Jul 3, 2008

Business - Ban on hoardings in Chennai aftereffects

For several hoarding owners in Chennai all hell broke loose on April 9, 2008 when the Supreme Court upheld the Madras High Court’s order banning unauthorised and hazardously positioned hoardings in Chennai. The Supreme Court upholding the Madras High Court’s order not only shocked the hoarding owners but also the entire advertising fraternity and left many in doldrums. This has also resulted in employees of several unorganised and small time players losing their jobs, while some big agencies either shunted off their employees to other divisions or transferred them to other cities.
With the ban on hoardings, the advertisers are left with few options, and the result is that prices of other out-of-home mediums such as road medians, bus panels and bus shelters have soared. Diamond Publicity, a Chennai-based OOH agency, has acquired 1,000 buses plying in Chennai for the rental cost of Rs 5,000 per bus. Earlier, the rental for each bus was around Rs 1,500 per bus every month. Diamond Publicity has taken the buses for the period of three years.
Similarly, road medians, which used to cost Rs 3,500 per month, is now rented out at Rs 12,000 and upwards. The Corporation has already floated a tender for 500 bus shelters in Chennai, which will be allotted to the highest bidder under build, operate and transfer (BOT) model. According to an industry source, the cost for building the bus shelters would alone cost more than Rs 75 crore. The duration of the winning bidder owning the bus shelters has also been reduced to eight years from 12 years which, according to a Corporation sources, was the collective decision of the Corporation.
Originally, the tender for bus shelters was floated in February 2008, and Big Street had won the bid by paying a whopping Rs 14 crore. However, after the ban on hoardings, the tender was called off and the Corporation floated a fresh tender on June 27, 2008, in which some of the national players, including Big Street, are participating.
According to a source from Chennai Corporation, the Corporation expects a higher bid this time as there are no hoardings in the city. An industry source said that the bid might even touch Rs 50 crore this time. Amidst all this, some of the OOH players this reporter spoke to said that the ban on hoardings was a huge setback and had hit the livelihoods of many. However, there were others who were optimistic about the hoardings returning to Chennai.
“There is no ban on hoardings in Chennai. This is a Government move to regularise the industry, which will only help stabilise the industry,” said Sridharan, Vice-President, Diamond Publicity. He hopes the hoardings would be back in Chennai in a much more organised manner.
Willis D’monte, Director-Operations, Big Street, felt that the ban on hoardings in Chennai would not affect their business plans as their focus was on street furniture and transit medium. “We will participate in tenders wherever it is viable and has revenue potential. Hoardings will come back, but I cannot say when,” he added.
The players in Chennai believe that hoardings would be back, but when is a question nobody has an answer to.

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