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BW Businessworld

Toeing The Congress Line

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One thing that has not changed after the BJP government unseated the UPA regime is the policy orientation of the central government. The BJP is religiously pursuing the Congress policies. UPA’s Swabhimaan has become BJP’s Jan Dhan, Nirmal Bharat is now Swachh Bharat and the previous government’s manufacturing policy is embodied in the Make In India campaign. That’s not all. The BJP, which opposed the Insurance Bill while in opposition, is now trying to pass it with some cosmetic changes. It might be politically prudent for Congress to see this as BJP’s U-turn on policies and positions, but the fact remains that there is continuity in action. What Congress needs to do is to support all meritorious decisions. The BJP, on the other hand, should try to avoid unnecessary changes if it needs faster legislation of new laws, or smooth implementation of its policies and programmes.  
— Joe C. Mathew
Life After Zero
Wholesale price inflation (WPI) decelerated for the fifth consecutive month in 2014-15 — it came in at nil in November on a year-on-year basis (from 7.5 per cent). The last time WPI fell lower than this was when it hit (-) 0.3 per cent in July 2009. Before you clap your hands, zero inflation may well mean that there is no demand in the economy; that’s why prices remained at where they were a year ago. India Inc may well be losing its pricing power. Either way, a rate cut by Mint Road is round the corner. The 10-year yield is at its lowest levels (since August 2013) at about 7.50 per cent levels; it has fallen steadily over the past 10 weeks. 
— Raghu Mohan
Time To Change
Yet another round of climate change talks concluded without any headway being made. And we had a role in that. It is well known that India and China are now the biggest emitters of greenhouse gases. Yet, we continue to blame the developed world for all the pollution. At the recent Lima convention, the only intervention made by the Indian environment minister was that the developed nations need to provide more aid to developing nations. In the run-up to the convention, the minister had declared India’s commitment to a greener, cleaner tomorrow. It is high time India changed its reactionary stance and worked towards building a clean tomorrow, not for the world but for itself. It can only do so if, like China, it recognises the hazards of increasing emissions and finds ways to reduce the impact of climate change.  
— Joe C. Mathew
Manna From The Heaven
Beleaguered airline SpiceJet seems to have come out of turbulence, at least for now. Its former promoter Ajay Singh and two investors are said to be pumping in Rs 1,200 crore to bail out the cash-strapped airline. Earlier, the aviation ministry, worried that SpiceJet might go the Kingfisher way, came to its rescue by permitting it to accept bookings till March-end, asking banks to give short-term working capital loans worth Rs 600 crore and requesting state-owned oil companies to extend a credit line for fuel for two more weeks. The airline had to cancel 1,800 flight after oil companies stopped supply of fuel in the face of mounting dues. The cancellations prompted the regulator to ask the airline to stop selling advance tickets beyond a month. The airline needs more than just an infusion of cash; it needs to drastically change the way it is run.  
— Nevin John
Oil Is Right With Air India?
Even as Spicejet has flown into turbulence with oil companies, debt-ridden national carrier Air India promises to coast through air pockets — ironically thanks to oil. Rohit Nandan, CMD of Air India, talks of turning cash positive by 2018. Sounds incredible? Well, AI might have found a magic wand in the crashing oil prices. According to a senior AI official, AI’s annual fuel bill is nearly Rs 9,100 crore and it expects a 15 per cent savings in fuel thanks to the drop in oil prices. Apart from that, it is taking a cue from airlines such as Delta that earn nearly billions of dollars through baggage taxes. By comparison AI, which is fairly liberal with its bags policy, gets barely one per cent of its revenue from baggage taxes. The other revenue source could be cargo. Currently Rs 16,500 crore of AI’s revenue comes from passenger services with cargo contributing barely Rs 1,300 crore. The target is to push cargo to 10 per cent of overall revenue by putting its 18 Dreamliners to optimum use. In theory it sounds utterly simplistic, but AI’s problem has always been one of implementation. Plus don’t forget the debt of Rs 40,000 crore that it has on its books. 
— Chitra Narayanan
FM Radio: The New Rock Star
Those who thought radio is an old-world media format with little business future will have to think again. In recent days, Jagran Publications, owners of the largest mass circulated daily Dainik Jagran, have bought a controlling interest in Radio City, among the largest of the FM Radio networks. India Value Fund (IVF) and Star India, the current owners of Radio City’s holding company Music Broadcast (MBPL), have exited raking in an estimated Rs 475 crore. Radio City broadcasts from 20 cities, and has a healthy operating margin of around 28 per cent. It had notched up revenues of Rs 162 crore in FY2014. The fact that Jagran has chosen to jump into radio broadcasting through an acquisition speaks volumes of the strength of the business. After a hesitant start in 2001, FM radio has demonstrated that it is a sustainable business. Jagran has also timed its entry well hoping to take advantage of the third round of auctions which will see as many as 839 stations in 294 cities and towns being put on the block.   
— Gurbir Singh
(This story was published in BW | Businessworld Issue Dated 12-01-2015)