Companies & Sectors
Tough measures needed to make Air India survive, thrive says IATA

IATA said the Indian government should take steps to stabilise operations of the state-run carrier first so that it could survive and thrive

 
New Delhi: Tough measures need to be taken to make Air India "survive and thrive", global airlines body International Air Transport Association (IATA) said on Wednesday, asking the government to take a cue from the merger of two state-owned Japanese carriers which slashed jobs and operations to come out of bankruptcy, reports PTI.
 
IATA chief Tony Tyler, who raised the issue at a CII conference on Indian aviation, said the entire sector was in a 'multi-faceted crisis' which could be resolved by coordinated public policies.
 
"To do that, we need an 'India Inc.' approach that addresses the crippling issues of high costs, exorbitant taxes and insufficient infrastructure," the Director General and CEO of the International Air Transport Association said here.
 
Drawing a parallel between Air India merger and Japan Airlines (JAL) after its 2002 merger with Japan Air System, he said both of them faced global financial crisis, recession and fuel price hike soon after their merger.
 
Hit by these problems, JAL filed for bankruptcy in 2010. The Japanese government then launched a $3 billion restructuring plan and took "difficult decisions" to turn the merged airline around.
 
"The cuts were deep -- some 50 routes and 16,000 jobs. That's just short of a third of the workforce. With this bitter medicine, and other measures, JAL emerged from bankruptcy. After reporting a $2.5 billion profit in 2011, it plans to re-list its shares this autumn," Tyler said in a clear indication that the government should take tough steps to bring Air India out of the crisis.
 
Later when asked whether he wanted Air India to be privatised, he said he did not suggest privatisation. The government should take steps to stabilise its operations first so that the airline could survive and thrive, he said.
 

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SKS Microfinance employees swindle Rs15.8 crore

There was cash embezzlement by the employees to the tune of Rs2.5 crore and loans given to non-existent borrowers was Rs13.3 crore, the micro lender said in its annual report

 
Hyderabad: SKS Microfinance has said that some of its employees have cheated the company to the tune of Rs15.8 crore in the last financial year, reports PTI.
The services of employees involved have been terminated and the company has written off over Rs14 crore.
 
The auditors of the company have reported that there was cash embezzlement by the employees to the tune of Rs2.5 crore and loans given to non-existent borrowers was Rs13.3 crore, the micro lender said in its annual report.
 
“We have been informed that during the year there were instances of cash embezzlements by the employees of the company aggregating Rs2,50,91,317; and loans given to non-existent borrowers on the basis of fictitious documentation created by the employees of the company aggregating Rs13,33,13,975,” auditors SR Batliboi & Co said in the annual report.
 
“The services of all such employees involved have been terminated and the company is in the process of taking legal action. The outstanding balance (net of recovery) aggregating Rs14,24,40,656 has been written off,” the auditors added.
 
SKS said that employee fraud is an inherent risk in the business the company operates in, since all the transactions are cash-based.
 
In case of cash embezzlements, the company has recovered an amount of Rs1,08,59,714 including the insurance cover.
 
Cash embezzlement is 0.09% of disbursement during the year, SKS clarified.
According to the annual report, total disbursements in the 2011-12 stood at Rs 2,736 crore.
 
To mitigate this risk to a large extent, the management has put in place several preventive control measures such as procuring indemnity bond from every field staff, with personal guarantee of a third person.
 
“Every bank transaction (deposit/ withdrawal) is to be executed by minimum of two staff comprising a bank signatory and a confirmed staff. The strongbox at every branch is controlled by two keys and the keys are held by two different employees in the branch,” SKS informed.
 
The company also said that surprise visits are conducted by managerial employees, at the time of carrying out cash/bank transactions by field employees besides minimising the cash balances at various branches to the lowest level possible (Rs50,000+ next day disbursement).
 
In case of cash embezzlements, SKS said it has taken fidelity insurance to minimise the losses from cash embezzlements.
 
In case of loans given to non-existent/fictitious borrowers, SKS said it has recovered an amount of Rs73,97,648 against these cases including insurance cover. These cases are 0.49% of disbursement during the year. 
 

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COMMENTS

Rajan Alexander

5 years ago


Level of staff ethics can be correlated with organizational culture and organizational culture in turn is a reflection of the ethics of the business/ownership structure. So when the latter comprises of loan sharks, how does anyone expect an organization to behave more ethically and with integrity?

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