Business - India;Western Railways calls OOH players for 7-year contract

Nitin Sharma

The Western Railways in Mumbai has once again called OOH advertising players to bid for the 7-year sole/bulk advertising rights for the entire suburban section of Mumbai Division from Churchgate to Dahanu. The minimum bid price/ license fees for the tender has been fixed at Rs 40.5 crore per year, bringing the total amount to Rs 283.5 crore. The suburban section of Mumbai division has 36 stations, including two terminal stations of Mumbai Central and Bandra terminus handling about 32.53 lakh passengers daily.

The winner of the bid will have to up the license fee from the second year onwards by 10 per cent, 15 per cent, and 20 per cent, respectively, on an annual basis from the previous year’s license fees.

The tender consists of a two-packet system, wherein Packet A contains the technical bid, while Packet B contains a financial bid. The technical bid will be opened on December 12, 2008, at 3 pm. The date of opening of the financial bid will be intimated to the eligible bidders later. The licensee will be allowed to pay the license fee on a quarterly basis.

According to a Railways official, who did not want to be name, “The tender provides for an unlimited scope to the licensee to develop many advertisement sites for various media at various locations of the station with prior approvals. No additional charges shall be levied on the advertiser for new sites during the currency of the contract as the entire suburban section of Mumbai division will be covered under the contract.”

“The existing commercial publicity contracts (except for the media of trains and other exempted sites/media) shall be handed over to the licensee after their contractual period. All new sites displayed and existing sites taken over during the contract period would be co-terminated with the original expiry date, and I feel that it is a golden opportunity for the OOH players,” the official added.

Though Railways officials feel that the tender would provide the licensee with a golden opportunity as he/she would be able to lure the advertisers to reach consumers everyday by offering unlimited scope of advertisement opportunities, industry experts seem to have a mixed point of view.

Ajaz Memon, Director, Network Media Solutions, said, “In the time of economic slowdown, when everyone is trying to cut down on expenses, the Railways officials have once again come up with a tender, which was earlier forfeited by the entire industry. And this time, too, I feel that despite them increasing the tender period from five to seven years, the tender will be a failure as it involves the interests of many existing players who already have the rights for some stations, and also because the minimum bid price of Rs 40.5 crore is on the higher side.”

On the other hand, Sriram Iyer, CEO, Street Culture, felt that this tender was a huge opportunity. He said, “In the long run, this tender will be a great opportunity for anyone who wins. The tender would give rights to 36 stations, which is a great property for channels, media and financial clients who would be looking out for mass coverage. Moreover, the economic slowdown shall not last for long.”

Kalpesh Vora, Director, Creation Publicity Pvt Ltd, noted, “This tender would have been great had all the stations been given to the winning bidder at the same time. But there are many small pocket stations where already a couple of media owners have the sole property rights, which would extend to 2010. As a result, only a few players will bid for the advertising rights.”

Yogesh Lakhani, Director, Bright Outdoor Advertising, was upbeat about the tender. He said, “It is a very good opportunity for the OOH players to bid for this long term tender despite some shortcomings.”

Mangesh Borse, Director, Symbiosis Advertising, had a suggestion for the Mumbai Western Railway officials. He said, “It is high time that the Railways officials hire an OOH consultant as they have time and again failed to tender this particular stretch. And this time, too, they will meet with the same fate as this particular stretch from Churchgate to Dahanu Road has not been priced competitively. Hence, very few players will think of participating in the bid. Secondly, despite the Railways officials increasing the tender period from five to seven years, the deal still is not economically viable.”