Mumbai, March 10
Aviation regulator DGCA wants grounded Kingfisher Airlines to clear all dues, including pending salaries of employees, before taking up for consideration its application for renewal of flying licence.

"The airline (KFA) has been promising to pay salary dues to its employees since the past six months, but has not done so. Moreover, the renewal of Kingfisher Airlines' air operator permit (AOP) is not only linked to the unpaid staff wages, but also to the massive dues towards its vendors and lessors," DGCA sources said here.

"So we have to take into consideration all these dues before accepting the airline's application for licence renewal," they said, adding the airline needs to come up with a credible revival plan, which should include 
commitment to clear dues of all stakeholders.

The regulator's apprehension stems from the fact the airline management has repeatedly failed to act on its promise to clear the salary dues of its employees, who have not been paid since June last year, the sources said.

Last week, KFA chief executive Sanjay Aggarwal met the DGCA officials in a bid to get the AOP renewed.

The private airline, grounded since October last year, lost its flying permit in December though it has a two-year window to get it renewed.

The KFA-DGCA meeting came amid report that the Civil Aviation Ministry was likely to auction the Vijay Mallya-led carrier's domestic slots and international flying rights to other Indian airlines.

Naresh Goyal-promoted Jet Airways' application seeking KFA slots is already pending with the ministry.

Aggarwal reportedly told the watchdog that the airline was awaiting proceeds from the UB Group's deal with the UK firm Diageo to clear salary dues. The Group has sold 53.4 per cent stake in United Spirits to Diageo for about $2 billion.

He also requested the government to keep aside some of the slots, including those at Mumbai and Delhi airports, of KFA so that they can be used once the airline resumes flights.

KFA, which started operations in 2005, is reeling under debts of about Rs 8,000 crore and a similar amount of accumulated loss. Last month, KFA lenders decided to start the process of recovering Rs 7,500 crore outstanding loans from the airline. — PTI 

HITTING air pocket

The private airline, grounded since October last year, lost its flying permit in December though it has a two-year window to get it renewed

KFA, which started operations in 2005, is reeling under debts of about Rs 8,000 crore and a similar amount of accumulated loss

In February, KFA lenders decided to start the process of recovering Rs 7,500 crore outstanding loans from the airline

Uflex Ltd is India’s largest flexible packaging company with large manufacturing capacities of plastic film and packaging products, providing end-to-end solutions to clients across more than 114 countries. With facilities in Dubai, Mexico, Egypt, India, Poland and the USA, it is currently undertaking expansion plans involving investments of $130 million in setting up new manufacturing facilities and capacity expansion in existing locations with an aim to achieve $2 billion revenue by FY 2015. Talking to Girja Shankar Kaura, RK Jain, Group President (Corp. F&A), Uflex Ltd, shares the company’s growth story.

Q. What have been Uflex Limited’s strengths in building for itself the status of a truly multinational corporation?

A. Because of Uflex's strong manufacturing base in India, Mexico, Dubai, Egypt and Poland, it has been able to cater to global markets spanning the USA, Canada, South America, UK, Europe, Russia, CIS countries, South Africa and other African countries, West Asia and South Asian countries. Uflex is the only integrated unit of its kind in the world with flexible packaging at its core.

Uflex has been following the strategy of growth with innovation, proximity to customers and focus on operational excellence and better quality and service to customers to become one of the largest packaging companies globally.

Q. What is Uflex’s market share of flexible packaging in India?

A. Total flexible packaging market in India is $4 billion approximately and it has been growing around 17-20% per annum. The total market is divided into almost equal share in organised and unorganised sector. Uflex has approximately 30% market share of the organised market.

Q. What are the company’s future targets and plans for venturing into new fields?

A. In the financial year ended March 31, 2012, Uflex became the first Indian company in the flexible packaging sector to achieve the milestone of $1 billion revenue. The company targets to achieve revenue of $2 billion (Rs 10,000 crore) by FY 2015-16.

Q. What are the company’s plans to build up capacities?

A. Uflex Ltd has invested Rs 400 crore ($80 million) to set up a polyester films plant in Kentucky in the US with an annual capacity of 30,000 metric tonnes. This facility started production in January this year. It is also investing Rs 250 crore ($50 million) to expand capacities of flexible packaging and other intermediary products within India which is expected to roll out by mid FY 2014.

In the quarter ended June 30, 2012, Uflex completed the setting up of its new manufacturing facility for production of 30,000 MTs of polyester film in Wrzesnia in Poland. During the financial year ended March 31, 2012, Uflex completed the 2nd phase of expansion of its facility in Mexico aggregating a total capacity of 60,000 MT of PET film and commissioned an AL-OX coater, CPP plant of 12,000 MTs and PET film of 30,000 MTs in Egypt.

Q. Could you share with us the company’s financials?

A. Yes, Uflex has grown from strength to strength registering a 16% increase in its consolidated revenue for the quarter ended September 30, 2012 at Rs 1,250 crore as against Rs 1,078 crore for the same period last year. The firm's consolidated net profit for the September quarter of 2012 stood same at Rs 57 crore as during the corresponding quarter last year. The firm had registered a 22% increase in its consolidated net revenue for the quarter ended June 30, 2012 at Rs 1,376 crore as against Rs 1,125 crore for the same period last year.

Q. What’s the company’s organic growth strategy. How has it impacted the Indian market?

A. India is a relatively under grown market for packaging. Most of the products used to be sold either in loose or conventional packaging. However, with higher economic growth, lifestyle changes, setting-up of organised retail chains, the consumer preference has been changing to branded and quality goods, which is increasing the demand for packaged goods.

Uflex has been following a strategy for growth with innovation, proximity to customers to provide better services and quick deliveries and focus on operational excellence. It has built up its strength in commissioning and operating the plant most efficiently and large sales and distribution network in over 140 countries across the world. 

New Delhi, March 10
The second round of 2G spectrum auction for CDMA services will start tomorrow and it may last just an hour as Russian conglomerate Sistema's Indian unit SSTL is the only bidder.

Auction rounds are scheduled to begin between 0900 hrs and 1900 hrs Indian Standard Time on Monday, as per an official document. The government has put on block CDMA spectrum worth Rs 6,400 crore.

According to provisions, auction can extend beyond 60 minutes only if there are competing bids and tomorrow's auction could end as the shortest online sale of radiowaves in terms of time consumed.

The auction for 2G spectrum for GSM players held in November last yeat was spread across three days fetching the government Rs 9,407 crore. The CDMA sale did not take place in November as there was no participant due to high cost.

Government has since then reduced the spectrum base price by 50 per cent but still no company, except SSTL, has shown any interest.

In 2010, spectrum auction for 3G services ended after 34 days and 183 rounds of bidding. This was followed by 16-day long auction for wireless broadband (BWA) spectrum.

Auction for 3G and BWA spectrum had fetched government over Rs 1 lakh crore.

Sistema Shyam Teleservices Ltd (SSTL) has deposited Rs 613.75 crore for the auction, according to information disclosed by the DoT. This makes the company eligible to bid for minimum quantum of 2.5 Megahertz spectrum (two blocks of 1.25 Mhz airwaves frequency) in 11 circles.

The company has already announced discontinuation of services in 10 out of 22 telecom circles - Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East, Orissa and Punjab. — PTI

New Delhi, March 10
Gearing up to launch services in India in partnership with Tatas, Malaysia-based low-cost airline AirAsia has got the Ministry of Corporate Affairs approval for the name of its Indian venture that is to be called AirAsia (India) Private Ltd.

The name of the new company has been registered in the state of Maharashtra and the approval was granted by the Ministry of Corporate Affairs (MCA) earlier this month, a senior official said.

The company is now in the process of incorporating itself in India and completing other formalities of submitting the required documents and certificates with the ministry, he said. The filing process for the new venture is being completed on a fast-track basis, he added.

Before incorporating itself in India, a company needs to get its name approved by the Ministry of Corporate Affairs, after which it is required to file an application for incorporation.

Thereafter, the company needs to file a notice of situation of registered office, followed by filings related to particulars of appointment of managing director, directors, manager and secretary.

The country's foreign direct investment clearance body FIPB (Foreign Investment Promotion Board) has already approved investment in the new venture, wherein Malyasia-based AirAsia would hold 49 per cent stake, Tata Sons will have 30 per cent and 21 per cent stake would be owned by Arun Bhatia of Telestra Tradeplace.

Being started with an initial investment of $14.5 million (about Rs 80 crore), AirAsia India would compete in the domestic passenger aviation space with the likes of Jet Airways, Spicejet, IndiGo, Go Air and state-run Air India.— PTI

Geneva, March 10
After being the starring act for several years, the electric car backed into the shadows at this year's International Geneva Motor Show as carmakers grow weary of waiting for sales to take off.

Electric vehicles were not completely absent from the showrooms as the 83rd edition of the Geneva show kicked off, but no new models were unveiled and car company executives on site for the media days on Tuesday and Wednesday barely mentioned them.

"Public confidence (in electric) has really fallen since its peak at the Paris show in 2010, when we only talked electric," BIPE analyst Clement Dupont-Roc said.

Back then, French carmaker Renault, which leads the electric market, opened the order books for its first electric models and chief executive Carlos Ghosn said he expected the cars to represent 10 per cent of the market by 2020.

Renault's compatriot PSA also plunged into the space, as did Japan's Nissan with its Leaf.

But as things stand today, sales have fallen far short of expectations.

In France, which claims to be the leading market in Europe for electric, less than 6,000 new such vehicles were registered last year.

The low volumes are part of the explanation for the weak offering on display in Geneva, but there are other issues as well.

"There are three tasks we have to overcome when it comes to electric vehicles. One is pricing, second is the mileage they can cover and the third is infrastructure," Osamu Masuko, president of Mitsubishi, said at the show.

Mitsubishi has been providing PSA with electric cars, but last August the French carmaker halted the influx since it was unable to unload the ones it already had.

"We had weak forecasts for electric, and now, we're selling even less than those weak forecasts," acknowledged Maxime Picat, in charge of PSA's Peugeot brand.

Nissan has also been unable to meet its objective of selling 9,000 Leafs in Europe. As a result, it was showing a new version in Geneva offering better range and especially a lower price, according to industry media.

Chevrolet, which already has the Volt electric car and is preparing to launch a new, smaller one called Spark, is also not betting on a European boom in the segment any time soon. — AFP

Q. I have closed my PPF account after 30 years. It will maturing for payment on April 1, 2013.

I have four grandsons and two granddaughters and all of them are school going. Out of the said four grandsons, two have lost their father (my son died on January 24, 2010)

I intend to give education gift (in lakhs) to all the grandsons/granddaughters through their parents to lessen their burden from the proceeds of my PPF.

Please advise me if this gift is taxable to the donor or to the donee and what is the legal procedure to do so. Can I give equal amount to my wife also? Before disbursing the amount as above, will it be advisable to get the full PPF amount transferred to my savings account without calling for any tax liability on two different accounts mixed with each other. I am 77 years old.

— DR Sharma

A. a) You can gift any amount to your grandsons and granddaughters as the gifts so made are not taxable in the hands of the donor or donee. I may add that the income arising on the gift so made would be clubbed with the income of the father/mother, as the case may be, till such time the grandchildren are minor.

b) A gift to grandchildren can be made by executing a gift deed or by a simple letter. The gift so made should be accepted by the donee or on his behalf by the natural guardian.

c) In case any amount is gifted to a wife, the income arising from such a gift is taxable as the income of the husband. However, no tax would be payable on such a gift either by the donor or the donee.

d) It would be advisable to deposit the proceeds of the Public Provident Fund account in your savings bank account and make the gift by a cheque to the grandchildren or to your wife.

Q. I wish to send a cash gift from my savings in India to my son who is working in the USA. What is the maximum amount that can be sent in any year without having to pay any gift tax etc.

— JN Nanda

A. You can remit a sum of $2,00,000 to your son as a gift in accordance with the provisions of the Foreign Exchange Management Act, 1999. The above remittance is permitted without any approval from the Reserve Bank of India in terms of Master circular dated 2nd July, 2012 issued by the RBI.

New Delhi, March 10
Adopting a name and shame policy to make borrowers pay their dues, banks have decided to publish in newspapers photographs and details like names and addresses of wilful loan defaulters and market leader SBI has taken the lead in doing so. Besides, banks would also publish photographs, names and addresses of guarantors of such defaulters in newspapers if the dues are not cleared within 15 days of the notice containing particulars of the original borrowers.

Some banks have also decided to prominently display the photographs and other details of the wilful loan defaulters at branches in the locality of such borrowers, a senior executive with a leading bank said.

Taking the lead, State Bank of India has begun publishing photographs and other particulars of such defaulters and has published one such public notice in newspapers for five defaulters in the national capital. These persons had taken export credit loans of Rs 3 lakh each and their outstanding amounts were in the range of Rs 2.6 lakh to Rs 2.93 lakh.

Executives at many other banks said they would also publish the photographs and other details of their wilful defaulters in local newspapers circulated in areas of residence of such persons.

As per RBI's regulations, wilful defaulters are mostly those who are found to be engaged in deliberate non-payment of dues despite adequate cash flow and good net worth.

Besides, banks can also classify defaulters as 'wilful' if the loans are utilised for purposes other than those previously stated, funds are siphoned off from the bank-financed activity, records are falsified, securities are disposed of without bank's knowledge and the borrower indulges in fraudulent transactions.

RBI has already put in place a system to disseminate credit information pertaining to wilful defaulters for cautioning banks and financial institutions, so that any further bank finance is not made available to such borrowers.

Now, banks have decided to make public the photographs and other details of wilful loan defaulters through newspaper notices, so that such borrowers clear their dues. — PTI

Tightening Noose

Some banks have also decided to prominently display the photographs and other details of the wilful loan defaulters at branches in the locality of such borrowers, a senior executive with a leading bank said

In one such notice, SBI said names and photographs of the guarantors of those defaulters would be published in newspapers if these borrowers do not clear their dues within 15 days of the publication of notice

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." Next time if you are not sure about which stock to buy or which IPO to invest in, think about this famous quote by investment guru Warren Buffet.

Often, we as investors tend to opt for cheaper stocks or get attracted by low-priced IPOs. However, it is important to first understand the process of IPOs.

IPO process

Investment in stock market can be done in two ways; either through the secondary market by investing in stocks of the company which are already listed or through the primary market by participating in an IPO. IPOs can be made either through the fixed price method, book-building method or a combination of both. In the fixed price method, the price at which the securities are offered, is fixed in advance. In the book-building method, the investors have to bid for shares within a price band specified by the issuer and the final price is decided after observing the result of the bidding. The fixing of the band and the bidding process is done with the help of a book runner — typically an investment bank or a group of several companies specialising in securities. While most companies that are eligible to make a public issue are free to price their shares, a few like infrastructure companies are subject to compliance with SEBI norms while banks are required to get the RBI's permission. The prices are decided by the company's board of directors, which fixes the band after consulting the book runner. In India, the issuer is allowed a price band of 20% (i.e. the cap of band should not be more than 20% above the floor price).

After deciding the band, bids are invited on all prices of the band. Retail individual investors may also bid at the cut-off price, which means they are willing to buy at whatever price that is ultimately determined. Once the book is closed, the seller fixes the price at which all of its shares will get sold.

Who should invest in IPOs?

There can be two kinds of investors for IPOs. One is the long-term investor who buys the stock of a company with a mindset of holding it for a long period of time to make profits. The other kind is the short-term investor who just buys into the IPO to sell during the initial few days or even hours of listing and make what are known as listing gains.

I recently received a letter from one of my readers explaining how a wrong reporting of someone else's transaction linking him to CIBIL by the member bank has jeopardised his ability to take home loan from any lender. This letter prompted me to write this article for the benefit of others. In this article, I wish to discuss in detail the importance of a credit report and also the process to be followed for obtaining the same. It also discusses the process to be followed when there are wrong entries in your report.

Credit report

You can obtain your credit report from CIBIL (Credit Information Bureau of India Ltd.) established under the law of the land. As per the provisions of the law, all the financial institutions are required to share the data of their borrowers at least with two of the credit information bureaus. Data reported by the financial institutions are collated at the CIBIL. Details of all your credit transactions, be it loan or credit card, are reported by the banks and financial institutions and are available in the form of a single report at one place.

Please remember CIBIL just maintains the factual record of all your credit payment history (currently only loans and credit cards) compiled from information received from different lenders. It does not brand or label anybody as a defaulter since before lending any money, the lender would like to verify the credentials and creditworthiness of the borrower in order to ensure that the borrower shall service the loan regularly. With CIBIL and other credit information bureaus, the lenders have access to these data so as to minimise risk of his loan being not serviced regularly or becoming bad.

As the lender will invariably obtain details of your credit profile from Credit Information Bureaus like CIBIL, it is in your own interest to know in advance as to what details will be available to the prospective lender. Moreover, it may also happen that due to similarity in the fields like address, name, city etc. or sheer carelessness, transactions in respect of someone else might have been included under your profile.

Like after certain age doctors advise every one to go for regular full body health check-up so as to be able to take preventive and corrective steps to take care of our health, this equally applies to your credit report as well. Everyone who wants to borrow money in future from the banking system, be it in the form of home loan, personal loan or credit card, should periodically obtain his credit report. This will help you in identifying any wrong entry included in your profile. This is very important in cases where you are planning to buy a house with the help of a substantial amount of home loan. In cases where you have already paid advance to the seller and get shocked to know that due to some incorrect reporting, your credit report is spoiled and the lender has refused to sanction you the home loan requested. This may even result into you losing your earnest money paid to the seller/builder. So, obtain your credit report from the credit information bureau well in advance before you plan to take home loan or a car loan.

How to obtain your credit report?

CIBIL offers you two products. One is credit report and the other is credit score. Credit score is a numerical value which is derived on the basis of various variables related with your credit transaction and other related factors. Credit score is a numerical value between 300 and 900. Any score above 700 is generally considered credit worthy.

You have to pay Rs 470 to get the CIBIL score together with your credit report. However, in case you just want to know whether any incorrect entry has been reported in the report, you just need to pay Rs 154 by way of a demand draft.

Along with the form you need to attach two documents, one for your identity and other for your address proof. For the purpose of identity, you can attach any of the documents like PAN card, passport, driver's licence, voter Id. For your address proof, you can attach any of the documents like credit card statement, electricity bill, passport, bank statement, telephone bill, ration card.

What details are available in the credit report?

After obtaining credit report, the first thing to do is to verify all your basic details like address and PAN number are correct. In addition to the basic identification details, the CIBIL report contains data of your credit history with various financial institutions. This report shows details of your loans and credit cards present and past as well. In case there has been any delay or default in payment of your credit card dues or loan EMIs, this will reflect in your report. In case any amount has been written off by the lender as irrecoverable, this will also show in the report which reflects very badly on the borrower and makes it almost impossible for the borrower to avail any credit facility from the system in the future.

What can you do in case there are some erroneous entries in your CIBIL report?

While going through your credit report, if you find any incorrect entry, which does not belong to you or though relates to your transactions but the reporting is erroneous, you need to take immediate action.

In order to get the error corrected, you should write a mail to CIBIL at consumerqueries@cibil.com with full details of the error/inaccuracy. In case your lender has reported something incorrectly, like the case where your loan amount has been fully paid but reflects outstanding in the report as outstanding, in case of such errors, please inform the bank concerned/lender also with details about the errors reflected in your CIBIL report along with the relevant documentary proofs. In case the error is genuine, the lender is supposed to rectify the same and send the updated report to CIBIL.

Please file a written complaint with the nodal officer of the bank along with relevant proofs of your request to the bank to either correct the error or to provide you with the asked details in case any entry not belonging to you has been included in your profile.

If either the bank or the CIBIL does not respond or act on your request within 30 days of your request, you should file a complaint with the banking ombudsman at www.bankingombudsman.rbi.org.in.

Please bring it to the logical conclusion, as any bad reporting in the records of CIBIL can jeopardise your ability to borrow from the credit system. Sometimes it can even disturb your plans to buy properties when you plan to go for big ticket loan like home loans.

So go ahead and make an application for your CIBIL report if not anything else just to know what your standing in the records of CIBIL is.

The author is CFO, Apnapaisa.com. The views expressed are his own