Will government be able to revive aviation industry?

SpiceJet got a bitter taste of the banking community's distaste for airlines when it ran into rough weather last year.

After burning their hands by lending more than USD 1 billion to Kingfisher Airlines , the Indian banking community shut the doors on airlines, disgruntling players in the cash-crunched sector.

Is the situation improving? The government certainly thinks so.

SpiceJet  got a bitter taste of the banking community's distaste for airlines when it ran into rough weather last year. With total liabilities of Rs 1,600 crore and curtailed operations, the government requested banks to cough up Rs 600 crore in working capital loans to the airline. But even with bank loans of only Rs 300 cr on its balance sheet, and promoter Kalanithi Maran willing to furnishing personal guarantees for fresh loans, lenders refused to increase their exposure to SpiceJet.

SL Narayanan, Group CFO, Sun Group said: "The family of his does not have the liquidity to pump in Rs 600 crore at this point in time now which is why we needed help to get this money sourced from the banking system and he is willing to give a personal guarantee but nobody wants to accept it."

Lenders are haunted by memories of Vijay Mallya's now defunct kingfisher airlines, which owes more than Rs 6,000 crore to a consortium of mostly state-run banks. Ranking number one in India's list of top 406 loan defaulters, the crisis forced policymakers to pressure banks to get tough on borrowers as bad loans piled up. But this argument has not gone down well with Indian carriers, which are starved of cash and are bleeding heavily.

"Banks cannot take a blind view of the entire industry by not lending to airlines. A banks job is to help industries and it is ironic that they loan money to those who don't need it and don't lend to those who need it," said Sanjiv Kapoor, COO, SpiceJet.

But the civil aviation ministry, which had a huge role to play in reviving SpiceJet, believes the situation is changing for the better.

Anil Srivastava, joint secretary, civil aviation ministry said: "I am very sure that gradually the confidence of lender is developing.. While we were handling the SpiceJet issue; we found that confidence being generated and it is not the situation during Kingfisher."

But until banks find the right balance between the quest to lend to the cash-strapped sector and lowering their NPAs, airlines will have to continue relying on other sources of funding such as external commercial borrowing (ECBs).

SpiceJet stock price

On February 06, 2015, SpiceJet closed at Rs 20.90, down Rs 0.65, or 3.02 percent. The 52-week high of the share was Rs 24.10 and the 52-week low was Rs 11.10.

The latest book value of the company is Rs -16.49 per share. At current value, the price-to-book value of the company was -1.27.

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India Inc's 3-point Budget wishlist

End tax terrorism, create fiscal space for greater public spends and increase the ease of doing business - the three point mantra that captains of India Inc are swearing by. Speaking on the sidelines of the "re-making India discussion by Mint for Budget 2015", industry leaders shared their wish list.

India Inc is not mincing words in placing tax reforms, the highest on the agenda for the make India Budget 2015.

Rajesh Sud, MD & CEO, Max Life Insurance says: "Tax reform is an urgent need. A lot is expected to end the ad-hocism and tax terrorism. The government's stance is welcome but needs to be followed up with action. GST sounds good, but why leave out alcohol. Some more edginess, instead of consensus politics is required."

Industry captains have also pointed at issues, varying from infra projects in a logjam to slashed health budgets to absence of stimuli for prospective defense players. A common thread, they claim, is the need for greater public spends.

Kishore Jayaraman, President - India & South Asia, Rolls Royce, says: "The government needs to create more fiscal space. It can do so through its disinvestment scheme. Sale of land assets, spectrum sale, coal auctions will all be useful to generate cash in the system."

Meanwhile, stressing on the need to make India, before making in India - industry leaders are also pointing at the need to improve the "ease of doing business", with Pakistan and Nepal ranking higher than India.

Krishna Kumar, vice-chairman & MD, Philips says: "There is a need to create a hospitable environment. Facilities such as arbitration, single window clearance, reducing the number of approvals required. Addressing these issues would be crucial for make in India."

India Inc assures that there is money on the sidelines waiting to participate for realizing the "Make in India" dream - but the onus, they say, is on the government to provide the cues.

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Watch exclusive interviews of Indian leaders at WEF

Watch exclusive interviews of Indian leaders at World Economic Forum (WEF) at Davos, Switzerland.

Watch exclusive interviews of Indian leaders at World Economic Forum (WEF) at Davos, Switzerland.

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Internet biz will grow 10 times in India in 10 yrs: Cisco

Technology major Cisco is betting big on Prime Minister Narendra Modi's Digital India mission. In an exclusive conversation with CNBC-TV18, Cisco's Chief Technology Officer Padmasree Warrior says she is exploring opportunities to invest in electronics manufacturing in India.  

According to her, India's internet business will increase 10 times.

Below is the verbatim transcript of Padmasree Warrior's interview with CNBC-TV18's Malvika Jain.

Q: What is your view on Prime Minister Modi's Digital India drive?

A: Yes, it's actually a very exciting vision for us to hear Prime Minister Modi talk about digital India and the nine pillars that he has highlighted as part of that initiative. Government of India is expecting an investment to the tune of over Rs 100,000 crore in this area. That's very exciting to see. There are many trends that we believe will support this move towards digital India. If we look at India, our estimates say that the internet traffic will almost increase 5x from 2013 to 2018. Mobile data traffic will increase 24x or 24 times from where it is in 2013 to 2018. Internet business per se will almost increase 10x from where it is currently in the next decade. So all of these metrics support the fact that there is a need for digitizing and enabling many solutions not only in the government but in the private sector to move towards digital India.

We have a large initiative that we refer to as smart cities which pretty much aligns with the vision that Prime Minister Modi has towards digital India. In addition to that we are working with many customers and partners in the retail segment in the manufacturing segment and smart grid to enable bring technologies to help with bringing current business on to the platform.

Q: Fair enough but if you talk about the emerging trends in the technology space, what is it that Cisco betting big on?

A: So, the big trends that we are pushing and we see that'll change the face of technology are I would say we can summarize them as three trends. First is cloud computing. There is shifting of IT from a premise based solution to a cloud based service. That's definitely something Cisco is leading in and will continue to drive cloud based solution.

The second is mobility, the rise of the mobile as this powerful platform. Essentially, actually it's very big in India, right? Most of the things that I see people using here, lot of the applications are getting created on the mobiles, so that's a second big trend.

The third is the rise of the internet of things which is really the machine to machine connection and the things to things connection. So those are the three big major trends that we see that will transform not just the IT industry but essentially every business that we currently support across the globe.

Q: Another area which is seeing a lot of interest from investors is electronics manufacturing. This is something that that is also being pushed by the government. Proposals worth around Rs 19,000 crore have been received by the government. So, far Cisco is the company which could support electronic manufacturing. Would this be an area that you would be exploring?

A: Yes, we are evaluating that. We are working with the government. For us it has to make business sense of course and as long as everything is competitive and we see the growth opportunities we'll certainly explore the possibility of doing that.

Q: The last time I had interviewed you mentioned to me that foreign investors were cautiously optimistic about India but those were early days for the Narendra Modi government and since then a lot of initiatives have been taken. The sentiment in the Indian economy has revived. So, as a foreign investor the cautious optimism that you were talking about has that shifted to absolute confidence in the governments vision, its plans and its goals?

A: Definitely it is getting better. The optimism is getting stronger. I myself participated in some of the discussions in New Delhi when President Obama was visiting here and I also participated in the state department events when Prime Minister Narendra Modi was visiting Washington DC. Overall definitely the confidence is growing. My boss John Chambers was in India few months back and he emphasized also the importance our company places in India not just as a market but actually as a talent base for us.

Our teams here in India for Cisco produce products that we market globally. So, they are not just making products for India but for our global base. So, definitely it will all depend on execution but definitely the optimism is there and the confidence is growing.

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Bombay HC lifts stay to FTIL-NSEL merger

The division bench headed by Justice V M Kanade directed the corporate affairs ministry to proceed with the final order under the provision of the Companies Act and said it will look into the case after the final order was issued.

The proposed merger of the crippled commodities spot exchange NSEL with its parent  FTIL got a shot in the arm today with the Bombay High Court lifting the stay order it had passed last November, and asking the government to pass the final order.

The division bench headed by Justice V M Kanade directed the corporate affairs ministry to proceed with the final order under the provision of the Companies Act and said it will look into the case after the final order was issued.

"The government will hear all the parties and their contentions within 30 days and pass an order within four weeks of the hearing," said the bench, adding it is keeping open the option for Financial Technologies to challenge any adverse order passed by the government.

The court also said that the government's final order will be kept in abeyance after passing and would be subject to the clearance of the court. The direction came after government counsel Ranjit Kumar sough revocation of status quo order, saying FTIL's decision to dispose of its assets such as Bourse Africa and hiving off its trading software Odin had violated the status quo. Kumar also told the court that the government will pass final order only after hearing all the parties.

He said the court should direct FTIL to not dispose of its assets. Commodity market regulator Forward Markets Commission (FMC) had late last year proposed to merge NSEL with FTIL, as demanded by investors following the Rs 5,600 crore payment crisis at the exchange. The FMC move came after it felt that the workforce and financial strength of NSEL has been depleted and so it was "financially and physically incapable of effecting any substantial recovery from the defaulting members".

FTIL challenged the move in the Bombay High Court, which ordered the status quo on the draft order. Jignesh Shah-promoted FTIL owns 99.99 percent in NSEL on which trading was suspended after the repayment crisis came about.

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PM Modi listening to industry is encouraging: Intel

Intel's Renne James says the fact that prime minister Modi is listening to the industry is very encouraging and she is hopeful about India

Global CEOs have been lining up at Prime Minister Narendra Modi's door. The latest being Intel's Renne James and she is upbeat on the India story and the prime minister's Digital India drive.

Below is the verbatim transcript of Renee James' interview with CNBC-TV18's Shereen Bhan

Q: You met Prime Minister Modi. Post the meet, what is your view on India?

A: I feel very hopeful about India. His initiatives and his personal engagement on his vision for the future of digital India is quite impressive. He is a technology user himself. He shared with me about how he uses technology in his own personal cloud and I feel that because he himself knows how to use the technology he is very well equipped to have a real good push on what is happening. So we are very encouraged and he is listening to the industry which is also very encouraging. So it is very good.

Q: But what is all that going to translate into in terms of investments in India for Intel because the R&D story is well established. So what about manufacturing in India? The government has unveiled an electronic manufacturing policy, the minister says that they have managed to get investments worth Rs 19,000 crore. Is there any possibility of manufacturing in India?

A: There is always a possibility of anything.

Q: The probability of it happening sooner rather than later?

A: The probability in a short term is probably close to zero because we are now in a situation in the semiconductor industry where we have all built our capacity for the near term needs and any of us three largest manufacturers in semiconductors right now probably are most likely to add capacity on to our existing plants. If things go as Prime Minister suggested then India could be a possibility, but today, no, we just aren't building any new capacities.

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How Ajay Singh is restructuring SpiceJet after takeover

With ex-promoter Ajay Singh once again in Spicejet's cockpit, the crisis-hit airline is taking a new direction. Spicejet's management has gone back to the boardroom to undertake a strategic review of its entire operations.

We will be back to 26 Boeings and 15 Q400s in the summer schedule starting in April and then we intend to grow back rapidly thereafter.

Sanjiv Kapoor

COO

SpiceJet

With ex-promoter Ajay Singh once again in Spicejet's  cockpit, the crisis-hit airline is taking a new direction. Spicejet's management has gone back to the boardroom to undertake a strategic review of its entire operations.

In a chat with CNBC-TV18's Farah Bookwala Vhora, Spicejet COO Sanjiv Kapoor opened up on the tough decisions being made on fleet ramp-up, network expansion and rationalisation of staff.

Below is the transcript of the interview on CNBC-TV18.

Q: What changes is Ajay Singh making?

A: Ajay is obviously looking at every aspect of the business. He is already looking at all of the strategy, the returns, the costs, so on and so forth.

We will be back to 26 Boeings and 15 Q400s in the summer schedule starting in April and then we intend to grow back rapidly thereafter. We are going to be rationalising some stations in the summer schedule because with fewer aircraft, you can't spread yourself too thin. You need to again have more depth than breadth.

Q: Time and again we have seen reports on the attrition that is taking place and the staff rationalisation plan that is under works at this point. Give us a sense of where you started at and what would be the total staff at the end of this year. Also take us through the process of furloughs that is unfolding at SpiceJet at this point.

A: Well, the staff ratio that LCCs in this part of the world should aspire should be below 100 but we want to bring the number down to below 100 per aircraft. I don't want to go into more specific than that.

A large part of the right sizing has occurred on its own actually, naturally due to attrition. So that has actually taken care of the chunk of the reductions and any further reductions that had acquired as we have mentioned in the past will be done as fairly as possible and will be done on the furlough concept, which is that those staff we will hire back once we start growing again.

SpiceJet stock price

On February 03, 2015, SpiceJet closed at Rs 22.45, down Rs 0.55, or 2.39 percent. The 52-week high of the share was Rs 24.10 and the 52-week low was Rs 11.10.

The latest book value of the company is Rs -16.49 per share. At current value, the price-to-book value of the company was -1.36.

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Sixth aircraft by Jun may see us break even: AirAsia India

In a chat with CNBC-TV18's Farah Bookwala-Vhora, Airasia India chief Mittu Chandiliya discussed plans to ramp up fleet and the impact of the regulatory & policy uncertainty on its expansion plans.

At the end of 2015, we would be around 12 to 14 aircrafts.

After missing its November 2014 deadline, low-cost carrier AirAsia India is hoping to break even soon as it starts flying its sixth aircraft in May-June.

In a chat with CNBC-TV18's Farah Bookwala-Vhora, Airasia India chief Mittu Chandiliya discussed plans to ramp up fleet and the impact of the regulatory & policy uncertainty on its expansion plans.

Below is the transcript of the interview on CNBC-TV18.

Q: How are you planning to ramp up operations?

A: Over the last four months we have seen a lot of policy changes and whether it is the RDG, whether it is the 5:20 -- it didn't make sense for us to rocket up the launch and commit to certain markets, certain routes when there could be a drastic change which should make it prohibitive to go to certain markets and certain routes.

So the whole idea was let us take a step back, let us see kind of how the industry shakes up and then make a decision based on routes and airports after that.

Q: How do you intend to ramp up your fleet?

A: We are having one [aircraft] which will come to us in about three weeks. The fourth one will come towards the end of April. We will have five before May and then after June-July, we would probably add another six to seven more aircraft.

Q: So, in totality when you end 2015 how many aircraft would you have added?

A: At the end of 2015, we would be around 12 to 14 aircrafts.

Q: What is the plan to break even? We have seen that also get deferred from last year to now. We are hearing about May-June.

A: In terms of breakeven it is always going to be a factor of anytime we hit the sixth aircraft. We would be in a much better state to break even.

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Budget 2015 wishlist of e-commerce sector

E-commerce is the new buzz-word in the start-up and technology community. And it's all set to scale new highs as it looks to outstrip the impressive growth recorded by household names like Flipkart and Snapdeal last year.

The Digital India idea has a slew of start-up and established companies in the technology and e-commerce space excited. They all believe Budget 2015 will be the start of a new era of higher growth. But only if the finance minister stays away from unfavourable regulations and takes concrete steps towards improving the ease of doing business in India.

E-commerce is the new buzz-word in the start-up and technology community. And it's all set to scale new highs as it looks to outstrip the impressive growth recorded by household names like Flipkart and Snapdeal last year. Financing, however, will be key to the success of this growth plan. And venture capitalists aside, the industry now wants the government to open the doors to more foreign direct investment.

Kunal Bahl, CEO, Snapdeal: "There is a lot of discussion around FDI in retail, e-commerce company that owns inventories and we still are in discussions because that is not the business model we follow. We follow a different business model. We see ourselves as a technology platform where 100 percent FDI is allowed."

Funding avenues aside, the sector also wants the government to do more in pushing it's the Digital India drive. They say an easier policy regime will be manna from heaven for the growing legion of firms offering internet-based services.

Nishant Rao, country manager, LinkedIn India says: "Government is already talking a lot of the right stuff - making it easier to do business, investment in digital technologies with Digital India. If we start delivering on those pieces and deliver on the policy aspects, that will help the economy grow faster and we will be in a good shape."

Speaking of policy, the government has already begun looking at coming up with a policy for e-tailers and here too, players say an easier operating environment is the order of the day.

Bahl adds: "My only recommendation/ suggestion would be that as long as the framework makes it easier for us to operate, it will be a welcome."

The ball is now in finance minister Arun Jaitley's court. The e-commerce and the technology space are holing for big things in Budget 2015 and the minister will have to balance the need for quick growth with a policy and regulatory framework that provides sustainable growth opportunities.

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GVK moves Delhi HC against coal auction over compensation

Litigation worries for the government over coal block auctions are mounting. GVK Power has moved the Delhi High Court seeking a stay on the auctions over compensation offered to prior allotees.

Litigation worries for the government over coal block auctions are mounting. GVK Power  has moved the Delhi High Court seeking a stay on the auctions over compensation offered to prior allotees.

GVK's plea challenged the provisions of the 2014 coal ordinance on grounds that it was aggrieved at the "arbitrary" determination of compensation for its mining infrastructure, which was much lower than it expected.

GVK claims that this compensation is merely a fraction of the investments made. GVK is claiming Rs 550 crore, while the government has fixed the compensation at Rs 57 crore for its Tokisud block.

GVK Power stock price

On February 02, 2015, GVK Power & Infrastructure closed at Rs 11.14, up Rs 0.54, or 5.09 percent. The 52-week high of the share was Rs 20.85 and the 52-week low was Rs 8.51.

The latest book value of the company is Rs 15.69 per share. At current value, the price-to-book value of the company was 0.71.

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