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INDIAN ECONOMY: OVERVIEW, GROWTH & DEVELOPMENT
Indigo airlines continues to recruit expat and ‘out-of-job’ pilots

At a time when Jet Airways is facing financial difficulties, India’s budget carrier IndiGo has said that it continues to engage in recruiting expat as well as “out of job” pilots in India. William Boulter, Chief Commercial Officer of IndiGo, said on Wednesday, “We continue to engage in recruitment efforts both for expats (pilots) and for the pilots who might be out of job in India to join us.”

IndiGo on Wednesday launched its flight on the Delhi-Istanbul sector and announced to use its expanding fleet of A320neo and A321neo aircraft to connect more Indian cities to countries such as China, Vietnam, England, Myanmar and Saudi Arabia.

IndiGo is facing acute shortage of commanders amid aggressive expansion of its fleet. The carrier has more than 210 planes in its fleet. It is offering jobs to pilots of Jet Airways along with compensation for overdue salaries from the cash-strapped full-service airline, IndiGo said on March 12. Shortage of trained and experienced pilots has been an issue for domestic airlines amid capacity expansion to meet rising passenger traffic.

BSNL seeks to recover Rs 700 crore from RCom, to approach NCLT

BSNL is set to approach the National Company Law Tribunal soon in order to recover around Rs 700 crore in dues from bankrupt Reliance Communications (RCom), according to reports.

“BSNL has already invoked a bank guarantee of around Rs 100 crore submitted by RCom for default on payments. Decision was taken on January 4 by BSNL Chairman and Managing Director Anupam Shrivastava to start legal proceedings against RCom for recovery of dues of around Rs 700 crore,” news agency PTI reported sources as saying.

RCom had earlier this year approached the National Company Law Appellate Tribunal (NCLAT) stating that it wants to voluntarily take up the insolvency process, since it would help monetise its assets. It had also sought a direction from the top tribunal to 37 lenders led by SBI to release Rs 260 crore directly to Ericsson. However, the courts ruled in favour of the lenders and RCom chairman Anil Ambani had to cough up the money to prevent ending up in jail.

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Jet airways’ pilots write to PM Modi on non-payment of salaries

The pilots of financially-strapped Jet Airways have urged Prime Minister Narendra Modi and Civil Aviation Minister Suresh Prabhu to intervene and instruct the management to release their pending salaries.

“We fear that the airline is on the verge of collapse. This will leave thousands of people unemployed. It will change the dynamics of aviation as fares will increase due to a reduction in capacity, and travelling public will face major inconvenience,” said the National Aviators Guild (NAG), the registered trade union of Jet Airways’ Indian pilots.

Two days ago, they had threatened to stop flying from April 1 if their pending salaries are not cleared by March 31.

While the airline is going through a tough financial phase, all employees except for pilots and engineers are getting paid on time, claimed the NAG in communication to Modi and Prabhu. “The pilots and engineers are now almost three months behind salaries and facing a lot of financial hardships with no relief in sight. Our repeated pleas to the management have gone unheard. The pilots have maintained professionalism and not hampered operations of the airline as that would have had a catastrophic effect on passengers’ travel plans,” read the letter.

Naresh Goyal-led Jet Airways is facing the worst financial crisis of its 25-year existence with more than one billion dollars of debt. As it struggles to stay aloft, the carrier has delayed payments to banks, suppliers, and aircraft lessors some of which have begun terminating lease deals.

Pierer industrie in talks with Bajaj auto for 48 per cent stake in KTM

Bajaj Auto and Austria’s Pierer Industrie AG have started discussions to assess the possibility of transferring Bajaj’s 48 per cent stake in KTM AG to KTM Industries AG, with the Pierer-Group continuing to retain the controlling majority over KTM Industries AG. “Pierer Industrie AG and Bajaj will now evaluate the proposals in detail. The transaction decision is targeted to be made in the second quarter of 2019,” Bajaj Auto said in a regulatory filing on Thursday.

At present, Pierer Industrie AG holds approximately 62 per cent of the shares of KTM Industries AG. The listed company KTM Industries AG holds approximately 51.7 per cent of the shares of KTM AG. “If Pierer Industrie AG and Bajaj decide to execute the transaction, KTM Industries AG will examine the legal and economic requirements and conditions of a capital increase by contribution in kind from the existing authorised capital of the company.

The authorised capital enables a capital increase of up to 50 per cent of the existing share capital,” the filing added. Bajaj Auto said if the transaction is executed, KTM Industries AG’s stake in KTM AG would increase from current 51.7 per cent to approximately 99.7 per cent.

 

Leave now, lenders tell Naresh Goyal

Alarmed by the speed at which Jet Airways is flying from bad to worse, lenders of the crisis-hit airline led by the State Bank of India have asked chairman and promoter Naresh Goyal and his management team to step down with immediate effect. They have also told him to reduce his stake in the company from 17 per cent to 10 per cent.

“The lenders have made their case clear. The plan is to overhaul the management with Naresh Goyal stepping down. They are ready to give time till March 24 for Jet Airways to come up with a better proposal. Else, the Committee of Creditors is likely to take hold,” a senior finance ministry official said.

SBI chairman Rajnish Kumar on Wednesday met Finance Minister Arun Jaitley along with Aviation Secretary Pradip Singh Kharola and Principal Secretary to Prime Minister Nripendra Misra. Kumar said the meeting was to apprise the government of the dynamic situation.

Sources said the reason why bankers are wary about Insolvency and Bankruptcy Code is because most of the loans were given against brand value without any tangible collateral. This means, the bankers will not be able to recover any value.

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Embassy office parks IPO oversubscribed

Embassy Office Parks’ REIT IPO was subscribed 2.58 times by the evening of third and concluding day of the subscription period, according to data from the stock exchanges.

A JV between Embassy Group and Blackstone, Embassy Office Parks planned to raise around Rs 4,750 crore in what is billed as India’s first REIT (Real Estate Investment Trust) listing.

The institutional investors’ portion (75 per cent) was subscribed 2.15 times. The rest non-institutional investor portion saw subscription of 3.10 times. A fixed rental yield plus a potential for capital appreciation made REIT investments in the commercial real estate place attractive for institutional and high net-worth investors.

“Fresh investments are expected in commercial real estate as yields have been higher at 8-9 per cent as against 3-4 per cent in residential sector,” said Surendra Hiranandani, Founder & Director, House of Hiranandani.

REITs will provide boost to commercial real estate, he said, adding a large global and domestic institutional investors had started increasing their exposure to the segment over last few years in expectation of REITs.

SEBI asks exchanges dealing in agri-commodity derivatives

SEBI on Wednesday asked the exchanges dealing with agri-commodity derivatives to create a fund for farmers and FPOs in which the regulatory fee forgone by the regulator would be deposited.

Besides, it has issued framework including action plan and guiding principles for the utilisation of fund.

In September last year, the regulator had decided to levy a nominal fee of Rs 1 lakh per exchange instead of levying charges based on turnover slab rates and proposed to set up a fund with the fee foregone by it.

SEBI on Wednesday said, “It has been decided that the stock exchanges dealing with agricultural commodity derivatives shall create a separate fund earmarked for the benefit of farmers/FPOs (farmers producer organisations) in which the regulatory fee forgone by SEBI shall be deposited.” For the fund, SEBI said the exchange needs to draw an action plan for full utilisation of foregone fee in any financial year to be utilised during the succeeding financial year. “Such action plan shall be drawn up by the 10th of April of the year in which the fund has to be utilised,” it added.

The exchanges would be required to disseminate the details of the action plan on their websites under intimation to SEBI. The earmarked fund shall not be clubbed with any other funds such as Investor Protection Fund, Investor Services Fund, and Corporate Social Responsibility Funds, SEBI said.

Factors like waiver or subsidy in warehousing charges, reimbursement of cost of bags provided to farmers and FPOs for deposits on exchange platform, and subsidising of broker fee for farmers, among others, should be considered by exchanges for preparing action plan.

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