AI express still has no training system

Air India Express, the subsidiary of Air India (AI) still does not have a proper training system in place even after being pulled up for various safety lapses by the Directorate General of Civil Aviation (DGCA) on a regular basis.

"AI Express does not have a training set up the way it should actually have, which is a systemic flaw. It has entered into an agreement with AI wherein the national carrier will be providing manpower and other training facilities to it. However, the onus of maintaining the standards of flying operations is still with the CEO of the airline and not with Air India," said a senior official in AI requesting anonymity.

It should be noted that AI has allegedly spent Rs 80 cr on the stipends, hotel accommodations, conveyance and other such expenses of the 150 pilots belonging to AI Express as they were grounded due to lack of training between September 2010 and September 2011.

In the same year, AI constituted a training committee for the training of pilots particularly of its subsidiary Air India Express. In India training facilities were in bad semblance, so quotations were invited from world over. Following many vendors quotations, the training contract was awarded to Miami based PAN-AM Academy at $38,000. However, the contract was revoked soon by Arvind Jhadav, ex-CMD of AI, and given to a second vendor, Lufthansa Flight Center at almost double the cost at $67,000.

It is important to note that Air India is yet to implement carrier pattern after the merger. The training reportedly and allegedly is in such bad shape that AI has to suspend its general manager (Training) for irregularities in records and later the general manager (Operations) for negligence in arranging pilots.

Auto industry wants relaxation of taxes in Budget 2013-14

AVIATION

The ailing aviation industry wants infrastructure status so that it can get some relief in terms of taxes and access to finances. FICCI said in its pre-budget memorandum, "Ease RBI limits on sectoral funding thereby removing the current compulsion for airport developers to raise required funds or debt from multiple banks making the process time consuming and cumbersome."

The industry body has also suggested that the government should allow import of items required for development of airports at a concessional rate of basic custom duty of 5%. Some of the items required for airport development are airfield crash fire tenders and other fire fighting vehicles, runway marking and pavement testing machine, aerobridges etc. Also, the apex body wants exemption from customs duty for X-ray baggage inspection system and other airport security systems.

FICCI has also recommended that the finance ministry allow private airport operators to raise funds from the market and be allowed to issue long term non taxable infrastructure bonds.

AUTOMOBILE

The auto industry's primary expectation is the relaxation of taxes. The Society of Indian Automobile Manufacturers has suggested that the government should reduce the excise duty on cars to 20%, excluding small cars. The industry body has also pointed out that the duty on 10-13 seater vehicles should be 10%.

Industry experts are hoping that the government will take measures to reduce the widening gap between the cost of petrol and diesel cars.

Analysts have suggested that the government should increase diesel prices across the country in order to boost the sale of petrol cars.

HEALTHCARE

The Confederation of Indian Industries (CII) has recommended to the government to award infrastructure status to the healthcare sector. According to the CII, in 2011-12, Pranab Mukherjee, then finance minister, had announced that capital stock in hospitals will be treated as infrastructure sub-sectors and added that detailed guidelines to this effect would be announced by the government soon, the CII has said that the guidelines should be announced at the earliest. It has also recommended that the scope of the Rashtriya Swasthya Bima Yojana (RSBY) should be extended to include the entire BPL population.

Further, Sanjay Kumar, managing director of Zimmer India, which creates personalised joint replacement technologies said that the exemption limit under Section 80D of the Income Tax Act should be increased from Rs 30,000 to Rs 60,000 for payment of health insurance premium for self and dependent family members.

AGRICULTURE

The agriculture sector needs the government to enable policy framework with attractive fiscal incentives to attract private investment in the rural economy. According to FICCI, private investment in agriculture and allied activities can provide the necessary boost to the already committed government spends and can have a multiplier effect in the rural economy.

In its pre-budget memorandum, FICCI also suggests that the government should increase investment in agriculture and allied sectors. It has requested the government to increase the funding given to institutes like ICAR and state agriculture universities.

Special offers and discounts to boost V-day sales

Young couples shop for Valentine's Day; Source: WSJ blogs

Brands are giving special offers and discounts in the hope that shoppers will open their wallets as Valentine's Day approaches.

"Valentine's Day is a very important day for us. It validates our business model. We expect 15% to 20% of the total sales to be generated on this day," said Varun Vummudi, CEO, Giftology.com, a Bangalore based online gifting platform. For Valentine's Day, the website is offering vouchers to shoppers for Salsa India's live dance classes. The site has tied up with various merchants to expand the gifting options for customers.

Similarly, Jabong.com, a popular e-commerce website is offering 750 brands including perfumes and jewellery at discounted prices. Tradeus.in, another e-commerce website, has launched Valentine's Day special jewellery, fragrances, watches, lingerie, apparels, flowers and cakes. The website is offering up to 85% discount on these products.

Restaurants and café houses too are pepped about the day. "Valentine's Day is a very special day for us. Since it's a weekday this year, therefore the revenue will be four to five times more than what we would have typically generated on a regular weekday," said Sanjay Kapoor, marketing manager of Thank God It's Friday (TGIF).

The US-origin restaurant will offer a four-course meal for Rs 899, including appetizers and wine. Similarly, the Beer Café in Gurgaon will launch an exclusive Estrella Damm Inedit Beer in cooperation with the brew masters of Estrella Damm, a Catalan pilsner. The pub will also offer Valentine special platters to the diners.

Café Coffee Day, the biggest coffee chain in India, is celebrating a Valentine's week and is offering meals for Rs 199. "Our customers on Valentine's Day primarily consist of school and college students and therefore we offer them the best of schemes at the lowest prices," said a Café Coffee Day manager who did not wish to be named.

The Delhi based restaurant chain Cocoberry too has come up with six new flavours at a price of Rs 99 for people visiting their stores on 14 February.

In Chandigarh, however, no special offers are being given by gift stores, even though they have brought in new stock for Valentine's Day.

The manager of the only Hallmark store in Chandigarh says, "We have cards and gifts for Valentine's Day, but we are not offering any discounts. The market in Chandigarh is not big enough to make profits through discount offers."

The Archies stores have a range of new gift options for both men and women. A store owner said, "Not many people are now buying physical gifts. It is difficult to make profits if we provide special offers. Most people buy fancy stuff online, which is why online stores are offering various kinds of discounts." Other store managers also mentioned that the sale of cards has been decreasing and is at least 20% less than last yeast.

Chandigarh's retail chains may not be much excited, but the local shops have their stock ready. A gift shop in Sector 8 has been decorated for Valentine's Day and has its shelves full of heart-shaped goods, including soft toys, watches, phones, pen stands, photo frames and a range of other gifts. The DLF mall in Chandigarh has also been decorated in the Valentine theme of red and pink hearts.

Clothes and apparel stores are displaying red, white, pink and black as colours of the month. A Meena Bazar store manager said, "We are banking on the large number of parties that happen in Chandigarh to increase our sales. It is a good time to pamper your love with new clothes."

Chandigarh's youth have mixed feeling about the celebrations. While couples are ready to party, the single men are unhappy. "14 February used to be a good opportunity for us to propose to the girl we liked. However, with girls becoming very careful and the police proactive, we fear there will be consequences to a harmless proposal," says Kshitij, a student of Khalsa College. The girls of MCM DAV college say they will celebrate Valentine's Day with a "girls' day out, rather than with the boys who cannot be trusted with anything".

Virtual war breaks out on Facebook, Twitter

A virtual war broke out between young Kashmiris and the rest of India over the execution of Afzal Guru. The "cyberwar" peaked to such levels that Facebook users started removing their Kashmiri friends from their list and vice versa.

The Kashmiri youth flooded Facebook and Twitter condemning the execution of the key conspirator in the Parliament attack case, with posts accusing the Central government and the country in general of being biased.

"With regard to Kashmir, India continues to behave like a colonial state it is. Any doubts, surely vanished today," tweeted Mirza Waheed, a journalist and avid Twitter user.

Another users conveyed his "condolences to the bereaved family" and "May the departed soul rest in Peace and Jannah # Afzal Guru", the user tweeted.

Sanam Khan, a Srinagar based journalist posted on Facebook, "The killers of Rajiv Gandhi (PM of India) were not hanged...the killers of Beant Singh (former Chief Minister of Punjab) were not hanged...they did killing long before but Afzal Guru was hanged...don't understand this."

Most of them came under severe attack from people from different parts of the country, who branded such opinions as "inflammatory, and anti-national".

Jagadish Konduru, a Facebook user posted, "People are arrested when they post inflammatory comments against Rahul or Sonia or Chidamabaram or Manmohan. Can't you see the kind of inflammatory words they say against country?? India? Where is the government or law now?"

A Twitter user posted, "Anybody who protests against hanging of terrorist #AfzalGuru deserves to be beaten..."

Yogendra Verma, a Delhi based IT professional said, "A large crowd of idiots are of the view that by hanging Afzal Guru, India has burnt all its bridges to Kashmir. What are they smoking? Was Gujarat antagonized when butchers like Babu Bajrangi and Maya Kodnani were convicted?"

Senior journalist Abhijit Majumdar too tweeted, "Those calling India's justice system communal after Afzal Guru's hanging, remember: India's chief justice is a Muslim, IB chief is a Muslim."

Air India spent Rs 8 cr to train pilots it did not need

Air India, the cash strapped national carrier, has spent over Rs 8 cr to train 31 additional pilots above what it needed in 2012. And this in spite of the financial woes that have been hounding the carrier, which is trying to improve operational efficiency and is adopting various cost cutting strategies. "Out of the 31 pilots, 22 were trained for Boeing 777 and nine for Boeing 744," said a senior official on the condition of anonymity. Air India was facing a shortage of 99 pilots for Boeing 777 in 2012, however, it chose to train a total of 121 pilots for B-777.

Currently, Air India has 20 Boeing 777 aircraft, for which a total of 396 pilots including commanders and first officers are required. The current strength of pilots available for Boeing 777 is 297.

For the five Boeing 744s, the airline requires 34 pilots, while it actually has one surplus. Apart from the single extra pilot, the airline is also training 10 additional flying officers for the aircraft.

According to the official, the estimated cost for training a set of crew comprising two pilots is Rs 54,00,000. So for 31 pilots, the cost would be over Rs 8 cr 10 lakh. "The 31 pilots were clubbed into a crew of two. If the training is done domestically, the training fee is computed according to per hour rate," the official added.

"A pilot requires approximately 20 sessions to complete his training, with each session consisting of six hours. Each hour costs anywhere between Rs 21,600 and Rs 32,400," the official told The Sunday Guardian.

It is to be noted that aviation regulator Directorate General of Civil Aviation has not made it mandatory for any carrier to train additional pilots. Air India did not comment on the matter.

Sahara will have to sell off real estate to pay investors

Sahara Pariwar chief Subroto Roy at an event; Source: Pardaphaash.com

Subroto Roy's Sahara Group will have to sell off many of its real estate assets in order to pay investors of the two companies Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corporation (SHIC) and comply with the Supreme Court order to pay its investors, with 15% interest.

"Sahara has many real estate projects in progress across the country. For the two companies to pay off the entire amount of Rs 24,000 cr, the group may have to put up many of the real estate assets on sale," said a real estate expert requesting anonymity.

Currently, Sahara owns the Amby Valley Limited, which owns the Amby Valley city near Mumbai, valued to be close to Rs 40,500 cr. The group also owns close to 95% stake in special purpose vehicles having 64 projects in 64 cities in the entire country. The total land available is believed to be 4,400 acres.

The company also has considerable land assets in Gurgaon with a project spread over 186 acres of prime land in Delhi and Haryana bordering Gurgaon. According to real estate experts, Sahara Group intends to develop the available land as commercial space and residential apartments, including group housing, branded villas, luxury apartments, club and hotels.

Sahara owns a 33% stake in the Versova project spread over 106 acres of land near Mumbai, a 40% stake in residential projects in four cities, on land worth Rs 888 cr. It also has a 50% stake in 15 city home ventures in as many towns, worth Rs 5,192 cr.

The conglomerate also has land banks in cities like Pune, Lucknow, Ahmedabad, Gwalior and many others. According to the company, the total land bank of the group is 36,631 acres.

"A core committee meeting takes place in Mumbai at regular intervals to discuss the matter. However, there is not much clarity as to how are they arranging the funds," a senior company official told The Sunday Guardian on condition of anonymity.

Sebi has now frozen 100 bank accounts including Sahara chief Subroto Roy's account. The SC last week had pulled up Sebi for not freezing the bank accounts of SIRECL and SHIC.

The court also issued notices of contempt of court to the two Sahara companies for not furnishing the documents to Sebi and for not refunding the investors. Sahara's counsel has defended the two companies and said that they had to pay Rs 2,620 cr.

Sahara did not offer any comments at the time the story went to press.

Kingfisher airline faces dissolution

Kingfisher Airline (KFA) will face dissolution if banks remain firm on their decision to recover the loans given to the grounded carrier. "With the lenders planning to recover loans and revoke the collaterals available to them, the airline is bound to be dissolved," said an expert who did not wish to be named.

The lenders collectively have an exposure of about Rs 8,000 cr in KFA and intend to recover Rs 1,000 cr by selling its assets and Mallya's pledged shares in his other companies by March end.

"These shares and assets are low-hanging fruits which should give us Rs 1,000 cr. The balance consists of corporate guarantees, personal guarantees and properties attached to the airline," said Shyamal Acharya, deputy managing director of State Bank of India. The country's largest public sector bank has a total exposure of Rs 1,961 cr in KFA, the highest in the consortium. The bank had reduced the rating of the airline from being an average risk to becoming a defaulter in its 2011 report.

The second biggest lenders of the airline is the Punjab National Bank and IDBI bank with a collective exposure of Rs 1,600 cr, followed by Bank of India and Bank of Baroda with Rs 650 cr and Rs 550 cr respectively.

A Kingfisher Airlines flight lands; Source: PunterCalls

Currently, the banks collectively have Rs 6,500 cr worth collaterals from the UB Group companies. Some of the collaterals include shares of United Spirits worth Rs 500 cr and securities held by Srei Infrastructure Finance of Rs 500 cr.

It is important to note that KFA, in the third quarter report of 2012-13, has said that it is in constant dialgoue with the DGCA and is confident of meeting its requirements for renewal of the permit and re-starting its operations.

The company had requested bankers for further credit facilities for planned reconfiguration of aircrafts and the revival plan submitted to the DGCA for renewal of the scheduled operators permit which was duly rejected.

At present, the banks are working out the legal issues for commencing recovery of loans from the airline.

Recommendations to the government

REAL ESTATE

The real estate sector has recommended that the government should increase infrastructure spending in urban areas, give the sector infrastructure status and moderate high input costs.

"There is a need for the government to increase infrastructure spending with a view to unlocking the value of neglected and hidden land assets in suburban and peripheral districts," said Anuj Puri, chairman and country head, Jones Lang LaSalle India.

He further added that the government in the upcoming budget should also provide infrastructure status which will enable the sector to access debt lending at better interest rates and reduced collateral values. "Since the sector is not under the umbrella of any specific regulatory authority, financing has been an issue over a number of years of credit slowdown. The budget should enable a broader scope for external commercial borrowings for real estate and provide a general relaxation of financing norms," said another industry expert requesting anonymity.

TELECOM


The Telecom industry has recommended that the government should provide infrastructure status to the sector. "The key recommendations included the long awaited infrastructure status to be provided to the sector, along with a revision of the high levies and taxes on the industry, which amount to more than 30% of the revenues. The precarious financial state of the industry and the critical investment environment restricting its revival have also been sought to be addressed," said the Cellular Operators Association of India (COAI).

According to the COAI, the sector is essentially providing public telecommunication services, which should be viewed as a critical infrastructure industry. Currently, the industry is not within the purview of the definition of infrastructure projects.

The COAI noted that infrastructure status will also help the sector get finances as banks have been reluctant to get fresh exposure in the industry due to uncertainties in the policies. "Despite long term viability of the telecom sector, banks and financial institutions do not want to take any fresh exposure, cutting down the funding options of the industry drastically due to the growing regulatory uncertainty in the sector," the body noted.

Questions raised against Ajit’s Tier III airport plans

Civil Aviation Minister Ajit Singh is planning to set up airports in Tier III cities such as Bareilly in Uttar Pradesh, Along, Ziro and Passighat in Arunachal Pradesh, Rupsi in Assam, Bilaspur in Chhattisgarh and Thanjavur in Tamil Nadu. All the concerned states have been asking for these airports. However, serious questions are being raised about the feasibility of these projects.

Civil Aviation Minister Ajit Singh ; Source:  Outlook India

"It is good to construct airports and boost the connectivity among various cities, however, the ministry should invest only if a project in a particular city is economically viable," said aviation expert Javed Raza, who is also the general secretary of the Janata Dal (United). He explained that airports in cities like Bareilly and Bilaspur will not be economically beneficial as the Airports Authority of India (AAI) will not be able to recover the money it invests in these projects.

"We are targeting first class train passengers in these cities. While the projects will not be generating revenue initially, it will be beneficial for both the AAI and the passengers in the long run," said a senior official from AAI on the condition of anonymity. He added that the initial revenue from these airports will depend on that generated by airports in Tier II cities.

The ministry also has the daunting task of convincing India's cash strapped airlines to fly on these routes. "The government will first have to present a bouquet of airline friendly policies like removal of taxes and others to make the routes lucrative for the carriers," noted an expert.

On the political front, Singh had shown keen interest in the development of airports in UP and had requested the Akhilesh Yadav government to build airports in Meerut, Bareilly, Faizabad and Gorakhpur, which was apparently not accepted. "Airports in these cities will encourage more industries to be set up in them, which would eventually boost the state's economy. While in other states, airports have been developed in even small towns, UP only has two of them. The UP government, apparently, is not interested," Singh had said last year.

29 AAI officers suspended

The Airports Authority of India suspended 29 officials in 2012 for offences such as misbehaviour with colleagues, theft and misappropriation of cash.

According to an AAI officer, those suspended included six top officers who allegedly favoured a private firm while awarding ground handling service contracts at some airports. "They were suspended by Civil Aviation Minister Ajit Singh once the irregularities came to light," said the officer on the condition of anonymity.

Another case is about dowry demands made by an officer, and is pending in court. Another senior employee was caught for illegally taking components and accessories from AAI premises.

A senior official in the AAI's commercial department was suspended when irregularities were found in the granting of licences for Common Use Terminal Equipment and Common Use Passenger Processing System at the check-in counters of different airports. However, the suspension was revoked by the end of the year.

"A senior AAI employee posted in Bangalore and Tirupathi airports was caught for mismanagement of cash and was arrested by the CBI later in the year," noted the AAI officer.

Boeing is all set for a long haul in India through local tie-ups

Boeing India is keen on increasing its footprint in India and is looking at various partnerships and collaborations with Indian companies and institutions. In an exclusive interview with Pratyush Kumar, President, Boeing India, Purba Das finds out the US aircraft manufacturer's strategy for the Indian market.

Q. Could you tell us how big the market in India is for Boeing? What is the market share enjoyed by the US aircraft manufacturer in the country?

A. The Indian market is extremely important for Boeing in terms of both civil aviation and defence sectors. Boeing has steadily accrued its presence in India over the last 70 years in these sectors. We have just delivered the Indian Air force its first C-17 for flight testing. Today, Boeing's partnership with India has expanded to meet the country's aerospace and defence requirements and is creating sustainable value in the Indian aerospace sector.

Q. What is the company's strategy in India?

A. We are looking forward to bringing out the best in our Indian partners. Besides that, Boeing has developed important relationships with local suppliers in the country and is actively pursuing technical and business partnerships with other Indian companies and institutions. These are aimed at increasing our footprint in the Indian market and help augment the aerospace industry in the country.

Q. What are your recommendations to the government for the upcoming budget?

A. The high prices of aviation turbine fuel (ATF), high airport taxes, and other such factors need to be looked at. The government should also think about providing infrastructure status to the civil aviation industry in the country, as connectivity is extremely important for the growth of the nation.

Q. What do you foresee for the Indian airline industry in 2013-14?

A. There are short term fluctuations in the industry in terms of high input costs for the airlines. But in the long run, the sector is bound for a robust growth. We expect new airlines to come up, keeping in mind the growing middle class which will create the need for new players in the year. Boeing has projected India's commercial aviation fleet to grow more than 4.5 times over the next 20 years. The Boeing 2012 Current Market Outlook India has forecasted that the airline market in India will need 1,450 new airplanes worth $175 billion in next year 20 years.

Q. Tell us more about your association with Aero India.

A. We are excited about participating in Aero India because it is an opportunity to meet with customers and partners during the show, as well as showcase what Boeing can do for the country. At the show, we will be discussing C-17 Globemasters III, P-8I anti-submarines and anti-surface warfare aircraft, CH-47 Chinook heavy lift helicopter, and others.

Q. Could you tell us something about your Boeing Business Jets (BBJs) business in India?

A. Well, we are in the process of interacting with a few entrepreneurs for BBJs in India and hopefully things will work out soon.

‘Go Air had 112 safety lapses’

Go Air in the air!

The safety audit conducted by the Directorate General of Civil Aviation in 2012 found the Wadia group-promoted Go Air with the highest number of lapses, followed by Air India Express. "The audit team has made 112 observations about Go Air, which is the maximum number of safety lapses among the six carriers audited," said a senior DGCA official on the condition of anonymity. Air India Charters, which operates Air India Express, has the second highest number of lapses at 65. In the third place is Vijay Mallya's defunct Kingfisher with 36 safety issues, followed by Jet and Indigo with 23 safety issues each.

The safety assessment covers aspects such as operations, maintenance, security, commercial and ground support for the smooth functioning of an aircraft.

In its audit report of 2011, the DGCA had said that Go Air had very few trained pilots and that its engineering audit for 2010 was not carried out as planned. "Air India Express too was pulled up for safety issues in the previous audit," said the DGCA official. "Air India Express lacked pilots and cabin crew, proper and regular training, qualified safety officials and did not comply with safety audits," said the source.

When contacted, the Go Air spokesperson told The Sunday Guardian that the DGCA audit had not found anything related to the safety of their aircraft or operations: "Out of the total number of 53 observations spread across departments, most were related to documentation with suggestions for further improvement. The same were immediately corrected and action taken report was submitted to and accepted by DGCA. We always report all incidents and there is a constant flow of information to the DGCA authorities". About the inadequate number of trainer pilots, the spokesperson said that the matter was taken up with DGCA and required waiver was given to the airline. Go Air is currently outsourcing this requirement to the Airbus training facility. "Additionally, we are hiring instructors and examiners way above the requirement norms laid down by DGCA," the spokesperson noted.

"The DGCA has a team for preparing and monitoring the annual surveillance programme. A special division holds monthly reviews of the inspection carried out by each directorate and maintains a database of the findings. Once the report is prepared, they are sent to the concerned airlines. The enforcement of corrective action is then followed up," said the official. The 2011 safety audit had found out that some airlines had violated airworthiness standards and did not carry out regular maintenance checks of the aircraft. Some serious issues such as aircraft parts with corrosion deposits were found while ground support equipment was not in order.

The safety audit of SpiceJet is awaited. Air India went through International Air Transport Association's (IATA's) Operational Safety (IOSA) and received the IOSA certification, the first airline in the country and among the first 10 carriers in the world to have that certificate.

Air India Express refused to comment on the findings.

Rani, Mithun may open India product show in Myanmar

The Indo-Myanmar Chamber of Commerce has approached Hindi film actress Rani Mukherjee to inaugurate the India Product Show 2013, which will be held in Yangon, Myanmar in the first week of May. "We are in talks with Bollywood actors Rani Mukherjee and Mithun Chakrobarty to become the chief guests for the gala dinner after the opening ceremony," said a senior official of the Indo Myanmar Chamber of Commerce and Industries. The official added that the chamber is still negotiating with the two actors regarding the logistics.

"The idea behind inviting Bollywood actors is to attract large crowds at the exhibition and also add glamour to the event. The inauguration ceremony will be then followed by a dinner, which will be attended by the top brass of the Myanmar government and business community," the official said requesting anonymity as the talks were in the initial stages.

The chamber hopes to tap companies from various industries including consumer goods, auto engineering parts, non conventional energy, home furnishing, pharmaceutical and others.

The association is in talks with consumer goods giant Godrej Consumer Products, Kores India Ltd, consumer electronic major IFB and Samsonite."There is a lot of scope for all these industries in Myanmar. Our talks with industry body FICCI have reached an advanced stage," said the official.

The India Product Show was organised in Myanmar last year and had close to 20 participants including Godrej Consumer Products. "The Indian government has not been so supportive of the initiatives and therefore, it has been difficult for us to organise large scale exhibitions in Myanmar to promote trade between the two countries," the official said.

RBI under Finance Ministry's pressure to cut rates

The Reserve Bank of India (RBI) is under pressure from both, the Ministry of Finance, as well as the Indian industry to cut repo rates by a minimum of 25 basis points in the first monetary policy review in 2013. This will be held on 29 January. According to sources in Mint Street, Mumbai, the Central bank will finally slash rates this time "as the headline inflation has moderated and has currently touched the lowest level in three years", from 7.24% in November 2012 to 7.18% a month later, because of the downward movement in fuel and manufacturing.

"The Central bank has not cut rates since April 2012, thus leaving the RBI with the freedom to cut policy rates. It will most probably cut rates by 25 basis points after taking into consideration various factors including inflation in both, the wholesale price index (WPI) and consumer price index (CPI)," said a senior official requesting anonymity. He pointed out that inflation in non-food manufacturing sectors has dipped to 4.2% in December from 4.5% in November last year, thus leaving room for rate cuts.

"We expect the central bank to cut rates in this policy meet as there is a lot of room for rate cuts this time. A rate cut is essential to strengthen the economy as India has the highest interest rates among major economies," said Sudip Bandyopadhyay, managing director, Destimony Securities.

However, the inflation in the CPI has remained high, which has cast a doubt on whether the "monetary hawk", RBI Governor D. Subbarao, will make any rate cuts in this policy meet.

"The high food price is not allowing the inflation in the CPI to moderate. It is certainly a matter of concern for us," said another RBI official, who favours Subbarao's line of high interest rates "to send a signal that the RBI is serious about battling inflation". He added that this conservative view is echoed by C. Rangarajan, advisor to the Prime Minister.

Earlier this week, Subbarao had said that the slow growth of an economy can be stimulated by either monetary easing or by fiscal stimulus, "but both the monetary and fiscal side have no room for stimulus. So that is the big concern", said he.

The inflation in the CPI has soared to 10.56% in December last year as it was driven by higher prices of vegetables, edible oil, pulses and cereals.

Industry sources are happy that Subbarao had signalled a rate cut in January-March 2013 in the policy review meet in October 2012. The Central bank chief had previously rejected all calls for rate cuts last year citing high inflation as the key reason.

Sahara Real Estate sits on bond allegations

The Sahara India Real Estate Corporation (SIRECL) is yet to reply to the allegations made by a few investors regarding forceful conversion of SIRECL bonds into Sahara Q-Shop bonds.

Subroto Roy's SIRECL, one of the two Sahara India firms that have been ordered by the Supreme Court to refund money to its investors, has been accused of forcefully converting SIRECL bonds into Sahara Q-Shop bonds.

Taking cognisance of the complaint, on 21 December 2012 the Ministry of Corporate Affairs (MCA) had directed the company to reply with all the necessary documents within 10 days.

The Registrar of Companies (ROC), Kanpur, had asked the company to furnish "your parawise clarification/explanation to the allegations raised by the complainants along with documentary evidence within ten days".

The ROC in its letter also warned the company of "necessary penal action under relevant provisions of the Companies Act", if the firm failed to adhere to the orders.

According to Amitabh Thakur, an IPS officer of the Uttar Pradesh cadre, who is one of the three complainants, Sahara has been forcefully converting investors' bonds, into Sahara Q-Shop bonds.

"One of the investors, Ashish Verma, who is also a complainant, had invested a total sum of Rs 2,32,000 in four Adobe bonds of Rs 58,000 each, which he had bought on 26 February 2011. However, he was later told by company officials that his bonds had been converted into Sahara Q-Shop bonds," Amitabh Thakur told this newspaper.

Thakur also alleged, "Sahara India preferred this circuitous and roundabout way to raise and collect public money in the garb of getting advance from the customers for buying a complete range of goods of this company chosen from their brochures."

In his complaint to the Security and Exchange Board of India (SEBI), Thakur has said that the company was "orally saying and assuring a return of Rs 2,335 on every investment, bond or purchase of Rs 1,000 bond, coupon or customer copy while saying in the General Terms and Conditions of its customer copy, 'Global Advance of minimum of

Rs 10,900 for buying complete range of goods but there will be no interest ever on advance amount' and thus trying to bypass the authority of various regulatory authorities, including SEBI, the RBI, the Ministry of Corporate Affairs and whosoever else is concerned."

Thakur told this newspaper that since the company did not adhere to the MCA's instructions, the complainants will now be initiating further actions against the firm.

Sahara India did not offer any comment, at the time when the newspaper went to press.

Employees hopeful KFA will fly again

The employees of Kingfisher Airline are hopeful that Vijay Mallya's company will be back in business even though its flying permit was cancelled last year. The optimism of the employees received a boost after Vijay Mallya, in a letter to his employees on Thursday, promised to restart the airline. "I can still say that all is probably not over for Kingfisher Airline. It is true that the scheduled operators permit (SOP) was suspended and has still not been renewed. However, we are praying for its revival and hoping for some positive news soon," said an aircraft maintenance engineer.

According to some employees, the company was one of the best places to work in while it was doing well and that the brand helped them get better opportunities professionally. "It is because of this that we got a lot of job offers in the past but still preferred to work in

Kingfisher," said a senior pilot on the condition of anonymity. He added that if the airline was revived, the industry could see some of former pilots return to the airline.

Mallya's letter said, "We have submitted a detailed restart plan to the DGCA which is in two parts. The first part deals with a limited re-start utilising 7 aircraft ramping up to 21 aircraft in 4 months. The second part is a full scale rehabilitation of our Airline growing to 57 aircraft within 12 months of recapitalization. Both plans contain detailed information on key assumptions and funding requirements including payment of outstanding salaries to employees." Mallya has also said that the management is taking all possible steps to convince the Directorate General of Civil Aviation on the revival plan, which includes submitting no objection certificates from vendors and other trade partners. The liquor baron has promised that the airline will get a funding of Rs 650 crore, an estimate required for starting the operations, from UB group and its associates.

"If we could wait so long, let us wait for some more time to see Kingfisher fly in a few months' time. We nurtured our professional dream and reared our family based on hopes. Plans change as per the situation and hopes never die. That is what life is all about," said an emotional employee after reading the letter.

Fuel prices to rise again in 2013

Fuel prices in the country are expected to increase in 2013 as the government wants to curb the growing fiscal deficit and wants to rationalise the energy prices in order to avoid slashing down of expenditure in other core sectors.

"In 2013 fuels will witness an increase in their price since it is too low and is one of the primary contributors to the growing fiscal deficit. The government has also emphasised on the need for elimination of subsidies on fuel that has resulted in huge losses," said an industry expert requesting anonimity.

According to sources in the finance ministry, diesel will see a hike of about Rs 10 in the next 10 months. However, the government will hike the prices by Rs 1 every month in order to evenly pan out the impact on the consumers. Also, the government is mulling to rationalise petrol prices by close to Rs 15 and Rs 20 in the new year.

The Rangrajan Committee report has also suggested that LPG prices should be increased thus indexing it entirely with the international market prices.

The move comes in the wake of the economic situation prevailing in the country. Prime Minister Manmohan Singh said that a hike in energy prices and reduction in subsidies was inevitable and essential for achieving the growth target of 8% in the 12th Five Year Plan.

Singh also noted that if subsidies on energy are not controlled, then the government will have to cut down on other planned expenditures so as to curb the fiscal deficit that the country is facing.

Currently, the state-run oil marketing companies, Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, are incurring a loss of Rs 9.28 per litre of diesel and Rs 31 per litre of kerosene. The huge losses incurred by these oil marketing companies will result in further hikes in the fuel prices.

Darjeeling tea is now safe from impostors, copycats

Darjeeling tea growers have won the right to protect their label "Darjeeling" from other tea players across the globe. The European Union, recognising the authenticity and uniqueness of the region's tea, has registered "Darjeeling" tea mark as a Protected Geographical Indication (PGI).

The GI status granted to Darjeeling tea implies that after five years, tea producers in the European market will not be able to market their product as "Darjeeling" if their tea has even a small quantity of leaf not "cultivated in Darjeeling". This will ensure that foreign producers cannot charge premium prices for their own tea.

Tea producers in Darjeeling have been trying to protect "Darjeeling" since the mid-1980s when the label was first introduced. "We realised that the 'Darjeeling' label was being misused when tea plantations in the region became financially sick in the 1980s. While the demand and sale prices were high, the value realisation for tea producers in the region was low. This marked the beginning of our struggle to protect and promote authentic Darjeeling tea, which was produced in the hilly regions of Darjeeling district (in West Bengal)," said Kaushik Basu, general secretary of Darjeeling Tea Association, a body of tea producers. He added that the Association, along with the Tea Board of India, applied for PGI status in 2007, as soon as the Geographical Indication law was introduced in Europe. "The GI law in Europe was introduced in the mid or late 90s. It was only in 2006 that the EU amended the law to incorporate a provision for protecting foreign brands as GI in Europe, provided that those brands were being protected as GI in their home countries," added Basu.

The tea growers of the region filed an application for Darjeeling tea as a PGI in 2007 and after battling fierce objections from tea players in France, Germany, Italy, Austria and the UK, won the rights in early 2012.

In India, Darjeeling tea was registered as a Geographical Indication in 2004, after the Geographical Indication Act 1999 came into force in September 2003. "Darjeeling Tea is the first product in India to get GI status in India," said Basu.

Prior to this, Darjeeling tea producers protected their brand through certified marks and collective trademarks. The Tea Board, in the past, has fought more than 15 cases regarding the misuse of the Darjeeling name including from Sri Lanka, the US and France.

According to a report, the board successfully managed to get a trademark application for "Darjeeling Nouveau" by the US company Republic of Tea rejected in the United States. It also won a trademark infringement case against Dusong, a French company. The company wanted to adopt the Darjeeling mark with a kettle device for its product.

Prior to the GI status in Europe, tea owners had protected Darjeeling tea with certification marks. "At places where there are no GIs, Darjeeling is protected as a mark. In some jurisdictions, our produce had certification marks and while in other jurisdictions, the tea collective mark," noted Basu.

According to the Tea Board, Darjeeling tea is protected as Certification Trade Marks in the US while the brand is a collective mark in Belgium, Netherlands, Luxembourg, Germany, Austria, Spain, France, Portugal, Italy, Switzerland, (former) Yugoslavia, Egypt and Lebanon. It is registered as an official mark in Canada and as a trademark in Japan and Russia.

Currently, close to 10 million kg of tea is produced in Darjeeling and is sold at Rs 400 per kg in the domestic market. "Germany is the biggest buyer of Darjeeling tea followed by the US, Japan, UK and other smaller countries," said Basu.

Men’s grooming market booms

The men's grooming market in India is booming, with a growth rate of 25% every year. Industry experts attributed this rapid growth to the rising consciousness among men about how they look.

"Men are far more particular about their looks and their overall hygiene than they ever were. This has created a huge untapped market for personal care players to cater to these demands," said Naresh Gupta, who is the managing partner of the creative agency Bang In The Middle.

According to market analysts, a major portion of the growth is likely to come from India's three million rich adult males. Industry estimates suggested that the market size for men's personal care products is Rs 1,700 cr.

The report by Men & Boys (M&B), India's first exclusive retail chain, which offers men's personal care products, suggested that the monthly per capita consumption of grooming products of this segment is expected to be more than double by 2020. At present the monthly per capita consumption is Rs 850, a figure that is expected to touch Rs 1,774 by 2015 and Rs 3,739 by 2020.

Amit Bagaria, chairman of the retail consultancy firm Asipac and the founder of M&B, in the report said, "A large percentage of men in this segment are above 40 and are just beginning to see the benefits of anti-aging products."

Subhashish Jha, a senior manager with a multinational company said that since he is a marketing professional, it is important for him to look good and clean when he goes for meetings. "I always have a face-wash in my bag and I use it before leaving for a meeting. It is important to look good and tidy when you are meeting someone, since it creates a good impression. Even otherwise, I use the product on a daily basis since I want to look good and ready for all times." Patnaik added that he also uses skin lightening gel to combat tanning.

College student Arindam Ghosh said that he started using these products on his girlfriend's suggestion. "My girlfriend asked me to use beauty products to reduce the pimples on my face. She had initially suggested some home remedies, which were cumbersome. Later she bought me my first anti-pimple gel."

Witnessing the rapid growth of the category, US-based cosmetic company Avon will launch 12 products for men next year.

The M&B report suggested that soaps constituted 35% of the market in 2011 and its share is expected to dip to 16.2% by 2020. Shampoos accounted for 11.4% of the market share in the men's personal care segment.

Market share of pre-shave oils, shaving creams, gels, foams and aftershave balms and creams will grow from the current market share of 5.5% to 7.9% by 2020.

"Men, especially in the higher income brackets, have begun to understand the harm that aerosol, alcohol do to the skin; aerosol also harms the environment. In fact, more and more men are opting for 100% organic or natural products in our shops," said Amit Bagaria.

The fragrances and deodorants segment has been growing at a rate of over 40% per annum and is expected to gain a market share up to 14.2% in 2020 from 5.1% of the last year.

"The much advertised and hyped skin brightening or lightening products comprise only 1.1% of the men's grooming products market in India, but this segment is also projected to grow to 1.7% of the total market share by 2020," said the report.

Rupee set to gain against US dollar in 2013, say experts

The rupee is expected to strengthen and will trade at around 53 against the US dollar in 2013. The appreciation in rupee is likely to ease the inflation in the energy sector, thus bringing relief in the prices of basic necessities such as fuel and electricity.

"We are expecting the rupee value to appreciate and trade around 53 against a US dollar next year," said commodity expert Sudip Bandhyopadhyay, managing director of Destimony Securities.

Economists said that one of the fundamental reasons for the boost in the rupee value is that the current account deficit will be better than the last fiscal.

"Last year, the current account deficit had hit an all time high and was around 4.2% of the GDP while the current account deficit in the current fiscal year of 2012-13 will be around 3.7% of GDP. This will thus ease some pressures on the rupee," said Sunil Sinha, head of economic research and senior economist at rating agency Crisil.

Another reason that will contribute to the appreciation of the currency is the improvement in both external and internal macro environment. The experts referred to the euro zone crisis as the external macro environment, while the internal macro environment included the widening fiscal deficit and the policy paralysis that had slowed the growth of the economy.

"Even though the situation in the external macro environment, particularly in Europe, has not yet settled, we are expecting the situation to be less volatile. This is because the euro zone has been able to bail out Greece, Spain and has been able to arrest the situation to some extent," Sinha said.

He further added that on the domestic front, fiscal deficit and policy paralysis were two major causes for the rupee's decline.

"In recent times, there has been some action on both these fronts. The government has taken some reform measures. Also, it has laid out a map for fiscal consolidation which is expected to improve the situation of the rupee," he added.

Experts have asserted that a major reason for the rupee's decline were petroleum products that were available at subsidized prices. To tackle the situation, the government increased the prices of diesel, cooking gas and also put a cap on the available gas, which according to the economists was required to curb the growing deficit.

It is being that once the rupee appreciates, energy sector will gain the most. "If the rupee value goes up and the international oil prices remain stable, then obviously inflation will come down in the fuel sector. Also, industries such as steel and power, where imported coal is used will see a dip in their prices. So, primarily the energy sector will improve as prices will go down and there will be a cascading effect on other industries. Thus, transportation costs will not go up and electricity prices too will remain stable," said another economist who requested anonymity.