Sponsoring sporting events — Govt plans to tighten norms for oil firms

Sponsoring sporting events — Govt plans to tighten norms for oil firms

Author | Source: Business Line | Tuesday, Feb 07,2006 8:30 AM

A+
AA
A-
Sponsoring sporting events — Govt plans to tighten norms for oil firms

The Ministry is of the view that the funds from the corporate social responsibility kitty should not be used for sponsoring large tournaments like one-day international cricket matches or football leagues.

STATE-OWNED oil companies will hereafter have to dip into their advertising and marketing budgets if they wish to support mega-sporting events like cricket matches. The Petroleum Ministry is in the process of tightening the sponsorship norms for these companies especially in the wake of mounting pressure on their bottomlines.

The Ministry is of the view that the funds from the corporate social responsibility (CSR) kitty should not be used for sponsoring large tournaments like one-day international cricket matches or football leagues.

Currently, the oil companies are allowed to earmark 0.75 per cent of the net profit for CSR activities. It has been noted that some of the companies were using these resources for sponsoring sporting events.

"Since associating with mega events results in brand promotion, it is felt that the money from the advertising and promotional budget should be used for the purpose," a senior Ministry official said.

Recently, ONGC associated itself with the ninth National Football League.

The company contributed Rs 8 crore to become this season's title sponsor.

Similarly, IOC is an existing International Cricket Council (ICC) sponsor and had also bid Rs 255.95 crore for acquiring the Indian team sponsorship, which eventually went to the Sahara group.

According to officials in the media industry, association with cricket offers good returns to companies.

In the past, IOC has been the presenting sponsor for various cricket tournaments and has been advertising aggressively on Doordarshan.

The companies were only recently asked to cut down their advertisement budgets.

Pressure on brand-driven cos: While upstream companies could afford to cut their ad spends since they are not brand-driven, downstream companies which are under pressure as a result of growing competition from both the private sector and multinational oil companies are forced to increase their budgets, an IOC official said.

The launch of premium grade petrol under the brand names of Speed, Premium, and Power, and branded diesel such as Diesel Super and Turbo Jet and branded lubricants saw the oil marketing advertise aggressively.

For 2005-06 IOC is estimated to spend Rs 135 crore on advertisements.

Tags: e4m

Write A Comment