Commerce and Industry (ASSOCHAM) in its recent study titled Vision 2030 for Emerging Cities of India. A network of organised mass transport systems is essential as the number of cities with more than 10 lakh people will increase from 48 to 68 in the next two decades.

"There will be a huge demand for mass transit rail as the number of cities with population of 40 lakh and above will increase from seven to 13 by 2030. The subsequent growth explosion in these cities will account for almost 70% of India's GDP," said D.S. Rawat, general secretary, ASSCOHAM.

According to the study, Mumbai is likely to have a population of 3.3 cr by 2030, Delhi 2.6 cr, Kolkata 2.3 cr, Chennai 1.1 cr, Bangalore and Pune 1 cr each. India's total urban population is already 37.7 cr and may exceed the earlier projection of 59 cr by 2030, states this study.

Among all forms of public transport, the Delhi Metro has helped reduce over five lakh vehicles on city roads since its inception. "Metro rail has the potential to bring all-round benefits to businesses, the environment and people from all walks of life. It is evolving as an industry on its own, and creating space for new services and jobs," states the report.

"The metro rail's contribution in reducing carbon emissions in cities like Delhi and Kolkata has been immense. Reduced traffic congestion on the roads, easy connectivity to commercial hubs and office complexes and reduction of pollution will be the most evident benefits from organised mass transport," said Chandan Choubey, senior analyst of transportation and logistics from KPMG.

The ASSOCHAM study also states that the Central government should move quickly to establish the Metro as the best mass transport means.

9 October in The Sunday Guardian.