Friday 27 April 2012

BOND MARKET LIKE AIRPORT WITHOUT TRAFFIC


"Some of these fears are unfounded in the current environment because the system has enough checks and balances to support a wider bond market," said a veteran broker. The bond market is like a world-class airport with very little air traffic.

It was a world where money was scarce, smart brokers struck deals with MNC banks to make money, stock transactions were not disclosed, and government bond deals were reported with a lag in single entry records in RBI ledgers. Harshad wanted to play the game that was confined to a handful of smart brokers and banks. He used the government bond market to fund his stock purchase. As a broker for deals where one bank borrowed against security from another bank, Harshad credited the cheque to his account instead of the borrowing bank's, and used the money to buy stocks.

Simply put, he was going short on bonds and long on stocks. In a tight money market with bond prices falling, he bought back bonds at a lower rate to cover the short. With the country's largest lender, State Bank of India, acting as financier, he not only took on the older players in the bond street but simultaneously pushed up stocks to levels unheard of. Stocks surged, traders followed him, and legitimate transactions gave way to illegal ones. Banks that borrowed often issued bank receipts, or BRs, instead of bonds as printing of securities took time.

The intention - and there was nothing fraudulent about it - was to allow institutions sell bonds purchased in a primary issue against letter of allotment. Frauds happened when banks, under the spell of Harshad and his followers, started issuing BRs with no proper security to back up. SBI, according to bankers of that era, discovered a Rs 500-crore hole in its bond book when tax officials trying to cross-check whether brokers have paid tax approached the bank.

As Harshad bought stocks, there was a parallel set of players who misused the bond market in a reverse way. They were the lenders in badla trades (done to roll over positions). Like Harshad, they too used the bond market and banks for finance. But unlike Harshad, they did not buy stocks, but lent the money to those who wanted to roll over their positions. In a way they shorted bonds as well as stocks.

TIME TO CHANGE

It was only natural that after the scam, doors to the bond market were shut for brokers. What had shocked the world then was not the nature of the deals, but the magnitude of the scam and the number of players involved. Today there are some signs that the doors may be opened up in the near future.

Perhaps, banks as well as regulators are beginning to understand the importance of a corporate bond market (which will remain shallow as long as government bonds stay the way they are). When banks, with their new and stifling capital rules, find it difficult to give loans endlessly, large borrowers like infrastructure companies and blue-chip corporates as well as mid-sized firms will turn to the bond market for funds. At that point, they should not run out of resources.

Retail investors in stocks, who were the biggest losers in the '92 scam (as in all scams), had returned to the market after some years. Regulators, however, take a long time to change their minds. If they fail to quickly bury the past, the price of an illiquid bond market can turn out to be far more than any scam.

http://timesofindia.indiatimes.com/business/india-business/Time-to-bury-the-ghosts-of-Harshad-Mehta-scam-and-revive-the-bond-market/articleshow/12906433.cms

Bid to steal air cargo: Four arrested


THIRUVANANTHAPURAM: The Valiyathura police on Thursday arrested four persons in connection with the theft attempt of air cargo at the Thiruvananthapuram International Airport the other day.
Sukhil, 23, Prasad, 23, Rajesh Zavier, 22, and Sibin, 22, were those arrested. While the first three are temporary employees with Air India SATS, the fourth is working at a studio in Valiyathura, police said.
Three cartons containing electric fans and vacuum cleaners were found outside the airport wall on Sunday morning, which were abandoned by the thieves after the cargo complex employees raised an alert.
Though the accused said that it was their first attempt, the police have not confirmed this. ‘’We are investigating whether they were carrying out this for quite sometime,’’ said Sajin Louis, Valiyathura sub-inspector.
‘’A racket’s role cannot be overruled and the police are on a detailed probe,’’ he added.
Security Beefed Up
Meanwhile, security has been beefed up at the airport following the theft attempt. The security measures were a follow-up to the joint meeting of the officials of the Airports Authority of India (AAI), CISF and the Kerala State Industrial Enterprises (KSIE), which manages the air cargo complex.
‘’Lighting has been improved in the area where the cargo is temporarily kept before transporting it to the cargo complex,’’ said Airport Director D Chandramouli.
‘’It has also been decided not to allow labourers to come beyond 10-15 feet of the cargo complex wall,’’ he added.
The AAI also cleared the waste equipment dumped in the area which helped the miscreants to hide stolen materials. The KSIE also set up additional lighting in the area which lies behind the cargo complex.
The CISF, on its part, has intensified patrolling in the area and the AAI has also asked the state police to conduct regular patrolling on the roads around the airport.��

SpiceJet's direct flights takeoff from Kozhikode


Kozhikode, April 27:
SpiceJet Ltd has launched direct flight services from Kozhikode to Chennai, Bangalore, Thiruvananthapuram and Hyderabad.
Flights to Bangalore and Chennai commenced on Friday, while services on Hyderabad and Thiruvananthapuram routes would start from May 5, according to Mr Neil Mills, Chief Executive Officer of SpiceJet.
The airline will operate daily flights to Thiruvananthapuram, Hyderabad and Chennai destinations.
The Kozhikode-Bangalore service will be available five days a week (Monday, Wednesday, Thursday, Friday and Saturday). SpiceJet has strong presence in Kerala, connecting the State to all important cities in the country.
From Thiruvananthapuram, it connects with Ahmedabad, Aurangabad, Chennai, Kochi, Mangalore, Mumbai and Nanded. From Kochi, the airline has flights to 15 destinations including Colombo, Chennai, Hyderabad and Goa.
Mr Mills said that SpiceJet had newly acquired Bombardier Q400 aircraft for enhancing connectivity to Tier-II and Tier-III cities.
On this aircraft, the airline is now connected Hyderabad to 12 cities.
It was expanding its footprints on new destinations with a brand new fleet of Q400 NextGen turboprop aircraft and Boeing aircraft, Mr Mills said.

Lufthansa to deploy latest Boeing aircraft on India flights


Bangalore, April 27:
Lufthansa will deploy the Boeing 747-800 on the Delhi and Bangalore routes in the current summer schedule.
India will be the first Asian country where Lufthansa will fly “the world's newest aircraft”, according to a press release.
It will deploy the aircraft on its direct Delhi - Frankfurt and Bangalore-Frankfurt routes.
Lufthansa is the launch customer for this aircraft, the first of which will connect Frankfurt and Washington from June 1 with six flights a week. New Delhi, Bangalore, Chicago and Los Angeles will be added successively during the summer schedule with the arrival of four additional aircraft scheduled to join the Lufthansa fleet in 2012, said the release.
“The B747-800 features many innovations, such as the new Lufthansa Business Class product which includes a seat that turns into a horizontal lie-flat bed,” said Mr Axel Hilgers, Director — South Asia, Lufthansa German Airlines.
“The fact that we introduce the best products currently available on board of our long-haul fleet to India first shows the importance of this market for Lufthansa,” he said.
http://www.thehindubusinessline.com/industry-and-economy/logistics/article3360336.ece?ref=wl_info-tech

Mumbai-Delhi air fares will go up from May


Mumbai, April 27:
All fliers on the busy Mumbai-Delhi route will have to shell out more from May.
This follows the user development fee (USD) that will be levied by Delhi airport and airport development fee by Mumbai International Airport Ltd (MIAL).
This fee will be collected by the airlines or travel portals.
For those who have already booked tickets, MIAL will collect the development fee through a special counter at the airport.
Passengers had better get ready to shell out around Rs 1,000 to Rs 1,100 more on this route from May 15{+.}. Tickets on this route (for a mid-May passage) are currently around Rs 5,000 (one-way).
Outgoing travellers from Delhi airport flying more than 500 km will pay Rs 462.80 and an incoming passenger, including those from Mumbai, Rs 391.60.
This means the aggregate ticket cost for a flight to Delhi from Mumbai will cost around Rs 500, including the MIAL's Rs 100 development fee.

airport development fee

The airport development fee for Mumbai airport will come into effect from May 1.
Every domestic passenger flying out from Mumbai will have to pay Rs 100 while for the international passenger, it will be Rs 600.
As a result, airline companies have decided to increase air fares.
“The cost of fares will go up. There is no other choice. The return fare on Mumbai-Delhi route will be higher by around Rs 1,100. From an airline's perspective, there are additional charges like landing charges that will go up,” said Mr Mahalingam Shivkumar, Senior Vice-President (Finance), Jet Airways.
Travel agents and tour operators say that the move to levy the charges during the peak of domestic travel season will have an adverse impact on the tourism industry.
“This step doesn't promote tourism. April - June is peak domestic travel season. With air fares already so high, this move will further dampen the mood of the travellers,” said Mr Iqbal Mulla, President, Travel Agents' Associations of India (TAAI).
All airlines have jacked up their fares on many busy air routes like Mumbai-Delhi by 10-25 per cent over the past few weeks.
“India's aviation industry is already in a financial turmoil. This increase in airport charges will further push it into trouble,” Mr Mulla added.

Immigration 'chaos' at Heathrow airport?


London: With less than two months to go for the London Olympics, tempers rose at the Heathrow airport last night after long queues and delays to clear immigration prompted frustrated passengers to brand the experience as 'omni-megashambles' and 'chaos'.

Angry passengers reported that there were only three immigration officials on duty last night to clear thousands of passengers from outside the UK and European Union.

There were four officials clearing passengers from within the European Union. Similar problems have been reported for several days, including by passengers from India.

Many flights from India land in London in the evening.

Alistair Campbell, communications director to former Prime Minister Tony Blair, was one of the thousands of passengers stuck in long queues last night. He said only three to four border staff were on duty for EU arrivals and just three for passengers coming from outside Europe.
He tweeted: "If this is what Heathrow T5 border queue is like on an average Thursday, Olympic athletes should think about coming soon".

Campbell had this to say to Olympics secretary Jeremy Hunt, who is currently under pressure to quit for alleged proximity to the Rupert Murdoch's company: "Jeremy Hunt should get down to Heathrow and do a bit of pre-Olympics border control recce work. Take his mind off things".

Keith Vaz, chairman of the Home Affairs Select Committee said the will demand improvements from Immigration minister Damian Green when he appears before it next month.

London Mayor Boris Johnson said: "We have to get this sorted. London's the business capital of the world and we can’t allow this position to be undermined, putting economic growth and jobs at risk".

The UK Border Agency, which is responsible for immigration controls at airports and has been subjected to funding cuts, is likely to draft in extra staff to deal with the larger number of passengers for the Olympics.

Besides passengers and officials related to the Olympics, concern over delay at immigration has also been expressed by MPs, who believe that "far less thought seems to have been given to the issue of how to deal with long queues at immigration".

In a letter to Hunt, the Culture, Media and Sport Select Committee said the issue of long immigration queues would have several impacts, including jeopardising future visits by people who arrive for the Olympics.

John Whittingdale, chairman of the committee, wrote: "While visiting tourists will understand that the Olympics is a busy time, if the wait is in excess of an hour then it may deter tourists from returning".

He added: "The second impact may be that planes cannot unload their passengers into the terminal due to capacity being exceeded. This would lead to circling in the air, planes being left on runways or planes blocking gates".

Noting that the proportion of passengers entering Heathrow from outside the European Union "may be significantly higher than usual" during the Olympics, Whittingdale said it would result in a longer process at immigration checks.

"We also understand that the flight schedule is not changing in any way and there was no suggestion that any contingency has been made for, perhaps, extra time being made to remove items from aeroplanes or for the unloading of passengers," he wrote.

Opposition slams hike in Delhi airport charges


New Delhi, April 27:
The Airports Economic Regulatory Authority's decision to allow the Delhi International Airport Ltd to increase user development charges by 346 per cent is becoming a political hot potato.
Opposition parties raised the issue in the Rajya Sabha and criticised the Government for allowing such a hike in airport user fee. During zero hour on Friday, CPI (M) MP, Mr K.N. Balagopal, said Delhi airport had become the most expensive airport in the world.
He said the matter was an issue of privilege as the Rajya Sabha was yet to discuss amendments to Airport Authority of India (Major Airport Development Fee) Rules, 2011. The rules, which allowed the private airport developers to levy user development fee, are yet to be adopted by Parliament, as Opposition members have moved amendments to it.
Mr Balagopal said even the International Air Travel Association has said the New Delhi airport was the most expensive. “How could the Government allow this to happen?” he said, and added that user development fee was charged even from incoming passengers in the name financial crisis being faced by the DIAL.
“When a related legislation is pending before the House for one year, how can the Airport increase the airport fee three to four times a year,” Mr Balagopal said.
CPI (M) leader, Mr Sitaram Yechury, and some members from the BJP demanded a ruling from the Chair on the issue. “Without any rule they have collected Rs 1,500 crore,” Mr Balagopal said.
He later told Business Line that he was likely to approach the Privileges Committee of Parliament against the AERA's decision. The AERA cleared a 346 per cent increase in airport charges recently. Domestic passengers will have to pay Rs 290 more and international travellers will pay about Rs 600 more as user development fee.

Delhi airport tariff hike nod to help GMR


Tariff revision at Delhi Airport and softening interest rates are likely to help GMR Infrastructure return to profits in fiscal 2012-13 and give some relief to investors. 
GMR Infra has got approval from Airports Economic Regulatory Authority to increase tariff at Delhi Airport by 353% from May 15. The airports segment posted loss of Rs 115 crore in the quarter ended December. The airports segment is the company's largest segment, which contributed 42% to revenues for the third quarter. 
Also, the company would save about Rs 25 crore per quarter in interest costs due to a 50-basis-points drop in interest rates, according to ETIG analysis. GMR Infra has been posting losses since the past five quarters. In the December quarter, it posted a loss of Rs 191 crore. Besides the airport business, the company has also made huge investments in the power sector. 
It has almost 42,000-MW thermal capacity under development, out of which 2,000 MW will be ready for operations in the first half of the current fiscal and the remaining will be ready to commission in the next fiscal. 
For its 2,000 MW, which will become operational this year, the company has coal linkage with Coal India and is expecting timely supply of required coal. Once operational, these plants will help improve the firm's cash flows. The company also has coal mines in Indonesia, which it can use manage lack of coal availability from Coal India for its upcoming capacity. If the company is able to receive coal from Coal India, it will sell its Indonesian Coal in the open market, further helping it improve cash flows. 
In addition, the company's only gas-fired power plant is running at low capacity due to limited gas availability from Reliance's KG basin. Also, it is yet to receive coal linkage for one of its plants. 



TN-based URC may bag contract for metro station at Chennai airport


New Delhi, April 26: 
The Tamil Nadu-based URC Ltd is likely to bag the contract for construction of the metro station at Chennai airport. The value of the project is estimated at Rs 51 crore. 
Official sources told Business Line that URC's bid is likely to emerge as the lowest from among the seven bids that have been received. The award of the contract is likely to be announced in the next few days. The project is to be completed in 14 months from the award of the contract. 

The project involves construction of an elevated metro station and will include construction of a basement for scooter parking, doing the entire mechanisation at the station and construction of concourse for ticket sales among other activity. 
The completion of the project will make Chennai the second city after Delhi which will have a metro train connection to the airport. Officials indicated that unlike in Delhi the metro connection will not go right into the airport. 
The Airports Authority of India is also in discussions with Chennai Metro Rail Ltd to designate metro stations where passengers can check in their bags. This would require adequate screening equipment to be installed at those stations and security procedures to be put in place, sources said. 

Change in Air India flight timing


The timings of Air India services operating in Thiruvananthapuram- Kochi- Kozhikode sector have been changed with effect from May 1. 
Flight AI-9505 on the Kozhikode- Thiruvananthapuram route will operate on Mondays, Wednesdays, and Fridays. The flight will leave Calicut international airport at 7.45 a.m. and will arrive in Thiruvananthapuram at 8.50 a.m. 
Flight AI-9503 from Thiruvananthapuram to Kozhikode will operate on Tuesdays, Thursdays, and Saturdays leaving Thiruvananthapuram at 7.55 a.m. to arrive at Calicut international airport at 9 a.m. 
Flight AI-9503 from Calicut airport to Kochi will operate on Tuesdays, Thursdays, and Saturdays. It will leave Calicut airport at 9.30 a.m. and arrive in Kochi at 10.15 a.m. 
Flight AI-9505 from Kochi to Calicut airport will operate on Mondays, Wednesdays, and Fridays as per the following timing: departure from Kochi 6.30 a.m.; arrival at Calicut airport 7.15 a.m.