State attracts Rs 4,846 cr investment at Aero Park

The Karnataka government, which is promoting Bangalore as a potential hub for aerospace industry in the country, has seen investment proposals from as many as 54 companies for a combined investment of Rs 4,846 crore. Of these, 46 proposals are in the small and medium enterprises segment and the rest are major projects with investment of over Rs 50 crore cleared by the state high level clearance committee (SHLCC). Once set up, these projects are expected to generate employment for about 30,000 people.

"We have identified the aerospace sector as a focus area for attracting investment into the state. The state has an ideal ecosystem for the sector and we want to cash in on this not only to sustain Karnataka's position as the country's aviation hub, but also to encourage and support the MSMEs in the sector," M Maheshwar Rao, commissioner, department of commerce and industries, government of Karnataka told Business Standard.

The state has acquired 982 acres near the Bangalore international airport for the aerospace park, of which 250 acres have been set apart for the aerospace Special Economic Zone (SEZ). The government till now has allotted 218 acres to 25 companies at the SEZ. The major investors at the SEZ include Hindustan Aeronautics Limited (Rs 2,095 crore), Dynamatic Technologies (Rs 465.8 crore), Jupiter Aviation Logistics (Rs 630 crore), BEML Limited (Rs 316 crore), Mahindra Aerospace Pvt Ltd (Rs 284 crore), European Aeronautics Defence and Space Company (Rs 278.2 crore), Sobha Aviation and Engineering Services, Tyco Electronics Corporation India, AMADA (India) Pvt Ltd and Wipro Ltd (Rs 52.05 crore) among others.

These companies are setting up manufacturing plants for producing aircraft components, assemblies, MRO activities related to aerospace applications, aerospace actuators and parts, engine and engine components, welded structural assemblies, aviation training academy among others. Further, Rao said the government expects to attract more companies to the aerospace SEZ during the forthcoming global investors' meet (GIM) in June 2012. At the recently concluded India Aviation 2012 held in Hyderabad, the government had fruitful discussions with several global and Indian players in the aviation sector, he said.

He also said the state government and Confederation of Indian Industry (CII) have formed a joint task force on aerospace with the overall intent of promoting and developing the state's aerospace industry.

The government also proposes to establish a Technology Innovation Centre on aerospace at the Bangalore Aerospace Park to provide R&D support, particularly to SMEs. The government plans to approach organisations like ISRO, USIBC, NAL, EADS and Honeywell among others to become stake holders in the Technology Innovation centre. As recommended by the Joint Task Force, the government hopes to set up an aerospace university in the near future to cater to the human resources for the aviation sector, he added.

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Tribunal directs taxmen to defreeze bank accounts

Kingfisher Airlines has got a breather as the Bangalore Bench of the Income Tax Appellate Tribunal has directed the Income-Tax Department to lift immediately all attachments, including bank accounts, which were frozen for non-payment of Rs.349.09 crore tax deducted at source (TDS) by the company.

However, the Tribunal, in its interim order, has asked the company to immediately pay Rs.44 crore of the total outstanding and pay the remaining amount in weekly instalments of Rs.9 crore each, commencing from April 4. The Tribunal issued interim directions last week on an appeal filed by the company challenging the demand made by the Department in its December 30, 2011, order.

"The business activities of the assessee [company] are disturbed due to the attachments of bank accounts. The demand of the Department may be met by the assessee when it is allowed to run the business smoothly and earn something from that business. By putting the business of the assessee at halt through attachment is not a solution," said the Bench, comprising N. K. Saini (Accountant Member) and George George K (Judicial Member).

The Department had demanded payment of Rs.372 crore as TDS from the company for assessment years 2010-11, 2011-12, and 2012-13, following analysis of records during search conducted in the company's premises. The Department had attached bank accounts of the company in February, as the company did not make payment, and had collected Rs.23 crore while attaching the bank accounts.

The Department had contended before the Tribunal that the company had illegally withheld the revenue payable to the government even after deducting the said amount from various sources in the two years.

However, the company had contended that the department should have appreciated it [company] was having acute financial difficulties besides claiming that it was not given sufficient opportunity of hearing before passing the final orders for making payment, among other contentions.

The Tribunal, however, has said that the company prima facie has an arguable case and the balance of convenience also lies in favour of the company, while noticing a letter written by company's Chairman and Managing Director to the Department on March 9 proposing to pay the outstanding tax in eight equal monthly instalments of Rs.44.60 crore.

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AI to directly import aviation turbine fuel

The carrier is expecting an equity infusion in 2012-13

Ailing national carrier Air India has decided to go in for direct import of Aviation Turbine Fuel (ATF) in a bid to curb the escalating cost.

The AI board, which approved the direct import on Tuesday, also gave a go-ahead to the state-owned carrier to soon appoint a service provider who would source the supply as well as provide the necessary infrastructure for storage and distribution of the same for in-plane fuelling.

AI expects to end the year with a higher-than-budgeted performance in the revenues. However, the escalating cost in fuel is likely to set it back by an additional Rs. 2,200 crore and its fuel bill is estimated to be around Rs. 8,000 crore for 2011-12. Added to this, the additional interest cost of Rs.1,500 crore eroded the profitability of the airline.

The board also took on record the progress on the restructuring of the working capital into long-term loans whereby Rs.11,000 crore worth of working capital is proposed to be converted into long-term loans and Rs. 3,400 crore into cash credit facilities.

The government would provide support in respect of the non-convertible debentures of Rs. 7,400 crore.

AI is expecting an equity infusion shortly in the financial year 2012-13, which would not only improve its operating and financial parameters but would also give considerable comfort to the institutional lenders in the form of better net worth.

Meanwhile, AI's operating and financial performance up to February this year registered a continuous increase compared to last year. The passenger revenue during February 2012 went up to Rs. 949 crore from Rs. 718 crore in February 2011, registering a 32.2 per cent increase.

As part of the risk management strategy, the board approved the hedging of fuel up to 20 per cent of the total international uplifts and allotted a specific amount in its budget. A risk management team of senior officials was set up in order to continuously monitor and take positions on fuel hedging.

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Air India board okays direct import of jet fuel

New Delhi, March 27:

National carrier Air India's board of directors has decided to import jet fuel directly. The board also approved the hedging of fuel up to 20 per cent of the total fuel uplifted abroad.

According to a statement issued after the board meeting, Air India would shortly appoint a service provider. It will source the supply as well as provide the necessary infrastructure for storage and distribution of the same for in-plane fuelling.

Meanwhile, the company claimed its financial and operating performance up to February had improved significantly. Passenger revenue in February went up to Rs 949 crore from Rs 718 crore in February 2011, an increase of 32.2 per cent, the airline said in a statement.

The total number of passengers who flew Air India also went up from 0.962 million in February 2011 to 1.091 million in February 2012, registering an increase of 13.4 per cent. Air India expects to end the year with higher than budgeted performance in revenues.

However, the escalating fuel cost is likely to add Rs 2,200 crore to its fuel bill, which is estimated to be around Rs 8,000 crore for 2011-12. Additional interest cost of Rs 1,500 crore also eroded its profitability, the airline said.

The board also approved the capital budget for 2012-13, which was in line with the annual plan outlay of the company involving a capital outlay of over Rs 400 crore on non-aircraft projects.

The bridge financing of the two 787 Dreamliner aircraft, which would be raised from Standard Chartered Bank, of $195 million, was also approved by the board. The bridge financing is expected to be closed soon.

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Kingfisher suspends flights to some more cities

New Delhi, March 27:

Kingfisher Airlines has asked most of its staff members "to stay home" in cities around the country to which it has "temporarily suspended" flights.

The airline which used to operate to about 60 destinations now flies to less than 30 cities. Kolkata, Hyderabad, Patna, Lucknow, Thiruvananthapuram and Bhubaneshwar are among the cities to which the airline has "temporarily suspended" operations.

The airline's management has said that since Kingfisher "could resume" operations after getting re-capitalised, most staff members will remain on the company's rolls despite staying at home in cities to which flights have been suspended. The airline now operates about 120 daily flights down from more than the 400 flights that it operated earlier.

The airline, however, failed to quell speculations that it is planning to go in for large scale staff retrenchment. In a statement it merely said that it is in a "holding pattern" and is waiting for various decisions from the Government, the consortium of bankers on foreign direct investment and working capital funding among others.

"All of these will have a major impact on the staffing decisions we will have to make," the airline said in a statement. Kingfisher has not given the number of cities to which it has curtailed operations or the number of employees it has asked to stay home. The cash-strapped airline has about 5,400 employees.

"Staff members are being asked not to report for duty the day after a flight has reached. They are just told that there will be no operations from the next day," a disgruntled employee said.

Kingfisher has said that in the holding plan "adequate care" has been taken to ensure that part of the airline's "core inter-metro schedule is retained, while connectivity is maintained to many cities where Kingfisher is the sole operator".

The statement adds that the airline has started its summer schedule operating about 120 daily flights with 20 dedicated aircraft.

Interestingly, the DGCA Web site shows that till April 10 this year, Kingfisher Airlines' international operations will only be a daily flight between Delhi and London. Earlier the airline used to operate to Hong Kong, Singapore, Dubai, Bangkok, Kathmandu, Colombo and Dhaka.

The airline, which has debt of about Rs 7,000 crore, has failed to pay its staff over the last couple of months. The airline reported a 75 per cent increase in its net loss at Rs 444 crore for the quarter ended December 2011.

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