Companies & Sectors
Tata-SIA's 'Vistara' puts other carriers on their toes

The very announcement of Tata-SIA's full service domestic carrier Vistara's entry into the Indian market has put all other operators on their toes

 

Tata-SIA's full service domestic airline is aptly called, Vistara, to cover the vast territory in India. It expects to travel to neighbouring countries, when the 5/20 rules are expected to be revised. It plans to launch services during the festive season starting in October this year. Its first aircraft is scheduled for delivery in September.

 

As it stands now, Vistara hopes to obtain Air Operators Permit (AOP) from the Director General of Civil Aviation (DGCA) soon, after which some more formalities will have to be completed before actual passenger flights can start.

 

Vistara has Delhi as the designated hub from where initial services will cover Mumbai, Goa, Patna, Chandigarh, Srinagar, Hyderabad and Bangalore in its first year of operation. Other destinations that will be included, over the next four years, are Chennai, Pune, Kolkata and Kochi. This will naturally depend upon the volumes and traffic flows.

 

Vistara, being a full service airline, is expected to meet exacting demand of its passengers and they hope to commence operations with A 320-200. Eventually, they expect to have a fleet of 20 planes, including seven A320 neos by Vistara's fifth year of operation. By the end of 2014, however, they will be serving with five aircrafts to meet their needs.

 

During a meet with the press, the CEO of Vistara, Phee Teik Yeoh, stated that they shall treat every passenger as a "guest" and make the full service facility in all sectors to their comfort.

 

The official announcement of the arrival of Vistara in the airline scene witnessed other serious developments in the domestic market. The chief operating officer of SpiceJet, Sanjiv Kapoor, issued a reassurance to its employees that the airline was not headed the Kingfisher way. The public and its employees are aware that the airline's accumulated losses rose to Rs2,189 crore and debt was Rs1,736 crore. The next quarterly results are expected to be announced on 14th August.

 

GoAir joined IndiGo as the next airline in the country to reach "profitable" status, even if small. IndiGo, India's largest domestic airline has been operating at a profit and may soon go in for an initial public offering (IPO), though details are not yet made public. GoAir is reported to be looking for a foreign airline for foreign direct investment (FDI). "We are looking for a long term strategic partner," said its CEO Giorgio De Roni.

 

GoAir was established in 2005 and will be getting its 20th aircraft in October. It will by then be able to fulfil the need of 5/20 rule, currently in operation, and may seek permission to fly abroad with the appropriate authorities.

 

Another major move came from Jet Airways, soon after the Vistara announcement. Jet announced that they would be bring Jet Konnect under its own brand by the end of this year and they would be happy to be able to "serve a meal, post an additional crew member" to make the master brand acceptable to the travelling public. Jet Airways and Etihad Airways announced a strategic alliance in Mumbai with the latter having a 24% stake in the former. President and CEO of Etihad Airways, James Hogan is reported to have said, during the Mumbai meet, that "Jet's India operations will be a stronger threat to other domestic low cost carriers". Since 2009, however, Jet Airways has not reported a profit. They expect to go on cost-cutting measures and launch more international routes in order to return to profitability by 2017.

 

Thus, the very announcement of Vistara's entry into the Indian market has put all other operators on their toes. In the next few months, one may expect some sort of mutually beneficial route arrangements or even mergers among the low cost carriers in order to secure a good share of the market and reduce capex on buying or leasing new aircraft by utilising the existing seat capacity.

 

It is only hoped that Vistara does not have hiccups to actually launch its flights which, as it stands now, are scheduled for October, the festive season.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

User

Sugar industry moving towards crisis?

The Centre needs to seriously take up issues of sugar mills and farmers and bring about proposals to resolve it, while ensuring a fair price formula for all concerned. Piece-meal decisions affecting the sugar industry will not be beneficial in the long run

 

The sugar industry in Uttar Pradesh (UP) is in revolt. Five major mills, such as Balrampur Chini, Bajaj Hindustan, Dharmpur Sugar, DCM Shriram and Dwarakesh Sugar have informed the Stock Exchanges that they have issued suspension notice to UP Chief Secretary, the Cane Commissioner and Principal Secretary (Sugar) that they will not start cane crushing when it starts in November this year, unless the government implements the Rangarajan Committee's recommendations.

 

Though the government had notified the increase in import duty from 15% to 40%, to curb cheaper sugar imports, this has not come into vogue, due to the lack of a notification to this effect. The promised payments for meeting the arrears to settle the cane farmers have also not been fulfilled completely. UP alone has Rs5,742 crore to settle, as against an all India figure of Rs9,252 crore. Thankfully, subsidy on raw sugar continues and cheaper credit facilities (loans) have been made available.

 

Following the move by the leading five mills, it is expected that 62 mills of the balance 95 mills in UP may also join the revolt, as they have given suspension notice to the state government on Monday that they too are unable to start the crushing operation for 2014-15 season, in the absence of rational pricing policy for sugar cane. They have demanded the linkage formula recommended by Rangarajan Committee.

 

In UP, sugarcane price has been fixed at Rs280 per quintal (100 kg) by the state government, whereas the actual realisation from sugar is far below the cost of production which, millers state, to be at Rs37 per kg while the ex-factory realisation is Rs31.50, thus leading to a loss of Rs5.50 per kg. In the linkage-formula, the cane price is liked to sugar, which is realistic and practical.

 

The problem for the industry has been brewing for months now. Based on the recommendations from the Indian Sugar Mills Association (ISMA) and public debates, the government finally hiked import duty on sugar from 15% to 40%, but so far it has not "notified" the same. The assistance for settling arrears payments has been slow, though interest-free loans have been made available.

 

Due to these uncertainties, there is a fear that cane farmers may switch over to other crops.

 

In the meantime, in the two-day annual convention of South Indian Sugar Cane and Sugar Technologists Association, President RV Vatnal, stated that "sugar cane farming should be made remunerative to the farmer, but at the same time, the operations of the mills should be made sustainable". He said that all efforts should be made to cut the cost of cane cultivation, increase yields and the sucrose content of the cane at the farm level. It was also necessary to improve the efficiency of the mills and find ways to better use of by-products. He felt that the government policy must be tailored to take care of both.

 

In the convention, there were talks of mechanisation due to shortage of labour and migration for other jobs; but it was felt that due to a large number of small (parcels of) land under sugarcane cultivation, this may not be feasible, unless some sort of co-operative arrangement was organised at the village levels.

 

Jagadeesh Gudanganti, the CMD of Siddapur Distilleries Ltd, Karnataka, felt that the cane price should be pegged at 70% of the actual revenue realisation of by sale of sugar, molasses, 25% of bagasse and press mud or 75% revenue of revenue realized by sugar alone. Those present in the convention felt that if Maharashtra and Karnataka could bring about legislation to follow the Rangarajan formula, why it should be introduced in the country on a uniform basis?

 

In all the confusion prevailing in the industry, the relieving factor has been the output projection for 2014-15 season at 25.3 million tonnes, marginally higher by 4% over the last season, as against the domestic demand estimated at 23 million tonnes. Also, the much feared deficit in monsoon appears not to have affected the cane sowing and the Ministry of Agriculture confirms that, by mid-July, sowing covered 46.09 lakh hectares against the normal 45.37 lakh hectares.

 

In the meantime, due to the adverse sugar producing climate in Brazil, sugar prices may show an upward trend this season. The global deficit has also been estimated at 2.1 million tonnes, thus opening up further opportunities for India to export more sugar. The last year's carry forward stocks of 7.5 million tonnes would come in handy, should the demand from our overseas buyers suddenly increase due to conditions in Brazil.

 

In the circumstances, it is essential that the Centre seriously take up the issue with the mills and bring about proposals to resolve the matter in the interest of ensuring a fair price formula for all concerned. Piece-meal decisions affecting the industry will not be beneficial in the long run.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

User

COMMENTS

Prem Bajaj

3 years ago

the whole darned world either makes and/or imports sugar from global markets and several many agri countries have not only become a larger participant in the sugar cycle but also follows globally accepted practices that our politicians keep from integrating into...... this seems a standard 3-5 year cycle (given there are 2 cuts on India sugarcane crops compared to higher cuts elsewhere and upto 6-7 in Brazil) - and the Indian sugar scam keep humming. Ring a bell? from another story on 'ROT at the Top' creaming the Indian Tax Payer in bailing out loss making corporates time and again.

Mahesh S Bhatt

3 years ago

Let the problem ballon & than politicians make moneywith price rise. Normal industry practice in agri based products. Mahesh

How to make coal suppliers more accountable

The country has 39 mt of coal in stock at various places. On the other hand, power producers are reeling under fuel shortage with a stock that would last for seven days. It is inconceivable that 39 mt of coal piled up in just one day. Hope the government take necessary action against all those responsibile for this situation

 

Nearly half of the Indian thermal power plants in the country, which depend upon coal, are reeling under fuel shortage with less than seven days in stock! The first step is to overcome such a dangerous situation by promulgating an ordinance, if necessary, to ensure that all these units have at least 15 days inventory, so that there is no shut down leading to a power crisis.

 

Set against this unfortunate hand to mouth existence, Power Minister, Piyush Goyal has just discovered that 39 million tonnes (mt) of coal are in our stocks, at various places, but not moved to or delivered to the power generating consumers! This would mean, most regrettably, that at various coordination points, nobody was doing his/ her bar chart right, to ensure that goods are on the "move" so as to reach point of consumption.

 

When monsoon begins, with India Meteorological Department (IMD)'s projections, everyone concerned ought to know the way wind blows and what type of rains can one expect in a given territory. And be prepared for it. It is also the time, when power generators plan shut downs for over hauling of their thermal plants, as power needs are lower at this point of time.

 

Take the case of Andhra Pradesh Power Generation Corp (AP GenCo). They have announced shutdown of several of its thermal power plants in the state, as hydel power generation increases during the monsoon. AP GenCo will take up overhauling of a 500 MW and 2 x 210 MW plants at Dr Narla Tatarao Power Station in Vijayawada and another 210 MW at Rayalasemma Thermal power station. Generally, 15 to 30 days are needed for this overhaul and the Southern Regional Power Centre and the Central Electricity Authority has been notified with the shutdown schedule. In case of AP Genco, they expect to overhaul all their units by end of December each year, so as to render hassle-free service during summer.

 

Reverting back to India's main coal supplier, Coal India Ltd (CIL), against the target of 35.80 mt, CIL has achieved only 33.1 mt. Likewise, during the first four months of this fiscal, CIL production was only 141.34 mt against the output target of 148.43 mt. And the off-take during April-July was a target of 171.43 mt while only 157.59 mt was achieved. Power Minister, as also the power generators, needs to know what caused them to fail in this manner. Discussions and debates in the past have revealed the bottle-necks in the clearing of coal from pit heads, non-availability of rakes, or delays in getting them in time. Besides, the exclusive corridors for transporting the precious coal to points of consumption have not been made ready.

 

The National Democratic Alliance (NDA) government has been proposing to develop inland waterways to overcome the communication bottlenecks in railway transportation, as the originally planned "dedicated" corridors are not yet ready and fully functional. Inland waterways, if planned and developed, would greatly reduce the strain and dependence on railways. Already, barges have begun supplying imported coal to the Farakka Super Thermal Plant in the absence of land based transport alternative. Inland waterway transportation would be cheaper and definitely congestion free.

 

From the press reports, it appears that the NDA will endeavour to give a decisive push to make Ganges-Hooghly waterway navigable for freight movement by vying for a Word Bank loan upto $1 billion (about Rs6,000 crore) and for which the Inland Waterway Authority will be having discussions with them. The government plans to have a few barrages on the Ganga from Allahabad to Haldia to facilitate movement of larger vessels.

 

As a matter of interest relating to inland waterway utilisation, China has already 15,000 kms of navigable waterways and hopes to add 5,000 kms more in the next decade. On the contrary, India has not made much headway in this direction. However, it plans to spend Rs1 lakh crore on the development of waterways of which Rs20,000 crore are expected to be financed by the government itself, while the rest may come from borrowing or from public sector.

 

Such developments will take time to achieve. However, what is of immediate importance is to have top priority consultations amongst the Ministry of Coal, Power, Railways and the Coal India officials, duly and actually represented by the CMDs of the seven subsidiary coal mining companies to know the ground situation to move the coal piling up everywhere. Information from CIL could be "doctored" and need not necessarily be as per the ground situation as experienced by the shipping mining unit.

 

It is inconceivable that 39 mt of coal did not pile up in just one day. This backlog must have been going on for months and it is truly a shame that all the concerned officials did not take adequate steps to overcome the impasse, and let it grow in size to this level. They need to answer why they let this grow into a big balloon.

 

All the officials concerned in all these Ministries are to be held ACCOUNTABLE and those who did not do their job need to be given a golden handshake at the worst. No government can tolerate this sloppy work that hurts the nation. Railways must make the rakes available and ensure speedy movement of the coal cargo on a priority basis.

 

No excuses. CIL needs to deliver the goods.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

User

COMMENTS

P K SINGH RATHOR

3 years ago

No doubt,the ground stock of coal of CIL is to the tune of 39 mt in different mines.But power producers are reeling under fuel shortage not due to weakness of Coal India but due to the reasons well known to all Indian citizens.The main reasons are delay in land acquisition, MOEF clearance and more over transport bottleneck due to poor rail infrastructure.The promulgation an ordinance for having at least 15 days coal inventory inventory at power plants will not serve the purpose and will increase import and out go of forex leading to increase in current account deficit unless until, domestic coal production is increased. Coal India Ltd (CIL), during the first four months of this fiscal, has produced 141.34 mt against the output target of 148.43 mt. This non-achievement of target in summer season was due to conditions imposed by local authority of coalfields in Odisha regarding time of operation of work due to scorchinhg heat and the production schedule suffered. Also problems created by localites particularly in Hensmul village of Talcher coalfield and closure of mines for some days also caused less production there. This loss of production will certainly be made up when production peaks after November after monsoon is over.The stock can be cleared if railways provide rakes at the rate of 221/day while average availability is 180- 190 racks/day in the past.Three rail corridors in command area of MCL, CCL and SECL will solve the transport bottleneck but making these operation will take at least 5 years from now. The proposed development of inland waterways to overcome the communication bottlenecks will not hep Indian coal producers in moving coal as mines are not located in coastal belts. Only imported coals can be transported to Farraka(WB) Bhagalpur, Mizaffarpur, Barh and others in Bihar and UP.

Dinesh Kumar Jain

3 years ago

(1) Reliability in transportation of coal from production area to Sidings of CIL,

(2) Accurate loading in the rakes as per the loading norms of Indian Railways i.e. Permissible Carrying Capacity (PCC) of the Box-N & Box-NHL wagons is required to decrease the piling of coal. Most of the coal rakes dispatched from the Sidings of CIL are Under loaded.

(3) The poor loading performance and over stay of the rakes at the "Sidings" of the CIL against the stipulated time recommended by Indian Railways.

(4) Intentional rakes detention at the Sidings of the Coal Company due to "Over Loading" in few boxes beyond tolerance loading norms of the Indian Railways.

(5) The "Sidings" of CIL have been completely hijacked by the contractors of the Coal Company & the Liaison agents of the Coal Consumers.

(6) Poor unloading performance or overstay or Release of coal rakes inside the Sidings of the power plants is also main reason for rakes (empty) crisis.

Dinesh Kumar Jain
Bilaspur (CG)

jaideep shirali

3 years ago

One aspect that needs to be looked into is the smuggling of coal from various Govt coalfields by a corrupt administration. For example, passing off 5 truckloads as one truckload, etc. This could have been a reason why the coal mafia prospered and maybe prospers even now. It seems ridiculous that we supposedly have huge coal reserves, but are importing costly coal. The NDA Govt has a task on its hands in putting the coal sector back on its feet and making it efficient. Coal India and its subsidiaries need to be more accountable to the nation. The task would have to start with making systems transparent and efficient, not opaque methods that spawn multiple Coalgates.

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