Companies & Sectors
TV18 blames the Union Budget for poor second-quarter performance!
Elections are the most coveted event for TV news channels and Union Budgets are what business TV channels look forward to. Their viewership shoots up on those occasions—it’s no wonder that TV channels advertise heavily the coverage of Union Budget as an event. That is when they hope to rake in the moolah. This is widely known to the investor community. Therefore it comes as a shock that CNBC blames the just-released poor performance of its September quarter on the Union Budget of July. Raghav Bahl, managing director, Network 18, has said just this in an interview to his own channel.
 
“Unfortunately, the last quarter was a quarter in which we had a budget and we also had a couple of competitive launches in that quarter. So, our cost level has also gone up,” said Bahl to CNBC. In September 2009 quarter all business news channels broadcasted both these events with much fanfare. If revenues don’t come from such mega events why does CNBC advertise them so much?
 
In the March quarter when TV18’s news operations reported a 36% decline in revenues of its news broadcasting business, IDFC-SSKI had blamed the poor performance on the fact that time there was no Union Budget which is normally held in February and boosts the March quarter results.
 
TV18’s news operations reported a loss of Rs33.10 crore for the September quarter which takes the loss in the first half to Rs61.38 crore. Loss for the year ended March 2009 was Rs166.36 crore. The news operation was the only bright spot in an array of lossmaking businesses of the TV18 group— Newswire, Web business and Infomedia—until 2008.

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L&T’s loud thinking

L&T’s claim that it will build mega-nuclear plants each year with 3,000MW-4,000MW capacity seems far from reality

In some sections of the press, AM Naik, chairman, L&T, has been quoted as saying that the company is planning to build 3,000MW-4,000 MW nuclear plants every year. The projection seems to be too big. Considering an average price of Rs 8 crore for each MW, a 3,000MW nuclear plant will cost Rs 24,000 crore and a 4,000MW one will cost Rs 32,000 crore. In fact, power industry equipment (without power transmission) contributes less than Rs500 crore to L&T’s annual turnover of Rs 34,000 crore. D Morada, head, corporate communications, L&T, clarifies that “the company has entered into joint ventures with Mitsubishi, Japan for supercritical boilers and steam turbines for thermal power plants.” He further confirms that these JVs (4000 MW/year) will generate revenue from next financial year 2010-11. For this, the company has installed capacity of 3,000MW-4,000MW at its Hazira complex.
 
A nuclear plant usually takes around eight years to build. The gestation period is comparatively long as compared to thermal power plants. Morada says that revenues from the power industry will “leapfrog from 2010-11.”
 
The company has also said that they have developed plasma reactors. However, plasma reactors are still at the experimental stage. Till now there has been hardly any sustainable success in these types of reactors. The largest research project is being carried out at the International Thermonuclear Experimental Reactor (ITER) in France at the cost of $12 billion. India is also one of the participants in this project among seven other countries developing thermonuclear reactors. India has earlier done one experimental plasma reactor, Tokomak—code-named named ‘Aditya’.
 
Morada adds, “Plasma reactors are still the subject of research. L&T has contributed to the Tokomak plasma reactor in India.” He further says that L&T is likely to get a “one-time opportunity in ITER which will go beyond 2025.”
- Dhruv Rathi ([email protected])

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Pilots’ strike: Everyone's benefitting except the affected airline
Given the turmoil and sudden strikes in the airlines industry, operators offering alternate services like flight pools are witnessing a surge in demand. Not to be left behind, even the Indian Railways tried its hand to woo passengers stranded during the Air India pilots’ strike.
 
The strike by Jet Airways pilots which lasted for about five days in September, proved costly for the airline resulting in a loss of about Rs2 billion. Jet Airways carries around 24,000 passengers and its revenues are in the range of about Rs400 million, per day.
 
Air India, the national carrier, has been a loss-making entity for years. During the full year to end-March, the carrier posted a loss of over Rs50 billion and had to seek a bailout from the Union government. According to the Federation of Indian Airlines, during the 12 months to end-March, the domestic carrier suffered a loss of Rs100 billion.
 
Last month, during the Jet Airways pilot's strike that lasted for five days, Airnetz Aviation Pvt Ltd's unit Airnetz Charter operated around four flights with 30 bookings, compared with just one flight a week in normal course. Similarly, during the Air India pilots’ strike, the flight pool service provider had six bookings. Majority of these flight pools were on the Mumbai-Pune and the Mumbai-Ahmedabad route, Airnetz said.
 
During the airlines strike, flight pool services are required by business and first class passengers coming from international destinations having their connecting flights on the affected airline, said Omkar Mistry, chief operating officer, AirnetzCharter.com, in a release.
 
On an average, the company operates around 15 flights a month, out of which four are flight pools. Typically, travelling on a flight pool basis would cost you 30% to 40% premium than your business class ticket on any airline. The 40% premium becomes a profitable option during crisis times, as fares for bookings on other airlines also shoot up considerably.
 
With Air India pilots' agitation resulting in cancellation of flights, especially from Delhi, private airlines like Indigo, Jet Konnect, Kingfisher Red and JetLite were reported to be operating with a full load. Many passengers cancelled Air India bookings and preferred private airlines on Delhi and Mumbai routes, during the crisis.
 
According to media reports, Indigo's newly introduced flights to New Delhi, reported about 80% load factor while JetLite's flights to Mumbai were also operated with almost the same load factor.
 
The Indian Railways too has tried to cash in on this opportunity. During the Air India pilots strike, the Indian Railways set up train passenger reservation counters at all important airports throughout the country for the convenience of stranded passengers who wanted to travel by train.
–Yogesh Sapkale with Amritha Pillay  [email protected]
 

 

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