OOH sector welcomes the Budget as positive and balanced

Despite the possibility that the sector may be liable to be charged service tax, OOH players are satisfied with tax reforms & investments for infrastructure development

e4m by Abhinn Shreshtha
Updated: Jul 18, 2014 8:19 AM
OOH sector welcomes the Budget as positive and balanced

The Union Budget’14 has left a lot of people divided views. While many see it as a progressive and growth-oriented undertaking, there are quite a few voices that point out the lack of anything substantial for individual sectors.

We spoke to some OOH players about their thoughts on the Union Budget, keeping in mind its effect on the outdoor advertising sector. It seems most OOH players have had more realistic expectations from the Budget.  “There was nothing too great expected from it (the Budget) but it was very balanced. The positive wave is continuing and the coming two years will be good,” said Sanjeev Gupta, MD of Global Advertisers.

Even Rajiv Saxena, MD, Blue Ocean Media feels that though it was a good budget with some important announcements, it was more of a long-term plan. “There were lots of things in terms of tax reforms and infrastructure development but we will see the fruits getting reaped only in the second year,” he said.

Sunder Hemrajani, MD of Times OOH, was pragmatic in his reply. “With fiscal deficit constraints and the fact that the Finance Minister has been in office for only 45 days, this was expected. The Big Bang will be next year,” he said. He further added that asset creation in rural areas and investments in infrastructure were good points about the Budget.

Perhaps, the most significant development for the OOH industry is the rumour that, like digital and mobile advertising, even outdoor advertising will now be levied a service tax.

Haresh Nayak, Regional Director, Posterscope Asia Pacific. & MD, Posterscope Group India, confirmed that there was still ambiguity about this and they were waiting for a detailed report but he admitted that if true this would be a major drawback for the OOH industry. Explains Gupta, “If it (service tax) comes in then it will only harm the industry. The consumer will have to burden the increased amount and this will lead to lowering of OOH budgets.” However, he admitted that there is still no clarity on the issue. “The FM has not said anything and I don’t think it will happen.”

Hemrajani and Saxena, though, felt that levying of service tax would not have that big an impact on the industry. Though Saxena agreed that it could increase cost for the advertiser, service tax would lie on the positive side for the vendor. Explains Hemrajani, “This is a tax you can adjust. Though cash flow might be affected a little, the overall impact on P&L will be marginally positive.” It remains to be seen whether this news is actually true as OOH players we spoke to themselves seemed divided on how much weightage to give this issue (For example, Hemrajani said the news was accurate, while Saxena felt OOH advertising would not be removed from the ‘negative list’)

One of the biggest positives the OOH industry believes is the amount of investments that have been announced for infrastructure development in the country. From new infrastructure projects to new policies like introduction of FDI in railways, the sense is that this will only create more advertising opportunities for the sector. When asked to compare this Budget with the previous one, Nayak opined that the investment in new infrastructure projects was a big positive and a reason why this year’s budget was marginally better.

However, he did have this to say about the OOH industry in general. “Most industries do a lot of lobbying but the OOH fraternity doesn’t do this. This is one thing missing. We are not taken seriously nor are we doing enough to convince the government that we can make a positive impact and change,” he said. His concern is valid, with the OOH ecosystem long being too fragmented to make a united stand on issues. Though some attempts have been made to change things in the past, they have yet to yield noticeable results.

With the sense of optimism which has been seen in the outdoor sector since the beginning of the year and with important decisions on infrastructure development and reforms proposed in the Budget, it seems the OOH sector is in for good times in the coming months.

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