Moving Forward Slowly but Surely

Moving Forward Slowly but Surely

Council and Office Bearers for the Year 2006-07

The Council for the year 2006-07, constituted afresh at the previous AGM, held its 2318t meeting immediately after the conclusion of AGM on 19th September 2006 to elect President, Vice President, Hony Secretary and Hony Treasurer, to co-opt other members to the Council, to constitute various committees and appoint their Directors, and to chalk out the programme of activities & events for the year. Mr Binod Agarwal and Mr Pradip R Kamdar were unanimously re-elected President and Vice President, respectively, for the year 2006-07. Mr Ashish M Gupta and Mr Nikunj Sanghi were unanimously elected Hony Secretary and Hony Treasurer, respectively.

The new Council continued on course charted by the previous Council, ably headed by Mr Binod Agarwal. The Council also embarked on a few new initiatives for the benefit of retail automobile trade. It is a matter of satisfaction for the Council that the activities undertaken by FADA made a steady headway. Important activities and events during the year under report are as under:

Council Meetings

Council during the year held 6 meetings at Delhi (2), Mumbai, Kolkata, Chandigarh and Chennai. The objective of rotating the meetings was to meet members in various parts of the country and to understand the scenario at the local and regional levels for appropriate action.

FADA-FICCI Conference

Coinciding with its 43rd AGM, FADA organised a Conference jointly with FICCI on the theme: 'Auto Retail- Framework for Growth' on 19th September 2006 at FICCI Auditorium, New Delhi. The conference deliberated upon challenges arising from the tremendous growth of Indian automobile industry, including the human resource challenge, motor vehicle registration procedures, taxes on motor vehicles, road infrastructure, parking facilities within cities and urban centres, and provision for automobile dealerships with 3-S in the land use planning of major cities, for rapid & orderly growth of automotive and allied businesses.

The conference was inaugurated by Mr T R Baalu, Hon'ble Union Minister of Shipping, Road Transport & Highways. The Interactive Session chaired by Mr Vinay Nevatia, Chairman, Auto Retail Task Force, FICCI and Past President, FADA, on the topic 'Regulatory Framework for Auto Retial' comprised of eminent panelists, namely: Mr Sumantra Chowdhury, Principal Secretary (Transport), Government of West Bengal; Mr N Balachandran, Special Commissioner (Transport Department), Government of Delhi; Mr Ajay Misra, Transport Commissioner, Government of Andhra Pradesh; Mr Iqbal Singh, Transport Commissioner, Government of Punjab; Mr Upendra Jain, Deputy Transport Commissioner, Govt of Madhya Pradesh; Mr Eswaranatrajan, Head, Motor Vehicle Underwriting and Claims, ICICI Lombard; and Mr Ravi Bhatia, General Manager (Sales Support), Maruti Udyog Limited.

In addition to Inaugural session & Interactive Session on Regulatory Framework, the day-long conference comprised three more sessions focusing on: The Human Resource Challenge; Taxation & Insurance; Infrastructure - Land Use & Urban Planning. Distinguished speakers at these sessions included: Mr Onkar S Kanwar, Past President, FICCI and Chairman, Apollo Tyres; Mr K Srinivas, VP (HR), Bajaj Auto Ltd; Mr V Vaidyanathan, Head-Retail Group and Mr Sachin Khandelwal, Head, Vehicle Loans, ICICI Bank; Dr Harivansh Chaturvedi, Director, BIMTECH; Mr Sushi I Solanki, Commissioner, CBE&C; Mr S Madhavan, PriceWaterHouse Coopers; Mr D D Goyal, MUL; Mr V Sridharan, Mis Lakshmikumaran & Sridharan; Mr Rakesh Jain, Past President, FADA; and Mr A K Jain, Commissioner (Planning), DDA.

Eastern Reaion Auto Convention 2007

FADA and its founder member The Motor Industries Association (MIA) jointly organised the Eastern Region Auto Convention on the theme "Managing Growth" in Kolkata on 15th March 2007, on the lines of regional convention organised in 2005 at Mumbai. The Hon'ble Minister for Transport, Sports & Youth Services, Government of West Bengal - Mr Subhas Chakraborty inaugurated the Convention. Mr Ravi Kant, Managing Director, Tata Motors graced the occasion as the Chief Guest. A galaxy of speakers & panelists, who made presentations and interacted with the participants on topics ranging from Customer Satisfaction to Dealer Viability, Insurance & Taxation, and Human Resource included: Mr Mohit Arora, Country Director-India, JD Power Asia Pacific; Mr B Kapoor, Sr GM (Mktg), Mahindra & Mahindra; Mr Anil Dua, VP-Mktg, Hero Honda Motors Ltd; Ms Puloma Dalal, Tax Consultant; Mr Sudhir Chand, Management Consultant; Dr G P Jakhotiya, Consultant, Jakhotiya & Associates; Mr Pradeep Saxena, Sr VP, TNS Automotive India; Mr Vijay Kumar, Bajaj Allianz; Mr Dipankar Chatterjee, Consultant; and Mr Sharath Vijayaraghavan, ED, Sundaram Motors.

The daylong conference comprising Inaugural Session and four Business Sessions evoked an overwhelming response and witnessed engrossing deliberations. Around 300 participants representing automobile dealerships, vehicle manufacturers, equipment manufacturers, banks, finance companies and insurance companies, had an exciting and educating experience of acquainting themselves with the current and emerging scenario. The convention also threw up a number of ideas on new business opportunities awaiting the players in automotive business and on coping with the new challenges brought about by the growth in its wake.

Reaional Meetinas & Open House Sessions

Regional Meetings and Open House Sessions were organised at Mumbai, Kolkata, Chandigarh and Jalandhar with a view to reaching out to members in various parts of the country and identifying and highlighting the problems & issues facing automobile dealers at the state and local levels.

The meetings provided an opportunity of interaction with the Government authorities, representatives of automotive industry and others connected with automotive business, including Mr Sumantra Chowdhury, Principal Secretary (Transport), Government of West Bengal; Dr Karamjit Singh, Add!. Transport Commissioner, Govt of Punjab; Mr M K Mahajan, Add!. Transport Commissioner, Government of Rajasthan; Ms Puloma Dalal, Tax Consultant; Mr Sachin Khandelwal, Head-Credit Cards, ICICI Bank, Mr Arvind Mathew, President & MD, Ford India; Mr Rajesh Jejurikar, MD, Mahindra Renault & Executive VP, M&M Automotive Sector; Mr Shyam Mani, President-Sales & Marketing (CVBU), Tata Motors; and local service tax officials.

Industry Relations

FADA continued to work in partnership with industry and all other stakeholders for sustainable growth and development of automotive business as a whole. Regular interaction with SIAM on host of issues including sales tax on warranty parts, gray areas in service tax, dealer viability and absence of provision for automobile dealerships with 3-S facility in the land use planning of major cities, was maintained.

Interaction with the Government

FADA continued to have a regular interaction with senior officials of Government at the Centre and States to sensitise them on the following issues in particular –

▪

Non-uniformity in provisions and rates of VAT on Used Vehicles across States;

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Sales tax on warranty parts;

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Confusion and legality of service tax on the amount received by automobile dealers from NBFCs and banks for arranging vehicle finance on behalf of the customers;

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Rationalisation of excise duty on all cars at 16%, irrespective of its size and engine capacity;

▪

Delegation of registration of vehicles to Automobile Dealers and dispensing with the requirement of physically taking the vehicles to RTO's for inspection, particularly when the new vehicles are already type-approved and certified by national test agencies for compliance with the provisions of Motor Vehicles Act and Central Motor Vehicle Rules;

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Uniformity in vehicle registration procedures and taxes;

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Putting in place an effective Inspection & Certification Programme for in-use vehicles, including non-transport vehicles; and

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Land Planning & Development, specifically the SC order on land use restrictions in Delhi.

Representations to the Government Authorities

Automobile dealerships in Delhi & other major cities are faced with a piquant situation inasmuch as there are no commercial spaces big enough to accommodate automobile dealership showrooms that require large areas for display of vehicles, accessories, office, etc. The composite dealerships with 3-S facility under one roof, which is nowadays a norm the world over, are confronted with an acute problem. While the sales showrooms are not permitted along with workshops in industrial areas, workshops are not permitted to be operated in commercial areas.

Representations were made to the Union Ministry of Urban Development for modifications in the land use laws for permitting the composite activity of sales, service and spares on industrial plots and creating auto clusters in Delhi and other major cities.

Representations on the issues of FBT and VAT on Used Vehicles were also submitted separately to the Ministry of Finance, Government of India and Empowered Committee of State Finance Ministers.

FADA also submitted its Pre-Budget and Post-Budget Memoranda to Union Ministry of Finance, Ministry of Heavy Industries, FICCI and ASSOCHAM. A representation for inclusion of issues of concern to automobile dealers in the Automotive Mission Plan 2016 was made to the Ministry of Heavy Industries. FADA's suggestions on (i) Provision for automobile dealerships with 3-S facility in the land use planning of major cities, and (ii) Assured availability of parts and service for a reasonable time after introduction of a new model were incorporated in the Automotive Mission Plan.

In addition to the meetings and interaction with transport authorities in various States, FADA submitted its suggestions on issues relating to motor vehicle taxes & registration procedures, as also on other matters affecting Motor Vehicles Act/Central Motor Vehicle Rules to the national chambers, namely, FICCI and ASSOCHAM for being taken up with the appropriate authorities.

Petition to Hon'ble Supreme Court

Arising out of the judgement dated 21st July 2004 of Hon'ble Supreme Court in the case Mohd Ekram Khan & Sons Vs Commissioner of Trade Tax, UP, Lucknow, upholding the levy of sale tax on supply of parts in replacement of defective parts during the warranty period, the previous assessments in the case of automobile dealers are being re-opened by some of the State Governments.

A petition/appeal to the Hon'ble Supreme Court against the demand notices issued by the State Governments in this regard was filed. However, the bench hearing the petition did not admit it saying that the outcome of a similar case filed by an individual automobile dealer pending with the same bench should be awaited.

10.

Major Initiatives

(i)

FADA Helpline

Having regard to the growing complexities of automobile dealership operations, a service viz. 'Helpline' was started by FADA in November 2005. The 'Helpline' service aims at helping FADA members with the practices, legal positions and clarifications on various issues relating to taxation, environment laws concerning vehicular pollution and workshop operations, procedures & provisions contained in Motor Vehicles Act/Central Motor Vehicle Rules and vehicle registration taxes. This initiative of FADA has attracted a large number of queries from members on various issues. President, Director - Helpline and FADA Secretariat have tried their best to clarify all such queries to the satisfaction of members.

(ii)

FADA Academy Programme

Keeping in view the widespread shortage of trained manpower suiting the needs of automobile dealerships and their workshops, FADA had taken an initiative to conduct training courses in association with reputed institutes in different parts of the country. Mr Kalyan Malshe representing 'Balaji Management Consultants' and formerly associated with Bajaj Auto as General Manager (Mktg) had been appointed as the Consultant to steer the project.

A Pilot Training Programme to train Service Supervisors and Spare Parts Supervisors had been launched on 13th February 2006 in Pune, in partnership with IndSearch - a renowned management institute. Two batches of students have undergone theoretical-cum-practical training at Pune since then.

This major initiative was taken forward in right earnest. The training courses were also launched at Kolkata and Kolhapur during the year. Discussions were held with Tata Motors and Mahindra & Mahindra to seek the support of industry in this task. Both the companies appreciated the initiative undertaken by FADA and offered to extend their full cooperation and support, including financial support and sponsorship of candidates for the training courses.

Although the response from candidates offering to join the training courses has not been as encouraging as expected, FADA is persisting with the programme to bring more cities within its ambit.

(iii)

G10 Programme

The idea of formation of groups of 20 automobile dealers with a view to identifying the best management practices through deliberations and exchange of information & data among the group members was borrowed from National Automobile Dealers Association (NADA, USA). The first group constituted by FADA started off well and came out with its first set of recommendations on Effective Workshop Operations. However, the programme could not sustain momentum due mainly to the inability of Group members from different parts of the country to travel long distances frequently for meetings.

The programme was revised and a small group of 10 members was constituted at Kolkata. A presentation on study of sales and workshop operations of 8 car dealerships in Kolkata was made at the Council meeting on 14th March 2007.

11.

FADA Journal

Monthly publication "FADA Journal" continued to grow in terms of quality, content, popularity and circulation. The contents of Journal, in particular, evoked appreciation from automobile dealers and others connected with automotive business, for their substance and usefulness.

12.

Media Coverage

FADA's activities and concerns were widely covered by the national & regional media from time to time.

13.

Changes in Constitution of FADA

Amendments in Articles of Association of Federation of Automobile Dealers Associations seeking to enlarge the size of Council from 36 members to 46 members with a view to giving representation to various regions, cities and segments of the market and to add an enabling provision for co-option of past presidents in the Council for their enlightened inputs in its deliberations, became effective from 3'd October 2006 after being approved by the Central Government under section 25(8) of the Companies Act.

14.

Membership

FADA's membership strength as at the end of Council Meeting held on 25th August 2007 at New Delhi stood as under:

Founder Members :	4
Association Members :	17
	21

Other Members i.e. Individual Members/Life Members/Supporting Members

Region	Individual Members	Life Members	Supporting Members	Total
East	193	41	2	236
North	327	52	4	383
South	258	54	10	322
West	345	58	21	424
Foreign	2	-	-	-
Total	1125	205	37	1367

These members, most of whom owning multiple dealerships, represent more than 70% of the retail automobile trade in the country.

15.

FADA Secretariat

Secretariat of FADA continued to function from its own office premises located at 805, Surya Kiran, 19 KG Marg, New Delhi - 110 001 . Efforts are being made to further strengthen the Secretariat with a view to providing more services of substance to the members in keeping with the growing membership base and their ever-increasing expectations as well as changing dynamics of retail automobile trade.