All PSU Employees Predestined to Suffer AIR INDIA Turbulence!As Air India staff forced to borrow, sell assets as salaries are not paid! WE have been warning the white color PSU Employees about the Impending Fate! We had been in touch with some AIR INDIA employees also, but they NEVER did take seriously the Reforms Drive and have always been Habitual to live in IVORY Towers! Quite Ignorant of Economy, Society, Governance and Policy Making! Air India have been targeted for long! SBI, LIC, POST and Railway have NOT to be spared. PF, Pension go to Market. No Job Security! worsening working condition! And after the Disinvestment and Sell out Cloud omnipotent omnipresent Enveloping entire Public sector, it seems to be NO PAYMENT! We had been warning about the Tsunami long before. We had been warning of Alienation and STARVING! Now the hour has come! Just open your eyes!
Indian Holocaust My Father`s Life and Time - SIX HUNDRED NINETY FIVE
PSU Employees Predestined to Suffer AIR INDIA Turbulence!
WE have been warning the white color PSU Employees about the Impending Fate! We had been in touch with some AIR INDIA employees also, but they NEVER did take seriously the Reforms Drive and have always been Habitual to live in IVORY Towers! Quite Ignorant of Economy, Society, Governance and Policy Making! Air India have been targeted for long! SBI, LIC, POST and Railway have NOT to be spared. PF, Pension go to Market. No Job Security! worsening working condition! And after the Disinvestment and Sell out Cloud omnipotent omnipresent Enveloping entire Public sector, it seems to be NO PAYMENT! We had been warning about the Tsunami long before. We had been warning of Alienation and STARVING! Now the hour has come! Just open your eyes!
The Government today approved the constitution and operation of theNational Social Security Fund for unorganised sector workers with an initial allocation of Rs 1,000 crore.
Finance MinisterPranab Mukharjee had announced setting up of the fund in his 2010-11 Budget speech.
The constitution of the fund, which was cleared by the Union Cabinet today, will support social security schemes for various segments of unorganised workers like weavers, toddy tappers, rickshaw pullers, beedi workers etc.
Most of these workers do not have social security cover in the form of life or disability insurance, health care and pensions.
"The fund will also facilitate evolution and funding of schemes by various departments which are currently involved in welfare of these segment of workers," an official statement said.
The Labour and Employment Ministry will be the nodal ministry for operation of the fund.
Figures state there are at present 94 per cent of the workforce in the country in the unorganised sector.
Recognising the need for providing social security to the workers and as a follow up to the Unorganised Workers' Social Security Act, 2008, the Finance Ministry in his budget speech for 2010-11 had announced setting up the security fund.
JOHANNESBURG: Religare Capital Markets Ltd's acquisition of a 74 per cent controlling stake in South African broker Noah Financial Innovation has been hailed by analysts as a sign that India could be the next foreign direct investment driver in South Africa's financial services sector.
Indian investment banking and institutional securities company RCML, which concentrates on emerging markets, said the acquisition would boost its current trade and research capacity in South Africa.
"South Africa is one of the markets that RCML has identified as being of key strategic importance and the Noah acquisition complements the existing team by providing a meaningful local presence," RMCL Chief Executive Martin Newson told media.
Jean Pierre Verster, an analyst at 360ne Asset Management, said the acquisition indicated an about-turn in South African and Indian sectoral investments, as it had been predominantly South African companies investing in the Indian financial services sector until now.
"It's only natural that at some point when they've created sufficient wealth and accumulated enough capital from their domestic markets that they would look at investment outside India," Verster told the Business Report daily.
Nick Chambers, head of investor relations and capital markets at Africapractice, said RCML's move was a bold one in the African banking and financial sector that had traditionally been the preserve of European investors.
Chambers told Business Report there was also a significant difference in the approaches of India and China in FDI. "While the Chinese have followed a model that mostly invests in traditional African sectors such as resources, Indian companies have been seen to diversify from this model and invest also in non-traditional African sectors that incorporate services such as information and communications technology, agriculture and business process outsourcing."
The RCML deal came as the World Investment Report 2011 of the UN conference on Trade and Development (Unctad) showed thatFDI into South Africa had dropped hugely by 70 per cent to only a sixth of the peak of USD 5 billion recorded barely two years earlier.
Stephen Gelb, a professor of economics at the University of Johannesburg, attributed South Africa's drop to tenth position in the list of countries attracting the most FDI in the African continent from fourth place a year earlier to few major mergers and acquisitions being finalised.
"Most huge investments in South Africa come through mergers and acquisitions," Gelb said, although other economists blamed the FDI reduction on talk of nationalisation and government policies which made potential foreign investors nervous.
Foreign direct investments worldwide are projected to return to pre-crisis levels this year, with inflows expected to be up to USD 1.6 trillion, according to aUN report.
UNCTAD's 'World Investment Report 2011' released here today said that recovery ofFDI inflows would continue this year while pegging the amount at around USD 1.4 trillion to USD 1.6 trillion.
Bogged down by the 2008 financial meltdown and its ripple effects,FDI worldwide tumbled to just USD 1.19 trillion in 2009. Last year, the inflows were slightly better at USD 1.24 trillion.
In 2008, FDI flows stood at USD 1.74 trillion. "The record level of cash holdings, low rates of debt financing and rising stock market valuations of transnational corporations should encourage them to expand overseas...," the report said.
Last year, more than half of theglobal FDI inflows were into developing countries and transition economies. However, foreign direct investments in services as well as in the financial industry slumped during 2010.
As per the report, cross border non-equity modes (NEMs) are increasingly shaping the global value chains. NEMS include contract manufacturing, services outsourcing, contract farming, franchising and management contracts, among others.
NEMs of international production generated at least USD 2 trillion in sales globally in 2010 are growing rapidly, shaping world trade and investment patterns, the report noted.
However, UNCTAD cautioned that global business environment is still beset by uncertainties.
Risk factors such as a possible widespread sovereign debt crisis, fiscal and financial sector imbalances in some developed countries as well as inflation and signs of overheating in major emerging market economies could derail FDI recovery, the report said.
28 JUL, 2011, 06.25AM IST, ANINDYA UPADHYAY & SABARINATH M,ET BUREAU
Air India staff forced to borrow, sell assets as salaries are not paidNEW DELHI/MUMBAI: The 40-year-old Air India Staff Colony Consumer's Cooperative Society provides monthly household goods to some 8,000 employees of the national carrier residing in the suburban Mumbai colony.
In good times, the cooperative would provide credit, including funds to take capital goods on hire purchase, to the tune of 35 lakh every month to some 4,000 members. The money would be deducted from monthly salaries.
But these are turbulent times for Air India, which is bleeding losses of a little over Rs 20 crore a day. Employees have not been paid for two months-and the salary for July looks uncertain.
- Air India Express pays salaries to its staff
- Air India to get 532 crore for VVIP flights
- Finance ministry refuses to pay Rs 105 crore to Air India
- 'Air India needs 135 planes to rebound'
- Cash-strapped Air India cuts flights, employees worry over salaries
That's bad news for the cooperative society. "We are not able to deduct from salaries for the past two months. If this situation persists, we will stop providing credit from August," shrugs KV Varghese, who manages the cooperative. He adds the number of members approaching the society to buy on credit is increasing, and the hire-purchase scheme has been stopped as monthly instalments were overdue for two months.
The woes at Air India Colony are just one manifestation of the financial strife of the airline's 38,000-strong workforce. Almost every cadre of employees, from janitors and peons to engineers and the much-envied and much-pampered pilots, is feeling the pinch, some more than others.
Shyam Kumar, who has been working at the airline's Delhi office for 35 years, secretly withdrew his wife's savings and presented it to her as his own salary. "When she later read in the newspapers that AI employees haven't been paid for two months, I was caught. She confronted me if I had taken debt. I denied it, but actually I have taken debt from her and she doesn't know that," says a downcast Kumar.
Kumar, however, is among the more fortunate ones who can fall back on their spouse's income. Others are not so lucky. A few have had to sell gold and jewellery to meet monthly obligations. Take S Ramesh, 53, who has pledged his gold chain, gifted by his father at the time of his marriage, with a private lender for Rs 20,000.
Ramesh is the head sweeper at the Air India office at the Mumbai airport. A Grade 2 employee with the airline for over 25 years, his monthly salary is a gross of Rs 23,000. "We were told that within the next three years, we will be making profits and our salaries will rise. Now, it's been exactly three months since I received my salary," says Ramesh. Pledging the gold chain is at a best a short-term solution. "I have to pay 25% interest on the pledge, but I managed household expenses for two months.
The future looks grim. Not sure when his next salary will come, Ramesh is spending sleepless nights thinking about sustaining his family of four, which comprises an engineering college-going daughter and a son in school.
|Air India on verge of acquiring NPA status news|
|28 July 2011|
| *Mumbai: Lurching from crisis to crisis, state-owned Air India (AI) now finds its interest liability grown to around Rs700 crore for the April-June period after failing to pay lenders for the third month in a row. The badly struggling carrier is now teetering at the edge of being declared a non-performing asset (NPA) in the books of the 22 banks which have lent it money. |
It lenders include the State Bank of India and the ICICI Bank.
The airline must clear payments before the end of this month, or else its dues will be categorised as NPAs.
The carrier is now desperately awaiting infusion of equity and also clearance of outstanding amounts by the Government of India to escape the latest trap.
According to senior AI officials, they are awaiting clearance of outstanding amounts by the ministry of finance, which amount to a total of Rs1,732 crore. Of this, Rs1,200 crore is additional equity infusion and Rs532 crore is the amount owed by the Government to Air India for VVIP services.
These payments have already been received in-principle approval from a Group of Ministers, but final approval is expected only on 17 August when it meets again.
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NEW DELHI: Air India now faces a risk of being declared a non-performing asset by financial institutions/banks and a big question mark on its survival. The debt-laden airline is on the verge of defaulting on payment of installments on working capital ...
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New Delhi: The government is planning to hit the market with eight to nine more public sector units' (PSU) public offers this fiscal, with a view to meeting the target of garnering R40,000 crore from disinvestment.
Since four to five months would go without any PSU offers due to summer and winter breaks in the US and EU, this would mean that the remaining five months would see about two issues each.
Power Finance Corporation (PFC)'s follow on public offer the only PSU disinvestment that the government could carry out this fiscal. This FPO in May fetched the government R1,100 crore.
Thanks to the ongoing summer break and the December-January winter lull in Europe and US which could foil foreign investors' participation in the programme, activity on the disinvestment front would be seen at its peak in the months of September, October, January, February and March, a senior official said. A final call would...
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Hindu Business Line - 10 Jul 2011
PTI Taking a step forward in its disinvestment plans for the fiscal, ... (PFC) which was the first follow-on public offer of aPSU in the current fiscal. ...
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Moneycontrol.com - 16 Jul 2011
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Wall Street Journal - 19 Jul 2011
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to determine the extent of disinvestment in each PSU;. • to prioritise the PSUs referred to it by the Core Group in terms of the ...
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13 JUL, 2011, 09.27AM IST, SAURABH SINHA,TNN
Finance ministry refuses to pay Rs 105 crore to Air IndiaNEW DELHI: Debt-riddenAir India does not seem to be getting life-saving money in a hurry. The finance ministry has turned down aviation ministry's request to release Rs 105 crore to the Maharaja. The home and defence ministries owe this money to AirIndia for the VVIP flights operated by the airline. The finance ministry had earlier asked aviation authorities to work out a long-term cash requirement for AI based on some reliable plan to turn around the airline.
"AI had taken Rs 200 crore last month from a bank for 15 days to pay salaries. We had hoped payment of Rs 105 crore dues of VVIP flights would help us repay that loan. But that request has been turned down," said sources.
Now a group of ministers on AI will meet next week to discuss how to keep the airline alive. With Tuesday's Cabinet reshuffle ending the uncertainty over Vayalar Ravi (who got additional charge of the ministry this January) continuing as aviation minister, AI employees are looking forward to firm steps from the veteran Congress leader.
"No amount of money pumped in the airline or plans made for AI can work without the right management in place. In the past also we have seen plans like merger and buying planes going horribly wrong and AI is now on death bed. The minister must do something about the serious mismanagement," said a union leader on condition of anonymity.
Thanks to questionable decisions like mega plane deals and AI-IA merger taken during UPA-1, AI is facing an uncertain future with the airline now not able to pay salaries or bank loans on time. A turnaround plan worked out for the airline has pegged AI's cash requirement at over Rs 44,000 crore over the next decade along with over 100 more planes for the airline to survive.
But given its gross mismanagement, whether the government does pump that kind of money remains to be seen. Long time employees including senior pilots feel a board of governance should be formed for AI so that no one individual is able to hold sway over the dying airline. "AI needs money but it also needs the right people at top to ensure that money does not go into a black hole," said a senior pilot who has seen the airline's change of fortunes in past few years.
Air India to get 532 crore for VVIP flightsNEW DELHI: Financially troubledAir India got a small breather on Monday when a group of ministers (GoM) set up for the airline cleared payment of Rs 532 crore to the Maharaja on account of theVVIP flights operated by it.
The airline, whose combined debt, losses and dues are almost Rs 87,000 crore at present and needs Rs 6,000 crore immediately to survive, also got an in-principal approval from the GoM for equity infusion of Rs 1,200 crore this fiscal.
Besides VVIP flights, AI was given the Rs 532 crore relief for evacuating Indians fromEgypt. Finance minister Pranab Mukherjee-led GoM discussed the airline's poor financials.
Being aware that AI's requirement is way more than what the government has currently agreed for, aviation ministerVayalar Ravi said the GoM would meet again next week to discuss other financial issues. AI is set to default on its bank loan repayments.
The airline's management came with a presentation on a turnaround plan but the GoM felt the committee of secretaries of many crucial ministries should do the presentation.
UPA-II has possibly learnt lessons from the way AI acted on plans to buy 111 new planes and merge AI andIndian Airlines during UPA-I that have brought the airline on the brink of closure. The latest plan made for the airline that advocates adding 130-odd more planes to the fleet is being examined closely by key ministries to avoid making past mistakes.
AI has working capital loans of Rs 22,000 crore along with loans of Rs 40,000 crore; dues of Rs 5,000 crore and accumulated losses of Rs 20,000 crore. The airline is not paying salaries on time. Salary of May was paid in June-end . There is no word to employees so far when June salary will be paid.
26 JUL, 2011, 07.10AM IST, RAJAT PANDIT,TNN
IAF likely to go in for another 63 fighters
NEW DELHI: The "mother" could well become the "granny" of all defence deals.India is likely to go in for another 63 fighters after delivery of the first 126 MMRCA (medium multi-role combat aircraft) if the "timelines" for its other fighter development projects are not met, say top defence officials. This would be the biggest overhaul of any air force in the world in such a short period.
When the MMRCA selection process was initiated in mid-2007, the project cost was pegged at Rs 42,000 crore, or $10.4 billion for 126 fighters. But it will zoom well beyond $20 billion if India opts for 189 jets. Even with 126 jets, this is the biggest such fighter contract going around the world as of now.
India is likely to go in for another 63 fighters after delivery of the first 126 mediummulti-role combat aircraft if other fighter jet projects get delayed.
The move comes even as the defence ministry is all set to open the commercial bids of the two jets left in the MMRCA fray -French Rafale and Eurofighter Typhoon, "within a week or two". Eurofighter Typhoon is backed by the UK, Germany, Spain and Italy.
The ministry has already rejected "any scope for comeback" by other four jets, including the American F/A-18 s and F-16 s, ejected out of the MMRCA race in April on technical grounds after gruelling field trials. "We are looking for only 126 fighters. The first 18 jets will come from abroad, while the rest 108 will be manufactured byHindustan Aeronautics Ltd after transfer of technology from end-2016 or early-2017 onwards," said a senior ministry official.
"But yes, if the timelines for the Tejas LCA (Light Combat Aircraft) and the stealth Indo-Russian FGFA (Fifth-Generation Fighter Aircraft) projects are not met, we will go for more MMRCA to retain IAF's combat edge," he added.
Apart from inducting 272 Sukhoi-30 MKIs contracted from Russia for around $12 billion,IAF is slated to induct the first lot of 120 indigenous Tejas from end-2013 onwards. India also hopes to begin inducting 250 to 300 FGFA from 2020 onwards under the joint project with Russia, which rough calculations show will eventually cost India around $35 billion in the decades ahead.
But that is in the future. The request for proposal for the ongoing MMRCA competition, issued in August 2007, did have the standard clause of India reserving the option to go in for 50% more fighters, over and above the initial 126.
13 MAY, 2011, 08.29AM IST, RAJAT PANDIT,TNN
Decks cleared for biggest ever Indo-US defence deal of $4.1 billion 10 C-17 Globemaster-III aircraft
- C-17 Globemaster III aircraft to be inducted at Hindan base
- Government set to decide $30 billion Medium Multi Role Combat Aircraft deals
- India signs pact with US to buy 10 C-17 airlifters
- US welcomes India's decision on 10 C-17 Globemaster
- India set to sign $2.4bn Mirage deal with France
NEW DELHI:India may have ejected American fighters out of the $10.4 billion race to supply 126 medium multi-rolecombat aircraft (MMRCA) but US really has no reason to crib. Decks have now been cleared for the biggest-ever Indo-US defence deal: the $4.1 billion contract for 10 C-17 Globemaster-III giant strategic airlift aircraft.
Defence ministry sources on Thursday said the Globemaster deal, a direct government-to-government contract under the American FMS (foreign military sales) programme, should get the "final nod" from theCabinet Committee on Security "within this month".
"All issues connected to costing and offsets (under which Globemaster-manufacturerBoeing will plough back 30% of the contract value into India) have been resolved," said a source.
IAF certainly needs to augment its strategic airlift capability to swiftly move combat systems and troops over large national and international distances, given that it has just over a dozen Russian-origin IL-76 `Gajraj' aircraft. Capable of carrying a payload of almost 170,000 pounds and landing even at small forward airbases with semi-prepared runways, the four-engine rugged C-17s can transport tanks and troops over 2,400 nautical miles.
With mid-air refueling, C-17s can go even longer distances. Along with the C-130J `Super Hercules' aircraft already being inducted, the C-17s will play a significant role in countering China's massive build-up of military infrastructure all along the 4,057-km Line of Actual Control, which includes five fully-operational airbases in Tibet.
That's not all on the US arms deals front. India is already conducting commercial negotiations for the around $1 billion "follow-on contract" for four more P-8I Poseidon maritime patrol aircraft, eight of which were earlier ordered for $2.1 billion in 2009.
Similarly, negotiations for six more C-130J `Super Hercules' heavy-lift aircraft will begin soon. "IAF has already inducted two of the earlier six C-130Js ordered for $1.2 billion in 2008. Two more will come around July, with the last two in September-October," said the MoD source.
So, if all this is taken into account, US has notched up sales worth around $9 billion to India in the arena of military transport and reconnaissance aircraft alone.
If one adds other deals connected to military aviation, like the $822 million for 99 GE F-414 engines for Mark-II version of the indigenous Tejas Light Combat Aircraft and the $170 million for Harpoon Block-II anti-ship missiles, as well as the proposed ones for attack and heavy-lift helicopters, the overall figure will jump to well over $11 billion.
Consequently, all the brouhaha over India choosing a fighter over "a strategic partnership" in the MMRCA project has not gone down well. "We went purely by IAF's technical and flight evaluation in the MMRCA project," said the MoD source.
"While Eurofighter Typhoon and French Rafale were right up there in the laid-down 643 test-points, the others (American F/A-18 and F-16, Russian MiG-35 and Swedish Gripen) were not fully compliant. So, now Typhoon and Rafale will compete commercially for the project," he added.
FROM US, WITH LOVE
C-17 Globemaster-III: 10 of these rugged giant strategic airlift aircraft to be inducted from 2013-14 onwards under a $4.1 billion contract. Capable of carrying a payload of 164,900 pounds after taking off even from makeshift airstrips, C-17s will give India swift power projection capabilities. Another six C-17s likely to be ordered at a later stage.
P-8I Poseidon: 12 of these long-range maritime patrol aircraft to be inducted from early-2013 onwards, costing upwards of $3 billion, to plug surveillance gaps over Indian Ocean. Armed with torpedoes, depth bombs and Harpoon missiles, P-8Is will also boost anti-warship and anti-submarine warfare capabilities.
C-130J "Super Hercules": Six of these tactical airlift aircraft, customised for "special and covert operations", to be inducted within this year under a $1.2 billion contract. Negotiations in progress for another six C-130Js.
28 JUL, 2011, 07.03AM IST, TNN
Air India close to defaulting on loan repayment again
- Lenders miffed as Air India defaults on interest dues for third month in a row
- Air India to get 532 crore for VVIP flights
- Finance ministry refuses to pay Rs 105 crore to Air India
- 'Air India needs 135 planes to rebound'
- Air India to pay defaulted interest payment in a week
NEW DELHI:Air India now faces a risk of being declared a non-performing asset by financial institutions/banks and a big question mark on its survival. The debt-laden airline is on the verge of defaulting on payment of installments on working capital loans of about Rs 22,000 crore for the third month in a row, following which lenders may take this step. Since April,AI has been defaulting on payment of interest on working capital loans as well as service tax.
The airline's total debt is over Rs 43,000 crore and it owes an additional Rs 4,500 crore to vendors like oil companies, airports apart from unpaid wages to employees. The situation is so bad that the aviation ministry is having a rethink on what to do with the 27Boeing 787 Dreamliners ordered by AI as part of the 111 aircraft order, whose delivery is to begin from October.
By the end of this fiscal, AI's combined debt-losses-due figure is expected to reach Rs 1-lakh crore mark. The government is trying to restructure AI's loans but there has been no progress so far. "We have given our inputs on debt restructuring but so far nothing has been finalized," said a bank chairman. Among the big lenders areBank of Baroda, Bank of India, PNB,Central Bank of India andOriental Bank of Commerce.
UPA-II is now finding it hard to save AI, thanks to the steps taken during UPA-I that included ordering 111 planes worth Rs 50,000 crore and merging AI andIndian Airlines. On the flip side, UPA-II is now being careful by not acting blindly on big money-spinner plans that promise to bring AI out of the woods. After all, the plans for merger and 111 planes had promised to make AI a world class airline but their implementation has brought AI to the brink of closure.
The latest survival plan prepared for AI envisages pumping in over Rs 43,000 crore into the airline over 10 years along with adding 130-odd planes to its fleet. This plan has not gone down well with the finance ministry and even senior aviation ministry officials are not convinced that it can be implemented. No one at the moment seems to know what to do to save AI.
Air India pilots face financial turbulence Mihir Mishra / New Delhi July 25, 2011, 0:40 IST
Commander Satish Sharma (name changed), a pilot with Air India (AI), is in a financial mess. Once part of AI's elite with a fat pay packet and swanky lifestyle, Sharma had to recently take a loan on his bank fixed deposit to pay Rs 80,000 equated monthly installment for a house he bought a few years ago.
Sharma, a senior pilot with a flying experience of 12,000 hours, is troubled because the cash-strapped AI has been paying only 20 per cent of his salary for the last few months. AI has not been able to pay him flying allowance, also called the productivity-linked incentive (PLI), which accounts for a bulk of his pay.
His harrowing experience is shared by the 1,700 other pilots of AI.
The well-paid pilots have been hit more than the others as PLI is a very large part of their pay. However, most were not ready to come on record.
AI pilots who fly domestic get Rs 4 lakh every month, out of which as much as 80 per cent, or Rs 3.2 lakh, is PLI. AI is paying them only the basic salary of Rs 80,000 per month, that is, one-fifth of their total salary.
An AI spokesperson said the airline was in a financial crisis and all employees were facing a financial crunch.
"Our chairman has asked for support from the employees. All of us should work together to ensure that the company revives quickly and our salaries are restored," he said.
Pilots who fly international get a fixed gross salary of Rs 5 lakh. This includes basic and other emoluments of Rs 80,000, Rs 3.2 lakh for 80 hours of flying (they get this even if they fly less, unlike the domestic pilots) and a flexible component called the flying allowance which comes to $2,100 (Rs 1 lakh). They are being paid only the fixed salary and the flying allowance. This means they are getting Rs 1.80 lakh per month, a third of their total salary.
Another commander whose monthly budget used to be over Rs 1 lakh said he had to cut expenses. "I have stopped getting gifts for my wife and child. We have reduced family outings. We are under stress all the time," he said. He said many of his colleagues had taken loans on their provident fund (PF) corpus.
The problem is made worse by the fact that the take-home salaries are even less. "Out of Rs 80,000, we take home Rs 35,000 after tax, PF and other deductions," said the commander.
According to the latest figures, AI has dues of Rs 450 crore. While it has not paid PLI for May, June's salaries have not been paid yet. Salaries for May and PLI for April were disbursed in June. Without financial restructuring, most experts said, the gap might continue for a while.
The problem has been accentuated by the fact that AI has to buy fuel on a cash-and-carry basis. So, out of the average revenue of Rs 22 crore a day, Rs 14.5 crore is paid to the oil companies, leaving just Rs 7.5 crore for aircraft loans and interest on working capital.
Air India has accumulated loss of over Rs 20,000 crore. It lost Rs 2,226 crore in 2007-08, Rs 7,189 crore in 2008-09, Rs 5,551 crore in 2009-10 and Rs 6,000 crore in 2010-11. Its total debt is Rs 46,950 crore.
Air India flying in turbulencePublished: Wednesday, Apr 20, 2011, 2:50 IST
By Mihir Vasavda | Place: Mumbai | Agency: DNA
After a season full of underachieving, Air India appear to be getting it right when it matters the most. Just when it looked like relegation was inevitable for them, six crucial points from last two matches has helped them leapfrog to 11th on the table, giving them some breathing space.
The results give Air India some solace considering the precarious off-the-field situations they have been involved in. Coach Santosh Kashyap had nearly a dozen players injured before the break, which kept them from taking part in the Mumbai League.
Consequently, they were axed from the league by Mumbai District Football Association, ensuring the title went to Air India's city rivals Mumbai FC.
No sooner than they could revive from that setback, Air India were nearly axed from next edition's I-League as well. Thanks to the intervention by AIFF president Praful Patel, they were given one year extension to get their house in order.
"There were many distractions but we tried to focus on the game," admits Kashyap. "In fact, the mid-season break worked for us as our injured players got the much-needed time for recovery. When I took charge of the team, I hardly got any time to work with the team because of the packed schedule.
"That time, the fitness level of the team was low. We lost the matches in the last 20 minutes. So, the first thing I worked on was the endurance level of the team," added Kashyap, who took over the responsibility to guide Air India to safety from Yusuf Ansari, who is now the goalkeeping coach.
Upon taking charge, Kashyap said his first priority was to get the team composition right. "For example, I tried playing Napoleon Singh — who is originally a right back — as a right half and that experiment is paying off quite well. Same is the case with Manjeet Singh, who is doing very well up front," Kashyap said, stressing that the key to recent results has been the possession-oriented game his side has been playing.
Kashyap believes the win against league leaders Salgaocar a couple of weeks ago has been the turning point of their season. "That result has given us the confidence that we can beat the best. We are facing some very tough opponents in our last four matches, so that win has been a morale booster for us."
Air India next face title contenders Churchill Brothers, and with Mohun Bagan, JCT and Dempo as their last three opponents, Kashyap has his work cut out. "It will be a challenge but we are confident to rise to the occasion."
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Low-cost carriers have been upping their share of the domestic pie at the expense of Air India.
Galloping crude oil prices threaten to take the wind out of the recovery in the aviation sector.
July 23, 2011:
Only the brave or the foolhardy would venture into the business of flying in the Indian skies. If this is the unflattering first impression one makes after running through the financials of most airlines in India, it would be understandable.
Consider this: National carrier Air India has not made a profit since the merger with Indian Airlines in 2007; it has a mind-boggling debt of Rs 47,000 crore, accumulated losses of Rs 20,300 crore, and is desperately dependent on government handouts for survival. Kingfisher Airlines has not made a profit since inception in 2005, has loans in excess of Rs 6,000 crore (after the recent loan restructuring), and accumulated losses of around Rs 5,300 crore. The net worth of both these airlines today has been badly eroded.
The other original full-service carrier, Jet Airways, made a loss on a consolidated basis in each of the last four years, has debt of around Rs 13,700 crore and accumulated losses of Rs 1,730 crore (as on March 2011). Clearly, not a pretty picture.
The skies, though, look somewhat clearer when it comes to the country's low-cost carriers. SpiceJet, the only listed pure play low-cost airline in the country has posted profits in the last two years (after losses for three years before), and has little debt on its books (at least for now).
The other two low-cost players — Indigo and GoAir — whose financials are not publicly available, are reported to be doing well. Not surprisingly, of late, it is players in this category which have been stealing the thunder, in the sky and also on the airwaves. They have been increasing their market shares and have been placing mega orders for aircraft in anticipation of future growth, mainly in smaller cities and towns of the country.
CRUDE IMPACTYet, even for the low-cost grouping, it may not be a smooth flight this year, courtesy that old bugbear of the aviation industry — galloping crude oil prices — which seriously threatens to take the wind out of the nascent recovery in the sector. After a disastrous 2008 and 2009 when zooming crude oil price, overcapacities and finally slowdown-induced demand destruction almost crippled the sector, airlines slowly picked up the strings in 2010.
An improving economy propelled strong growth in demand for air travel. Low-cost carriers, aided by healthier balance-sheets and offerings that catered to a predominantly price-conscious market in the country, benefitted the most. The full service carriers too showed signs of revival, helped by tweaks to their product-mix and debt restructuring initiatives.
The process of recovery and growth however received a rude jolt in the latter part of 2011 with crude oil again crossing the $100 a barrel mark. This resulted in losses for all the listed players in the March 2011 quarter — a spectre which may continue if crude oil remains at elevated levels (currently around $118 a barrel).
Fuel costs, which typically account for around 30-40 per cent of airline sales, shot up to as much as 50 per cent during the March 2011 quarter. Not surprisingly, the stocks of Jet Airways, Kingfisher Airlines and SpiceJet have been battered on the bourses over the past six to nine months.
While continued strong demand conditions (domestic passenger traffic grew by almost 18 per cent in the first half of the calendar) will ensure that top-line growth for the sector remains healthy, high cost pressure, especially on the fuel front, is likely to take a toll on the bottomlines. Those with huge debt to service will feel the pressure more. This will make it imperative for airlines to increase fares — easier said than done.
While airlines have started passing on cost hikes to some extent, a steep increase in yields may be possible only at the risk of negatively impacting load factors (currently hovering around 80 per percent for most players).
What may make this more difficult is that during the last three months, increase in domestic capacity has exceeded increase in demand. Another factor that could preclude fare hikes is the aggressive pricing strategy adopted by players such as Air India in a bid to recoup lost market share.
UPPING THE STAKESOver the past year, the low-cost carriers have been upping their share of the domestic pie at the expense of the full service carriers, primarily Air India, whose share has declined sharply from 17.3 per cent in July 2010 to 14.9 per cent currently.
During this period, the sharpest gain has been registered by Indigo, which has seen its share go up from 16.9 per cent to 19.6 per cent. SpiceJet and GoAir have also increased their share to 14 per cent (13.2 per cent) and 6.1 per cent (5.6 per cent) respectively.
As things stand, Jet Airways, along with JetLite, has the highest domestic market share at 25.5 per cent though this has come down from 26.6 per cent in July 2010. Kingfisher Airlines is at a distant second with a share of 19.8 per cent down marginally from 20 per cent a year ago.
With Indigo snapping close on the heels of Kingfisher, and SpiceJet planning to launch services to Tier-II and Tier-III cities this calendar, the market share dynamics could be set for further change, in favour of the low-cost carriers.
To tap new markets and expand market share, the low-cost carriers have gone on an aircraft shopping spree. SpiceJet has placed an order for 30 Boeing 737-800, and 30 Bombardier aircraft. GoAir has placed an order for 72 A320 neo aircraft, while Indigo's order for 180 aircraft of the same type was one of the largest in commercial aviation history.
While delivery of most of these aircraft is scheduled to be phased out over the next three to six years, it remains to be seen, whether the assumptions of strong growth implicit in these big-ticket buys will hold true. If these come unstuck, it could well be an encore of 2008 and 2009, when oversupply added significantly to the pain .
SHAKE-OUT?Given the current sector dynamics is a shake-out or consolidation possible?
If international experience is anything to go by, this cannot be ruled out. Already, the clamour for shutting down Air India is getting louder, with many objecting over what is perceived as throwing good (tax-payer) money after bad. Quick completion of their fund-raising plans and moderation of debt levels is also vital in the case of Kingfisher Airlines and Jet Airways. For the moment, the low-cost players seem much better placed to tide the turbulence.
Keywords: Aviation sector, Airlines, Crude Impact
28 JUL, 2011, 05.17AM IST, ET BUREAU
Governance reforms need of the hour, says PC
NEW DELHI: Home MinisterP Chidambaram on Wednesday accepted that improvinggovernance remains the greatest challenge for the government. However, he sought to dispel perceived notion ofpolicy paralysis, stating that the government continues to put economic growth, change and reforms at the centre of all issues.
"The current problem (faced by the country) does relate to governance. But it would not be correct to generalize. We have examples of good governance, the issue is how to make it universal," said Chidambaram at a function at Ficci to discuss a paper on 20 years of reforms by ET's consulting editor Swaminathan S Anklesaria Aiyar.
Other panelists Jaswant Singh, C Rangarajan and Abhijit Sen, member, Planning Commission, also said governance requires greater attention. Chidambaram further said that 20 years after liberalization, there are two issues on which greater progress should have been made namely, increasing the pace of reduction in poverty and increasing access to education.
Chidambaram added the current blips like declining investment rate, high inflation can be tackled with a good mix of policies and that sustaining high level of growth in India over the next 10-15 years is possible.
A panel of other policymakers at the function to discuss the paper "The Elephant that became a tiger -20 years of economic reforms in India" , agreed and reiterated Chidambaram's take that the foundation of current high growth economy was laid by the liberalization in 1991.
Aiyar stated that the reforms in 1991 had helped India's image morph from a lumbering elephant to a tiger and be looked upon as a "miracle economy" and a "superpower". "The perceived notion of India as a bottomless pit for foreign aid to a political and economic superpower is staggering," Aiyar said.
He added that having an 'brain-intensive' export market, entrepreneurial innovations which had made India a leader of "frugal engineering" along with conventional macroeconomic parameters like healthy savings rate, per capita income point to a sustained robust growth rate in future. However, Aiyar also pointed out that the government has a huge unfinished agenda of improving governance and quality of public goods being delivered by the government. "As far as governance is concerned, we are still waiting for a miracle," Aiyar added.
Former Finance and External Affairs Minister Jaswant Singh said that tackling high prices and reforms in agriculture need more attention. C Rangarajan, chairman prime minister's economic advisory council, also stated that the three issues facing the government in the short run are taming high prices, bringing the current account deficit in the balance of payments to 2.5% of GDP and continue fiscal consolidation to meet FRBM targets.
28 JUL, 2011, 05.22AM IST, ET BUREAU
Finance Minister backs RBI rate-hike; govt ready to risk growth to tame inflation
- Rate hike will bring down inflation to 6 percent: Pranab
- Oil prices unlikely to moderate significantly: Finmin
- Fitch retains investment grade sovereign rating for India
- Inflation biggest challenge to growth momentum in the short term: FM
- FM asks institutional investors to stay bullish on India
NEW DELHI: Finance MinisterPranab Mukherjee strongly backed the Reserve Bank's move to raise keypolicy rates and warned that it may not be the end ofrate hikes, sending out a clear signal that the government was ready to risk lower growth to tame the rampant rise in prices.
The central bank on Tuesday stunned markets by raising the repo rate by a sharp 50 basis points to 8%, drawing sharp reactions from industry, which said the move would impact investments and hurt growth. "I don't think it is end of the tunnel," Mukherjee told reporters on Wednesday when asked whether RBI was nearing the end of monetary tightening that has resulted in 11 interest rate increases since March last year, lifting the key policy rate by 3.25 percentage points. The finance minister's strong endorsement of the policy should put to rest speculation that the government and the RBI were not on the same page on the need for a stiff rate increase.
Asked if the RBI action surprised him, Mukherjee said: "I cannot say it surprised me. It is substantial no doubt, but given the situation it was necessary." Mukherjee said June's wholesaleprice-basedinflation was "reasonably high and unacceptable", though he added that it was a global phenomenon caused by the rise in prices of fuel and other commodities. Provisional inflation for June was 9.44%, which is expected to exceed 10% when final numbers are released. "I am optimistic that measures taken by the RBI by adjusting the crucial rate will have an impact and inflation will come down."
The government, on its part, would also take "appropriate action" to support RBI's monetary policy to control inflation, he said.
The RBI has been critical of the government's role in inflation management, pointing to the rise in the minimum support price for farm produce even as food inflation remained high and possible fiscal slippage. Highlighting the pressure on prices from the fiscal side, RBI governor DuvvuriSubbarao on Tuesday said it remained a risk to its projections of 8% GDP growth in 2011-12 and 7% inflation by fiscal end.
"(There was a) significant upside risk to the projected fiscal deficit for 2011-12 as fiscal deficit has been a key source of demand pressure," RBI stated in its release on Tuesday. Fiscal deficit is pegged at 4.6% of GDP but most experts expect the government to breach that by a big margin. The government has already exhausted most of the funds set aside for petroleum subsidy while the food subsidy bill has shot up by Rs 35,000 crore.
"We are looking at ways to compress expenditure. There is revenue buoyancy and, together, I think they will help us in reaching fiscal deficit target," Mukherjee said. Earlier this month, the finance ministry announced austerity measures, including a ban on meetings in five-star hotels and restrictions on foreign travel to help curb spending.
16 JUL, 2011, 06.37AM IST, SMRITI SETH,ET BUREAU
Global slump in economy a boon for India, only if it doesn't get worse: Report
Vol:40278 shares traded
Vol:2021353 shares traded
- For FIIs, India's still hot despite high valuations: Mark Mobius, Executive Chairman, Templeton Eme...
- Indian slowdown, high inflation likely to persist
- GDP base could be shifted to 2011-12
- Will the eurozone crisis leave India unaffected?
- India to grow at a slower 8 percent: World Bank
NEW DELHI: The renewed crisis of confidence in the global economy could well benefit India, if it does not blow up into something bigger.
Together withChina,India will stand out as an island of growth in an otherwise bleak global economic landscape, helping it attract more capital flows and investments.
"India is the fastest growing economy. Broadly, I would expect India to attract more capital flows in comparison to the rest of the world as we witness a slowdown in global recovery," said Sonal Varma, India economist, Nomura.
Recent evidence points towards a moderation in global growth as the developed world is struggling with debt and unemployment, and the emerging markets are fighting inflation by sacrificing growth. Search for returns is likely to send investors scurrying to India, expected to expand at about 8% in 2011-12 while the rest of the world sees a moderation in growth to 3.2% during 2011.
India's relative insulation from the rest of the world is another tick mark in its favour. Exports have a small 13% share in GDP, though rising fast at over 30% after the financial crisis, and its public debt is mostly internal. Public and private consumption combined has a 70% share in India's GDP.
The strong domestic orientation of the economy was largely the reason India managed a 6.8% growth in 2008-09, the high point of the financial crisis.
"In case of a slower recovery, FIIs to India won't be adversely affected. There is some insulation in that respect like we witnessed in the past", said Biswajit Dhar,Director General, RIS. Portfolio net inflow rose nearly 300% in 2009-10 when world economy actually contracted by 1% during 2009. FII inflow during 2011 (uptil 5th July) was already Rs 6,776 crore.
"Equity valuations and a conducive foreign investment policy environment will continue to be strong pull factors for capital inflows", says Varma. FDI inflows are also expected to recover with acquisitions as an attractive option for investors. A pick up is already evident with $ 7.79 billion inflows in first two months of 2011-12 fiscal.
Weak global demand will also keep commodity prices low, benefiting India that is exposed to imported inflation because of high reliance on imported crude and other inputs.
"This (lower commodity prices) will be good for India as it will ease inflation and help attract capital," said Saugata Bhattacharya, chief economist, Axis bank. However, a weak global demand can upset India's exports, but it does not seem to be a big worry.
"To the extent we are dependent on foreign demand, we will face lower demand from abroad. If India's domestic demand keeps up then we are safe", said Parthasarthi Shome, Director,ICRIER. Domestic consumption demand has been growing at plus 8% since 2007-08 in India.
Also, the recent diversification of export destinations to MENA (Middle- East and North African) and Latin American countries will limit the impact of a slowdown in demand from traditional markets on Indian exports. India's exports rose over 30% in 2010-11 despite softness in the world's biggest markets.
But a deep crisis will singe all, including India because of its reliance on capital inflows to fund its current account deficit, pegged at around 2% of GDP in 2010-11 and projected to rise to over 3% in 2011-12. A default by one of the vulnerable euro zone countries could be one such event.
"In case of a major risk event, the mood in the financial markets and risk appetite will worsen. Investors will rush to safe havens such as gold or the dollar, affecting fund flow into India" said Abheek Barua, chief economist,HDFC
28 JUL, 2011, 06.52AM IST, ET BUREAU
Poor governance, lack of reform driving overseas investments awayThe latestWorld Investment Report (WIR) shows the global economy is coming out of the woods, but gradually. Therefore, even a moderate rise inglobal investment flows to $1.24 trillion in 2010 is heartening. It augurs well for developing countries led by China that absorbed over half of theFDI inflows. However, the bad news is that inflows to India fell off a cliff to $10 billion in 2010 and even less this year. The WIR correctly attributes the decline in overseas investment to delays in approvals of large projects and worries about macroeconomic factors like inflation.
These concerns need to be addressed with the seriousness they deserve. The government should come up with a policy framework that is receptive to FDI, instead of tying up investments worth billions of dollars in coils of red tape. New Delhi must also break out of the policy paralysis that has gripped it. Just talking up sentiments is not enough; the government has to prove that it is capable of action by doing things. And there's plenty to be done.
One, it has to come up with a progressive policy on land acquisition that gives everybody whose livelihood depends on land a continuing stake in its development. It has to free up urban land, now made artificially scarce by large government holdings and pointless land-use rules. This scarcity pushes up the capital and working costs of building infrastructure. Two, it has to show that India welcomes foreign investment. One step forward would be to allow FDI in multi-brand retail.
This will bring in financial capital and new technologies for storage and transport, and also contain inflation. It also needs to adopt a policy which says that FDI is welcome in all sectors, barring a handful. It should abolish the system of case-by-case approvals. Three, environmental clearances should come quickly. Four, rules should be eased to make it easy for foreign investors to do business in India. And finally, the government should ensure a stable tax environment with low rates. With its huge economic potential, there's only one reason why India languishes at number 14 out of the 20 top destinations for investors: policy paralysis. That has to end.
29 JUN, 2011, 05.27AM IST, ET BUREAU
A new window for more foreign portfolio money is welcome reform, with caveats
- QFIs: The foreign investment hope for Indian mutual funds
- Index fund offers exposure to equities at low cost
- Gold ETFs beat equity mutual funds
- Government puts ceiling of $10 bn on QFIs investments
- Big corporates and cash-rich companies investing in Equity Mutual Funds
When many Budget promises remain on paper, the good news is the government has delivered on two of them: guidelines for infrastructure debt funds to attract overseas investment last week and now, the liberalised regime for overseas investment in the stock market.Foreign retail investors (as distinct from non-resident Indians) will now be allowed to invest up to a cumulative total of $10 billion a year in the stock market through mutual funds instead of having to come through foreign institutional investors. With this, the equity market, though not individual stocks, is now effectively open to investors, globally - although the notification talks of investment by qualified foreign investors, in practice, anyone who can satisfyKYC (know your customer) norms can invest in the market.
Portfolio investment is an important channel through which countries attract overseas capital and to the extent it becomes easier for foreigners to invest in Indian stocks, the move should lead to more inflows to the stock market. Agreed, our stock market has been among the worst performers in the calendar year to date (-14.8% in dollar terms). Nonetheless, the market prognosis for any economy that is expected to grow at 8-9% in the medium to long-term cannot but be positive; so any move that eases investment restrictions is welcome.
Two caveats are in order, however. Moreforeign fund inflows could make the stock market even more dependent on foreign sentiment and increase volatility. The remedy is to bring more long-term domestic savings to the stock market. We need more action on this front. The other area of concern is the continuing lack of official resolve to enhance inflows of the more desirable kind of foreign investment, of the direct kind.
The government should bite the bullet on liberalising foreign direct investment (FDI) in sectors likeinsurance and retail trade. While boosting portfolio flows and moving to liberaliseFDI are not mutually exclusive choices, inaction on the latter front means enhancing the volatility of overall inflows even while forgoing the systemic gains FDI brings in.
28 JUL, 2011, 10.44PM IST, AP
Wall Street: Jobs report pushes US stocks up despite debt worries
- Nifty ends below 5500;metals,realty,oil&gas down
- Sensex falls further by 1.21% on interest hike, global trend
- US unlikely to default: Standard & Poor
- US braces for debt deal vote amid default jitters
- Wall Street slides on earnings, economy
- US stocks end lower on White House veto threat on debt
- Wall Street: US Stocks sink as debt limit remains unresolved
- Wall Street: Banks, transports lead US stocks higher
- Wall Street: Markets flat after rally, Apple still gains
NEW YORK: An unexpected decrease in unemployment claims sent stocks slightly higher Thursday even as a stalemate continued in Washington over how to avoid a US debt default.
The government said first-time applications for unemployment benefits fell to 398,000 last week, the lowest level in four months. That's a sign that employers are laying off fewer workers.
TheDow Jones industrial average rose 51 points, or 0.4 per cent, at 12,354 in afternoon trading. The index fell over the previous four days over worries that the US might default on its debt as soon as next week if Congress doesn't raise the country's borrowing limit.
The Standard & Poor's 500 rose 11, or 0.8 per cent, to 1,316. TheNasdaq composite index rose 33, or 1.2 per cent, to 2,798.
The House of Representatives is expected to vote later Thursday on a new plan to avoid a default. SpeakerJohn Boehner pleaded with fellow Republicans in a closed-door meeting to support the proposal, which calls for cutting $900 billion from the deficit over the next decade.
The bill still faces opposition from Senate Democrats and the White House, but the vote could bring President Barack Obama and Congress a step closer to resolving the standoff. The Treasury Department says the government won't have enough money to cover all its bills after next Tuesday.
Even if the US doesn't default, investors worry that the country might lose its triple-A credit rating. That could raise interest rates and possibly slow down the US economy, which is still recovering from the worst recession in decades.
``We're running out of time,'' saidPhil Dow, director of equity strategy at RBC Wealth Management in Minneapolis. ``It's getting scary.''
Markets were far less volatile than Wednesday, when the Dow had its biggest one-day drop since early June. The price of gold, which tends to rise when investors are fearful of economic disruptions, fell 10 cents to $1,615.20 in afternoon trading. It's still up 13.6 per cent this year.
The dollar rose against other currencies, as did Treasury prices. The dollar and Treasurys would likely fall if investors worry that a default is imminent.
Utility and telecommunications stocks were the only two of the 10 company groups in the S&P 500 index to fall. That suggested investors were becoming more comfortable taking on risk since those stocks tend to be less volatile than the rest of the market.
Bristol-Myers Squibb Co. rose 2.4 per cent after the drugmaker reported earnings that were better than analysts anticipated. The company also raised its earnings forecast for 2011.Exxon Mobil Corp. fell 1.1 per cent, the most of the 30 companies that make up the Dow average, after its earnings came in below analysts' estimates.
LSI Corp., which makes storage and networking chips, rose 13.7 per cent, the most in the S&P 500, after the company issued a forecast for third-quarter revenue that was higher than expected.
Other earnings results were mixed.DuPont Co. rose 1.9 per cent after the chemical maker said its earnings increased 5 per cent on higher revenue. The company also raised its earnings outlook for the year.
Akamai Technologies Inc. fell 19.3 per cent, the most in the S&P 500 index, after the online streaming company's earnings were lower than analysts had expected.Sprint Nextel Corp. fell 15.9 per cent. The nation's No. 3 wireless carrier said its loss widened in the second quarter, in part, because of a tax expense and investment losses.
28 JUL, 2011, 08.50AM IST, SIDHARTHA,TNN
Big banks block move to free savings rates
- Banks against deregulation of savings rate, write to RBI
- Savings rate deregulation will spawn innovative products
- ET Classroom: Casa
- Savings rate deregulation may push up costs for a/c holders
- Opening up the last spoon-fed rate
NEW DELHI: At a time when interest rates are rising, some of the country's largest banks are trying to block a move to deregulate savings bank rate, fearing their cost would rise beyond 4% in a free market regime.
While the Indian Banks' Association (IBA) had opposed the move earlier, the issue came up for discussion again during the Reserve Bank of India's postmonetary policy meeting with bank chiefs on Tuesday. The bankers, who are split between the larger and smaller players, took up the matter in the evening during theIBA management committee meeting.
Though banks are willing to borrow overnight funds from the RBI at 8%, they are threatening to increase service charges on basic banking services such as use of cheques and ATMs if savings rates are deregulated, which is seen as an acknowledgement of the fact that they are using savings bank balances as subsidized funds.
Besides, they are invoking the interests of smaller depositors to make a virtue of continuing with the regulated regime. For instance, a banker said that in a free market regime, those with say Rs 1 lakh or more in his savings bank account would get 6% along with freebies such as unlimited number of cheques.
But another person with Rs 50,000 to Rs 1 lakh would earn 5% and with a limited number of free cheques. At the other end would be someone who has Rs 10,000 in his savings bank and would earn 4% and would get only 10 free cheque leaves in a year.
Executives with some of the smaller and new banks, which have lower current account-savings bank account (Casa) balances, said if the savings bank rate was freed, they would immediately raise rates. While they concede that banks would pay more in the initial few months, things would settle down as the gap between fixed deposit rates and savings bank rate would shrink.
"That's the global experience. So, interest rates would be volatile only in the short run and in any case it would benefit depositors," said a bank executive.
At present,SBI pays 7% on term deposits with maturity up to 90 days, which translates into a difference of three percentage points with the savings bank rate. When it comes to a one-year fixed deposit, the difference is 375 basis points as the country's largest bank is offering 7.75% on such deposits. The story is similar across banks.
Bankers said the larger players fear that with new banks expected to come into the picture, the fight for savings bank balances is only going to intensify. "RBI should index the rates to inflation, which can help depositors earn more on their savings bank funds," said a banker.
|It has been suggested that Tata Airlines be merged into this article or section. (Discuss) Proposed since March 2011.|
|Founded||July 1932 (as Tata Airlines)|
|Commenced operations||15 October 1932|
|Frequent-flyer program||Flying Returns|
|Airport lounge||Maharaja Lounge|
|Alliance||Star Alliance (From 31 July 2011)|
|Fleet size||103 (+30 orders)(incl. subsidiaries)|
|Destinations||75 (excl. subsidiaries)|
|Company slogan||Your Palace in the Sky|
|Parent company||Air India Limited|
|Headquarters||Air India Building, |
Nariman Point, Mumbai,Maharashtra, India
|Key people||J. R. D. Tata, Founder|
Arvind Jadhav, CMD
Air India (Hindi: एअर इंडिया) is a state-owned flag carrier, the oldest and the largest airline of India. It is part of the Indian government-owned Air India Limited (AIL). The airline operates a fleet of Airbus and Boeing aircraft serving Asia, Australia, Europe and North America. Its corporate office is located at the Air India Building at Nariman Point in South Mumbai. It is the 16th largest airline in Asia[dubious – discuss]. Air India has two major domestic hubs at Indira Gandhi International Airport and Chhatrapati Shivaji International Airport. An international hub atDubai International Airport is currently being planned.
Air India was founded by J. R. D. Tata in July 1932 as Tata Airlines, a division of Tata Sons Ltd. (now Tata Group). On 15 October 1932, J. R. D. Tata flew a single-engined De Havilland Puss Moth carrying air mail (postal mail of Imperial Airways) from Karachi's Drigh Road Aerodrome toBombay's Juhu Airstrip via Ahmedabad. The aircraft continued to Madras via Bellary piloted by former Royal Air Force pilot Nevill Vintcent. In 1932 Air India was based out of a hut with a palm thatched roof at Juhu Aerodrome and had 1 pilot and 2 apprentice mechanics along with 2 piston engined aircraft, one Puss Moth and one Leopard Moth aircraft.
Following the end of World War II, regular commercial service was restored in India and Tata Airlines became a public limited company on 29 July 1946 under the name Air India. In 1948, after the independence of India, 49% of the airline was acquired by the Government of India, with an option to purchase an additional 2%. In return, the airline was granted status to operate international services from India as the designated flag carrier under the name Air India International. On 8 June 1948, a Lockheed Constellation L-749A named Malabar Princess(registered VT-CQP) took off from Bombay bound for London via Cairo and Geneva. This marked the airline's first long-haul international flight, soon followed by service in 1950 to Nairobi via Aden.
On 25 August 1953, the Government of India exercised its option to purchase a majority stake in the carrier and Air India International Limited was born as one of the fruits of the Air Corporations Act that nationalised the air transportation industry. At the same time all domestic services were transferred to Indian Airlines (now renamed as Indian). In 1954, the airline took delivery of its first L-1049 Super Constellations and inaugurated services to Bangkok, Hong Kong, Tokyo andSingapore.
The jet age
Air India International entered the jet age in 1960 when its first Boeing 707-420, named Gauri Shankar (registered VT-DJJ), was delivered. Jet services to New York City via London were inaugurated that same year on 14 May 1960. On 8 June 1962, the airline's name was officially truncated to Air India. On 11 June 1962, Air India became the world's first all-jet airline.
In 1971, the airline took delivery of its first Boeing 747-200B named Emperor Ashoka (registered VT-EBD). This coincided with the introduction of the 'Palace In The Sky' livery and branding. A feature of this livery is the paintwork around each aircraft window, in the cusped arch style of windows in Indian palaces. In 1986 Air India took delivery of the Airbus A310-300; the airline is the largest operator of this type in passenger service. In 1988, Air India took delivery of two Boeing 747-300Ms in mixed passenger-cargo configuration.
In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747-400 namedKonark (registered VT-ESM) made history by operating the first non-stop flight between New York City and Delhi. In 1994 the airline was registered as Air India Ltd. In 1996, the airline inaugurated service to its second US gateway at O'Hare International Airport in Chicago. In 1999, the airline opened its dedicated Terminal 2-C at the renamed Chhatrapati Shivaji International Airport inMumbai.
2000 – present
In 2000, Air India introduced services to Shanghai and to its third US gateway at Newark Liberty International Airport in Newark. In May 2004, Air India launched a wholly owned low cost airlinecalled Air-India Express. Air India Express connecting cities in India with the Middle East, Southeast Asia and the Subcontinent. In 2004 Air India launched flights to its fourth US gateway at Los Angeles International Airport in Los Angeles (which has since been terminated) and expanded its international routes to include flights from Ahmedabad, Amritsar, Bangalore andHyderabad.
On 1 December 2009, Air India introduced services to its fifth US gateway at Washington Dulles International Airport in Washington, D.C., accessed via a stopover at JFK Airport in New York City. This service has been terminated.
- Re-privatisation plans
In 2001, Air India was put up for sale by the then NDA government. One of the bids was by a consortium of Tata Group-Singapore Airlines. However the re-privatisation plans were shelved after Singapore Airlines pulled out and the global economy slumped.
- Merger with Indian
In 2007, the Government of India announced that Air India would be merged with Indian. As part of the merger process, a new company called the National Aviation Company of India Limited(NACIL) was established, into which both Air India (along with Air India Express) and Indian (along with Alliance Air) will be merged.
On 27 February 2011, Air India and Indian Airlines merged along with their subsidiaries to form Air India Limited.
- Financial crisis
Around 2006–2007, the airlines began showing signs of financial distress. The combined losses for Air India and Indian in 2006-07 were 770 crores ( 7.7 billion). After the merger of the airlines, this went up to 7,200 crores ( 72 billion) by March 2009. This was followed by restructuring plans which are still in progress. In July 2009, SBI Capital Markets Ltd was appointed to prepare a road map for the recovery of the airline. The carrier sold three Airbus A300 and oneBoeing 747-300M in March 2009 for $18.75 million to survive the financial crunch.
Air India's corporate headquarters is located at the Air India Building at Nariman Point in South Mumbai. The airline moved there in 1970. The Air India Building also serves as a regional office for Indian.
- Delhi Hub
On 1 March 2009, Air India had made Frankfurt Airport at Frankfurt am Main as its international hub for onward connections to United Statesfrom India; however, the airline shut down the Frankfurt hub on 30 October 2010. However on July 14, 2010 Air India chief, Arvind Jadhav announced their intention to make the new terminal 3 at Delhi's Indira Gandhi International Airport the hub for international and domestic operations with the plans of starting new direct flights to Chicago and Toronto and also taking almost all international long haul flights away from its former Primary hub at Mumbai's Chhatrapati Shivaji International Airport due to lack of space. This would also provide greater convenience for transit passengers who before had to transfer between the international and domestic terminals which were located on completely different sides of the airport. They will now be able to catch their connecting flights within the same terminal.
- Return to profitability plans
The new Chairman and Managing director wants to change the order of some of the 111 planes ordered in 2006 to get narrow-body aircraft instead of the wide-body aircraft.
Corporate affairs and identity
- Air India Cargo
In 1954, Air India Cargo started its freighter operations with a Douglas DC-3 Dakota aircraft, giving Air India the distinction of being the first Asian airline to operate freighters. The airline operates cargo flights to many destinations. The airline also has ground truck-transportation arrangements on select destinations.
A member of IATA, Air India carries all types of cargo including dangerous goods (hazardous materials) and live animals, provided such shipments are tendered according to IATA Dangerous Goods Regulations and IATA Live Animals Regulations.
At the warehouse in Mumbai, Air India has developed a system of inventory management for cargo handling of import/export functions. This takes care of the entire management of cargo, supportsElectronic Data Interface (EDI) messages with Indian Customs and replaces to a great extent existing paper correspondence between Customs, Airlines, and the custodians. This also replaces manual handling and binning of cargo at the warehouse in Mumbai by Air India.
- Air India Express
Air India Express is the airline's low-cost subsidiary which was established in 2005 during the aviation boom in India. It operates scheduled passenger services primarily to the Persian Gulf andSouth East Asia. Air India Express is currently the only airline in Air India Limited which posts profits. It operates a fleet of Next Generation Boeing 737-800 aircraft.Cochin International Airport is the main hub of the airline from which it has connections to almost all the Gulf countries.
- Air India Regional
Air India Regional (formerly known as Alliance Air) serves mainly on regional routes. Its main hub is Delhi's Indira Gandhi International Airport.
- 1970–2007 livery
Air India's livery was mostly painted in red and white colours. The bottoms of the aircraft remain metal and unpainted but the upper portion is given a white background along with the airline's name written in red. The name is in Hindi on one side and in English on the other. The painted on red palace style carvings on the outside of the windows refer to their slogan "your palace in the sky" which is written on the back of the aircraft. Near the noses of Air India aircraft, the air plane is given a name. Most planes are named after powerful Indian kings or landmarks. Finally, the tail is mostly red with again, the carrier's name written in Hindi on one side and English on the other.
In 1989, to supplement its "Flying Palace" livery, Air India introduced a new "sun" livery that was mostly white with a golden sun on a red tail. Only applied to around a half of Air India's fleet, the new livery did not succeed, as the Indian flying public complained about the phasing out of the classic colours. The livery was dropped after two years and the old scheme was returned.
- Pre-merger livery
On 15 May 2007, Air India refreshed its livery, making the Rajasthani arches along the windows slightly smaller, extending a stylised cheatline from the vertical tail of the aircraft to the nose, and painting a small portion of the underbelly red. Additionally, engine nacelles are now deep red, and a gold-coloured version of the airline's stylized Konark trademark now adorns both the vertical tail and engine nacelles.
- Post-merger livery
On May 22, 2007, Air India and Indian unveiled their new livery. The logo of the new airline is a Flying Swan with the Konark Chakra placed inside it. The Flying Swan has been morphed from Air India's characteristic logo, 'The Centaur' whereas the 'Konark Chakra' is reminiscent of Indian's logo.
The new logo features prominently on the tail of the aircraft. Individually the Konark Chakra also features on all the engines of the aircraft. The choice of colours namely red for "Flying Swan" and orange for "Konark Chakra" are meant to signify vigour and advancement. Further the colours also have a strong association with two carriers thereby retaining the earlier imagery of traditional hospitality and service.
While the aircraft is ivory in colour, the base retains the red streak of Air India. Running parallel to each other is the Orange and Red speed lines from front door to the rear door, subtly signifying the individual identities merged into one. The brand name 'Air India' runs across the tail of the aircraft in hindi.
- Short-haul routes
Air India's short-haul routes mainly include domestic cities and cities in South East Asia and South West Asia. For short-haul routes itsAirbus A310, Airbus A330, Boeing 747-400 and Boeing 777-200LR are used apart from Airbus A320 family aircraft of Indian which are operated with Air India callsign and code.
- Long-haul routes
- Fleet info
- New aircraft orders
- On 11 January 2006, Air India announced an order for fifty eight jets - eight Boeing 777-200LR Worldliners, twenty-three Boeing 777-300ER and twenty seven Boeing 787-8 Dreamliners
- The airlines received its first Boeing 777-200LR aircraft on 26 July 2007 and Boeing 777-300ER on 10 October 2007.
- In April 2010, the airline has orderd three Boeing 777-300ERs.
- Air India expects to get its first Boeing 787 Dreamliner in Q4 2011.
Frequent flyer programme
The Maharaja Lounge (English: "Emperor's Lounge") is offered to First and Business class passengers. Air India shares lounges with other international airlines at international airports that do not have a Maharaja Lounge available. There are five Maharaja Lounges, one at each of the five major destinations of Air India, which are as following:
- Bengaluru International Airport (Bangalore)
- Chhatrapati Shivaji International Airport (Mumbai)
- Indira Gandhi International Airport (Delhi)
- Rajiv Gandhi International Airport (Hyderabad)
Air India's Boeing 777-200LR/-300ER as well as some refurbished Boeing 747-400 aircraft use theThales TopSeries IFE systems for onboard in-flight entertainment. Airbus A310s do not have personal LCD screens. Airbus A330s have widescreen displays in Business and Economy classes but no personal IFEs.
Awards and recognitions
- Preferred International Airline award for travel and hospitality from Awaz Consumer Awards 2006 
- Best International West Bound Airline out of India for three successive years by Galileo Express TravelWorld Award
- Best Corporate Social Responsibility Initiative. by Galileo Express TravelWorld Award 
- Best Short-Haul International Airline by Galileo Express TravelWorld Award 2008
- The Mercury Award for the years 1994 and 2003, from the International Flight Catering Association, for finest in-flight catering services.
- Amity Corporate Excellence Award instituted by the Amity International Business School, Noida, Uttar Pradesh to honour Corporates with distinct vision, innovation, competitiveness and sustenance.
- Reader's Digest Trusted Brand Award
- Dun and Bradstreet Award(D&B)- first in terms of revenue out of the top airline companies out of India
- Best South Asian Airline award by readers of TTG Asia, TTG China, TTG Mice and TTG-BT Mice China, all renowned Mice and business travel publications.
- Cargo Airline of the Year at the 26th Cargo Airline of the Year Awards
- The airline entered the Guinness Book of World Records for the most people evacuated by a civil airliner. Over 111,000 people were evacuated from Amman to Mumbai – a distance of 4,117 km, by operating 488 flights in association with Indian, from 13 August to 11 October 1990 – lasting 59 days. The operation was carried out during Persian Gulf War in 1990 to evacuate Indian expatriates from Kuwait and Iraq.
- The Montreal Protocol Public Awareness Award was awarded to Air India by the United Nations for environmental protection, especially in the ozone layer.
- World's first all-jet airline- June 1962
- World's largest operator of Airbus A310-300
- Air India's security department became the first aviation security organisation in the world to acquire ISO 9002 certification (31 January 2001).
- Air India's Department of Engineering has obtained the ISO 9002 for its Engineering facilities for meeting international standards.
Accidents and incidents
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Ten Air India flights have fatally crashed, including those due to terrorist attacks. Air India has a record of 6.82 fatal events per million flights.
- On 3 November 1950 Air India Flight 245 Malabar Princess a Lockheed L-749 Constellation (registered VT-CQP) carrying 48 people (40 passengers and 8 crew), flying on the Bombay-Cairo-Geneva-London route, crashed on Mont Blanc, France, killing all on board.
- On 11 April 1955 Kashmir Princess a Lockheed L-749A Constellation registered (VT-DEP) carrying 19 people (11 passengers and 8 crew) was bombed in midair, killing 16 of the 19 on board.
- On 19 July 1959 Rani of Aera a Lockheed L-1049G Super Constellation (registered VT-DIN) carrying 46 people (39 passengers and 7 crew) approached Santacruz Airport in conditions of poor visibility due to rain. The captain was using an altimeter with the barometric pressure set at 29.92". An overshoot was delayed and the aircraft crashed and suffered damage beyond repair. There were no fatalities.
- On 24 January 1966 Air India Flight 101 Kanchenjunga a Boeing 707-420 (registered VT-DMN) carrying 117 people (106 passengers and 11 crew) crashed on Mont Blanc, France, on the border between France and Italy, killing all on board. Among the dead was the noted Indian scientist, Homi J. Bhabha.
- On 1 January 1978 Air India Flight 855 Emperor Ashoka a Boeing 747-237B (registered VT-EBD) crashed into the Arabian Sea after takeoff from Sahar International Airport (nowChhatrapati Shivaji International Airport) in Mumbai, killing all on board (213 persons; 190 passengers, 23 crew).
- On 21 June 1982 Air India Flight 403 Gouri Shankar a Boeing 707-420 (registered VT-DJJ) carrying 99 passengers and 12 crew from Kuala Lumpur International Airport via Madras (nowChennai) crashed at Sahar International Airport after a heavy landing during a rainstorm. The fuselage exploded after starting a late go-around. Two crew members and 15 passengers were killed.
- On 23 June 1985 Air India Flight 182 Emperor Kanishka a Boeing 747-237B (registered VT-EFO) was blown up in mid-air, mid-flight by a suitcase-bomb planted by Babbar Khalsa Terrorists allegedly as revenge for the Indian Government's operation on the Golden Temple on June 1984. The flight was on the first leg on its Montréal-London-Delhi-Bombay flight when it exploded off the coast of Cork, Ireland. The plane crashed into the Atlantic Ocean. All 307 passengers and 22 crew on board died.After this incident Air India suspended all services to Montréal.
- On 7 May 1990 Air India Flight 132 Emperor Vikramaditya a Boeing 747-237B (registered VT-EBO) flying on the London-Delhi-Bombay route and carrying 215 people (195 passengers and 20 crew) touched down at Delhi's Indira Gandhi International Airport after a flight from London's Heathrow Airport. On application of reverse thrust, a failure of the no. 1 engine pylon to wing attachment caused this engine to tilt nose down. Hot exhaustion gases caused a fire on the left wing. There were no fatalities but the aircraft was damaged beyond repair and written off.
- On 4 September 2009, Air India Flight 829 Konark a Boeing 747-437 (registered VT-ESM) flying on the Mumbai-Riyadh route caught fire at Chhatrapati Shivaji International Airport. The fire started in number one engine while the aircraft was taxing to Runway 27 for take-off. An emergency evacuation was carried out with no injuries among the 228 people (213 passengers and 15 crew) on board.
- Air India Limited
- Indian (airline)
- Air India Regional
- Air India Air Transport Services
- Air India One
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