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Lenders, Kingfisher fail to tie up debt restructuring deal
China cuts banks’ reserve ratios for second time
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AI has only itself to blame for losing bilateral rights AIR India's failure to adequately utilize bilaterals on international routes has been one of the major causes for the state-owned carrier slipping into a bottomless pit. According to a study conducted recently, all plans and route deployments submitted by the airline's commercial and public relations officials were quietly thwarted by politicians for their own vested interests. Investor Guidance
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Lenders, Kingfisher fail to tie up debt restructuring deal
Mumbai, February 18 The marathon meeting of 18 bankers — including top officials of SBI, Bank of Baroda and Corporation Bank — to discuss working capital and other loans for Kingfisher remained inconclusive and would be held again to decide if additional funding could be provided to the debt-laden airline, sources said. A senior banker said the lenders were appreciative of the "viability report" prepared and circulated by SBI Capital, the advisor to Kingfisher, but could not reach unanimity on the final package. After the meeting, Kingfisher chairman Vijay Mallya said: "It was a very long, good, comprehensive meeting," but refused to divulge any details. Kingfisher posted a net loss of Rs 444 crore for this fiscal's third quarter ended December 2011 and is battling spiralling interest and fuel costs. Kingfisher employees fear the carrier was likely to reduce operations to a number of cities. On Friday, the airline suspended flights connecting Kolkata to many destinations after employees refused to work, citing nonpayment of salaries. Salaries for November have yet to be paid. In an internal memo, Kingfisher said the funds were urgently required elsewhere. It added operations to Kolkata were being suspended till Feb 25. Kingfisher’s auditors have warned it may have to suspend operations if it did not raise more capital. Reports said the airline's net worth has been eroded due to huge losses. The buzz in aviation circles is that Kingfisher's pilots are deserting the airline to sign up with profitable operators like Indigo, while other employees with fewer options are holding protests. The airline has reportedly been struggling to even pay employees’ salaries for the last couple of months even as it has accumulated a debt of over Rs 10,000
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China cuts banks’ reserve ratios for second time
Shanghai, February 18 The People's Bank of China is on the course of gentle policy easing to cushion the world's second-largest economy against stiff global headwinds, although it has been treading warily. PBOC delivered a 50-basis-point cut in banks' reserve requirement ratio (RRR), effective from next Friday, February 24, after repeatedly defying market expectations for such a move. It would cut the RRR for the biggest banks to 20.5% from 21%, injecting an estimated 400 billion yuan into the banking system that could be used for lending. China's once surging economy is likely to slow to 8.2% in Q1 from 8.9% in the previous quarter, according to the latest Reuters poll.
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Aviation Notes AIR India's failure to adequately utilize bilaterals on international routes has been one of the major causes for the state-owned carrier slipping into a bottomless pit. According to a study conducted recently, all plans and route deployments submitted by the airline's commercial and public relations officials were quietly thwarted by politicians for their own vested interests. Had AI been given a free hand to fly on different continents, the financial situation would not have been as bleak as it has turned out to be. The study further revealed a huge number of aircraft of different sizes and shapes from two manufacturers were ordered without proper plans for their utilization and operations. The politicians, unaware of flying technicalities, failed to realize that an aircraft sitting on the tarmac was costlier than flying it. Suddenly, the government has decided to do away AI's monopoly and allowed private domestic carriers to be part of bilaterals. According to the civil aviation ministry, "under the new arrangement code share operations will be encouraged. All possible steps will be undertaken to promote development of hubs to enable Indian carriers to attain a dominating position in the region. AI's operational plan will receive due consideration in allocation of the traffic rights and entitlements. The allocation of traffic rights to Indian carriers shall be done well in advance up to a maximum limit of five schedules, keeping in mind their demand, capacity and capability, operational plans and other relevant factors". The ministry's endeavour to make private carriers part of bilaterals has been well taken in the industry but "directional imbalances" in passenger load have to be given more attention than has been done so far. Minimum occupancy on all flights to break even or be profitable is essential. It is a very vexing situation that needs greater attention and study for the traffic load factor at all points of embarkation. Currently, there appear to be two schools of thought regarding involvement of foreign airlines in the domestic industry. A group of ministers have cleared 49 per cent foreign direct investment by foreign carriers and the proposal is awaiting the cabinet's clearance. However, many experienced civil aviation officials feel the time is not yet ripe for selling a stake to foreign airlines. Jet Airways chief Naresh Goyal has already gone on record saying "we don't need a foreign partner". Many officials feel the partnership would lead to further complications and the domestic aviation industry would face more problems than it is encountering at present.
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Investor Guidance Q: Last January I sold a house I had bought in 1993 for Rs 6,800,000. Other expenditure that I incurred include Rs 100,000 for repairs and paint jobs and Rs 300,000 for more of the latter. Can these expenses be added to the purchase price even if receipts aren't available? The tax rate is 20% after indexing, but can I take advantage of 10% without the indexing option also? What are the documents to be attached while filing tax returns? — Nilesh Sthalekar A: You can't treat painting expenses as a part of buying or selling expenses. Only indexed expenditure of a capital nature will be allowed to be added to the indexed cost of acquisition. Repairs to a house is a capital expenditure but painting is not. Any expenditure that is incurred specifically and exclusively for purchasing a house can be added to the cost of acquisition and for selling a house can be subtracted from the sale proceeds. You should have some solid proof for having incurred such expenses. The 10% rate isn't available for property sale. No documents need be attached with the returns. If required, the tax department will call for it. Q: I'm the karta (head) of a “Hindu undivided family”. Which of my two sons will become the karta after my death and how much tax will be levied in AY 2012-13? — Manjit Singh A: The senior most family member, irrespective of age, normally becomes the HUF karta. Your wife may do so after your death. The tax rates applicable to HUFs are the same as those for individuals.
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