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L E G I S L A T I O N Misplaced Premium The proposed insurance regulatory bill makes a clumsy attempt at professionalising agents. Beginning June, 2000, insurance agents in India will have to take a compulsory exam before their licences get renewed. A good idea, which-thanks to the proposed Insurance Regulatory & Development Authority (IRDA) bill-should keep them on their toes. There is a slight problem though. In the name of professionalising the insurance community, the IRDA seeks to protect the Life Insurance Corporation's (LIC)-and other state insurers'-stranglehold on the market. The draft guideline prevents an insurer (both life and non-life) from hiring an agent working for another insurance company. This means that somebody like the AIG or MetLife will not be able to hire an agent out of LIC or the General Insurance Corporation. ''The proposal is tantamount to depriving the agents and the clients of a better choice,'' says Praveen Pathak, 29, who is an agent for the LIC. But there is a way out. According to the draft Bill, if an agent wants to change the parent company, he has to surrender the licence to the IRDA, and appear for an exam-even if he has cleared it once-after four weeks of training by an institute recognised by IRDA. The IRDA, however, does not does not think that its proposals are harsh or unjust. Points out H. Ansari, 61, Member (Non-Life), IRDA: ''The Indian agency system has stood the test of time.'' May be. But in a liberalised industry, it is the customer, and not the government, who should be allowed to choose the insurer. -Biju mathews A G R O - I N
D U S T R Y Never count your chickens before they hatch, particularly if you are in the poultry business. Deluged by a massive overproduction of eggs and chicks, and the consequent crash in prices, poultry farmers in north India are destroying millions of broiler-hatching eggs. According to rough estimates, more than 1.47 lakh eggs were destroyed in the first three days of May, in and around Chandigarh. If one were to take into account the eggs destroyed in the other parts of Punjab, Haryana, and Uttar Pradesh, the figure is a whopping 50 lakh. The second poultry-crisis since 1992, when the Gumboro disease decimated stock, the glut has cost the farmers in north India Rs 7 crore thus far. Earlier, hatcheries in Andhra Pradesh, the country's top poultry producing state, destroyed about 2.5 million eggs. And hen-farms in the Pune-Nasik belt of Maharashtra are following suit. Gripes Gokul Patnaik, 53, the President of All India Food Processors Association: ''The problem is not of over-production but one of depressed demand.'' One way for the industry to boost consumption is to cut prices. But with the price of corn-it accounts for more than half of the industry's input costs-going up due to the supply shortage, hatcheries find their hands tied. Then there are problems relating to transportation and marketing. And producers accuse the trade cartel of cheating them out of their due share of the market-price. To this overflowing tale of woes, add allegations of dumping by American producers via the SAARC countries. Thus, while the producers are unable to recover costs due to nose-diving ex-farm prices, the consumer continues to pay the old rates. The emergence of a poultry-processing industry could help, especially since the demand for processed products like egg powder, chicken steak, and mixed chicken loaf is on the rise. That's a pretty problem for egg-heads. -Suveen K. Sinha I N T E R N E
T It may not make a great salad, but it will certainly soup up your dot.com. We are talking about the Webfarm, or, a virtual data-centre which Videsh Sanchar Nigam Ltd (VSNL) is setting up at Vashi, Navi Mumbai. To be up and running by July, 2000, the Webfarm is expected to house 3,500 servers, and house portals like rediff.com, indiainfo.com, indiaworld.com, and indiatimes. com. Some of these dot.coms already host their sites at VSNL in Mumbai. But many others rely on data-centres abroad. Besides paying international rates, they have to grapple with clogged gateways. Promises K.P. Tiwari, 49, the pointman for VSNL's data-centre: ''Our rates will now be competitive versus US-based Webfarms.'' VSNL plans to set up another data centre in Pune. At a rental of Rs 2 lakh apiece, the servers at Vashi are expected to fetch VSNL Rs 70 crore in annual revenues. And since its data-centre is fashioned after the US-based service lender Exodus', foreign portals seem interested as well. According to Tiwari, two dot.com transnationals have already approached VSNL for hosting their Websites. Here is one farm that looks WTO-proof. -Roop Karnani E - C O M M E R C E Investors may be fleeing dot.coms, but bricks-and-mortar firms are not slowing down in the race to get wired. A recent survey by the New York-based Net research company, Jupiter Communications, says that, by 2003, services, retail, and manufacturing industries in the US will spend an estimated $350 billion on building and expanding their on-line businesses-an almost 75 per cent increase over their 2000 spending of $200 billion. At the moment, services companies account for nearly half the spend, and their share by 2003 is expected to remain the same at $163 billion. Manufacturing firms, on the other hand, are projected to increase their Net infrastructure investment from $43 billion to $76 billion, and retailers from $45 billion to $67 billion. Surprisingly, back-end players like distributors and wholesalers will also be stepping up their spend-from $25 billion to $42 billion. The findings, while reassuring, are hardly surprising. As marketers push a greater variety of products on-line, their front-end must acquire the capability to support the complexities of e-Commerce. For instance, car-manufacturers are increasingly allowing consumers to custom-make cars on-line. For that, the consumer must be able to view 3-d images of the interior and the exterior. e-Tailers are also trying to replicate the real-world experience at their digital stores. Building feature-rich content entails high computing and bandwidth capability. Ergo, huge investments. Notes Jupiter analyst Ken Allard: ''To be successful in the Net economy, companies must continue to spend on commerce infrastructure.'' Would that mean throwing good money after bad? Don't hazard a guess. -R. Sridharan M A R K E T I
N G It was a case of MTV Bakra en masse. Only, it wasn't funny this time. Participants who forked out a cool Rs 6,000 per head to ''decode the youth gene'' at the MTV & Brand Equity Youth Marketing Forum held in the Capital recently, ended up cribbing. ''We want insights, and not a pedantic discourse on numbers,'' said Sunil Vyasprath, 33, Creative Director, Ogilvy & Mather. And despite a star line-up of speakers, few made an attempt at any original analysis. Yet, the message was clear: young people constitute is too important a market segment to be ignored. A sample? PepsiCo's Ron Coughlin traced the brand's evolution, and how it had managed to retain its youth appeal over generations. In the wake of the Great Depression of the early 1930s, Pepsi took the economy plank; when the Vietnam war came, it hooked onto that 'different' youth aspiration, and even reflected the hippie cult with the help of its global advertising chief, Alan Pottasch, who helped coin the punchline, Pepsi For Those Who Think Young. Moving from colas to mobile phones, Nokia shared its definition of ''affluent urban youth'' in the 15-24 age group. These hot potentials were tracked across Asia-Pacific including India, Australia, and New Zealand. ''Any communication exercise has to tap youth's desire, and not talk down to them,'' said Malcom Hanlon, General Manager, Zenith Media. No kidstuff, this youth marketing. -Shamni Pande |
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