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Wednesday, January 30, 2013

THE NIGHT THE SUN SHONE India’s Power Elite At TOI Awards Moved By Heart-Warming Stories Of Grit, Determination & Hope

 In an evening packed with lump-inthroat moments, three in particular stood out. Tamana Chona, a young school teacher who was born with cerebral palsy, had just handed over The Times of India Social Impact Award for education in the government category to the National Institute of Open Schooling, represented by its chairperson Dr S S Jena. Tamana gave him a quick hug, then marched over to the lectern and said she wanted to say a few words. It wasn't part of the programme but the host for the evening—National Awardwinning film-maker Prakash Jha, who has directed some of Indian cinema's most hard-hitting, socially relevant movies—graciously made way for her. 

    Tamana spoke haltingly but emphatically. "I have come a long way thanks to Dr Jena, who is my role model, and my mom and dad, who have helped me to shine. I want to learn more and more and I want to help street children and all the people associated with NIOS." 
She then asked the audience to join her in three cheers for NIOS. As she walked off the stage, Jha said with admiration, "What a brave girl. I'm positive she would have done a better job of hosting these awards." 
    When it was time to give the environment award in the NGO category, Sarjubai Meena strode on to the stage. Known in her village in Bhilwara as the "woman with the turban", Sarjubai launched into an impromptu speech about how the Foundation for Ecological Security—the awardee in the category—had helped transform her village. Unfortunately, few in the audience were able to understand the dialect that she spoke in. But the pride, determination and sincerity in her voice needed no translation. She received a rousing round of applause, and Jha remarked, "She has certainly earned the right to wear a turban". 
    The audience was also visibly moved when 11-year-old twins Hiranya and Thiruvara Bhargavi, who were born with cerebral palsy, were brought on to the stage—Hiranya in a wheelchair and Thiruvara in a wheeled stretcher. The twins and their mother, Apala, were there to give the award to the winner for
health in the government category—the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities. The stoic courage and fortitude displayed by them moved many to tears. 
COUNTERING CYNICISM 
The second Times of India Social Impact Awards in partnership with J P Morgan made for the sort of evening that could not fail to move and inspire even the most cynical. There were sagas of lives transformed, as in the case of Kapilaben Vankar, who made half the minimum wage in a factory in Anand in 1994, but began to earn decent wages after joining women's trade union SEWA, the winning NGO in the livelihoods category. Once too shy to speak to family members, Kapilaben has risen to become national president of SEWA, travelled to Washington and met US secretary of state Hillary Clinton. 
    And there were, quite literally, life-anddeath stories like that of Rajesh Shah, a chartered accountant from Mumbai, who in June 2005 suddenly collapsed in his office in a congested bylane in central Mumbai. Within 25 minutes, Rajesh was being treated in hospital, thanks to the ambulance service run by the winning corporate in the health sector, Ziqitza Health Care. Doctors later told him that he had suffered a stroke and could have been paralysed for life had he been 
brought even half an hour later. 
    There were so many inspiring stories that it came as no surprise when President Pranab Mukherjee, the chief guest of the function, hailed the awardees as a remarkable group of men and women who had the vision to look beyond cynicism to a brighter horizon; the courage to brave tremendous odds and believe 
that they could make a difference, and the selflessness to do so quietly. A LIFETIME OF INSPIRING WORK Congratulating TOI for its efforts to honour individuals and organisations who are silently contributing and creating a society worth living in, the President said it gave him special pleasure to hand over the prize to the joint winners of the Lifetime Achievement Award—Meira Paibi and the Naga Mothers' Association. "They come from a region that tends not to get too much attention in the national media. They have served as peacemakers in a frequently conflict-ridden area. And they are living testimony to the enormous healing power that women have to offer a troubled world," he said. He concluded by telling all the awardees, "I say you have made us proud." 
    Receiving the award, Naga Mothers' Association president Abeiu Meru said the group was happy and honoured to share it with Meira Paibi and looked forward to promoting peace between the two communities and in the northeast. Thokchom Ramani Leima, 83, who received the award on behalf of Meira Paibi, said, "We are grateful to our sons and daughters at TOI for recognising the efforts of mothers. We ask you to remember us beyond today." 

    Just as he was about to leave the venue, the President turned to Times Group vice chairman Samir Jain, managing director Vineet Jain and the senior editors of TOI to say, "I was not sure what to expect when you invited me to be chief guest. But this is a wonderful idea. It was very inspiring. Thank you for inviting me. God bless, God bless." 
No award, but Nirbhaya was on everyone's mind he evening concluded with a moving rendition of the National Anthem in sign language by children from the Government Secondary School for the Deaf, Kalkaji. Their performance at last year's awards had been hugely appreciated by the audience. Back on popular demand, their enthusiasm and bubbliness once again tugged at many heart-strings. 
    One person who did not receive an award (as TOI has consciously decided not to confer any posthumous awards) but was repeatedly mentioned was Nirbhaya, the 23-year-old girl whose brutal gang-rape and subsequent death led to an outpouring of public grief and anger. 
    Singer Rekha Bharadwaj dedicated one of her songs to her. Times Group managing director Vineet Jain began his speech by saying, "We emerged into the new year in a somber mood — our hearts broken by the brutal death of a 23-year-old girl right here in Delhi. But it has been inspirational to see so many young people rise up and decide that this young girl's death must 
never be forgotten." 
    And when Prakash Jha introduced singer-lyricist Swanand Kirkire, he did so by saying, "He wrote and sang the song he is about to perform here, in which he apologises to a little bird for the terrible things the world has done to her, and begs her to return. When we hear these words, we can't help but remember Nirbhaya, India's brave daughter." 
    Delivering the vote of thanks, Times Publishing CEO Ravi Dhariwal invoked Jawaharlal Nehru's words, "The service of India means the service of the millions who suffer...As long as there are tears and suffering, so long our work will not be over". He said, "The winners know that their work is far from over. But tomorrow, when they resume their labours, I am sure it will be with a renewed sense of purpose and determination. Like them, there are many other individuals and organizations working quietly and selflessly to change this country. We hope that tonight's ceremony will send out a powerful message to them: they are not alone. The Times of India will be with them on every step of their long, arduous journey."

President Pranab Mukherjee and Times of India Group managing director Vineet Jain


Union law minister Ashwani Kumar (L) with HDFC chief Deepak Parekh and former Cabinet secretary, ambassador to the US and governor Naresh Chandra



    (L-R) Chief election commissioner V S Sampath, Prasar Bharati CEO Jawhar Sircar and foreign secretary Ranjan Mathai


BJP's L K Advani. Behind him is Pakistan High Commissioner Salman Bashir


Ambika Soni of Congress


Top Congress and BJP leaders Digvijaya Singh (L) and Yashwant Sinha laugh away their political differences


(L-R) Union minister for overseas Indian affairs Vayalar Ravi, CPI(M)'s Sitaram Yechury and Ahmed Patel, political secretary to Sonia Gandhi



    The seniormost Supreme Court judge P Sathasivam with attorney general of India Goolam Vahanvati


(L-R) UID chief Nandan Nilekani with wife Rohini, J P Morgan India CEO Kalpana Morparia and Union environment minister Jayanthi Natarajan. Behind them is Egypt's ambassador Khalid Al Bakly (in glasses)


Union housing minister Ajay Maken tweets about the Awards live


Union information and broadcasting minister Manish Tewari cheers on


(L-R) BJP's Ravi Shankar Prasad, Union railways minister Pawan Bansal and Union social justice and empowerment minister Kumari Selja. Behind them are T K A Nair, advisor to the PM, and Sanjeev Tripathy (extreme right), who's just retired as chief of RAW, India's spy agency


Tuesday, January 29, 2013

Home, auto loans likely to get cheaper as RBI cuts key rates

But Banks May Not Change Deposit Rates

Mumbai: Rates on home and auto loans are set to get cheaper even as banks remain tentative about cutting deposit rates following a 25 basis points reduction in key rates by the 

Reserve Bank of India. However, this might be as good as it gets for borrowers, with RBI governor D Subbarao warning that inflation and the current account deficit will have to fall beyond expectations for further rate cuts. 
    Royal Bank of Scotland on Tuesday became the first to reduce lending rates following the RBI announceme
nt. RBS cut its base rate by 75 basis points to 9%. Top lenders including State Bank of India, HDFC Bank, ICICI Bank and Bank of India too indicated that they would reduce lending rates. 
    Home loans leader HDFC said it would reduce rates as soon as its borrowing costs come down, which is expected to happen in three to four weeks. 
    In a positive development for retail customers, long term deposit rates are expected to hold. In fact, two days ago, ICICI Bank and Axis Bank had increased interest rates on deposits on some maturity slabs. Currently, the spread between interest rate on home loans and long-term deposits is less than a percentage point. 
Scope for 25bps base rate cut 
Mumbai:In the third quarter review of the RBI's monetary policy, governor D Subbarao announced a 25 basis points reduction in the Cash Reserve Ratio (CRR) to 4% and a matching cut in the repo rate to 7.75%. CRR refers to the portion of deposits that banks are required to maintain with RBI without earning any interest while the repo rate is the rate at which RBI lends overnight funds to banks. 
    The twin measures together will provide banks with headroom to reduce their base rate by at least 25 basis points. The base rate is a benchmark rate announced by banks based on their cost of funds. Interest on all floating rate loans, including home and some auto loans, are benchmarked to the base rate.
Any reduction in the base rate will bring down cost of borrowing for all customers whose loans are set on a floating rate. 
    Subbarao said that although core inflation was low, food inflation continued to remain high and if it remained at these levels for long, inflationary expectations would build in prompting RBI to take monetary measures. "We have only one instrument—the interest rate. Using this we have to encourage investments by reducing lending rates, we have to discourage consumption, we have to improve savings and 
we have to reduce the current account deficit. It is an almost impossible task so it is a matter of judgment and balancing," said Subbarao. 
    The governor however remained tightlipped on when the RBI would issue guidelines for new bank licences. On controlling gold demand, the governor said that RBI has redesigned inflation bonds to come out with a product where both the principal and the return would be linked to inflation. According to Pratip Chaudhuri, chairman, State Bank of India, the country's
largest lender would stand to gain Rs 300 crore because of the combined impact of the reduction in CRR and repo rate. "We have the headroom to pass this on to borrowers without losing out on our margins," he said. He added that the bank's asset liability committee would meet on Wednesday to review lending rates. 
    Several banks, including Kotak Mahindra, ICICI Bank and Axis Bank, touched 52-week highs on the stock exchange. The BSE sensex however closed at 19,988, down 114 
points from its previous close following hawkish statements from the RBI governor stating that there is little headroom for further reduction in rates. 
    "Banks are facing pressure in margins because of increased provision requirement on restructured loans. There are issues on asset quality where banks are required to make provisions. So banks will have to look at opportunities for evening out the impact on their net interest margins," said K R Kamath, chairman, Punjab National Bank.



A NECESSARY MOVE, BUT NOT SUFFICIENT


The rate cut has come at a time when there have been other positive moves. This will mean that monthly outflow on loans will come down, which will positively impact consumption. We expect further easing of rates going forward 
Kishore Biyani | FOUNDER & CEO, FUTURE GROUP


This was necessary. But it is not sufficient. The CRR cut is a pleasant surprise. However, the monetary policy cannot be a magic wand for growth by itself. It is critical that the recent non-monetary measures are taken to fruition 
Harsh Mariwala | CMD, MARICO INDUSTRIES


We were waiting for this for 9 months. Personally, I believe there are fundamental triggers that need to be pulled. RBI's decision might improve sentiments, but will it drive actual investments is another matter 
Kiran Mazumdar-Shaw | CMD, BIOCON


The industry appreciates the signal from RBI that it is ready to promote growth in addition to anchoring inflationary expectations. We would have appreciated a higher repo rate cut but, under present circumstances, the 25bps lowering does send the correct signal. In the months to come, we expect fiscal and monetary measures to work in tandem to ensure that growth is brought back 
Adi Godrej | PRESIDENT, CII

Tuesday, January 22, 2013

A Lot in Store in a Stable Budget: FM


Minister allays fears about tax shocks, reaffirms commitment to fiscal discipline


Finance Minister P Chidambaram has promised stable taxation rates, more reforms, and committed to fiscal rectitude at all costs, allaying concerns about tax shocks and offering a peek into priorities that will shape the next budget. Chidambaram told investors in Hong Kong — the first stop on his fournation tour to woo investors to India — on Tuesday that the Indian economy will grow "no better than" 5.7% in the current fiscal as he declared that there was no case to downgrade the country's sovereign rating. 
"The market has been cautious leading into what is seen as an 'election/populist' budget in February. The finance minister was decidedly more positive. He suggests the fiscal deficit target will be met, taxes will not be raised and while policy will and should be biased towards the poor, the budget will offer a lot," said a note put out by Citi, which co-hosted his meeting with more than 200 equity and fixed-income investors. His comments about taxes are significant especially since the global debate over taxing the rich more has landed on Indian shores, with some murmurs about taxes such as inheritance tax or estate duty on the wealthy. 
Won't Breach Fiscal Deficit Target: FM 
Chidambaram's statement is also important as the previous budget, presented by his predecessor Pranab Mukherjee, had unveiled a host of controversial measures such as the General Anti-Avoidance Rules (GAAR) and retrospective amendments to tax laws. 
The minister, who is due to travel to Singapore, London and Frankfurt next to meet investors, said while the economic growth would be muted this year, he expected it to gain momentum next fiscal year and grow 6-7%. He also sought to allay apprehensions of ratings downgrade. "I was not worried when I took over (as finance minister) in August 2012, and after so many steps that we have taken, I think I should be less worried. In fact, all of us should be less worried. There should no case whatsoever for anybody to downgrade India." Rating agencies S&P's and Fitch had last year cut their ratings outlook for India to "negative", citing its slowing growth and high deficit. The warnings and fears of a possible impact of arating downgrade to junk status on
investment flows shook the government, prompting it to unveil a slew of long-stalled reforms. The government opened up the multi-brand retail sector to foreign investments, deregulated diesel prices and capped the subsidy on cooking gas. Asserting that fiscal deficit would be kept at 5.3%, Chidambaram said there was room to sell more state assets to ease the strain on finances and that the government would raise $5 billion from such divestments in the current financial year. "Under no circumstances will I agree to breach the fiscal target of 5.3% (in current fiscal)… The first step is fiscal consolidation and (India is) committed to the path of fiscal prudence... next year I will budget it no more than 4.8%," he told PTI. 
Chidambaram said the government had also effectively managed the GAAR issue. "There is universal acknowledgement that we have handled the GAAR situation fairly effectively and buried the ghost that GAAR will be some kind of a monster," he said. The Citi note said the FM heard the assembled investors patiently and informed them about the long-term reforms picture that includes reducing fiscal deficit by 0.6% every year to bring it down to 3% by 2016, a GST regime and faster clearance of infrastructure projects. "The FM was both clear and confident — of what needs to be done, how and when it will be done, and timelines. Importantly, there was also a lot of openness and willingness to take in audience feedback and suggestions. So he was not just talking, but also listening," Citi said. 

Chidambaram, who raised import duty on gold on Monday to discourage imports of the yellow metal, allayed concerns about India's high current account deficit, which stood at a record 5.4% of GDP in July-September quarter. "The silver lining is we are able to finance the current account deficit without reserves," he said.



HUL to more than double royalty fee

Payouts To Rise From 1.4% To 3.15% Of Turnover By FY18 | Q3 Net Up 16%


Mumbai: Hindustan Unilever (HUL), the Rs 22,000-crore FMCG major, on Tuesday turned the street's fears of a hike in royalty payments into reality. The maker of Dove soaps and Knorr soups, which posted a 16% growth in net profit at Rs 871 crore for the third quarter ended December 31, 2012, announced a new trademark and royalty agreement with parent Unilever, which will more than double the outgo from the current 1.4% to 3.15% of the turnover in a phased manner. 
    The news of a revision in the royalty payment agreement disappointed the street and led to about a 3% (Rs 14) decline in HUL's stock price on the Bombay Stock Exchange to Rs 482 on Tuesday. In mid-December, HUL's stock had fallen following Unilever's announcement to sign a trademark license agreement in Indonesia. 
    The revised agreement, which was approved by HUL's board on Tuesday, would come into effect on February 1, 2013. It will increase the royalty cost by an estimated 0.5% of turnover from February 2013 and March 31, 2014, and in the range of 0.3-0.7% of turnover in each financial year thereafter. 
    This will lead up to a total estimated royalty cost increase of 1.75% of turnover compared to existing arrangement till the year ended March 31, 2018. The total outgo in the first year (2013-14) is estimated to increase by around Rs 125 crore on a pretax basis to over Rs 400 crore, said industry analysts. 
    The news which comes in the wake of multinational Holcim announcing royalty payments to be gained out of its Indian subsidiaries, ACC and Ambuja Cement, has triggered a negative sentiment among analysts even though HUL reported a double-digit growth in its domestic business sales. 
    "What disappointed market the most was the increase in royalty arrangement to be paid to parent. Our preliminary analysis suggests 3% and 5% contraction in EBITDA (earnings before interest, taxation, depre
ciation and amortization) post this new royalty, ceteris paribus. We are assuming royalty expenses to go up 30 basis points each year after fiscal year 2014 till fiscal year 2018," said Rikesh Parikh, VP-markets strategy and equities, Motilal Oswal Securities. 
    HUL, which reported a 10% rise in net sales to Rs 6,434 crore during the quarter, however, believes the new 

agreement would benefit the company in staying competitive. In the context of the huge growth opportunity in India, as well as increasing intensity of competition, particularly from global players, Unilever is committed to ensuring that the support in terms of new products, innovations, technologies and services is commensurate with the needs of HUL to win in the market place and continue to generate significant value for all shareholders of HUL," the company said in a statement. 
    Last year, HUL's outgo on royalty was around Rs 300 crore, which was higher than that paid by some other multinationals like Colgate-Palmolive and GSK. 

HIGHER OUTGO 
äHUL paid a royalty of about 300cr to Unilever in 2011-12, calculated at 1.4% of turnover 
äFor Feb 1, 2013-Mar 31, 2014, the royalty payment will be 1.9% of the turnover (up 0.5%), taking the outgo to an estimated 400cr 
äEvery subsequent fi scal, royalty will be in the range of 2.2-2.6% of the turnover, reaching 3.15% by FY18

The business is consistently winning in the marketplace... and successfully leveraging Unilever's strong global innovation pipeline and best practices 
Harish Manwani | 
CHAIRMAN, HUL

Is FDI in retail in India a gimmick, asks SC

New Delhi: The Supreme Court on Tuesday said it would test the constitutional validity of the government's decision to allow foreign direct investment in multi-brand retail and asked the UPA government to spell out the safeguards put in place to protect small traders from possible onslaught of multinationals in future. 

    Parliament's approval of the policy decision was cited by attorney general G E Vahanvati to clinch the issue before a bench of Justices R M Lodha and S J Mukhopadhaya, which was hearing a PIL filed by advocate M L Sharma alleging that permitting FDI in retail was in breach of FEMA regulations. 
    The bench asked whether the government has received FDI proposals since Parliament approved the policy decision. "It is now six-seven weeks since Parliament approved the decision. Now the policy is in place. What has happened since then? Have you received some investment or was it just a political gimmick?" it said. 
SC: Legal validity of FDI is in question 
New Delhi: The SC on Tuesday made some terse comments about the Centre's decision to allow FDI in multibrand retail. Taken aback, attorney general G E Vahanvati said receiving FDI in retail will take some time as it was a part of series of reforms that would slowly transform the country's investment scenario to make it lucrative enough for the foreign investors. 
    More importantly, Vahanvati said, it would be beneficial for consumers and small traders. 
    Vahanvati stuck to his argument that it was a policy decision approved by Parliament after a detailed debate and hence the courts could not go into the necessity of such a move. However, the bench said, "It is a policy decision alright but its legal validity is challenged. The government must satisfy the court on this count... We want to know what steps had been taken by the government to alleviate these fears." 
    Vahanvati said these were the concerns Parliament debated before approving the decision. The bench was, however, firm on examining the deci
sion not only from small traders' point of view but also from all angles. 
    It asked the government to file an affidavit in three weeks giving a detailed response. 
    To explain its mind, the bench gave an illustration on elimination of competition by big players. It said, "Once the big players come in, they artificially so bring down the price that the small traders fail to match the price tag and are forced to shut shop. Once the competition is eliminated in this process, the big players jack up the price leaving the consumer no option but to pay." 
    Vahanvati said there was adequate legal framework to protect small traders from unfair means meant to kill competition and pointed out the setting up of the Competition Commission. But, the bench asked, "How many small traders can move the forum?" 
    On October 16, the court had said the permission to allow FDI in multibrand retail appeared to be at variance with the FEMA regulations. Two weeks later, RBI amended the regulations and the amendments were approved by Parliame

Monday, January 21, 2013

RIL Up 10% in Six Sessions, Brokers Raise Price Target


Analysts expect things to get better as RIL is expected to negotiate hard for an increase in gas prices after March 2014


    Reliance Industries, India's largest company by market capitalisation, has surged nearly 10% in the past six trading sessions, capping a gain of 2.35%— . 21.10 — on Monday to close at . 920.05 after hitting an intraday high of . 954.50. 
Leading brokerages have upgraded the stock ever since the company reported better-than-expected results on Friday, with a 24% jump in third quarter net profit, the first after four quarters of declining returns, aided by good earnings from oil refining business. Indeed, the stock was up even before the results were out and rallied over 7% between January 14 and 18, as investors were taking bets on higher earnings. 
"Companies like Reliance have entered into long-term contracts for buying low-grade crude oil with high sulphur content. Refineries are processing low-grade crude oil into high-margin products like petrol, diesel and aviation turbine fuel. The integration of refinery with petrochemical operations is also adding to their margins,'' said Deven Choksey, managing director at KR Choksey. 
Leading foreign brokerages like Macquarie has revised its 12-month price target for Reliance to . 1,100, while Goldman has put a price target of . 1,050 and Credit Suisse . 1,006. 
However, select brokerages have also raised questions over falling gas production in the Krishna-Godavari basin. 
At present, Reliance has two refineries at Jam
nagar with a combined output of 1.24 million barrels of crude per day. The complex refineries have turned more profitable compared with the bottom-of-the barrel refineries as these refiners can process low-grade crude oil into high value-added fuels. 
"The benchmark Brent crude oil prices is trading above $111 per barrel. Companies like RIL are getting a discount of nearly $10 per barrel on low-grade crude oil from international market and that's how it is able to post higher refining margins," said AK Prabhakar, senior vicepresident at Anand Rathi Financial Services. Analysts expect things to get better for Reliance going forward as the company is expected to negotiate hard for an increase in gas prices after March 2014. Besides, the launch of 4G telecom services from the middle of this year could be another big-bang trigger for the stock.



‘My Target for INDIA is to do Away with Oil Imports by 2030’

In less than three months after he took charge as petroleum minister, Veerappa Moily has been able to resolve several controversial issues in the oil and gas sector. He has approved raising crude oil output from the Barmer oilfield and convinced private oil and gas operators to accept CAG audits of their books. Recently, he implemented decontrol of diesel pricing, a decision that was pending for more than two years. In an exclusive conversation, the minister told Nistula Hebbar and Rajeev Jayaswal of ET that he is now preparing a road map to cut India's energy imports by 50% in the next seven years and make the country self reliant by 2030. 


What are you doing to raise oil and gas production to reduce India's import dependence? 
We have conventional hydrocarbons, shale gas and coal bed methane (CBM) resources. The need is to expedite exploration and production through right policy decisions that would encourage innovation 
and investments. We will constitute an expert panel, which will suggest the road map. My target is to reduce oil imports by 50% by 2020, 75% by 2025 and 100% by 2030. If China and Australia can do this in six years, why can't we? We will have aggressive acquisition strategy for oil and gas assets abroad. We will set up more LNG terminals. Gail is setting up pipelines across the country. Pipelines are up to the Pakistan border. We are planning to import gas from Turkmenistan. I'm confident. 
Who will be the new petroleum secretary after GC Chaturvedi retires this month? 
It is the prerogative of the Prime Minister. I don't have any particular preference. PM will make the right choice. All I need is positive mindset. I believe that you should mine your mind-set first before you mine minefields. 
The government allowed oil firms to fix diesel prices and mandated them to sell the fuel at market rates to bulk consumers . Is duel pricing of diesel feasible? 
There is no duel pricing. Bulk users, who consume about 18% of total diesel consumption, will pay full price from now. This will reduce subsidy burden on the fuel, which is . 96,000 crore this year. This will also encourage competition in the sector, which is good for the oil sector and good for the country. 
Is government firm on its decision on diesel? Private fuel retailers are apprehensive to take bold 
business decisions because they are uncertain about government's fuel retail policy? 
I don't think that there will be uncertainty. The government has taken the decision to give pricing freedom to oil companies. It is similar to petrol pricing. Oil companies fix petrol rates as market fluctuates. They recently reduced petrol prices by 25 paise. 
Currently petrol and diesel are priced on the basis of trade parity pricing. Is government considering changing it to export parity pricing? 
This decision has to be taken by the finance ministry. It is their domain. The oil ministry wants to raise the price of diesel to market level. 
The petroleum ministry has taken decisions on future oil and gas contracts and prices of natural gas. But no decision has been taken on CBM pricing, why? 
The matter is still pending with the Rangarajan committee. Until it gives its recommendations, we will treat CBM at par with natural gas, because it is also gas, but from a different source. Meanwhile, with the coal ministry, we are fine-tuning the CBM policy so that blocks under Coal India can also be used for CBM production. I had a meeting with the coal minister and the coal secretary on the matter. The coal ministry is to send us its comments on the matter in 20 days.


RCOM in Talks with RIL for Network-sharing Deal


Negotiations largely over pricing; RIL seen striking a hard bargain

    Anil Ambani's flagship company Reliance Communications (RCOM) is negotiating a network-sharing deal with elder brother Mukesh's Reliance Industries that is slated to launch fourth generation (4G) services or high-end data services on mobiles this year. 

While talks between both sides are at a preliminary stage, RIL is playing hard amid internal debates on how and when to launch services. The negotiations are largely over pricing, with RIL striking a hard bargain, two executives aware of the development said. 
If a deal eventually happens, it is likely to involve RIL leasing capacity on 30,000 out of the 48,000 towers held by Reliance Infratel, the infrastructure arm of Reliance Communications. But any such deal may be at a heavily discounted rate, they said. 
RCOM shares surged 7% on Monday to close at . 80, highest since April 18, 2012, after brokerage CLSA said that a tower-sharing deal with RIL for the latter's 4G 
rollout was inevitable. "RIL is the only pan-India 4G spectrum owner. Service rollout is reported to be in 2013 and its best option remains to lease towers from Reliance Infratel," said CLSA in a report. 
E-mails sent to both RIL and Reliance Communications went unanswered. 
In early 2011, RIL had approached independent tower companies seeking to lease electronic equipment to transmit airwaves for its 4G, or fourth generation, mobile technology services. At the time, the Mukesh Ambani-promoted company had sought to lease towers at. 19,000 a month, compared with an ongoing rate of . 24,000-31,000.The two groups had held talks on an infrastructure-sharing deal in late 2011 as they attempted to bring about the first major collaboration between the Ambani siblings after they divided the Reliance empire between themselves in 2005. But the talks did not make much headway at the time. 
Then early last year (March 2012), RIL approached vendors with a potential contract to build over 1,00,000 towers over the next two years, moving away from its earlier 'asset-light' model and disappointing telecom tower companies that were looking for a tie-up. For RCOM, elder brother Mukesh remains a major hope for increasing tenancy of its towers as a higher client base for its infrastructure is essential for the mobile phone company to sell stake in its tower arm. 
Debt-laden RCOM has been looking to sell a stake in its tower arm to raise funds for over five years. However, suitors require tenants, other than RCOM itself, on the towers to offer a premium for the Anil Ambani owned-company. RCOM had received a contract from Etisalat DB, which has shut operations after India's apex court revoked licences. 
The first signs of consolidation 
are emerging in the Indian telecoms space with several new licence awardees shutting services after the apex court quashed 122 permits in February last year, and existing ones slowing expansion due to a cash crunch. This has left once attractive tower companies high and dry. 
RIL-owned Infotel Broadband had invited bids earlier from tower operators for leasing around 26,000 towers across India for the first phase of its wireless broadband foray. But if Infotel does meet its target of building 1,00,000 towers, there might not be any need for it to rent further capacity. Indus Towers, the country largest tower company, owns around 1,10,000 towers. 
In May 2010, the Ambani brothers terminated a non-compete agreement that had been in place for five years. Subsequently Reliance Industries bought 95% in Infotel Broadband, the only company to win pan-India 4G airwaves in the auctions for Rs 4,800 crore, in addition to paying Rs 12,848 crore for 20 MHz of spectrum in all 22 service areas.At the time of Infotel's acquisition in mid-2012, RIL chairman Mukesh Ambani had said that the company would follow an 'asset light' telecom deployment strategy, meaning it would not build its own towers or rollout optic fibre cables to carry calls. But the thinking has changed somewhat along the way, added another source with direct knowledge of the development, requesting anonymity.



We’re Ready to Resolve RIL Row Via Talks: Moily

ARBITRATION NOT THE WAY FORWARD

Minister says Ranga panel proposals on gas pricing will go to the cabinet soon

   The government wants to junk arbitration proceedings and favours direct negotiations with Reliance Industries in its long-running dispute over the cost of developing the controversial KG-D6 block, Oil Minister Veerappa Moily told ET, heralding a paradigm shift in the ministry's stance towards Mukesh Ambani's firm. 

Moily also said his ministry had accepted all the recommendations of the Rangarajan Committee, which proposed a new formula to link natural gas prices with international benchmarks. The committee also suggested a new regime for future oilfield contracts that would eliminate micro-management by the bureaucracy and harsh audit reports that led to the dispute with Reliance. 
Reliance Industries' fortunes have turned since the exit of Jaipal Reddy, who had taken on Ambani and slapped a notice on RIL to deduct $1 billion from its cost of developing the field because output plummeted, prompting the company to initiate arbitration. Since Reddy's departure, exploration firms such as RIL and Cairn India have received several positive signals. This coincided with RIL's net profit rising 24% after four quarters of decline, helping its shares rise 2.2% and close at a 19-month high of . 919.95. 
Issues Being Sorted Out 
Shares of state firms have also soared after diesel decontrol. 
Moily said the oil ministry would soon take the Rangarajan Committee's recommendations to the cabinet. Analysts say the proposed pricing formula will significantly raise natural gas prices but only after April 2014, when prices are due for revision. State control on natural gas pricing and not allowing Reliance to recover $1 billion of its development costs in the D6 block are thorny issues for exploration firms. Moily said the issues were being resolved, and to further brighten investor sentiment, a proposal to award 34 exploration blocks, which were held up due to defence concerns, would shortly be considered by the newly-formed Cabinet Committee on Investment. 
"I want to clear all these matters and then we will launch the next round of the New Exploration Licensing Policy," he said. Moily, who was the law minister earlier, said the ongoing legal dispute with RIL can best be resolved by negotiations. 
Last year, the ministry blamed RIL for the fall in gas output from the D6 block, although the company attributed the decline to geological uncertainty. The ministry issued a notice to the company, forcing Reliance to initiate arbitration. RIL said its production sharing contract with the government did not provide for any such penalty. 

"All issues can be resolved amicably though dialogue," Moily said. RIL declined comment on the matter. 
A senior oil ministry official said negotiated settlement was the best option for the government as it did not have a very strong case in arbitration. The average gas sales from D6 block are about 22 mmscmd against the planned production of 86.73 mmscmd approved by the government. While imposing a fine, the ministry blamed Reliance for not drilling enough wells to raise and maintain output but RIL said the sharp fall was because of geological complexities. 
Moily ruled out any revision of D6 gas price before 2014. "We have accepted all recommendation of the Rangarajan Committee and gas price will be based as per its recommendations," he said. 
The oil ministry has accepted the PM panel's suggestion that future oil and gas contracts should be linked with production sharing right from day one and the prevailing cost recovery regime should be dispensed with. Oil ministry officials were wary of taking a stand on any matter pertaining to exploration and production of oil and gas after CAG criticised the oil ministry for being lax while enforcing contractual provisions in blocks operated by private energy firms. "We have taken a view on the Rangarajan committee report and prepared a cabinet note," he said. 
    (With inputs from 
    Nistula Hebbar)

VEERAPPA MOILY MINISTER OF PETROLEUM & NATURAL GAS

Ambani bros’ tie-up inevitable: CLSA

Mumbai: Will the Ambani brothers join hands for doing business? Yes, if a latest CLSA report is to be believed. And shares of Anil Ambani-led Reliance Communications (RCOM) gained 7% based on the report, which said that a tower/infrastructure-sharing deal with elder brother Mukesh Ambani's Reliance Industries (RIL) for its 4G roll out is "inevitable." 

    "Reliance Industries is the only pan-India 4G spectrum owner. Service roll out is reported to be in 2013 and its best option remains to lease towers from Reliance Infratel. Incremental tenancies will improve RCOM's financial health and EBITDA at 10-15%," said the CLSA report, adding that we look at value-unlocking deals as well as an easing of the company's debt burden of $6.7 billion. An RIL spokesperson declined to comment saying it does not comment on market rumours or speculation. A mail sent to RCOM failed to evoke any response till the time of going to press. Talks of the Ambani brothers coming together for business started when both the brothers were seen playing Dandia (Gujarati folk dance) together at their ancestral home in Chorwad, Gujarat on December 28, 2011 to celebrate the birth anniversary of their late father Dhirubhai Ambani, founder of Reliance Industries. This was after the brothers called a truce and scrapped the no-compete agreement in 2010. 
    RCOM officials also attended a vendors meeting called by RIL last year seeking to lease towers. However, RIL is yet to award any contract. Sources say RIL is yet to decide between its 'assetlight' strategy and 'build your own infrastructure' as building 1 lakh telecom towers would cost another $4 billion to RIL and would delay its 4G launch by at least a year. 
    "All depends on RIL's strategy as Mukesh Ambani is keeping all the cards close to his chest. In RIL's 2010 AGM, he talked of 'asset light' strategy for 4G rollout. Last year, reports suggested that RIL plans to build its own towers, which may further delay the 4G rollout," said a Mumbai-based analyst.

Anil and Mukesh Ambani (right)

Import duty up, gold, platinum now dearer

Govt Also Eases Deposit Norms To Curb Demand


New Delhi: The government on Monday sought to dampen the demand for precious metals by jacking up the import duty on gold and platinum to make them more expensive and help manage the economy better. Simultaneously, the Centre stepped in to move the yellow metal lying in lockers to revamp gold deposit schemes from banks as part of the plan to stem the demand. 
    The immediate pinch will be felt due to an increase in customs duty from 4% to 6%, although the move may spark illegal flow of the precious metals into the market. Traders said gold price, which went up by Rs 315 to Rs 31,250 per 10 grams immediately after the finance ministry announced the decision on Monday afternoon, will rise in the coming 
days as the market factors in the impact. 
    "The two percentage point increase will translate into a proportionate rise in the price of jewellery and bars," Jayant Manglik, president, retail distribution at Religare Broking, said. 
    Within a span of a year, gold, which attracted around 1% import duty, has seen a 
spike in levies as the government grapples with a widening trade and current account deficit (CAD), which is putting pressure on the rupee. CAD is the difference between exports and imports, net FDI and FII flows, remittances and overseas borrowings by local companies. While exports have shrunk, imports have been steady due to runaway appetite for gold and the steady demand for edible oil and crude petroleum. In fact, the widening trade deficit has negated the impact of higher inflows from other sources. As a result, the rupee has remained under pressure, and continues to hover around Rs 54-55 to a dollar despite the government's efforts to revive investor sentiment and attract overseas funds. 
    "It is difficult to establish the impact (of the tax) on CAD and by how much it 
will come down, but there will be some moderation in gold demand," economic affairs secretary Arvind Mayaram told reporters. Though import duty has risen, gold demand, after witnessing moderation, has been on a rising trajectory, creating a policy challenge as the government battles the threat of aratings downgrade. 
LOSING GLITTER 

    The hike in gold customs duty from 4% to 6% will translate into a proportionate rise in prices of jewellery and bars 
    The move may spark illegal flow of gold into the market 
    Govt trying to encourage people to earn income on idle assets lying in bank lockers 
    Revamped gold deposit scheme will see minimum quantity deposited reduced from earlier 200gm, while 
minimum tenure will be cut from 3 years to 6 months 
    But need to melt jewellery 
may dampen interest


Moody’s flags fisc deficit concerns Retains Investment-Grade Rating, Stable Outlook | Cautions On Growth


New Delhi: Retaining India's credit rating at the existing level, global agency Moody's has cautioned that a high fiscal deficit could pull down the growth in the coming years. "Large government deficits and debt ratios as well as supply constraints in the form of infrastructure, policy and administrative inefficiencies constrain the sovereign credit profile," Moody's said in India rating report. 
    On the positive side, the global rating agency reaffirmed sovereign credit rating of India at Baa3, which indicates investment grade, with a stable outlook. "Government finances are the weakest aspect of India's macroeconomic profile... We expect the government's fiscal position to remain weaker than peers 
over the medium term," it said, adding sustained improvement in public finances could result in rating upgrade. 
    As regards growth prospects, it said that a downturn was underway which could be exacerbated by slower global growth. However, robust domestic savings and a dynamic 
private sector would provide strength in the medium term, it added. Moody's expect Indian economy to grow by 5.4% in the current fiscal and 6% in 2013-14. Last fiscal, the economy grew by 6.5%. 
    It further said that while high commodity prices have raised the subsidy bill, govern
ment's measures to reduce fuel and fertilizer subsidies were too modest to compensate for high global commodity prices. The report has not taken into account the recent decision of the government to partially deregulate diesel and allow oil market companies to raise price by 45-50 paise every month, it said. 
    The government had raised the fiscal deficit target for the current fiscal to 5.3% of the GDP, from 5.1%, in view of increased subsidy outgo. 
    "Fiscal data available thus far suggest that meeting the deficit will present a challenge," Moody's said. In the near term, it said improvement in fiscal situation would depend in increasing tax revenues and expediting PSU disinvestment. 

    On the possibility of a rating upgrade, Moody's said an improvement in investment climate, project completion and reduction in infrastructure bottlenecks could lead to an upgrade. It cautioned that a continued increase in government debt ratio and worsening of the balance of payments situation could lead a ratings downgrade. 
    In the recent months, the government has taken series of reform measures to boost investor sentiment, including hiking FDI limit in retail, insurance among others besides easing overseas borrowings norms to stimulate infrastructure investment. 
    Last week it also deferred the controversial General Anti Avoidance Rules by two year to April 2016. AGENCIES 

NOT ALL HUNKY-DORY 

• Moody's warned that supply constraints in the form of infra, policy and administrative inefficiencies constrain sovereign credit profile 

• The global agency also pointed out that 'govt finances are the weakest aspect of India's macroeconomic profile' 


• On growth prospects, Moody's said the ongoing downturn could worsen if global economy slows down further 

• The report did not take into account the recent move to partially decontrol diesel prices

Sunday, January 20, 2013

They run their businesses… they also run the marathon

Many Corporate Czars Participate In Asia's Richest Marathon


    India Inc put its best foot forward at the 10th edition of the Standard Chartered Mumbai Marathon, chucking tuxedos to don sports gear on a cold Sunday morning to run for a cause close to its heart. 
    Corporate czars such as Anil Ambani (Reliance Group), Anand Mahindra (Mahindra & Mahindra), Deepak Parekh (HDFC), Sajjan Jindal (JSW), Gagan Banga (Indiabulls) and Niranjan 
Hiranandani (Hiranandani Constructions) participated in Asia's richest marathon. 
    "Running the marathon is what I look forward to the most every year. This year was particularly exhilarating with a personal best timing of one hour 39 minutes and 11 seconds (almost five minutes ahead of his previous year's timing). I believe in the simple philosophy: Worship your work and worship your body. We can probably buy every comfort we need, but we can't buy a new body. Training for 
and running the marathon is the best start I could have for 2013," Ambani told TOI. The 53-year-old Ambani, a regular participant, was dressed in a black Tee numbered 9999 and his iPod plugged in his ears. Ambani was cheered by his better-half Tina. 
    Every corporate czar who hit the road supported themes from girl-child education to environment and empowerment of investors. Mahindra, who participated in the Dream Run along with 400 employees of Nanhi Kali, which supports education of the girl child, raised Rs 50 lakh for the cause. But he appeared dismayed by the enormous litter generated. "It's as if the marathon was a tsunami leaving be
hind mounds of debris." 
    Banga said, "It's the best organized marathon. The Mumbai police were also super." 
    Jindal ran the dream run along with better-half Sangita. 
    "I have been participating for nine years. It's the spirit of Mumbai that brings me here every year. Fifty thousand people running for a cause together, braving the cold. Isn't that great?" said Parekh. 
    Hemant Bakshi (47), executive director–home and personal care, Hindustan Unilever, said, "Running was fantastic this year as well." 
    Sidhartha Mallya, director of Bangalore IPL and son of liquor baron Vijay Mallya, gave the marathon a miss.

RUNNING FOR A CAUSE: Anil Ambani (Reliance Group), Deepak Parekh (HDFC), Anand Mahindra (Mahindra & Mahindra) and Reserve Bank of India governor Duvvuri Subbarao

13 insights for India real estate in 2013

The year 2012 closed with a few notes of positivity as the inflation was below the Reserve Bank of India's (RBI's) projected levels and the Index of Industrial Production (IIP) growth increased in the last two months of the year, giving new hopes for 2013.



Overall, 2012 remained inactive, affecting all the major sectors in real estate. Office space absorption remained lower compared with 2011. Meanwhile, retail faced challenges of quality supply, affecting the overall absorption. The residential demand improved; however, developers continued to struggle with unsold inventories. With the expected moderation in inflation and strengthening policies, we have gathered few interesting insights for 2013 from real estate experts.  
 


1. Economy - As per RBI, the policies will focus towards growth in 2013, although risks of inflation will continue to remain. Interest rates are expected to witness a downward correction of 100 to 150 bps in 2013. The softening of interest rates is expected to reduce the home loan rates, in turn increasing the buying of real estate assets. Increasing urbanisation and consumption despite the slowdown in GDP growth will be the key drivers of the economy in 2013.



2. Policies - The recent policy initiatives are expected to improve the investment climate and business environment, and they are likely to benefit the real estate sector in 2013. Few policies to look at in 2013 are: the Real Estate Regulation Bill, likely to be tabled in the upcoming winter session of the parliament; the real estate investment trusts (REITs) or real estate mutual funds (REMFs), expected to get launched in 2013; and the Land Acquisition and Rehabilitation and Resettlement Bill, likely to be tabled in the upcoming budget session in 2013.



3. Infrastructure - The infrastructure sector achieved a substantial FDI of USD 2.8 billion, accounting for a notable 7.7% of the total FDI inflow in FY 2012. In the year 2013, the relaxation of FDI policies in multi-brand retail is expected to surge the investment in back-end infrastructure development such as logistics. Moreover, an FDI of up to 100% is also permitted under the automatic route in built-up infrastructure and is likely to surge the development of the city and the regional level infrastructure in 2013.



4. Office Real Estate - Office space absorption in 2013 is likely to remain equal to that in 2012. Supply correction will lead to fewer options for occupiers, and steady absorption will decrease vacancy levels. Competition for space in prime buildings in prime locations is expected to increase in 2013, and these spaces will start earning a premium. Rents are expected to increase from 2H13 onwards as fewer new projects are being launched, and vacant spaces are steadily filling up. Decisions on occupying special economic zone (SEZ) spaces will be taken by occupiers who are sure of taking a position in India as they have to go live by March 2014 to avail the benefits.
 


5. Retail Real Estate - The relaxation in FDI policies in multi-brand retail interestingly has surged aggressive growth amongst Indian retailers to take the first-mover advantage. This is expected to drive the demand in 2013. However, as supply of retail malls remains a challenge, retailers are likely to opt for built-to-suit (BTS) options or high-street properties. As most developers are focusing on residential developments, the supply of malls will reduce in the major cities over the year. In 2013, retailers will be cautious and take more time to execute agreements as they will do a detailed analysis before closing transactions. Retailers will commit to space only if they see approvals in place and the construction of the space in progress.



6. Residential Real Estate - REITs in India allowing investments in rental housing is a new trend worth watching. The framework and details of REITs, once formulated, are likely to drive the investor demand across the prime cities in India in 2013. Another interesting trend observed in the last two years was that the stock in the range of INR 2,000-3,000 per sq ft was fast sold out. In 2013, this range is likely to shift to INR 3,000-5,000 per sq ft with the increase in inflation and construction costs.


7. Industrial Real Estate - Sale-cum-leaseback of exiting industrial assets by existing companies is likely to increase in 2013. MNCs testing the waters in India are likely to focus on BTS industrial properties. Warehousing companies are now preparing for the goods and services taxes (GST) and are slowly moving from godowns to distribution centres. The growing trend in e-retailing and FDI in multi-brand retail is expected to surge the demand for warehousing spaces in 2013.



8. Education and Health Care - There are aggressive growth plans in K-12 and skill-space educational institutions in 2013, particularly in the non-metro cities of India, where there are large opportunities. In the health care segment, hospital chains, along with day care centres, are expected to expand aggressively in 2013. Both these segments are expected to attract private equity investment in 2013.
 


9. Investment Sentiments - Debt capital is likely to increase in 2013. Banks are expected to be more flexible in lending. Most of the realty funds are close to their exit periods as they were invested around 2006-2007. Therefore, the exit of real estate funds is expected to increase in 2013. Meanwhile, interest on income-producing assets by institutional investors is likely to increase over the year. However, the availability of such assets will continue to remain a challenge. Assets will witness a softening of yield rates amidst increased liquidity. 
 


10. Delhi - Most of the absorption in Delhi NCR is likely to focus around Gurgaon and Noida, with the exception of Delhi International Airport Limited (DIAL) and few select stand-alone Grade A projects of Delhi. As the demand supply gap of quality office space is expected to increase because of the supply constraints in select precincts of Delhi NCR, rents are expected to increase in certain micro-markets by 2H13. Developers will focus on delivery of the products.



11. Mumbai - Office absorption and residential demand will continue to increase in Mumbai. The trend of completion of highquality new office projects pushing up Grade A office vacancy levels and providing tenants with greater bargaining power will reduce in 2013. With banks drastically reducing lending activities over the last two years, resulting in debt remaining a constraint, not much of new  commercial supply (except spill over from 2012) is expected to be completed in 2013 and 2014. Residential launches are expected to increase; however, price drop is unlikely to happen over the year. Amidst constrained supply of quality retail malls, rental gap between Grade A malls and Grade B malls will further widen in the year.



12. Bangalore - In terms of office space, Outer Ring Road will continue to be the sought-after destination in 2013. For residential real estate, North Bangalore is expected to continue to remain as the best performing region in the city with strong infrastructure development, increased demand and price appreciation in 2013. Meanwhile, Whitefield will continue to retain its sheen for both office and residential real estate because of affordability, proximity to key work places and good social infrastructure.



13. Other Cities - Chennai, which witnessed a historical high number of residential launches in 2012, is likely to slow down in 2013. This trend is also expected in Pune. Meanwhile, Kolkata and Hyderabad are likely to witness increased launches. Prices of residential units are likely to increase in all the cities because of the increased construction costs. Ahmedabad, Bhubaneswar Kochi and Coimbatore are other cities in India that are likely to witness immense development activities in 2013.


Wednesday, January 16, 2013

Indian carriers face downgrade threat from US

  The Federal Aviation Administration (FAA), the national aviation authority in America, has issued a safety alert for its operators – a move that could have far-reaching implications for Indian airlines. 

    Indian training and safety standards are far below those demanded by the FAA, and experts have warned that airlines operating out of India stand a very real risk of being downgraded. This, they say, could even lead to Indian carriers getting barred from flying to America. 
    The FAA's Safety Alert for Operators (SAFO), issued for airlines and regulators around the world, deals specifically with degradation in pilots' skills, which is significant, keeping in mind recent controversies involving Indian pilots fudging simulator training records. 
    In the last one month, Jet Airways has derostered two pilots and Air India suspendeditstrainingheadforfudging simulator training records. 
    Asking airlines to encourage manual flight operations, the FAA said, "Flight operations data has identified an increase in manual handling errors and the continuous use of automated systems could lead to degradation of the pilot's ability to quickly recover the aircraft from an undesired state." 
    TheFAAurgedoperatorstodevelop and review their policies and training modules to ensure that pilots understand when the use of automated systems is preferred. "FAA advises that airlines adapt their policies to ensure that their pilots have the appropriate opportunities to exercise the aforementioned knowledge and skills in flight operations," the alert read. 
    Aviation expert Mohan Ranganathan said, "The FAA has taken a serious note of the diminishing proficiency standards. Unfortunately, in India, even examiners who have been fudging simulator hours and clearing pilots without any training or proficiency, 
are let off by the DGCA. Training violations should never be condoned because passenger lives are at risk." 
    With India's training standards nowhere close to the new guidelines and DGCA willingness to improve standards in doubt, experts warn of the worst-case scenario. 
    An FAA downgrade effectively means that aviation authorities have fallen short on technical expertise, personnel, record-keeping or inspection procedures. A downgrade would mean airlines will be prevented from launching new services to or from American cities, while existing codesharing agreements will be prohibited as long as the country remains downgraded. Atthesametime,existingflightswillbe subject to stringent checks. 
    "TheFAAhadputIndiaonnoticein August 2012, following which the DGCA explained its position and bought time. But if this kind of thing continues, the sword could come down any time," Ranganathan said. 
    Directorate general of civil aviation Arun Mishra said, "We have seen the safety alert and will act upon it as required.Violationsreportedtousarebeing investigated and steps will be taken to fulfill both FAA and the International Civil Aviation Authority (ICAO) guidelinessoastoavoidanydowngradeor strictures."

With India's training standards nowhere close to the new guidelines and DGCA willingness to improve standards in doubt, experts warn of the worst-case scenario

 

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