A Day In My Life.

And Ratan Tata retracts his seething statements on the PMO. So typical of him. First go to foreign media to give interview and get screwed every time. History has it that he has put foot in his mouth with every interview & retracted statements or clarified.

Yet, without fail these Tatas, Birlas and Ambanis will go to foreign media for interviews.

Below is the statement and clarification issued by Tata Sons on the Ratan Tata interview to Financial Times. Read and see the amazing u-turn made. I am sure this u-turn couldn’t have been possible in Nano. Jaguar, maybe?

Mumbai, December 8, 2012: Tata Sons clarifies that in Mr. Ratan N. Tata’s interview with the Financial Times, he spoke about coherence in implementation of government policy as a need rather than “lashes into the PM”, “rapping India”, “warning government of inaction” or “venal business environment”, as has been reported in the Financial Times and other media.

These are terms used by the publications and not by Mr. Tata, in any manner.

Mr. Tata has always supported the Prime Minister, Dr. Manmohan Singh, even when there was mass criticism of him and the last thing he would wish to do is to be a critic of the Prime Minister, as has been reported.

For record, the relevant portions of the interview are:

Q: When you look at your…I wanted to ask you about Globalisation in the west your moments, India’s most global company. When we last met you said that you felt that in the future the way that India was being governed made it very difficult to grow business here and therefore you felt that Tata and Indian companies should look abroad. Is it still the same way?

Ans: Yes it is still

Q:Tell me why and how you think that way?

Ans: Sometimes the issue is that different agencies of the government, different constituencies in the government, have almost contradictory interpretations of the law or different interpretations of what should be done. By that I mean there are differences between the centre and the state in some cases. So you have a central policy that is announced, on paper sounds very exciting but at the state level is very difficult to operate. Singur would be one such example. In other cases, it’s that constituencies or government may have made it a personality issue. You may have the Prime Minister’s office saying one thing and maybe one of the Ministers having a different view. That doesn’t happen in most countries. So you wouldn’t have a eight year or seven year wait to get all the clearances for a steel plant or as in the case of the airlines four or five years without any decision. These are the things that by and large would drive investors away in most other countries, if they were practised. And some of the countries they are practised and they don’t see investment. And at the time we started to look and

invest overseas, India had become a country which had foreign exchange reserves. You could actually make those moves which earlier you couldn’t because you didn’t have foreign exchange. So, we exploited them in that sense and both invested in or acquired companies overseas.

Q: Is it your sense that it is getting more difficult to do business in India? I mean

I suppose people are going to be interested in the way you feel whether it is India or industrialised world or maybe emerging markets or Africa. Things in India are worst it used to be in terms of growth, corruption and the way the government works?

Ans: You know, I have always been bullish about India’s potential. I still am and I feel India is a country that really has an enormous amount of potential and has the human capital to succeed. But if you sit down and say will it succeed? You see imbalances; you see energy availability is not enough to keep pace with the high rate of growth.  Then you see more recently you have got issues of land and land acquisition for projects. You have issues on state issues, one state versus the other in terms of dealing on sales tax and issues of this nature. You may have a given policy. I will give you another instance; For example the defence sector has been thrown open to the private sector. But it is still very difficult to establish a business in that sector and you can go round the cabin and somebody saying you should see so and so,  so and so, so and so and  you come back to the same and it does not happen.

Tata Sons is surprised that reputed media entities have sensationalised the observations, without taking into cognizance the tone, tenor and context of the interview.

Actions turn unbelievable  moment the cover of subtlety is blown.

With the New Yorker interview the most public secret of the Indian media is out. Money buys editorial and that is the way its going to be. But its time we stop playing puppets in the hands of anyone and everyone who throws money towards us.

I am not the Oracle but if this is the highway we have chosen then its clear that the bird in the hands and the one in the bush, both, will fly away. The goose mustn’t be killed for the golden eggs is an important lesson.

At this time we have forgotten these for quick gains.

I have just two points to make.

First is regarding the Robert Vadra-DLF saga.

The story was published in The Economic Times in 2011. What a public listed company does with its money is a cause of concern for its investors. If DLF gave money for free to Robert Vadra then its a corporate governance issue. If the shareholders of DLF did not raise the question till date I don’t see a point why Arvind Kejriwal should.

The media did not follow-up the story back then and the investors paid no attention. Because Kejriwal now drums up the issue and everyone in the business and general news runs after DLF, is purely acting like puppets in the hands of politicians like the chief of India Against Corruption.

This needs to stop.

Another example is the Coalgate scam.

Every single question when any journalist met companies which were in cement, power, metals space, etc were regarding the raw material (coal, iron ore, etc) allocation.

It was the Central Government policy to allot coal blocks to companies and every company tried to get some. It was policy. Stories were written and cheers rippled through the stocks on the Dalal Street the moment a company got the much needed allocation.

No question regarding the policy was asked back then. Why now? Because CAG puts it as a loss?

Was it very difficult to assess back then that every single coal block being allocated to private companies means a loss to the state?

It was two plus two back then but the media played by the rules of the policy.

These arguments may be naive and too simplistic for the better good of the complex politics but that is exactly what all this is: politics.

May 25, 2012

Below text (Only on the cigarette business) is verbatim from ITC’s press release announcing its fourth quarter and Fy12 results.

The Cigarettes industry in India continues to be impacted by an environment of rapidly escalating challenges and discriminatory taxation. The steep increase in the tax rates on cigarettes, both at the Central and at the State level, has led to the undesirable consequence of shifting consumption patterns to lightly taxed or tax evaded tobacco products besides fuelling the rampant growth of illegal cigarettes. In effect, the spiralling tax rates have only led to sub-optimising the revenue potential from this industry without achieving the stated objective of a reduction in overall tobacco consumption.

The steep hike in Excise Duty rates announced in the Union Budget 2012 will further exacerbate the problem of discriminatory and high taxation on cigarettes within the tobacco industry.

The accelerated tax increase on cigarettes relative to other tobacco products has shifted tobacco consumption to cheaper, lightly taxed or tax evaded products like Bidi, Khaini, Chewing Tobacco and Gutkha which are the most dominant forms of tobacco consumption in India and constitute as much as 85% of total usage. The objectives of revenue maximisation and tobacco control have been severely compromised by this lopsided tax policy on Cigarettes which now contributes over 74% of tax revenue, whilst accounting for less than 15% of tobacco consumption.

The domestic legal cigarette industry is faced with the growing menace of illegal cigarettes. Independent research indicates that, in India, whilst there is a fall in volumes of ‘duty paid’ cigarettes by 4.4% during the period 2005 to 2010, the ‘duty-not-paid’ volumes grew by 49.3% during the same period. India has now been recognised as one of the leading destinations for Illegal cigarettes.

Attractive tax arbitrage opportunities, due to high level of taxes on the legal domestic Cigarette industry in India, incentivises illegal flow of cigarettes into the country, especially of internationally advertised and known brands. Coupled with our porous borders, cigarette imports under Open General License (OGL) make it extremely difficult to monitor and regulate the inflow of illegal stocks. Further, with the domestic Cigarette industry being strictly regulated, including compulsory licensing under the Industrial (Development & Regulation) Act, 1951, a liberal import policy is contrary to the Government’s tobacco control policies. This is also detrimental to the interests of Indian tobacco farmers, as it directly impacts the demand for indigenous tobacco by the domestic industry.

The demographic construct of India’s population calls for multiple price points to meet the needs of the country’s diverse consumer segments. The growth of illegal cigarettes is also aided by the vacuum created at lower price points, where legal industry has been unable to operate, due to a disproportionately high tax burden. Further, the lacunae in the provisions of the Industrial (Development & Regulation) Act, 1951 encourages ‘fly by night’ operators to manufacture illegal cigarettes without obtaining requisite licenses and clandestinely clear them without payment of taxes.

The Company, along with other stakeholders and industry bodies continues to represent to the regulatory authorities seeking a non-discriminatory tax and regulatory policy on tobacco products in the interest of the Government exchequer, domestic farmer community and industry.

Despite a difficult operating environment in the market place, it is gratifying to report that the business further improved its market standing during the year. The business’s uncompromising commitment to continuous and consistent offerings of value-added, world-class products has been reinforced through innovations in product development and launch of differentiated offers. The portfolio has been strengthened through strategic investments in product quality and technology.

A premium line of hand-rolled cigars launched in 2010 under the brand name ‘Armenteros’ has gained significant consumer franchise, competing against world renowned Cuban and other cigar brands. The Armenteros range of cigars is now available in premium outlets across key cigar markets and is expected to further consolidate and grow its franchise.

The Cigarette business faces the daunting challenges of an unprecedented high incidence of taxation, complex tax structure, rising illegal trade and a discriminatory regulatory climate. Despite these challenges, the relentless pursuit of excellence in building robust, world-class brands and innovation in processes and investment in appropriate state-of-art technologies will enable it to further consolidate its market standing.