Companies & Sectors
Air passengers to benefit from new Aviation Policy
The Union Cabinet has cleared the National Civil Aviation Policy (draft released in October 2015), which among other things has capped airfares on un-served regional routes to push regional connectivity and making flying more affordable to the masses. The new civil aviation policy reflects a more liberal regime and a pro-growth approach that seeks to create a level-playing field and promote regional connectivity, say brokerages. In a research report, Edelweiss says, "The regional connectivity scheme augers well for players like SpiceJet, though dilution of the 5/20 rule will undoubtedly heighten competitive intensity in the international market over medium to long term for the incumbents."
 
According to ICICI Securities Ltd, increase in airports and development of maintenance, repair and overhaul (MRO) sector can significantly boost the sector from a long term view. "Essentially, a long term plan, the policy aims to boost regional connectivity through Government support and industry levy but will not have any short term impact. However, regional scheme will open up more routes for the airlines with regional aircraft like SpiceJet, Air India and Jet who already have such fleet of aircraft. Economics of viability remain to be tested. The biggest beneficiary of this policy will be the MRO industry which has been given a slew of incentives along with the commercial aero related manufacturing. An efficient domestic MRO industry has the potential of structurally reducing the cost of the domestic airlines, but again it is a long shot from here," it said in a research note.
 
Ratings agency CRISIL feels that the new aviation policy has potential to level the runway. "However, further clarity on regional connectivity is awaited. Also the policy does not dwell on the long-pending structural issue of high sales tax on aviation turbine fuel (ATF), which diminishes the attractiveness of the sector," it says.
 
Here are the key highlights of the National Civil Aviation Policy...
 
Enhance regional connectivity: Fares capped at all inclusive Rs2,500 per passenger per hour to regional destinations, with some aid in the form of viability gap funding (VGF) for the airlines under the regional connectivity scheme (RCS). VGF funded by way of a small levy per departure on all domestic flights (except regional) to be decided by the Ministry. States and other stakeholders to offer concessions for being eligible under this scheme – 20% of VGF to be funded by states, VAT on ATF to be 1% or less, airport charges waived off, reduced service tax on tickets and lower excise duty of 2% on ATF.
 
 
Replace 5/20 Rule: Now a requirement of 20 aircraft or 20% of capacity, whichever is higher, has to be deployed in domestic operations before an airline goes international. The draft policy released in October 2015 had kept all options open on this count. The final policy replaces it with 0/20, which implies that airlines can commence international operations provided they deploy 20 aircraft or 20% of total capacity -- whichever is higher -- for domestic operations. With this, new entrants such as Vistara and AirAsia India can fly overseas once they have 20 aircraft. As on date, Vistara and AirAsia India operate 10 and 6 A320s, respectively. "This will level the field on overseas routes for all domestic airlines -- IndiGo, Jet Airways, SpiceJet, Go Air and the new entrants such as Vistara and AirAsia India," CRISIL says.
 
Rationalise MRO: Ministry to persuade state governments for zero VAT on MRO activities, ensure adequate land for providers and no airport royalty and additional charges on MRO service providers. According to ICICI Securities, the MRO business of Indian carriers alone is around Rs50bn, 90% of which is currently spent outside India – in Sri Lanka, Singapore, Malaysia and United Aran Emirates (UAE). "The tax regime has been a key dampener for MRO activity in India. Abolition of these taxes may now encourage Indian airlines to get MRO work done domestically and save some costs. The MRO industry also can grow significantly with the large number of additions expected to the Indian fleets," it added. 
 
Route Dispersal guidelines (RDG): Category I routes rationalised on a more transparent criteria that is  flying distance of more than 700km, average seat factor of 70% and above and annual traffic of five lakh passengers. To that extent the current routes under this category get revised from earlier 12 to 18 (2 go out and 8 get added under the current criteria). Review of these routes will be done by MoCA once every five years. While the percentage of Cat I capacity to be deployed on Cat II/IIA remain the same as earlier (10% and 1%) the requirement for Cat III stands revised from earlier 50% to 35%. 
 
 
Bilateral traffic rights: Open sky policy with SAARC and countries located beyond 5000km from Delhi. Method will be recommended for allotment of additional capacity entitlements to those foreign airlines that have utilised their limits.
 
ICICI Securities, which initiated coverage on the civil aviation sector, says its supply-demand model for domestic air traffic implies 14% growth in passengers as evidenced from firm aircraft orders and latest delivery schedules. "With yield management becoming the singular strategy lever for Indian low-cost carriers (LCCs), cost structures assume high importance and structural asymmetries will decide the competitive edge for the airlines. However, much of these asymmetries in cost structure are inherited from the fleet strategy adopted by various airlines, hence normally have a long-lasting impact on their balance sheets. High operating leverage proves fatal in a cyclical downturn where balance sheet strength is vital. At the comfort of hindsight, bulk orders have benefitted IndiGo with valuable incentives, which have given it the structural advantage of lower rentals, while single fleet focus and strong balance sheet have lent IndiGo asymmetrical advantages on maintenance costs, redelivery expenses and supplementary rentals. That the other airlines have missed the plot thus far is a given, but the current growth phase of domestic aviation and low crude price outlook provide opportunity for them to shore up their balance sheet," it concluded.

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Bingo Tedhe Medhe, Fun Stix, Kurkure, Char-Chare, and Taka-Tak fail fat test!
Extruded snacks may sound like food jargon for everyday items namely Kurkure, Fun Stix and so on but it’s just a way of segregating a category of snacks made by a different process in this case extrusion cooking,  says Consumer Voice in a report. 
 
Five brands have been tested by Consumer Voice magazine and a major factor of safety for these ready to eat extruded snacks was total bacterial count. As brought to light by Consumer Voice not all brands fulfil this safety report.
 
According to Consumer Voice, a voluntary organisation working towards consumer education, ready to eat extruded snacks prepared by extrusion cooking involve the preconditioned raw food material to be subjected to high temperature short time cooking, which results in a plastic consistency in the material, following which the material is extruded through specifically tapered dies. As it emerges from the dies, it passes from a high pressure to a low pressure zone, which results in puffing of the final product. Finally, the product is coated with oil, flavours, salt spices, sweetening agent and packed. 
 
The brands tested by consumer voice included Bingo Tedhe Medhe, Fun Stix, Kurkure, Char-Chare, and Taka-Tak.
 
The report published by Consumer Voice mentioned the various testing parameters for the products.
  1. Total Bacteria Count: this is the amount of viable bacteria in a food product and serves as a key indicator of the products overall quality and safety. As per IS total bacteria count should not be more than 50,000 colony-forming unit (cfu) per gram.
    a. Fun Stix had the maximum bacterial count at 10,901 cfu per gram, which is above the prescribed limit in the Indian standards and hence not suitable for consumption.
    b. Kurkure had the least with 1,273 cfu per gram as reported by Consumer Voice.
     
  2. Fat on dry Basis (percentage): The visible fat intake in diets can go up to 50gm/person/day on the level of physical activity and physiological status. Adults with a sedentary lifestyle should consume about 25 grams of visible fat while those involved in hard physical work require 30-40 gm. Fat content in ready to eat extruded snacks should not be more than 25%.


     
  3. Packaging: The product shall be placed in flexible thermoplastic films or multi-layer or mono-layer construction or other laminates with paper and/or aluminium foil so as to provide high resistance to the passage of oxygen and water vapour and also to produce effective heat seal. The sealing shall be done hermetically with or without nitrogen flushing to retain the contents in a fresh condition. All brands were packed in thermoplastic films with nitrogen flushing.
    Consumer Voice also explored the peroxide value of extracted fat present in extruded snacks. Detection of this value is evidence of rancidity in fat or oils. As per IS 12566:1989 in ready to eat extruded snacks the value of extracted fat should not be more than 10 mq oxygen per kg fat. In the tests conducted by Consumer Voice peroxide value of extracted fat was nil for all brands, deeming them fit for consumption.
     
  4.  Marking: The following information shall be clearly and indelibly marked on the label of each container/packet as per food safety and standards (packaging and labelling) Regulations and Legal Metrology(Packaged commodities) Rules:
     
a) Name of the product
b) Trade name, if any
c) Name and address of manufacturer 
d) Batch or code number
e) Net quantity in gram or kg
f) Month and year of manufacture
g) The words 'Best Before' (month and year to be indicated)
h) Nutritional information
i) FSSAI license number
j) Logo indicating vegetarian and non-vegetarian status
k) Storage information
l) Maximum Retail Price (MRP)
m) Customer-care details 
 
Consumer Voice is a voluntary action group, consisting of academicians, professionals and volunteers channelising their energies towards creating informed consumers. You can subscriber to their magazine here.
 
-source Consumer Voice magazine issued  June 2016

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COMMENTS

Ramesh Poapt

6 months ago

error seems in bacteria count of the 2 products referred above- 50000 , 10901,1273? but still, a very good article.........!!!

Mere replicating manual process will not work in digital banking: SBI
While accepting that new financial technology startups (fintechs) are disrupting financial business and transactions, Arundhati Bhattacharya, Chairman of State Bank of India (SBI), the country's largest lender, says, these new fintechs are redefining payment and banking transactions. "Mere replicating manual banking process on digital platform will not work. We need to be ready to imagine the unimaginable," she said while speaking a summit in Mumbai.
The SBI Chairman was speaking at BANKing TECH Summit 2016 organised by industry body Confederation of Indian Industry (CII). "With emergence of technology, banks are facing two challenges of managing their technology legacy stack and bringing the cost down for small transactions. With the advent of new age technology, banks need to learn from new kids on the block and foray into unexplored areas of services to customer for enriching their banking experience. Banks today need to cross sell in collaboration with fintech companies as they are here to stay. Banks are ready to collaborate with fintechs provided that there is a regulatory framework in place for these startups," she added.
 
CII along with PricewaterhouseCoopers (PwC) also released a joint study titled 'Fintech: redefining banking for customers' during the summit. Most of the respondents of the CII-PwC survey believe that consumer banking, payments and remittances, and digital banking will face the maximum disruption from fintechs. Banks have responded by making fintech a key part of their business strategy.
 
 
"Contrary to the popular belief that fintech will disrupt the existing banking industry, the majority of our survey respondents believed that fintech would act as a strategic partner to banks. Banks have already started collaborating with fintech companies with majority of them collaborating with fintech companies whose services are focused on consumer banking, payments and remittances," the report says.
 
Interestingly, while the theme of the CII summit was 'Fintech: redefining banking for customers', as usual, there were hardly any representations from banking customers or consumer organisations. However, Maharashtra's Minister for Industries Subhash Desai, who was present as chief guest, turned the tables. In his address, he said, "I am here merely as a customer of a bank. I very rarely visit my bank branch since all transactions are now carried out through mobile banking. While new technologies are welcome in banking, customers expect all services to be made available at affordable cost or as low as possible. I hope the bankers and technology companies present here will think about the cost factor."
 
"I would love if some bank or fintech comes out with an app that gives additional 1% interest for bank customers," the Minister said on a lighter note.
 
The CII-PwC study highlights that technology has evolved from being a mere tool to enhance efficiency, reduce cost of operations to being a critical component of the strategy mix. Whether it is to scale up business, grow volumes, service customers, strengthen delivery channels or manage risk and compliance. In today's environment, a bank is constantly getting bombarded with increasing customer requirements and the threat of customer loss. 
 
"This report defines a structure for delineating advances in the fintech sector, on the lines of the 'digital out- digital in' frame work. No dialogue on advances in fintech would be complete without reference to blockchain technologies, which the next revolutionary wave that is waiting to happen with investments in Indian fintech companies growing to $1.2 billion in 2015 from $145.1 million in 2104", says Arun Jain, Chairman of CII Banking Tech Summit.
 
 
In such a volatile banking landscape, Mr Jain says, fintech has emerged as an innovator by providing out of the box ideas to approach and retain a customer and thus enhance the entire customer experience. With demographics and social changes, rapid urbanization and shift in global economic power to emerging markets providing further impetus to fintech growth.
 
 
Fintech companies cater to the entire spectrum of financial services-ranging from propositions that compete with core banking businesses to innovative lending facilities, seamless payment solutions and products that hit banking third-party revenue streams-be it personal finance management or analytics-backed wealth advisory services.
 
Speaking about fintech, Ms Bhattacharya explained SBI's idea behind launching its dedicated banking branch called 'InCube' for startups. "InCube will be very useful to the startups even though we are not giving them financing, because financing is not the only thing startups need. In fact, they really and truly need a lot of financial management advice, they need to understand how to manage their companies and they need to be free of these things to actually concentrate on what they do best. Cost of entry (into market) is definitely down, however, cost of remaining in business is not low and these fintechs need to understand this in order to survive in long term,” she added.
 
She also stated that new age customer is living by term 'GAFAA' - an acronym for Google, Apple, Facebook, Android and Amazon which has increased penetration of services through smart phones. 
 
According to the study, over the past few years, technological innovation has allowed new players to change the way the world perceives financial services. Vivek Belgavi, Leader for Financial Services - FinTech and Technology Consulting at PwC, says, "The ripples that were felt a decade ago through digitisation of processes have resulted in continuous technological innovation through disruption. This disruption has touched every thread of the fabric of the financial services sector and promises to revolutionise it completely. The underlying principles for each of the innovations are simplicity, supreme customer experience and added value to the customer."
 
In the digitally vibrant world, the Internet and the smartphone have been the two most prominent factors behind the change in the consumption of financial services sector offerings. Traditional banks face the threat of irrelevance at each stage of this disruption, given the emergence of newer and more preferable modes of accessing banking and related services. "Bill Gates once said, ‘Banking is necessary, banks are not.’ Digital disruption is now surging ahead and bringing in new business models, new technology, a renewed focus on consumer experience and new players in the market," Mr Belgavi added.
 
The CII-PwC jointed study also highlighted that banks must continue to enhance customer experience through their journey of digital transformation, but instead of undertaking this journey alone, they should partner with fintech by utilising their innovations in their day-today functioning. "Upon analysing their core strengths and weaknesses, banks need to associate and partner with fintech start-ups which can bridge the gaps and thus create a win-win situation for both. There is the single core message to both banks and fintech—collaboration is key," it concluded. 

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COMMENTS

Ramesh Iyer

6 months ago

Besides shaping up to compete with the TechStartups having Payment Bank licenses, SBI ought to review and overhaul its operations right down to its Branch level. While it tries to keep up with newer Technology in Banking systems, its staff's attitude and mindset is still stuck in the 1990s or earlier. There's a distinct difference between how a private Bank's staff interact with its customers at the Branch, compared with PSU Banks. Ironically, PSU Bank's Branch staff are comparatively (with private Banks) much older and experienced, yet are often clueless on the Bank's policies. The Govt has been pumping in money to keep most PSU Banks afloat, hence none of them is really pressured to be profitable. If the Govt changes this practice and forces PSU Banks to sustain themselves and be profitable, it would make a sea change in its operations and customer-orientation. PSU Bank staff have the job security their counterparts in private Banks don't, and also have hefty salaries, yet treat customers condescendingly, if not patronizingly. This mindset ought to change urgently.

manoharlalsharma

6 months ago

Mere replicating manual process will not work in digital banking: SBI/ alright but is it fare to charge 15/-per quarter to a S/B A/C holder? who merely do 3-4 transaction in a month & to update a Pass book takes 15/20 minuts.

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