Bankers have made it clear that Kingfisher’s promoters will have to infuse Rs800 crore worth of fresh equity into the company if they are to consider a second restructuring of existing debt, even as opposition mounted to any bailout of the private carrier
Mumbai: Debt-ridden Kingfisher Airlines today reported that its net loss doubled to Rs468.66 crore in the quarter ended 30 September 2011 from Rs230.81 crore in the same period last year, as higher fuel prices depressed operating margins, reports PTI.
The company’s income from operations, however, rose by 10.5% to Rs1,528.16 crore in the July-September quarter from Rs1,382.72 crore in the year earlier period.
Bankers have made it clear that Kingfisher’s promoters will have to infuse Rs800 crore worth of fresh equity into the company if they are to consider a second restructuring of existing debt, even as opposition mounted to any bailout of the private carrier.
The bankers have asked the troubled airline to come out with a ‘credible’ plan.
The lenders—a 13-bank consortium led by State Bank of India (SBI), who were yet to decide on ways to soften the troubled airline’s Rs7,057.08 crore debt burden—are due to meet Kingfisher management today.
Kingfisher had suffered a loss of Rs1,027 crore in 2010-11 and is estimated to have debt of over Rs7,000 crore.
The airline has cancelled several flights over the past few weeks.
Meanwhile, shares of the company were trading at Rs 21.65 apiece, up 1.41% from their previous close on the Bombay Stock Exchange at 11.30am today.
The idea of dynamic bond funds has mostly proved to be good only on paper. We studied eight of them and their returns since inception do not seem great. Some of them have given returns as low as 3% since inception
IDBI Mutual Fund has filed offer document with SEBI to launch IDBI Dynamic Bond Fund, an open ended income fund. The NFO is priced at Rs10 per unit. The objective of the Scheme is to generate regular income while maintaining liquidity through active management of a portfolio comprising of debt and money market instruments.
A Dynamic Bond fund, as the name suggests, is designed to give the fund manager the flexibility to change the duration of the bond as and when needed.
Interest rates and bond prices are inversely related. When the interest rate is rising, bond prices fall and the fund manager should be able to decrease the duration of the bond; short-term bonds face a lower impact. In addition, when the interest rate is falling they should be able to increase the duration of the bond.
The other flexibility is to move into cash and sit on the sidelines when the interest rate is rising sharply over different horizons. It is to offer the flexibility that dynamic bond funds were introduced. They will dynamically move from a fully invested situation to a fully cash position and various stages in between, depending on the fund manager’s reading of the interest rate situation. One of the most difficult things to predict.
Not surprisingly, the idea of dynamic bond funds has by and large proved to be good only on paper. We studied eight of them and their returns since inception do not seem great. Some of them have given returns as low as 3% since inception. Birla Sun Life Dynamic Bond Fund - Ret gave a return of 8% and Tata Dynamic Bond Fund fetched a return of 5 %. Among the others are Taurus Dynamic Income Fund (7%), UTI Dynamic Bond Fund (7%), Canara Robeco Dynamic Bond Fund - Retail (5%), Axis Dynamic Bond Fund and SBI Dynamic Bond Fund whose return is 3% each is the worst among the lot.
(SBI Dynamic Bond Fund was launched in February 2004 and Axis Dynamic Bond was launched in April 2011)
IDBI Dynamic Bond Fund will invest 100% in debt instruments (including fixed/floating rate debt instruments, government securities and securitized debt) with low to medium risk profile and invest up to 100% in money market instruments with low risk profile. Investment in securitised debt not to exceed up to 20% of the assets of the scheme.
Fund manager of IDBI Dynamic bond fund is Gautam Kaul.
For the domestic market in India, anybody and everybody happily places a sticker saying ‘organic’ on anything they want, after all this NPOP, NSOP and certifying agency system!
As with most such things, it starts with anecdotal personal experiences, and then it moves into research. This, therefore, was no different . . .
For years now, one has been keeping one’s eyes open for organic agri-products while travelling around the country. It has usually, been a pleasure as well as an education to look deeper into such discoveries, meeting people. They are really trying to keep pesticides and chemicals out of the growth chain, including the water being used. Typically, this has been an open experience, with people proud to show off their efforts. This is true from the Sunderbans to Mountain Kerala to Garhwal to Jodhpur, and more. However, of late, one has also observed the proliferation of signboards pointing to ‘certified’ organic farms, which on enquiring do not permit visitors inside.
Retail outlets in larger cities now devote increasingly more space, especially, in affluent areas for ‘organic’ products. Spices, tea, coffee, coconut, cereals, eggs, vegetables, fruits, juices and more—pretty much everything now has an ‘organic’ option available on the shelves, and it seems to cost a lot more too. The problem lies in the fact that somewhere in the fine print you can spot ‘like organic’ or ‘nature organic’ or even ‘organic approved’. Whether processed and packaged or sold fresh, there is still no clarity on the subject. So, it is pretty much about trusting the seller and parting with more money.
What has become even more visible of late is the term ‘organic’ being pasted on or over-printed onto the packaging of processed food imported into India. It is increasingly obvious that the original label, which may be in another language, has nothing to do with the product being organic. It has been added on by some entity usually as unverifiable as the sticker with the alleged importer’s provenance next to it.
There is more. Packaged breakfast ‘cereals’, amongst the most industrialised and mis-nomenclatured of all readymade convenience foods ever invented, are an example. Eggs in pretty cartons with little holograms pasted on are also promising in not just organic qualities, but also yellower yolks and browner skins.
So what’s really organic, to start with, in India? To start with, legally only those food products, which have had their production certified as per the National Programme for Organic Production (NPOP) as laid down by the Government of India, can use the term ‘organic’. Requirements vary by crop and product. They require intensive record-keeping and tracking, non-usage of a variety of chemicals for a number of years, and strict segregation, as well as, control at all stages in the production chain. This would include even the transportation and storage aspects—a truck used to carry non-organic produce, for example, would not be valid for organic food without serious cleaning up—organically. If a cold storage or vegetable or fruit shop does not clearly segregate organic from non-organic, then certification is at risk.
(This has, incidentally, been a mixed blessing for the smaller farmers. On one hand, they can join ‘groups’ which have moved into organic farming, thereby sharing costs and methods, and on the other hand, have to now deal with a ‘system’ that is as yet far from perfect).
Next, is an accreditation system—there are dozens of such certifying agencies in India. Obviously, where there is going to be competition of this sort, there is going to be room to manoeuvre. So every, now and then, there are reports of such agencies indulging in fraudulent practices. Luckily, they also get caught, it seems. Genetically-modified cotton being passed of as organic cotton is one such popular scam. But, by and large, as of now, the system does appear to work. These certifying agencies are supposed to not just grant certification to farmers and others in the business of organic products but also carry out regular verifications. They are supposed to do this under the NSOP (National Standards for Organic Production).
Finally, there are the entities in the business of organic products. They ensure that the land used is fit for organic farming. They are also responsible for sourcing seeds and natural fertilisers. All of them need to be certified and that’s where the issue comes—as of now, unlike in other countries, there is no single ‘mark’ or ‘logo’ which provides a single-point re-verification on this for the eventual customer. Nor is there a requirement that the product or packaging (or even advertising) for the domestic market has to carry details of the certification under the NPOP or NSOP—as yet.
So, what happens is that for the domestic market in India, anybody and everybody happily places a sticker saying ‘organic’ on anything they want, after all this NPOP, NSOP and certifying agency system. Obviously, for the export market, documentation is strong enough to cover this lacuna; otherwise the NPOP/NSOP would lose the rest of the world as a customer.
But when it comes to the Indian customer, pretty much anybody from anywhere in the world, or domestic, can happily put the word ‘organic’ on it. That’s the real and simple truth as on date. And there does appear to be a bit of a racket in this—after all, it is the same ministry of agriculture that is involved, which is also pushing non-organic farming methods and products. So the conflict is clear and there for anybody to see.
What is the solution? Well, other than sitting with the retailer and getting her to explain the complete chain, not much else. Yes, there are shops and outlets which have built up a reputation over the years, but they are few and far between. They are in danger of being hidden by the louder and brighter smart alecks in the game. But at this point in time, if that package or display says ‘Organic’, then some amount of re-verification is certainly in order. Some how!