Cricket fanatics of India have already witnessed several high-voltage matches in this season of the cash-rich league.
Despite all these discussions and debates, IPL’s season five hit spotlights even for non-cricketing reasons that to a greater extent marred the intensity and dramas within the field.
While, controversies and questions have always surrounded the tournament right from its arrival in the paradigm of world cricket in 2008, 2012 edition triggered arguably more controversies and speculations than the past seasons as it passed through some rough patches this year.
Spot-fixing shock:
Perhaps, the biggest blow the tournament received this year was spot-fixing allegations against few cricketers, who played for different franchises. Names of five Indian cricketers surfaced after a sting-operation conducted by a news channel brought back the dark clouds of ‘fixing’.
The five players are T.P. Sudhindra (Deccan Chargers), Mohnish Mishra (Pune Warriors), Amit Yadav (Kings XI Punjab), Shalabh Shrivastava (Kings XI Punjab) and Abhinav Bali, a young Delhi cricketer.
The Indian cricket board also suspended the cricketers on charges of spot fixing in the IPL, after their names surfaced in a sting operation conducted by India TV.
The Board of Control for Cricket in India (BCCI) president N.Srinivasan also appointed ex-CBI officer Ravi Sawani, a former head of ICC’s Anti-Corruption and Security Unit (ACSU), to file a report in 15-20 days.
According to “India TV” news channel sting operation, IPL players were accepting bribes.
Sudhnidra was caught in the camera allegedly demanding Rs 40,000 to bowl a no-ball in a particular match.
The issue also created an uproar in the Parliament and Union Sports Minister Ajay Maken asked the BCCI to clear the cloud over spot-fixing allegations in the IPL at the earliest.
“It is a challenge as well as an opportunity for the BCCI as it would help them eradicate the menace of match-fixing. They should resolve the issue early,” said Maken.
Shah Rukh Khan banned from entering Wankhede:
Controversies touched IPL-V once again when Bollywood actor and owner of the side Kolkata Knight Riders, Shah Rukh Khan got involved into a scuffle with a Mumbai Cricket Association (MCA) personnel. As a result of the scuffle the MCA banned Bollywood superstar from entering Mumbai’s Wankhede stadium for five years.
MCA president Vilasrao Deshmukh said Khan ‘has shown no regrets for his action and behavior’.
“The managing committee of the MCA is forced to ban Khan from entering Wankhede for a period five years,” Deshmukh said.
The MCA had alleged that Khan was “dead drunk” and started a brawl with security personnel at the stadium after a match in which KKR beat the home team Mumbai Indians while the actor denied the charges, asserting he was definitely not intoxicated.
Khan, however, argued that he became aggressive only when the cricket body’s officials ‘manhandled’ the children under his responsibility at the stadium and ‘misbehaved’ with him.
The entire episode surely added to the crown of controversies already worn by IPL-5.
Sting of molestation charges:
From cheerleaders to spot fixing troubles, nearly every possible controversies had touched the tournament so far, but it received a severe blow when molestation charges were made by a woman named Zohal Hamid, against Australian cricketer Luke Pomersbach.
Pomersbach, who was charged with allegedly molesting the woman and assaulting her fiancé, was arrested and then granted bail by a Delhi court but asked not to leave the country.
According to the charges, Pomersbach had allegedly misbehaved with the woman, a US citizen of Indian origin, at the Maurya Sheraton Hotel here during a party late Thursday night.
The woman in her statement said that Pomersbach invited himself for some drinks with the couple and some common friends from Mumbai in their room.
After some time, the women left her friends to catch some sleep but the Australian followed her and misbehaved with her. When the women’s fiancee intervened, Pomersbach allegedly beat him up as well landing him in hospital.
The woman also claimed that there was tremendous pressure on her to withdraw the case.
However, the woman later dropped the charges against the cricketer on May 24.
Rave party scandal:
Before the three controversies were silent, a fresh controversy surfaced on May 20 when a rave party scandal hit the tournament quite hard.
IPL players Rahul Sharma and Wayne Parnell of Pune Warriors were among the 100 odd people detained by Mumbai police after they busted a rave party May 20 night in Mumbai.
Both the players claimed innocence and Rahul Sharma claimed that he was in a different party in the venue- Oak Woods Hotel in Juhu and was not in the rave party.
Sharma said he was clean and also said that he would give up cricket if he tested positive.
“We reached there at around 7 in the evening and all of a sudden within half an hour of us reaching there, the police raid happened. We didn’t know what was happening, I asked the police officers and they told me that a raid was in progress,” said Sharma.
“We have cooperated with the police and have even given medical tests. I belong to a simple family and have not even had a beer in my life, where does the question of attending a rave party arise? I will give up the sport if my tests come out positive. I have told everything to the team management and things would be clear once the medical report comes out,” he said.
Commenting on the incident, South African pacer Parnell said: “I don’t do drugs. Myself and Rahul were there at the hotel in a party at the request of a friend. We went there and at 7′o’clock police were all over in the party. We were just at the wrong place at the wrong time.”
IPL -5 will surely keep hitting the memories of cricket lovers for all these controversies apart from the charismatic performance by their favourite stars on the lush green fields.
However, it is only time that will tell again that whether these events will actually thrash the popularity graph of the annual cricketing extravaganza in the upcoming years.
Nearly 85 per cent of India’s national income comes from the domestic economy where the currency of trade is rupee. Yet the steep rise in the value of the dollar against the rupee, which has fallen 22 per cent against the former since the beginning of 2012, is causing a serious concern for many big industries in the country.
Though the fall in rupee should yield benefit to major export-oriented industries like garments, Information Technology (IT), BPO, diamonds, gold jewellery, etc, the gain is limited as the foreign customers are driving the prices down almost to the extent of rupee depreciation.
On the other hand, there are a whole lot of import-dependent industries like petroleum, automobiles, gold jewellery, outbound travel, iron and steel, heavy machinery, etc, which are adversely affected due to rise in dollar’s value. Moreover, the rupee fall has hit industries at a time when the Indian economy is slowing down and the overall demand scenario is not very great. This will certainly impact the job market as large industries are employment intensive.
IT & BPO: Most experts and analysts are of the view that the Indian IT industry, which earned $69 billion in exports in 2011-12 will have windfall gain from the falling rupee. But the reality is slightly different. While the big companies entering into mid to long-term contracts with their clients can protect their rates in terms of dollar, medium and small companies are being pursued to take a hair cut in rates. Analysts believe that large companies will show a significantly higher profit in the June 2012 quarter due to rupee fall.
Says iGATE CFO Sujit Sircar, “It (rupee fall) is a positive thing for Indian IT in the short-term but not so in the medium-term. Travel expenses will shoot up with the rise in the value of dollar.” Industry analysts also believe that however profitable it might be for this sector, companies will not be able to sustain gains for long. “Though rupee fall adds to profit, IT companies might bring a change in their hedging policy going for short-term hedging and, thereby, losing some gains,” says Angel Broking analyst Ankita Somani.
Increased cost can also eat into some gains as IT major Infosys Ltd realised last year. In an analyst call last month, Infosys Chief Financial Officer V Balakrishnan said, “The rupee had benefited us for the year as it depreciated by close to 5.6 per cent in 2011-12 and that was beneficial to a margin of around 2.3 per cent. But during the year, (employee) utilisation came down by 4 per cent and the rupee benefit was more or less offset by lower utilisation.”
Speaking about the company’s policy on forex management, Balakrishnan said, “Infosys’ hedging position at the end of March 2012 was $889 million. We continue with the policy of hedging for the short-term because we believe volatility will continue for sometime to come.”
Currency fluctuations
To take the currency fluctuations and uncertainties on the stride, some companies have decided that the billing rates can be made neutral. The BPO services provider, EXL Services, for example, is in agreement with clients that any gain on rupee depreciation will be passed on to the client while a rise in the value of rupee will benefit EXL.
EXL Services CEO Rohit Kapoor was quoted in a news daily saying, “It works well for both, for us and our customers. Fall of rupee can be good for us because, if customers get lower price, they can give us more jobs.”
Infosys BPO which registered a 71 per cent net profit growth in the quarter ended March 2012 also seems to have benefited in a big way from the fall of rupee.
Infosys BPO CEO Swami Swaminathan says that though rupee will help them gain a better profit margin, it would not be that significant as 30 per cent of the revenue comes from the centres outside India. On the possibility of clients lowering rates, he says that deals which are already signed will not see any changes, however, it cannot be ruled out for contracts that would be renewed.
In a statement, India’s premier IT industry body Nasscom said that more than depreciation, the volatility of currency movement is a big concern that needs to be tackled since it hinders the planning process for the Indian IT-BPO industry.
Garment exports: Another big foreign exchange earner for India is the readymade garments industry which earned $34 billion in exports in 2011-12. Logically, these exporters should be making a killing since rupee has fallen by 22 per cent since the beginning of the year. But the reality is different.
Foreign importers, many of whom operate through middlemen, demand lower rates each time an exporter benefits from currency depreciation. Demand for rate cuts come at the time of shipment, though rates were fixed 3 to 4 months in advance with the contractors.
Says Texport Syndicate India Ltd CEO & Director Avinash Misar, “The international market today is expecting us to pass on the advantage of rupee devaluation as demand in Europe & USA is in no great shape. Almost all orders are now being booked with a conversion of Rs 57 per US dollar. Hence, literally, the competitive market has squeezed all the apparent gains.”
Agrees Confederation of Indian Textile Industries (CITI) Secretary General D K Nair, saying, “Rupee depreciation, in itself, is a very positive development for our exports of textiles and clothing. Since import intensity is one of the lowest in this industry, depreciation can only help.”
Car Industry: The list of industries suffering badly due to the falling rupee is long. Take the case of car industry wherein, on an average, 30 per cent of the cost is on account of imported materials like steel plates, engines, gearboxes and other parts. Car-makers fear they will have to raise prices to protect profits. For example, imports account for 25 per cent of the net cost for the car market leader Maruti Suzuki India.
Maruti’s Chief Financial Officer, Ajay Seth, says, “We are badly affected, suffering from an almost 15 per cent drop in rupee in 3 months. Though we have protected ourselves by hedging, it is only a short-term measure. In the long-term, the rupee must appreciate or else we will be in deep trouble.”
His concern is genuine. Value of Maruti’s total import bill in 2011-12 was Rs 8,500 crore in 2011-12 and a 20 per cent depreciation in rupee can shave off Rs 1,700 crore from annual profit. Another car major Toyota Kirloskar Motors (TKM) is worse off as its import dependence is 35 to 40 per cent.
Says TKM Deputy Managing Director (Commercial) Shekar Viswanathan, “We can do little to arrest the hit on our finances due to the sharp depreciation of the rupee. For every rupee depreciation, we lose as much as Rs 90 crore.” TKM is now trying to enhance localisation to reduce its import dependence.
Hyundai Motors India is slightly better off as the company is foreign exchange positive: it has earned more from car exports in 2011-12 than total imports, points out Senior VP (Finance) R Sethuraman.
Gold jewellery: Gold jewellery is another sector which has also lost a bit of its shine. The Rs 1,25,000 crore industry which depends on imports for 80 per cent of the yellow metal requirement, was first hit by the doubling of import duty in the budget. The fall in rupee has now made jewellery more expensive, beyond the reach of large number of customers.
Wait and watch policy
Lamenting about the plight of the industry, jewellery retailer and exporter Rajesh Exports Ltd Chairman Rajesh Mehta says, “As an exporter I am happy, but my buyers abroad are worried by our currency and are reluctant to pay more,” adding that owing to serious volatility importers are not is coming forward adopting a wait and watch policy.
Steel Industry: Indian steel industry depends heavily on imported coal, since large steel manufacturers use imported coking coal in the furnaces of integrated steel plants. The coking coal prices have already reached its peak of $320 per tonne and the fall in rupee is the added burden for steel companies.
Says JSW CEO Vinod Nowal, “The hurt is mainly felt due to the fact that the steel industry is largely dependent on imported raw materials, especially coal which is predominantly sourced from Australia. In the last one month or so, the cost of imported coal has gone up by Rs 1,000 per tonne or so, which needs to borne by the industry.” JSW in the financial year 2011-12 has booked a loss of Rs 800 crore only on account of rupee depreciation. Higher price of imported coal is also a headache for the country’s thermal power plants which are unable to pass on the higher cost of electricity to consumers.
Travel and Tourism: The travel and tourism industry in the country, which has been seeing considerable growth in the last few years thanks to higher disposable income with people, is now buying time expecting the rupee fall to stop. While domestic tourism has got a fillip, foreign tours are still doing well among the high-income segments, obseves Travel Tours India COO Ashwin Narayanan. “For an average Indian family of four with an annual income of Rs 15 lakh or more, one big vacation abroad each year is quite common,” he says. Tourists from abroad are also finding India cheaper as close to 5.80 million people from overseas visited India last year, informed Cox & Kings Ltd Head (Relationships) Karan Anand.
Falling rupee is also a problem for consumer electronics and civil aviation industries. Every time the rupee drops, the loss making domestic airlines are forced to pay more for the ATF (aviation turbine fuel), accounting for 45 per cent of the cost. Jet Airways, for example, has reported a net loss of Rs 298 crore for the March quarter mainly on account of rupee depreciation and higher fuel prices. Another industry that is likely to take a beating is that of heavy power equipment which has a major import basket as Indian companies like BHEL cannot meet the demand in the country.
