THE HITHERTO unregulated Rs 400-crore bottled water business is being put on leash.
After the recent government guidelines making Bureau of Industrial Standards certification a must for the segment from April 1, it has now decided to classify it as “food”, and has placed it under the aegis of the Prevention of Food Adulteration Act.
This means the growing water business would be more regulated as bottled water companies would require a PFA licence to operate their plants.
A lot of smaller, unregulated companies could fall by the wayside since they are not equipped to meet with these specifications, an industry source said. It will also ensure safety and hygiene for the product.
Though the initial notification about making BIS certification mandatory for the bottled water business was governed under the PFA Act, it is the first time that the government has notified bottled water as a food product, sources said.
The well-known brands are, however, unlikely to be affected because, while most of them have already procured the BIS certification and licences under PFA, the rest are expected to be able to secure it over the next couple of months.
Though the government has made it mandatory for these companies to get the BIS certification by April 1, some of the others who have not procured it may get an extension for three months if they have applied for a licence, sources said.
It would be good for the consumers and the companies serious about the market, Suveen Sahib, country manager, Danone, told ET. Danone sells the Evian brand of mineral water in the country.
It also means that companies serious in the business would have to invest in additional facilities for laboratory testing to keep quality in mind, he added.
Pepsi officials also welcomed the move and said that they have already procured both the certification as well as the licences for operating and selling bottled water. Pepsi sells the Aquafina range of bottled water products in the market.
According to sources, the new notification has been issued by the ministry of health and family welfare. The government had earlier also brought out a notification saying that medical professionals cannot endorse a food product.
Following this, Coca Cola India has discontinued its ad campaign which shows a doctors’ association endorsing its Kinley brand of bottled water from March 29, a Coca Cola spokesman said. He also said that the company has secured both the BIS certification and the PFA licence.
The bottled water market — which is growing at an estimated 40 per cent every year — has witnessed a lot of activity during the last two years.
All major food brands have either launched their products or are considering it. Some have actually launched second brands as well.
While Coke launched its Kinley brand of bottled water last year, Pepsi entered the market through its global brand Acquafina. Among domestic players, the major entrants include UB and Britannia — which is also expected to be a major player.
Nestle too entered the market during this time, but in the high-end segment, which is a very small component of the total market, with two of its international brands: Perrier and San Pellegrino. It has recently launched its mass market brand, Pure Life.
Karnataka guaranteed paper upgraded to A+
increasing share of the tertiary sector in the state’s economic output has added stability to the state’s economy
AT A time when several state governments have seen their ratings downgraded, the Karnataka government-guaranteed papers have been upgraded to A+ (so) (adequate safety with relatively higher standing within the category).
This puts Karnataka in the same league as Gujarat, which currently has the same implicit rating outstanding from Crisil.
It may be recalled that in the past one year or so, Crisil has downgraded the implicit ratings of two state governments: Orissa and Maharashtra twice.
Speaking to ET, Crisil’s head of infrastructure ratings, Sharad Jain said, “Karnataka has maintained fiscal prudence, as is reflected in its low deficit levels, debt to revenue receipts ratio and higher interest coverage levels, as compared to other states. Besides, Karnataka did not have to resort to ways and means advances from the Reserve Bank of India in the past three years.”
Crisil has upgraded the ratings assigned to eight bond issues, worth a total of Rs 2,479.2 crore, issued by Krishna Bhagya Jala Nigam from A (so) to A+ (so). The rating agency has also assigned an A+ (so) rating to a Rs 1,200-crore fresh bonds programme of the state government undertaking.
The ratings are based on the credit enhancement mechanism, in the form of an unconditional guarantee by the government of Karnataka, to meet the debt servicing obligations on the bonds and tripartite agreement between KBJNL, GoK and the trustees to the bondholders, facilitating timely payment of dues to bondholders.
KBJNL’s own revenues are not expected to be sufficient to meet its debt servicing obligations in the short to medium term.
The interest and principal repayments on the rated bonds are expected to be met through budgetary support provided by GoK to KBJNL.
Therefore, the ratings reflect the ability of GoK to service the debt obligations on the rated bonds, said a Crisil release.
The upgrade in KBJNL’s ratings is based on GoK’s sustained fiscal prudence leading to a consistently sound fiscal performance, as reflected in relatively lower revenue and fiscal deficits, low debt levels, high interest coverage and healthy liquidity position, as compared to other states.
The ratings are supported by a healthy growth in GoK’s revenues and outstanding tax effort, the release added. GoK’s relatively high per capita developmental expenditure is expected to lead to economic betterment in the medium term.
The increasing share of the tertiary sector in the state’s economic output has added stability to the state’s economy with a decline in dependence on the primary sector and a rise in per capita income levels, said Crisil.
KBJNL acts as a financing and implementing agency for the completion of Upper Krishna Projects in the state of Karnataka. The UKP was envisaged to tap the potential of the Krishna Basin for the purpose of irrigation and generation of hydro-electric power.
KBJNL is the nodal agency for the completion of the unfinished irrigation projects in the state in order to meet the Bachawat award, which addresses the issue of water sharing between the states of Karnataka, Andhra Pradesh and Maharashtra, the release said.
Power regulators increasing risks: Crisil – Mumbai
THE SETTING up of regulatory commissions has exposed power utilities to higher regulatory risks. This assumes greater significance in view of the fact that power utilities in India are operationally not very efficient, said rating agency Crisil.
The setting up of regulatory commissions in several states has been a welcome feature that is expected to make the power sector more efficient. The regulatory commissions are primarily conceived as tariff setting bodies that are expected to play a balancing act where the interests of all stakeholders are to be taken into account.
This is illustrated from the marginal tariff increases along with stipulations to reduce high level of Transmission & Distribution losses granted to power utility companies in Maharashtra and Orissa.
Crisil believes that states like Maharashtra and Gujarat, that are excessively dependent upon costlier power purchases from IPPs, are thus exposed to higher regulatory risks. This is because, the regulatory commissions factor the cost of power purchase to determine the extent of tariff hike, based upon the concept of merit order dispatch.
This has influenced the tariff award given by Maharashtra Electricity Regulatory Commission, wherein the regulator has asked Maharashtra State Electricity Board to cut down power purchase cost by following merit order dispatch.
Crisil expects the regulatory risk to continue to be one of the key rating determinants in the power sector, in the short-medium-term. This view arises from the fact that certain states have been facing delays in their respective regulators granting tariff increases.
Canadian MF to expand Indian operations @ New Delhi
CANADA-BASED mutual fund major Dundee is expanding its India operations
CANADA-BASED mutual fund major Dundee is expanding its India operations in a big way in line with its focus on wealth management for non-resident Indian clients.
To start with, the holding company for the group in India, which is registered as a non banking financial services company with the Reserve Bank of India, namely, Dundee Bancorp, has applied to the RBI for a full-fledged money changers licence.
The holding company currently has a restricted money changers licence from the RBI.
“Currently, we are catering to the investment and money management needs of our NRI clients via Dundee MF and our other group concerns. The idea is to broaden this focus to complete wealth management solutions,” Dundee Mutual Funds president Sunil Joseph told ET.
On the mutual funds side, the AMC is planning to launch a pure growth scheme and an index fund in the next two months in addition to introducing a cheque writing facility for its gilt and liquid funds in the next three weeks.
“At Dundee Capital Markets we are focusing on building a business of distributing mutual fund products. We will also offer segregated account wealth management facilities, ie portfolio management schemes for offshore clients and onshore clients under the aegis of Dundee Investment Management & Research, the investment manager for Dundee Mutual Funds in India,” Joseph said.
Once the regulatory issues are resolved, another group company Dundee Securities Company, is planning to set up trading terminals in London and Dubai to offer stock trading facilities for NRI clients. To facilitate this, the company has already acquired seats on the Bombay Stock Exchange and the Inter Connected Stock Exchange of India.
Other initiatives on the mutual fund front include setting up of a two-tier e-commerce enabled website and providing one-business-a-day redemption facility to investors in its Liquid fund.
Currently, Dundee Mutual Fund offers three open end debt-oriented schemes and two open-end equity oriented schemes in India.
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