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Tuesday, September 22, 2020

Advertisers wary, MCDs stare at loss of Rs 100 crore

While it is estimated that there could be a combined loss of around Rs 100 crore, the official said innovative measures would be taken to ensure the gap is reduced as much as possible.

Written by Abhinav Rajput | New Delhi | Updated: September 13, 2020 12:54:09 pm
Delhi municipal council, MCD advertisements, MCD advertisements loss, MCD outdoor advertisements loss, delhi covid lockdown, delhi city newsSince advertising is one of the major sources of revenue, the loss would mean that payment of salaries, services of the civic bodies and other ongoing projects could be further hit. (File)

The three MCDs are staring at a loss of around Rs 100 crore in earnings from outdoor advertisements, as advertisers have communicated to them that their existing, short-term and long-term bookings have been dropped. Advertisers have demanded remission from paying licence fee, and relaxation in interest and other contract rules.

“Lockdown will (has) seriously jeopardise all future prospects of clients… (and) things may not be conducive for advertisements in upcoming months. Due to the ongoing Covid-19 pandemic, all their payments have gotten held by clients…,” read the agenda placed before the standing committee by the South MCD for approval. Similar demands have been made before the North MCD, while East is likely to follow suit.

Since advertising is one of the major sources of revenue, the loss would mean that payment of salaries, services of the civic bodies and other ongoing projects could be further hit.

Officials said representatives of advertisers have demanded 100% remission in licence fee for the lockdown period from March 22 to June 7; 75% remission from June 8 to July 31; and 50% remission for August and September. No relaxation has been demanded from October onwards.

Explained

Why ads matter

Private companies displaying advertisements on billboards, hoardings and signages have to pay the MCDs, which have jurisdiction over collecting taxes from outdoor advertisements. Agencies such as Delhi Metro, DTC, malls and cinema halls also pay a share to civic bodies for the advertisements they display. The three MCDs earn around Rs 200 crore from advertisements — South MCD around Rs 140 crore; North around Rs 40 crore; and East around Rs 10 crore.

A senior official said a joint meeting of officials from the three MCDs and representatives of advertisers was held, in which they submitted that outdoor advertisements subsist on movement of public on roads, markets, malls and cinema halls. “If no one is on the road due to the lockdown, who would pay for advertisements?” the official said, adding that one of the first things that companies cut in an economic crisis are advertisements.

While it is estimated that there could be a combined loss of around Rs 100 crore, the official said innovative measures would be taken to ensure the gap is reduced as much as possible.

Leader of the house, South MCD, Narender Chawla said there is a major drop in revenue from all sources: “Several cases are dragging for years in court, where payment to SDMC is due. We are thinking of adopting an alternative dispute resolution mechanism to get some money.”

North MCD standing committee deputy chairperson Ritu Goel said there is a proposal seeking complete relaxation for a certain period and 75% and 50% in other periods. “But things are getting better now,” she said.

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