Tollywood runs out of ideas

Manasu gati inte
Manishi bratuku inte
Manasunna manishi ki
Sukhamu ledante…

Nothing succeeds like success. And nothing fails like failure. That’s the state of the Telugu film industry. Even as the apparently divided Telugu film fraternity concluded its three-day jamboree to honour itself, the dark clouds of uncertainty are forming in the horizon.

One of the largest film producing states, Andhra Pradesh had an enviable record when it came to making good quality films. There were the days when doyens like LV Prasad produced films that spelt class in every sense of the word. Legends like NT Rama Rao and Akkineni Nageswara Rao carried an entire movie on their shoulders. The same cannot be said of today’s tinsel town heroes.

Today, Tollywood is all about heroes. The rest don’t matter in the scheme of things. More than half of a film’s cost goes in the form of remuneration to the big names. An average Telugu movie costs close about Rs 10 to 15 crores, while the big budget ones cost a bomb. In a state where declining audiences and television serials are killing the silver screen, movies are a flop even before they reach the theatres. The economics simply does not work, as the box office collections do not come anywhere close to investment.

Even talented artists are hard to come by. Even in the sixties and seventies, Urvasi Sarada was so disappointed by the decline of standards that she migrated to the Malayalam film industry. In fact, today the Telugu film industry has imported most of its heroines who are models and item girls in Bollywood. Is the state, which spotted and groomed gems like Jayasudha and Jayaprada so bereft of talents that it is forced to depend on girls from other states? Does only glamour matter when it comes to the leading ladies?

Real estate tycoons who are flush with cash bankroll most of today’s movies. It’s a different story that many of the earlier real estate tycoons like G Punna Rao of the infamous GPR Housing, went bust as their movies flopped. The people who bought plots in GPR Housing were tricked and are now literally on the roads. History is now being repeated. And when the movies flop, thousands of people who invest in lands promoted by these real estate tycoons find that they are holding on to worthless pieces of paper.

The main problem with today’s Telugu movies is lack of realism. Very few movies connect up with the lives of today’s middle class, which is the prime target audience. Last year, saw two rare exceptions. Bommarillu and Godavari were two movies that broke away from the hackneyed themes and presented refreshingly different storylines. While Dil Raju’s Bommarillu made a neat pile of profit, Sekhar Kammula’s Godavari just broke even.

Abburi Ravi, the young man who wrote the cracker of a script for Bommarillu, slogged un-noticed for years working in ad agencies in Hyderabad. Struggling to make his ends meet, the young man almost gave it up in disgust and wanted to go back to Bhimavaram, his hometown. His passion was scripting movies and he knocked the doors of many producers and leading men hoping to tell them the stories he had painstakingly written. None him gave a second look and he was turned away rudely by many of the so-called big names of the Telugu industry. Today, the same big men are pleading with Ravi to write a movie script for them. The clock has turned a full circle.

The problem with life-like scripts and movies is with the audience, laments a Tollywood producer. “Movies goers in Andhra Pradesh are not mature enough to watch serious movies like they produce in Bengali or the Malayalam film industry,” adds a Tollywood producer who burnt his hands in trying out the new wave cinema. That might be stretching the logic too far. No doubt filmgoers in the state share a part of the blame, but the bigger share of the blame should lie with the movie-makers themselves. If Godavari and Bommarillu can be a hit what stops them with coming up life-like stories? Most of today’s Telugu movies are remakes of Malayalam or Tamil movies. This shows the drought of ideas in our backyard.

A serious scene set in a rural backyard in Konaseema is on and suddenly the hero and heroine break into a song and dance sequence in the Swiss Alps. Take the movie watcher seriously and respect their sensibilities. We are not morons.

Buying up the theatres to celebrate 100 days of a movie is foolish and leading men of Tollywood should stop living in a make-believe world. Fans associations are good to a limit, and after that they become a nuisance. And to add to that the news on the business front will not be music to the ears of the big bosses of Tollywood.

The news that Anil Ambani is buying up a number of the theatres in coastal Andhra Pradesh is a pointer of the scheme of things to come. News is that the Ambani junior will use his movie making behemoth, Adlabs to get into Telugu movie production. Known for his tightfisted way of operating, Anil Ambani will use his clout to steamroll opponents. Krishna Vamsi, Teja, Puri Jagannath, Bhaskar, Sekhar Kammula – you have got competition!

It is a wake-up call for Tollywood. A Chiranjeevi or a Nagarjuna can no longer guarantee to set the box office on fire. Get real, Get ready.

Eenadu hikes salaries

Last November we said AP Media is in for a boom. When KSR jumped ship from Andhra Jyothi to NTV at the turn of the year, we said it's the first sign of an impending shake-up in AP Media. Later, we forecasted attrition spurt at Eenadu primarily due to disappointment over lack of pay hikes. Within days of that post three seniors, each with over 10 years service at Eenadu and including the ETV bureau chief, resigned. Well, Eenadu management has seen the writing on the wall! On Tuesday they took the inevitable decision -- an across the board 15% hike in basic pay to all the editorial staff.

Quite a generous move from a management that's seen as tight-fisted -- seniors would tell you about the GRAND PARTY FOR FAMILIES where they were hoodwinked into signing papers and forego legitimate hikes mandated by pay commissions! This first-time-in-30-years unmandated mid-term hike indicates the pressure the one-million paper is facing to retain talent. The competition in Telugu media industry has just begun and should it hot up, well that might fetch more benefits!

Fudging the figures - The DC way

The problem with a public limited company is that you are answerable to your shareholders. Not everybody can rake up impressive numbers like the Ambani brothers do, year after year. As the old adage says - if you can’t beat them, then join them. That seems to be the adage of the Reddy brothers who run the Deccan Chronicle.

Here is an excerpt of an interview about on DC’s results with P K Iyer, ED of Deccan Chronicle Holdings on CNBC TV 18 :

The total sales for the previous quarter was about Rs 149 cr (ending Sept 06) and this quarter (ending Dec 06) it is about Rs 146 cr.

Can you believe that? DC, which generated a measly Rs 86 cr in turnover in the quarter ending March 06, has now almost doubled it turnover. But reality is otherwise.

All you have to do is to take the ad tracking figures from Hindu, Eenadu and Times and get the actual turnover of Deccan Chronicle. As per these figures, last quarter ending Dec 06, DC’s flagship Hyderabad edition has done no more than Rs 46 crore at full card rates. And if discounts that are liberally given by DC’s advertising department are taken into consideration then that figure would come down to around Rs 28 to 30 crore for the quarter ending December 06.

If you add the revenue from the other editions in AP, that figure would be another Rs 7 crore at the most, for the quarter ending Dec 06. In fact except Hyderabad, all other editions of DC (including Chennai) are running in huge losses. So much so, that they do not have editorial staff to run editions like in Vijayawada and Visakhapatnam.

Chennai is no better despite tall claims of the DC bosses. An analysis of DC’s Chennai edition shows that there are hardly any ads in DC that are generated from Chennai or the Tamil Nadu market. A majority of them goes into the Mahavishnu on Mount road — The Hindu and the Tamil publications.

All put together, DC’s ad revenues for the last quarter ending Dec 06 should not be more than Rs 80 to 85 crore. Only 8% of DC’s revenues comes from circulation so that means the total ad revenue would come to about Rs 132 crore (Rs 5 crore being other income as shown in the financial disclosures). So where does the remaining Rs 50 crore come from? Mr Iyer, can we have a clarification on that?

DC’s figures for the quarter ending Dec 06 are now un-audited, but will have to be audited sooner than later. But remember, auditors only see what is shown to them. Enron, Worldcom, Computer Associates are classic examples where the company fudged figures along with the auditors to keep their stock at a high level. Unlike in the US, we have no Sabrnes - Oaxley Act to counter this kind of fudging of figures.

Let SEBI appoint an independent body to go through the ads published for the last three months across all of DC’s editions. Once that is done, DC’s auditors will have to do a lot of explaining on how they allowed this kind of manipulation to go on. The cat will then be out of the bag. SEBI better go through DC’s books and do a clean up act, before we have another Eenadu kind of fiasco from coming into the limelight.

Diagnosing Unreason

We as a society cannot progress unless those in public life have the maturity to accept the risk of criticism and the society at large is ever vigilant about the opinion-makers and agenda-setters. Kiron-Sailaja's pregnancy was touched upon in this context, for which some wanted to crucify us. Let's see the issue afresh and see whether we were wrong or wronged.

Kiron is the Managing Director of Eenadu, the daily that's read by 1.30 crore people everyday. He is both an opinion-maker (Eenadu overdoes it, but let's not digress) and an agenda-setter. Such a lofty and privileged position demands that he demonstrates exemplary social responsibility and possesses a mindset that's in tune with the realities of the present.

What are the realities of the present times?
For decades now we have discussed at length the bane of population boom and have accepted that "small family" is a social responsibility. We have made legislations disallowing parents of more than two children contesting elections at panchayat level. Significantly, courts have ruled that the two-child norm is in our national interest.

The educated section of India has progressed even further, limiting themselves to just a child -- does not matter if the only child is a boy or a girl. I can immediately think of three of my friends who went for family planning ops after they had a girl in the first issue. All are economically capable of supporting at least two more children. Yes, the issue goes beyond economic status and involves the pressing need to put an end to gender discrimination by treating the girl child on par with the boy. Today, educated Indians detest a pregnancy spree to fulfill the desire of having a son. That's anachronistic and considered as sheer stupidity.

Do we respect a man who wants his forty-plus wife to conceive because a family is incomplete without a son? (because the family's property can never be bequeathed to the girl) What is the mindset of a man who does all kinds of religious rituals just to have a son? More importantly, has the father of two girls ever considered how his yearning for a son would impact his daughters? A 13-year-old girl is no kid. She can comprehend the goings on and draw her own inferences. Would not her parents' desperation for a son make her feel rejected and unwanted? If you disagree, find out yourself by talking to any girl of that age. Or better, let the publication conduct an essay or elocution contest for schoolgirls on the issue -- their voices would make us cringe and loathe ourselves.

It's very unfortunate that a chauvinist, steeped in outdated mindsets, heads an influential daily. What right will the paper has to take high moral ground when impoverished Lambadi tribals sell their girls, just to escape the tyranny of poverty and hoping against hope that the city biggies would ensure a better future for her? How can such narrow-minded people claim that their newspaper is the heart and soul of people when they themselves have no heart?

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The Southern skirmish

FLASH: Times of India group is about to buy Vaartha from the Sanghi family. MD of Times, Vineet Jain, Executive Director Saldhana and Executive editor Jojo were in town last week to finalise the deal. The move comes after Times made unsuccessful bid to buy out Andhrya Jyothi. Will the latest move go through?

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THE SOUTHERN SKIRMISH: For long, it was the domain of the Kasturi family, and it still remains so. Despite all the talk of inroads made by Deccan Chronicle, it still remains an also-ran in the leadership stakes for the Chennai market.

For starters, Deccan Chronicle which made its foray into the South with an edition in the Tamil Nadu capital took the Times route by starting out with a cover price war. DC also tied up with ICICI credit cards to offer the newspaper for a rock bottom price which was well above the trade terms of Audit Bureau of Circulation (ABC). Now that the heat and dust has settled, DC claims that it has a circulation of around 3 lakh and has an ABC certificate to prove that. But media buyers in the Dravidian heartland take the figures with a pinch (make that a tea spoon) of salt.

Just walk into any of the leading dealers of DC in Chennai at six in the evening and one can spot thousands of copies stacked up. In an industry where the product becomes obsolete by noon, such a sight is a sure confirmation of dumping. “It easy to dump copies and sell them in the raddi market with the connivance of the dealers,” says a leading media planner with one of Chennai’s biggest advertising agencies. DC circulation managers in Chennai accuse Hindu of doing the same in Hyderabad. It’s a game that everyone plays out, and media planners know that for sure.

So who is the leader in the Chennai market? No doubt the Kasturi family product Hindu still matters. But not for long. The Times of India is waiting on the sidelines watching the fun, for the Hindu and DC slugfest to end. Once both are bruised, Times will use its brute money power to steam roll into the Chennai market. Before that, if rumours are to be believed then Times might well start out with a Tamil newspaper, which it is said to be close to buying out. Once it gets that printing facility, Times will get its Chennai edition in place.

Financial analysts believe that it will be DC that will end as the biggest loser. DC’s total advertising revenues for all its editions last quarter put together was around Rs 86 crore. This is confirmed by all the tracking figures of all the leading publications in Hyderabad and Chennai based on full rates as per its rate card. Right now, only the Hyderabad edition of DC draws advertising on its own strength. Advertising agencies in Hyderabad say that DC offers up to 50% off on its card rates in Hyderabad. This fact, is confirmed by this writer who has seen bills raised by DC for its tabloid advertisers.

Even the Hyderabad citadel is under threat with The Times of India launching an all colour edition. Media watchers say, it was similar re-launch in Bangalore in 1996, that took Times past the then market leader Deccan Herald. Today, Times sells DH three to one. Times today prints around 1.85 lakh at its new Nacharam facility. Once they cross the psychological two-lakh mark then DC is in real trouble, as Times will repeat the Bangalore story here.

In fact, media watchers are wondering what happened to the proposed launch of DC in Bangalore. Sources say that DC bosses, the Reddy brothers are in talks with the owners of Deccan Herald for a possible buy out.
The danger for DC is that if it takes its eye off the Hyderabad market, then Times will hit hard in DC’s home turf. Times is already in talks with a leading industrial house in Hyderabad to buy its Telugu newspaper. On the other hand, if DC blinks in Chennai, then N Ram will go for its jugular. That’s the danger of ignoring your core competence, as management experts would say. Whatever it is, action south of Vindhyas is just hotting up!

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Let Truth Prevail

Murthy, a torn page

Eenadu chairman Ramoji Rao is known for being very sparing in complimenting his employees, typical of a Scorpio. The fastidious media baron was highly generous in one case: “Eenadu has created history… Ramoji is a chapter in the history book of Eenadu.. Murthy is a page in it,” he said about D V V N H S Murthy, chief reporter, ETV. The ONE PAGE Murthy resigned on Thursday. A few days more in service, Murthy would have completed TEN years at Eenadu. Had he waited for just couple of weeks and resigned in February, he would have got Gratuity benefit. Yet, the star performer, known for his investigative reports, made a hurried exit because “no self-respecting individual can take it when his integrity is questioned.” The man is holidaying in Kakinada and would be hotly pursued by other media houses once he returns. Murthy’s exit comes close on the heels of two others leaving Eenadu, including another senior and talented resource Goparaju Radhakrishna.

Of Yaga-s, Yatra-s & cold calls

DOUBLE PLEASURE FOR KIRON: Taken Off -- WILL BE BACK SOON!
SUMAN STRIKES AGAIN: Tireless and versatile, Suman believes in wasting no time. The talented man is back to his passion. After his first telefilm Sri Krishna Balarama Yuddam, he is now planning Ushaparinayam. The script is all ready but it’s yet not known if he would take to acting. Let’s wish him well!
RECRUITMENT YATRA: Ok, our lady editor is out of station. Sigh! She is off on a multi-location visit. Neither for reporting nor for relaxing but taxing herself to find people willing to work for her. Phew!! So, the wheel has turned full circle. Initially, local talent was shunned as sub par and ‘outsiders’ were preferred. Today, locals spurn overtures, forcing talent hunt elsewhere! Therein lies the lesson for the many others who are on the lookout for talent…the past will catch up, sooner or later. ET, FE, BL, BS, DNA and more are scouting for talent… too many cold calls going around. But bosses with dubious records of discarding team members surely would not be preferred. More on this in a day.

NTV starts the flurry

It’s official now! The first channel promoted by realtor and businessman Narendranath Choudhury is all set to flash on the small screens by June this year. NTV advertised for young TV journalists on Wednesday.
We learn that licensing and connectivity process is going on smoothly and delay-causing glitches are unlikely. A Rs 6-crore deal was inked recently to install edit suits and other technical infrastructure. NTV is going in for AVID edit systems for high-quality output.
Construction of Studios and News Rooms and an administrative block is under way at a location that’s on way to Apollo Hospitals at Jubilee Hills.

S R Ramanujan who has the experience of launching 10 channels at ETV, is busy in his new avatar as the CEO. For the old war horse who has been out of action for a while, the cables and systems must be smelling like napalm in the morning! We are sure he can’t wait to have a go at it!

Ex-Eenadu & Ex-Jyothi Kommineni Srinivasa Rao, now Executive Editor at NTV, has already planned his new team. NTV’s ad is only to recruit the foot-soldiers, fresh and raw hands. KSR has broadly decided whom he would poach from papers he worked earlier. It is very likely that some good hands from ETV, Eenadu and Andhra Jyothy may join NTV days before its launch.

I Satyanarayana, earlier associated with ETV, Eenadu, Andhra Jyothy and Vissa, may be assigned the task Editor-Output. Suryadevara Madhu Babu, who was with Eenadu Business Desk for 20 years, is the Business Editor. Business News is one segment that is nobody’s strength among the existing Telugu channels and Madhu Babu’s effort would be to use all his experience and exploit this opportunity. (This time around he might pull it off without Kidambi’s able guidance)

Vinayeswar, an experienced producer now with TV 9, is all set to join the new channel. Vinay worked for ETV for a long time and later at Vissa before jumping ship to join TV9. He will be the Chief Producer, responsible for PCR operations and On-line assignments. More producers from TV 9 might follow him to NTV.

If the Wednesday's Ad is any clue, NTV’s focus would be more on outdoor i.e. reporting section, than the desk. The thrust would be on Reporter-driven ‘live’ hungama. Desk may be relegated to a secondary role. Well, that means an action-replay of all the blunders that overenthusiastic TV9 reporters committed in the initial months of launching the Channel in 2004. Hope KSR would avert that.

POLICE SUPREMACY

From 1st April 2007, Jana Reddy will have nothing to do. No, that’s not an April fool day joke. The Home Minister of Andhra Pradesh will join his counterparts from other Indian states in the unemployment line, as the new Supreme Court guidelines on police administration kick in.

Not many citizens are aware of the real impact of the new directions of the apex court that have to be followed to the T. It will, in one stroke dismantle the eponymous politician-police relationship, which has become the bane of our society.

The judgment calls on states to implement rules relating to fixed tenure for DGPs, IGPs, SPs and SHOs as well as setting up of Police establishment boards to deal with transfer and posting of personnel. This part of the judgment will have to be implemented in four weeks, that is by January end.

The Supreme Court has also directed states to implement by March 31 the directions relating to setting up of State Security Commission, separation of police force for the purpose of maintaining law and order and investigations, and setting up of police complaint authority.

It was an innocuous petition filed by Prakash Singh, a former director general of BSF that has resulted in a tsunami of a judgment. Not many know about the genesis of this petition filed by Mr Singh. The tough ex cop, was the man in charge of the enquiry on the Alipiri bomb blast that almost cost C B Naidu his life. At the time of submission of the Alipiri report, Mr Singh made some suggestions, which were just unceremoniously dumped in the dustbin by the state government. That irritated Mr Singh to no end, and he filed a petition in the Supreme Court asking for an overhaul of the police setup.

In fact, Andhra Pradesh was among the states that strongly objected to the initial directions of the court and filed strenuous objections. The judges of the Supreme Court were caustic in their remarks and dismissed the plea of the states with disdain. What has got the goat of the present political setup in Andhra Pradesh and other states is the fact that the leader of the opposition will have the say in senior level police appointments. Imagine, Chandrababu Naidu being a part of the team that will decide on who the next DGP will be!

It is the posting of police personnel, right from constable level to DGP that politicians enjoy doing the most. Many corrupt police officials lobby their political masters for a posting, which has the requisite glamour. The politicians know that these police officials will do anything for them. Others, more honest do not care for the political setup and are often shunted to loop line postings.

The threat – "aisa jaga bejunga jahan paani bhi nahin milta" (I will transfer you to a place where you will not even get water to drink) is often used against policemen by self-seeking politicians. From small time political chamchas, to big time leaders, everyone revels in this brazen act of political power. The result is the creation of a unique mai baap culture.

From now on, policemen need not fear that. They can go about doing their job without being scared of extraneous considerations. Their fixed tenures will take away any threat of transfers. The same policemen who used to salaam good-for-nothing politicians and kowtow their illegal orders, will now not even care a damn for them. That’s the problem for the politicians.

Will all this turn policemen into absolute dictators? No. The police complaint authority as envisaged by the court will provide instant relief to those find themselves victimized by the men in khakhi.

The separation of the investigation and law order duties, will hopefully lead to better investigation of cases and timely prosecution of the accused.
The state is talking about filing a review petition in the Apex court without realising that the Supreme Court has said in its judgment that it will not entertain any more petitions in this matter. Implement the court orders first.

With no policemen to control or transfer, Jana Reddy, the third senior most minister in the cabinet will now have to look for another portfolio. Any suggestions on which ministry he should ask for?

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Sonia's benign Hand for Ramoji

Beleaguered media baron Ramoji Rao has finally pulled off a seemingly impossible act. The master manipulator has succeeded in getting Congress supremo Sonia Gandhi to intervene on his behalf and rein in his bete noire, Chief Minister Y S Rajasekhar Reddy. The ‘fight to finish’ between Ramoji and YSR will immediately thaw and peter out over time, without eroding the prestige of either of the two combatants.

Delhi political sources reveal that the cease-fire agreement reached in Delhi today is the culmination of weeks-long intensive negotiations carried out by Ramoji through his mediators.

Ramoji had adopted a clever strategy to checkmate YSR. The Eenadu editor made his team prepare an impressive CD – it had the English translation of all the ‘exposes’ and ‘anti-government’ reports his daily published. The CD was circulated among all important politicians, opinion-makers and, most importantly, all newspaper editors to secure their support to Ramoji in his noble endeavour of ‘defendnig the freedom of the Press’. The CD was aimed at creating an awareness about the ‘motivated action of State government against Margadarsi’ that was intended to ‘cripple a media house that upheld the values of journalism.’

It did not work. Many eminent Editors were shocked at the tone of Eenadu’s reports (thanks to the lady translator who was diligent at her work!) and were impressed that media in Andhra Pradesh enjoyed such unlimited freedom to rail the government!

The second part of Ramoji’s strategy was more subtle and much less in the open. Through N Ram and Manorama's Mathews he managed to reach Sonia Gandhi through Ahmed Patel and George. Sonia bought the argument of her advisers: N Ram’s is the only English Editor who has been consistent in his anti-BJP stance and can be trusted to not change his colours (unlike the likes of Mehtas & Mitras). The Congress cannot afford to estrange him and his media friends. So, peace has to be made with Ramoji. YSR camp presented its case strongly, Ramoji’s persecution of the Congress government and Eenadu’s personal attacks against YSR and his Cabinet colleagues.

Peace being the objective, a solution was worked out. Ramoji would continue his ‘fight’ against the state government but would immediately put an end to personal attacks. YSR would not have morning sickness when he looks at Eenadu. That means Sridhar would not sketch ‘demeaning’ caricatures of YSR, which the CM is hyper-sensitive about.

On Friday, when Media in Delhi grilled him if he discussed Margadarsi issue with the PM, YSR had his stock answer “Law will take its own course”. Congress sources say the issue did figure when the CM met Manmohan Singh and Sanjaya Baru.

Well, is all this true? Just keep an eye on Eenadu’s reports in the coming days. The easier way is to just observe Sridhar’s cartoons in the coming days! If Sridhar is soft on YSR you can be sure that Ramoji is safe in the benign hands of Sonia! Let’s wait and watch.
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The mother of all scams

It has been a scam that has been on for a long time, siphoning off thousands of crores from our exchequer without even a murmur. The mother of all rip offs has been kept under wraps thanks to high-level collusion between politicians, bureaucrats and the conmen. The scandal takes its origins from a slew of schemes that were ostensibly meant to provide a fillip to exports from the country.

The Duty Free Replenishment Scheme (DFRC) and Advanced Licence Scheme (ADL) schemes were promoted by Ministry of Commerce, Government of India, to encourage value addition to textile sector ports by using powerlooms. Under these schemes, exporters could import yarn without paying any import duties. The imported yarn is then meant to be processed into textiles, and exported within set time frames. But as is the wont, every rule has a loophole that is be exploited by crooks. Over the years, this scheme has been extended despite strenuous objections from the Ministry of Finance, resulting in severe loss to the Government.

The scamsters who run this mafia operation operate out of two hubs, Surat and Hyderabad. The yarn is imported in containers out of major Indian ports, the bulk of which come out of Nava Shweha port, Mumbai. The reason for selecting a busy port is to ensure that customs officials, who are hard-pressed for time, do not start looking into details about the destination of the material. Once the containers are cleared out of the port they are trucked out to Surat, where they are clandestinely sold to local textile units on a 50% mark up. This act is perpetuated by hundreds of fictitious firms, most of which exist on paper. Officials of the Directorate of Revenue Intelligence (DRI) have tracked hundreds of such firms only to hit a dead end. Most of them are one-room offices, which are used only as a mailing address. On the other hand, some firms that do have a semblance of existence, create fake export papers and claim the benefits.

Under DFRC, the company in question first exports the consignment and then exports the raw material, which was required for production. DRI officials say that using fake documents the yarn is showed as having been transported out of Surat to Hyderabad, while in reality nothing moves. DRI officials had better luck in shutting down the network set up by scamsters in cities like Patna, but not here. DRI officers have checked out the antecedents of a number of trucks at local RTA offices in Gujarat, only to learn that most of them were fake. Many of the number plates of the trucks mentioned in the transport documents were in fact, autorickshaws and scooters. Raids by DRI officials at numerous checkposts in border districts of Andhra Pradesh revealed that none of the so-called trucks from Surat ever entered Andhra Pradesh.

Hyderabad's association with this scam can be traced to a number of powerloom units in its vicinity, many of which are defunct now. The existence of a number of export oriented units make things easy for the scamsters. According to rules, the textile produced under the two schemes can be sold to export oriented units (EOUs), and are treated as deemed exports. Here again, fake papers are created to show that sales have been made to non-existent EOUs, and the benefits claimed. The re-warehousing in Hyderabad has been aided by dismantling of the licence raj, which prohibits excise officers from visiting the suspect powerloom factories. The yarn that is mostly exported from Korea and Taiwan goes through five to six processes before it is classified as a textile.

The kingpin of the scam who is based in Hyderabad, is said to be a former senior official of the Central Excise and Customs department. The man in question masquerades as a Telugu film producer, and is said to have enormous political clout both at the state and the central level. This has prevented DRI officials in Hyderabad from pinning him down despite firm leads. This man in question, along with others of his ilk, have floated numerous front companies in Hyderabad including two major ones which have been tracked by DRI officials, Ahmed garments and Royal fabrics. In cases where DRI officials have been able to act on fake companies, they have been able to only round up junior staff like clerks and receptionists who are listed as directors of the fictitious companies. The big fish, stay out of the game and remain only in the shadows. The film producer operates along with his aides have made millions through this scam trade most of which have been invested in real estate in Andhra Pradesh and in producing Telugu films.

The irony of it is that when DRI officials tried to use strong-arm methods to extract information from the detainees, they filed complaints with state and national Human Rights Commissions. Most of the tip offs to DRI come from their network of informers and Indian companies who are affected by the sale of duty free imported yarn at low prices.

Disturbed by huge revenue losses, Finance Ministry recently issued a special circular directing customs officials at all ports in the country to be on the look out for suspiciously large amount of yarn imports. Interestingly, the perpetrators of the fraud avoid smaller ports and Inland Container Depots, where customs officials are able to track such consignments. Unlike the DFRC scheme, the LAS scheme is spawning the biggest scamsters. Under ALS scheme, the first licence is sent by post to the company and the rest of the licences can be collected in person.

To make this possible, the fake companies often provide the address of a shop or a house, which in reality is just a mailing address. Once the initial licence has been collected, the entity vacates the premises. The ALS scheme also provides a window of two years from the import of the raw material to fufill the commitments. And predictably, in these two years the companies vanish into thin air and new ones take their place.

Having tried and failed in their attempts to nail the erring companies, DRI officials are now adopting different tactics. They take along textile engineers during the raids on powerlooms and this move has paid off. The textile engineers under panchnama, are able to certify if the particular factory is capable of producing textile from the imported yarn.
Raids on units around Hyderabad have revealed rusted machinery which have nor been used for years, and are in no way capable of producing anything, leave alone textiles. "But when we close one door, another opens" says a frustrated DRI official. Using their clout in the corridors of power, the scamsters have been able to file false complaints and get government agencies to conduct raids on the investigating officers based in Hyderabad. "Why should we get into trouble for doing our job" bemoans a DRI official. "Thanks to their political connections no one can touch them, and they have proved that time and again."
DRI officials say that this scam cannot be shut down overnight and will take months of co-ordinated work between central and state agencies. "What we are now looking is only a tip of the iceberg, and if busted will overshadow other similar scams by a huge margin," adds a DRI official. This can be done by conducting intensive checks of de-bonded warehouses in Hyderabad and other Indian cities. DRI officials suspect that very little of the so-called exports from Export oriented units like the Kandla Free Trade Zone (FTZ) are physical in nature. At the end of the day, it’s all about who will take a lead in closing down the mother of all scams. It depends on whom you ask.

The Eenadu cauldron

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The donkey and the carrot

One good reason why so many stories about Times group appear on this blog and elsewhere is due to the fact that there are so many ex employees of ToI who are working in other organisations. Most of them have left Times with a bitter experience and naturally would like to carry the lurid tales of the workings inside Times. Naturally, this disgruntled lot is a wonderful source of information to tap into. Here is one story developed by tapping into this ex Times network across four Indian cities.
In this post, we look at the way the newspaper industry is run by crooks who ensure that the system will never change. One of the blog comments on an earlier weekend story was on salary hikes. All of us know how arbitrarily these things are done, at the whims and fancies of those who run the show.
Even the highly exalted Times group is no exception.
The owners of Times are super rich thanks to the huge profits that the group is making. They are not answerable to anybody as the parent company is not publicity listed except for ENIL, which is the holding company of Radio Mirchi.
The Jain family running the Times, wastes a huge amount of money pampering swamis like Sri Sri Ravi Shankar and Swami Jaggi Vasudev. Unlike Narayana Murthy of Infosys, the owners led by Vineet Jain and his family never believes in sharing their mountain of wealth with their staff.
At one time, the employees of Times used to get their yearly rise or increments, which was added on to their salary. But post the exit of Pradeep Guha, who was hugely popular with the Times employees, the Jains have got into a reverse gear of sorts. Increments are a pittance, and most of the salary goes into what is now called variable pay. This is paid as per the performance of a particular branch, which is set against ridiculously unachievable targets.
The idea is to ensure that the donkey never reaches the carrot.
First, this variable pay was supposed to be paid every month, then it was changed to every quarter, then six months and finally the lackeys of the management decided that the payout would be after one full year. Which means that almost 30% of the salary is held back for one full year and even after that payment depends on the whims and fancies of the MD of the company.
So much for the professionalism and excellence that the top management of Times speaks about. The result – the employees suffer, while the owners of the Times group and their chamchas enjoy holidays in exotic locations all around the world. (Our old man too had his share of fun!)
Nobody has any idea where the massive profits of the group that is siphoned off is stashed. The Times group makes huge profits which are said to be in the range of Rs 400 to 500 crore every year. Only a miniscule part of this money is given to the employees asvariable pay.
Where does the rest of the money go? Only a privileged few know into which Swiss banks the moneyis laundered into. Remember the Directorate of Revenue Intelligence had rounded up the Ashok Jain, the then Chairman of the Times group and put him behind bars. The old man sang like a parrot, before he croaked. But the case was hushed up after the politicians and the DRI officials were paid off.
Now it's time to re-visit the Jains like Undavalli has done with Eenadu. It’s time we changed all this. It’s time for the employees of Times group to take charge. It’s time they fought for the profits which is made possible due to the blood, tears, toil and sweat of the employees. Let us in the media profession and trade union leaders help the Times employees get what is due to them, rightfully.
Why should the profits be enjoyed by only a select few? Let the accounts of the Times group be made open to a team of retired Supreme Court judges, and a ratio of profit sharing for the employees, right down to the last one at the bottom of the ladder be worked out. Let us expose the smooth talking big shots of the Times group who hobnob with the President, Prime Minister, Finance Minister, film stars and other hot shots. This is nothing but a shameless attempt to curry favours leveraging their position as the owner of a newspaper. It’s a crying shame.
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Bite the bullet

Power corrupts, absolute power corrupts absolutely. Surely you heard that one before. Andhra Pradesh is caught somewhere in the middle of all that. Options before YSR are limited, as he struggles to contain the huge power surge, and a contrived farmers agitation, backed by his political opponents.

On one hand, YSR has to be seen adhering to his pledge of providing seven hours of dedicated power supply. On the other, he has to be realistic about the actual availability of power. With immense pressure being mounted on the generating stations, problems are beginning to show up. Boiler leakages and tripping are becoming common. When you push things beyond their capacity, they tend to break down. It happens both to man and machine.

So what options does YSR have? For one he has to buy power from any source. He has now agreed to run the idle gas-based power plants of the independent power producers on naptha. It is an expensive option, but with his back to the wall, YSR does not have much of a choice. So buy, at any cost. But where does the money come from? To save money, the government will have to trim down both plan and non-plan expenditures across departments.

Next go on a power saving drive. The government has decided to start charity from home, and has decided to cut down on the use of air conditioners and usage of lifts. Good move, but it must go beyond rhetoric. What about residences of ministers and bureaucrats who cannot sleep without ACs? Transco estimates that the saving will be to the tune of 10 million units, which is equivalent of setting a 400 MW power plant. Hoardings and signages don't need power after ten, and can be switched off.
But for heavens sake don't switch off the street lights, as someone from the electricity department has suggested. That will lead to more accidents and defeat the entire purpose of the exercise.

Next, go on an organized load shedding programme. If there is a power cut, then tell the people about it. Tell them when the power cuts are scheduled, so that consumers can make alternative arrangements. Don't shut down power only in the suburbs, start shutting down power in Banjara Hills, Jubilee, Hills, Begumpet and Punjagutta – CPDCL will save a lot more power than it would save from cutting down power in AS Rao Nagar or Medchal. The move to shift the load shedding from Transco to the distribution companies is a step in the right direction.

Next, bite the bullet. Provide subsidy to farmers based on their consumption. That calls for meters to be installed for every pump in the state. If the farmer consumes less than 100 units a month, then waive his entire bill. If he consumes more then make a graded subsidy. Let the rich farmers who own hundreds of acres pay at the minimum 50% of their metered amount. Historically, it has been shown to be true that farmers are willing to pay if they get quality, committed power. It is the politicians who have spoilt the farming community with freebies.

If a poor factory worker in Hyderabad has to pay 4 rupees for a unit of power, why should a rich Honda City driving farmer not pay the thousands of rupees worth of power that he consumes? This way subsidy can be targeted directly at the farming community instead of being just thrown into the coffers of the distribution companies.

Next, scale up the capacity. The state needs to make huge investments in setting up new power plants. The 210 MW Rayalaseema power plant at Muddanur which will be synchronized with the grid in the second week of January is a small step in that direction. With one more unit expected to join the state grid in March, the state will have at least five million additional units in its kitty. February to April will be very crucial to the power scenario in the state, with demand from both domestic and farm segment expected to touch an all time high.

Next, get cracking on the gas front. The state MPs need to forge a common front and demand with the centre that ONGC must be made to live up to its promise. ONGC needs to get its house in order and provide required amount of gas to the units that are dependent on them. Push the Gujarat Gas Corporation and Reliance Energy to pre-pone their gas delivery schedules from the KG basin. Sign up agreements with both these entities now, so that the gas is first supplied to units within our state before being routed to others.

Looking at the future, get a nuclear power plant. Coal is not going to last beyond the next 50 to 60 years, and water is too risky in a state that is prone to erratic monsoon. If our state has to tackle the power shortage, then nuclear energy is the only long-term solution.

Till then, keep the candles ready. The lights might go off as you read this.

FUTURE SHOCK

There is nothing called a free lunch. Haven’t we heard that before? We have, but not the politicians. For them electric power is a vote catcher, one that would get them access to the seat of political power.

Towards the fag end of his tenure, the then Chief Minister, Chandrababu Naidu felt that the ground was slipping away from him. The reason for this political earthquake was the promise of free power by the then opposition leader, Rajasekhara Reddy. A startled Naidu did not know how to react, for he knew that the theory of free electricity was flawed. Rajasekhara Reddy in his eagerness to achieve the ultimate ambition of life did not.

Today, the doctor from Pulivendula must be ruing the pledge he made. Farmers along with self-seeking politicians are paying back him in the same coin that Congress leaders once used to beat Naidu with.

To understand the economics of power let us look at the basics. The State-owned power utilities, which includes AP Genco has an installed capacity of 6822 MW of power from four sources including thermal, hydel, gas and wind. Apart from this, the State has numerous independent power producers including GVK, Lanco Kondapalli, and Spectrum among others.

To top it all, some of the units are idle due to lack of gas supplies, while the State government continues to pay the IPPs for power they are not producing! Blame it on the agreement signed with the IPPs during Naidu’s time.

Against the total installed capacity of 12,040 MW in the state, the current production is only 5,300 MW while the demand is around 7,500 MW every day. This gap has led to frequent grid disturbances with frequency levels going dangerously low, which can lead to a total collapse of the southern grid.

This has forced the State to go with a begging bowl to other states and continue to draw excess power from the central grid, far beyond what is allocated. Still the economics of demand and supply remains. The gap between supply and demand, which is presently at 1,500 MUs per day, is likely to reach 2,173 MUs in the next 45 days.

The concept of free power began when Punjab State Electricity Board did away with metering of electricity for farmers and charging a flat rate based on the horse-power of pumpset installed. The government there had an eye on the vote bank when it took the decision that sent the state electricity board into bankruptcy. Haryana followed and in a matter of time, both the state governments realised that. But YSR felt that the scenario in AP was different, with farmers consuming poison like there was no tomorrow.

While in opposition, YSR and specially the Communists had led a strident opposition to the power policies of the CBN government. This reached a flashpoint when police fired on a crowd marching towards the Assembly, at Basheerbagh, killing two protestors. After assuming power the YSR government provided compensation to the next of the kin of those killed and installed a memorial at Basheerbagh. Today, the shoe is on the other foot.

CBN’s footmen are fronting farmers to stage sit-ins, rasta-roko, smashing up sub stations, locking up staff. YSR has appealed to the farmers not to panic or resort to agitation. “Care is being taken to continue power supply for seven hours to save their crops,” he pleaded. But who cares. For Naidu this is the moment he has been waiting for. He wants nine hours of power supply, and wastes no time in telling the farming community of his oft-quoted line in the run-up to the Assembly elections “In YSR reign, electricity wires can be used as clotheslines.”

The Congress leaders are at a loss on what to do. Kesava Rao and team did muster up courage to launch a counter attack, by visiting farmers and declaring all was well. For YSR, this is a headache he could have done well without. As it is, the doctor is finding it tough to handle the IIT issue, which has come on top of the Telangana and Pothireddypadu issues.

Another sticking point for YSR is that for every unit consumed by the farmers, the State has to pay AP Transco in line with the demands of the AP Electricity Regulatory Commission. The subsidy bill will inflate to beyond Rs 2,500 to 3,000 crores this year.
The shortage of more than 15 million units a day, will cost the government close to Rs 700 crores (if not more) in the next three months. It’s crunch time till March.

YSRs decision to impose a power cut on industries will not go down well with IT companies and prospective investors. His decision to resort to load shedding in the urban areas can also generate a backlash at the hustings.
So what does he do? What are the options before the government? These and other issues will be dealt in our next post that will be out on Friday.

The battle for an IIT

Arjun Singh’s announcement of setting up a new IIT at Isnapur, in Medak district has set off a wider political debate. Most of it has nothing to do with the contours of the proposed IIT, but has to do more with it location.

If the IIT comes up at Isnapur, near the highly-polluted Patancheru then one can be sure that many of the faculty and students will be exposed to breathing problems and diseases like cancer. In fact, the new IIT would have been ideally suited near Shamirpet as the entire area is developing into an excellent eco-system. (Disclaimer - the author of this article nor any of his relatives have any real estate investments in the area).
The Shamirpet area has the ICICI knowledge park, Genome Valley, NALSAR University, BITS and the 2000-acre Jawahar IT park which will dwarf the IT units at Madhapur and Gachibowli. These institutions could have provided the perfect ambience and the new IIT could have seamlessly merged in.

Secondly, Arjun Singh did not concede IIT just because he loves the state. Far from it. Two things have dominated the thinking. The new IIT and its location will provide a handle for YSR to beat his separate state opponents. It has already pit Adilabad against Medak and even KCR doesn't know whom to back.

Secondly, the Union government has given an undertaking to the Supreme Court that it will create more seats in IITs, to offset the reduction in the number of seats due to the reservation of backward classes. This new IIT in Medak is part of that bigger game plan.

Before one gets into the pros and cons on the location of the new IIT, let us step back and look at how this prestigious clutch of institutions came about.
On the ground that West Bengal had the highest concentration of engineering industries, the then Chief Minister of West Bengal, B C Roy persuaded Nehru to set up the country’s first IIT at Kharagpur. Poor Nehru, he must be ruing that decision if he looks at the industrial scenario in WB today.

Most of the earlier IITs had a foreign hand, with the Nehru and Krishna Menon duo persuading the Soviets in the pre-Cold War era to fund IIT Mumbai. The Americans did not want to be left behind and agreed to bankroll IIT Kanpur.
The Germans wanted the IIT at Bangalore, but were persuaded by then Education Minister, C Subramaniam to locate the new IIT next to the governor’s campus on land in Chennai, which was offered in a matter of minutes. (Mr YSR please note)
Apart from the four original IITs, the most of the later day locations of the IITs came up due to weaknesses of the political establishment. Rajiv Gandhi faced with a strident students movement in Assam buckled and conceded an IIT for Assam, which came up at Guwahati. It cost Rs 1,500 crore to set up the IIT in the back of nowhere.
Except IIT-Roorkee that was upgraded, all the six IITs were established as brand new IITs right from the scratch. According to the present estimates it will cost the government Rs 2,000 to 2,500 crore to set up a brand new IIT. Yes, that is how much the new IIT in Hyderabad is going to cost, assuming that the land comes free.

While all this is on, the GOAP grapples with the issue of securing about 3,000 acres of land that is required in one single location. To add to that, those who looked at Basara as the ideal choice for the new IIT, have upped the ante. Chukka Ramaiah, who has trained a number of raw hands into IIT class material, feels shortchanged. He and many others are challenging the state’s argument that the quality of infrastructure and international airport played a key role in locating the new IIT close to Hyderabad. The claim, that access to quality infrastructure swung the choice of the new IIT is true to a certain extent.

Modern IITs will succeed in attracting good quality faculty only if it’s located close to major city like Hyderabad. The faculty members in IITs have often complained that their spouses are not able to find work, or their children don’t get a chance to study in the top-of-the-line schools, if IITs are located in a remote location. Students too will opt for new IIT based on its faculty quality and quick access. Reaching Basara would have taken them at least three to four hours by train or road from Hyderabad. And setting up of an airport in Basara as proposed by Mr Ramaiah, will not make any economic sense for those airlines planning to fly in.

Meanwhile, students in Andhra and Rayalaseema have also begun their agitation to prevent the IIT from coming up in Medak. That cauldron of unrest is sponsored by politicians with regional interest is in no doubt.
Our honest question to all the people involved is a simple one: Is it not enough reason that an IIT is coming up in our state? Or do they want to scream and fight which will eventually frighten Arjun Singh and Co to take the IIT to some other state. That’s food for thought.

IITs in India:

• IIT Kharagpur 1951 (East);
• IIT Powai in 1958 (West)
• IIT Kanpur in 1959 (Central)
• IIT Madras in 1959 (South)
• IIT Delhi in 1961 (North)
• IIT Guwahati 1994
• IIT Roorkee in 2001

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