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The Week in Review for 18 November 2011

The Week in Review for 18 November 2011
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First Published: Fri, Nov 18 2011. 11 41 PM IST

File Photo
File Photo
Updated: Fri, Nov 18 2011. 11 41 PM IST
Kingfisher Airlines experienced a truly tumultuous week. It started Monday down in the dumps. There was news that flight cancellations would continue until 15 December. And the airline’s severe cash crunch remained. Then on Tuesday it reported its second quarter net loss had more than doubled to Rs469 crore.
File Photo
But Kingfisher’s chairman Vijay Mallya went into damage-control mode. Holding a press conference in Mumbai the same day, he tried to reassure investors. Mallya insisted it wasn’t time to write-off the airline. He added that Kingfisher was not looking for a government bailout and that only loss-making flights had been cancelled. Finally, Mallya defended the airline’s full service model, saying it was more profitable than a no-frills service. The campaign paid off. Shares of Kingfisher soared 2.34% on the BSE to 21.85 on a day the Sensex dropped 1.38%.
Of course, Kingfisher is still far from taking off. The carrier is now looking at shutting down some of its smaller stations. And it’s not clear if it will get the Rs800 crore worth of fresh working capital it wants. What’s more, Kingfisher is still weighed down by a debt of $1.5 billion. Its shares ended Friday 3.61% higher on the BSE at 24.05.
In other news, the finance ministry has swung open the door for more foreign investments in the bond market. On Thursday it increased the upper limits for FII investments in government and corporate bonds. Both limits have been increased by five billion dollars. That means FIIs can now put up to $15 billion in government debt and up to $20 billion in corporate bonds. So the overall limit for FII investment in debt is now at %60 billion instead of the earlier $50 billion. The revised limit has no residual maturity obligation, which gives FIIs more flexibility. Higher FII inflows could help stem the continuing fall in the value of the rupee.
Banks with bad loans are getting regulators worried. On Monday the Reserve Bank said it’s concerned abut the rise in non-performing assets. It added that money lent to infrastructure, real estate and retail firms was especially likely to cause trouble. The non-performing assets of Indian banks crossed the one trillion rupee mark as of September-end.
Moving to the economy, India’s stubbornly high inflation isn’t going down. Indeed, prices have risen more than expected in October. The country’s wholesale price index climbed 9.73% during the month. That’s virtually unchanged from September’s 9.72%.
Petrol has become cheaper again. On Tuesday the government slashed the price of petrol by Rs1.85 per litre. That’s exclusive of various state levies and taxes. This is the first cut in the cost of petrol in 33 months.
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First Published: Fri, Nov 18 2011. 11 41 PM IST
More Topics: The Week in Review | Kingfisher | Economy | India | BSE |