THE BRAND WARFARE

In August 2013, Pepsodent, a leading toothpaste brand from HUL came up with an advertisement that directly attacked its competitor P&G’s toothpaste Colgate with a claim that Pepsodent Germicheck is 130% better in fighting germs than Colgate. This ad was only a glimpse of the extent to which corporate biggies in the world of consumer space can go to in order to provide a longer shelf life to their products and influence consumer choice. This type of aggressive marketing, however, is not a new phenomenon in India and has been used actively used in the corporate world to grab attention and project one’s product better than the rest.

Comparative advertising like this is basically a sales promotion technique that compares the products/services of one undertaking with those of its competitors in order to generate attention. It makes certain claims to show that their product is better and that the claims of the rival company are not sensible. Famously known as ‘BRAND WARS’, these advertisements became notoriously common after they were used by popular soft drink brands Pepsi and Coca Cola followed by leading detergent brands Rin and Tide.

The corporate industry is divided when it comes to giving opinions on such type of marketing. Experts claim that it’s the mad competition that makes companies use such tactics to prove their products as the best and these are often harmless. However the past has also witnessed cases where brand wars have ruffled quite a few feathers and the companies have resorted to legal interference in this matter. 

A famous example is that of Wipro Consumer Care and Lighting and Godrej Consumer Products Ltd, both leading consumer products companies, filed suits against each other in the courts alleging wrongful advertising on each other’s part. First, Wipro Ltd got an injunction from a Hyderabad court on an ad by Godrej, which claimed its soap brand Godrej No. 1’s leadership over rivals such as Santoor soap, a Wipro brand. Wipro cried foul citing the ad to be “unfair, unethical, incorrect and misleading”. A week later, Godrej challenged Wipro for advertising its liquid detergent brand Wipro SafeWash, which claimed supremacy over Godrej’s own brand Ezee. The Punjab court, where the company filed the case, passed an interim injunction restraining Wipro from continuing the controversial ad.

Thus comparative advertising is a double edged sword which can prove to be extremely harmful for a company’s image as well as its products. Unless used in the right competitive spirit, it can end up hurting not the rival company but one’s own brand value. Thus for those resorting to such a forceful tactic, it is important to make sure that the claims it makes is truthful and will do the company more good than harm. Considering that the competition is only growing fiercer day by day one thing is for sure and that is that BRAND WARS are here to stay.

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Amnesty Scheme: A Generous Act By the Government

The problem of black money corroding the economy of the country is not a new or recent problem. It has been there almost since the Second World War and it has been continuously engaging the attention of the Government. The Government has adopted various measures in the past with a view to curbing
the generation of black money and bringing it out in the open so that it may be available for strengthening the economy. One such way is through Voluntary Compliance Encouragement Scheme (VCES).

The concepts of confession and absolution are rooted in human history and religion—it is hardly a surprise that they would permeate into the legal realm as well. After all, amnesty schemes in tax laws are nothing but an extension of the aforesaid concepts. India has experimented with tax amnesty schemes in the past with mixed results. In the past, the government brought VDIS scheme under income tax and the Kar Vivad Samadhan Scheme for indirect taxes.

The newly introduced Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) embodies the concepts of confession and absolution specifically in the context of service tax by providing for amnesty vis à vis specified scenarios of transgression of service tax laws. The Service tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) has now offered a lifeline to persons who have not complied with the law in the past, to set their service tax records straight. “VCES”‐A tool, designed by the Central Government which was announced in this Union budget, aims to iron out the past non‐compliance under service tax. By using a system of taxation by confession “VCES” will not only broaden the tax base, but also helps in smoother filing of returns by the non‐compliant assessees. The declarants under VCES will not just be exempt from penalties but can also do away with payment of interest and the risk of possible prosecution.

The eligibility for VCES is restricted to service providers who have not paid service tax or filed service tax returns for the period October 2007 to December 2012. In order to avail the benefit of VCES, the taxpayer would be required to pay the due tax which, if accepted by the tax authorities, will lead to an immunity from the levy of interest, penalty and any other proceedings under Chapter V of the Finance Act, 1994 (hereafter, the Act).Service tax amnesty scheme has so far yielded Rs 1,500 crore in revenue for the government, with 6,283 assessees taking advantage of the VCES that was announced in the Budget 2013-14. Last day for this scheme is 31st December, 2013. 

The Finance Minister said  that the Voluntary Compliance Encouragement Scheme (VCES) will be the last opportunity given to tax evaders so that they can come clean and make a fresh start. He advised the service providers not to expect another such offer within the next 20 years. 

So what are you waiting for? Grab this opportunity by its horns.

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What Harshad Mehta Did- The Stock Scam

In the early 1990s, the banks in India had to maintain a particular amount of their deposits in government bonds. This ratio was called SLR (Statutory Liquidity Ratio). Each bank had to submit a detailed sheet of its balance at the end of the day and also show that there was a sufficient amount invested in government bonds. Now, the government decided that the banks need not show their details on each day, they need to do it only on Fridays. Also, there was an extra clause that said that the average percentage of bond holdings over the week needs to be above the SLR but the daily percentage need not be so. That meant that banks would sell bonds in the earlier part of the week and then buy bonds back at the end of the week. The capital freed in the starting of the week could then be invested. Now, at the end of the week many banks would be desperate to buy bonds back. This is where the broker comes in. The broker knew which bank had more bonds (called ‘plus’) and which has less than the required amount (called ‘short’). He then acts as the middleman between the two banks. Harshad Mehta was one such broker. He worked as a middleman between many banks for a long time and gained the trust of the banks’ senior management. Let’s say that there are two banks A (short) and B (plus). Now what Harshad Mehta did was that he told the banker at A that he was dealing with many banks and hence did not know who would he deal in the end with. So he said that the bank should write the cheque in his name rather than the other bank (which was forbidden by law), so that he could make the payment to whichever bank was required. Since he was a trusted broker, the banks agreed. Then, going back to the example of bank A and B, he took the money from A and went to B and said that he would pay the money on the next day to B but he needed the bonds right now (for A). But he offered a 15 % return for bank B for the one day extension. Bank B readily agreed with this since it was getting such a nice return

Now since Harshad Mehta was dealing with many banks at the same time he could then keep some capital with him at all times. For example, he takes money from A on Monday, and tells B that he’ll pay on Tuesday, then he takes money from C on Tuesday and tells D that he’ll pay on Wednesday and the money he gets from C is paid to B and as a result he has some working capital with him at all times if this goes on with other banks throughout the week. The banks at that time were not allowed to invest in the equity markets. Harshad Mehta had very cleverly squeezed some capital out of the banking system. This capital he invested in the stock market and managed to stoke a massive boom.

He took the price of ACC from 200 to 9000.Thats an increase of 4400%!!!The market went up like crazy and the bulls were on a mad run. Since he had to book profits in the end, the day he sold was the day when the market crashed. The same day Vijaya Bank chairman committed suicide by jumping from the top of the banks’ office. The chairman knew that when it would become public that he had written cheques in the name of Mehta, he would be dead meat. One rather unknown fact about this scam is that there was a very important player in this scam who managed to keep a very low profile. That man was Nimesh Shah. He was just as involved as Harshad Mehta but he knew how keep out of the hands of the law. Nimesh Shah still deals in the stock market and is known to be a heavy player. Harshad Mehta is now dead. It is rumored that when he died, he still had 10% of ACC shares with him.

Source: www.bullrider.com

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