Air India could post highest-ever loss
In what could make Air India sale an uphill task for the government, the national carrier could report highest-ever loss of over INR 7,600 crore in financial year 2018-19, on account of low fleet utilization and high fuel prices among others. An official source said the total revenue in the previous fiscal stood close to INR 26,000 crore.
The airline has gone into losses ever since its merger with Indian Airlines in 2007. The massive fleet order cleared by the UPA government continues to weigh on its books.
"In the first two months of the fiscal we have seen 20-25 per cent increase in our sales. If, restriction from Pakistani airspace is withdrawn, we can still make operating profit," he said.
The airline's financial has shown signs of improvement following suspension of Jet Airways flights in April.
The government had last year set the ball rolling for Air India's disinvestment offering 76 per cent equity stake to private parties but the plan proved to be a damp squib -not a single investor turned up to submit expression of interest (EoI). This forced the government to put off the sale process.
It maintained that the plan would be taken up once the operating environment in the aviation sector improved. Impending general election was another reason for putting the plan on hold.
As the Modi government has returned with a thumping majority, it is now keen to complete its unfinished agenda from the previous term.
"The plan is to sell the airline within 100 days. The accounts for last fiscal is in the process of being closed so that bidding process could start at the earliest. This time, the government is in no mood to relent on the sale of Air India," an official source told IANS.
In order to sweeten the deal for Air India this time, the government is likely to offer entire 100 per cent stake in the airline and consider transaction advisor EY's suggestion to transfer more debt to a special purpose vehicle (SPV ).
The previous Modi government had decided to transfer debt amounting Rs 29,464 crore along with other non-core assets to the newly-created SPV to attract bidder interest for the carrier.
As total debt of the airline has since gone up to about INR 58,000 crore, the transaction advisor has suggested shifting more debt to the SPV so that private parties' liabilities come down.
"When bankers are finding it tough to get a buyer for Jet Airways, it will certainly be very difficult to convince investors to take over Air India. It is generally believed that foreign traffic rights is a big asset of Air India but following the experience after Jet Airways it is common knowledge as to how can an airline get bilateral seat quota," said an aviation analyst at one of the big four
A myriad of meteorological firms are empowering India Inc with superior climatic predictions to turn this once erratic factor into an all-weather ally.
Interestingly, all major verticals of the economy like agriculture, power distribution companies, automobile manufacturers, freight forwarders, event managers and airlines depend on weather-updates for managing smooth operations and meeting seasonal demand. At present, four major private weather forecasters are active in India. These firms provide everything from weather-related information, region specific predictions, trends and even crop insurance traded options.
"Weather-related information and timely information is as important for the agriculture sector as it is for the corporate segment," Devendra Kumar Pant, Chief Economist, India Ratings and Research (Fitch Group), told IANS.
"Companies use weather-related information along with time-series data points to come out with their production targets, inventory levels and pricing strategy, this is especially true for the two-wheeler segment and other FMCG."
A case in point is monsoon prediction: get this right and the implications are limitless. A healthy season, will indicate an uptrend in rural demand for products like cement, fertilisers, FMCG, farm equipment, twowheelers, while a consumption slowdown and inflation will accompany a below average rainfall months.
Industry insiders opined that the business of weather forecasting was never this interesting or profitable in India as it is right now. Currently, the field is equally divided with start-ups competing with heavyweights like IBM.
The global IT major IBM-backed -- The Weather Company -- provides personalised, actionable insight to consumers and businesses about accurate weather data along with AI, Internet of Things (IoT) and analytic technologies.
"We connect newscasters, airline pilots, energy traders, insurance executives, state agency employees, retail management and more to the weather intel they need, on any device," Himanshu Goyal, India Business Leader, The Weather Company told IANS.
"Weather-based decision making is becoming critical to many industries and is arguably the most important external swing factor in business performance. Businesses today are seeing the benefits and value of weather insights."
In many cases, these firms act as a thirdparty consultants to banks and insurance firms for coming out with accurate insurance premiums for crops, while at other times they aide electricity distribution companies predict the maximum power demand on a given season or even a given day. According to Noida-headquartered Skymet Weather Services' Founder and Managing Director Jatin Singh: "The business has gained traction in India as insurance, banking, agribusiness, commodity traders, retail and e-commerce, transportation and government institutions have become our clients over the years.
"We are India's largest crop insurance settlement agency."