Need to Know | Kingfisher, AAI reach settlement on dues

Need to Know | Kingfisher, AAI reach settlement on dues

New Delhi: Kingfisher Airlines Ltd and state-owned Airports Authority of India, or AAI, have reached a "settlement" after two days of negotiations over payment of dues amounting to about Rs280 crore, a senior government official said.

Terms of the settlement were not immediately known, but it means a decision by AAI to encash the airline’s bank guarantees worth around Rs60 crore will be held in abeyance for now.

A civil aviation ministry official, who sought anonymity, said the rest of the payment would be paid in instalments over a “period of time".

Kingfisher chairman and chief executive Vijay Mallya and chief financial officer A. Raghunathan met AAI chairman K. Ramalingam and chief financial officer S.C. Chatwal on Monday and Tuesday.

Also unclear is whether AAI, which runs most airports in the country, may have asked Kingfisher to move to what is called a cash-and-carry model that will entail the airline paying airport charges immediately after use. AAI is owed Rs1,011.86 crore by domestic airlines as of end-September, the latest data available shows. National Aviation Co. of India Ltd, which runs Air India, owes AAI Rs653.10 crore.

“Everything is under control. I have met all their payment obligations," Mallya said on Tuesday referring to the due owed to AAI and oil firms from which it has bought aviation fuel.

The government official, quoted earlier and who also did not want to be identified, said Kingfisher had initially given an undated cheque for Rs50 crore towards the dues and Mallya added a date on the cheque late on Tuesday. ‘The Economic Times’ had reported Kingfisher’s presentation of an unsigned cheque on Wednesday.

—Tarun Shukla


Arbind Singh gets Social Entrepreneur Award

New Delhi: Arbind Singh, executive director, Nidan, has been announced as the winner of the Social Entrepreneur of the Year Award 2008 in India. Planning Commission deputy chairman Montek Singh Ahluwalia conferred the award on Singh at the World Economic Forum’s India Economic Summit. In India, the Social Entrepreneur Year of the Award is an initiative of The Nand and Jeet Khemka Foundation and The Schwab Foundation for Social Entrepreneurship in collaboration with the UNDP.

—Staff Writer


Liquidity crisis hurting banks seen easing

Mumbai: Banks have for the last few days started parking excess liquidity with the Reserve Bank of India (RBI), instead of borrowing from the central bank, indicating that the liquidity crisis affecting the banking sector is easing.

Such short-term deposits with the RBI attract 6% interest rate.

On Wednesday, RBI absorbed Rs24,435 crore from the system and pumped Rs3,950 crore into the system through its liquidity adjustment facility, conducted twice a day. Through this facility, the central bank infuses or absorbs liquidity from the system.

The inter-bank call money rate, or the rate at which banks lend to each other on an overnight basis, closed at 6.40%, almost unchanged from its Tueday’s level. The call money rates rose to 20% in September when the liquidity crisis started emerging. The tight liquidity prompted the central bank to reduce banks’ cash reserve ratio to 5.5% from 9% in stages.

—Anup Roy


Cabinet to discuss pay revision in PSUs

New Delhi: The Union government is set to raise the proficiency levels of tax collection through better manpower deployment in key departments dealing with taxation.

A cabinet meeting on Thursday is also expected to discuss pay revision of executives in central public sector enterprises following a proposal by the ministry of heavy industries that revisions take place from January 2007. The cabinet may also discuss revision of salaries and allowances of judges of Supreme Court and the high courts as also retirement benefits to them.

Other issues include a discussion on restructuring of staff at Central Board of Direct Taxes and Central Board of Excise and Customs as also a new highway toll policy on Thursday.

—Sangeeta Singh


More Indian students in UK universities

New Delhi: Universities in the UK are recording a consistent rise in the number of Indian students enrolling for higher studies, the latest data from the British Council shows.

The number of visas issued to Indian students this year till September is 25,400, up 20% from 21,000 in the year-ago period. The British Consulate said it had received 37,000 applications. India remains second in a list China tops, though the number of Chinese students at British universities fell by 2,000 to 49,595 this year.

—Pallavi Singh


Power Grid to spend $1.4 bn on Sasan project

Mumbai: The country’s biggest electricity transmission company Power Grid Corp. of India Ltd (PGCIL) will spend $1.4 billion (RsRs7,030 crore) on a project in the central part of the country.

The company will build system to carry electricity from a project being set up in Sasan in Madhya Pradesh, it said in a statement to the Bombay Stock Exchange on Wednesday.



1.2% of Shipping Corp scrip sold in single deal

Mumbai: The country’s biggest shipping company Shipping Corp. of India Ltd. (SCI) had 1.2% of its equity change hands in a single transaction in Mumbai.

About 4.88 million shares were sold at Rs77.8 a piece on the Bombay Stock Exchange at 2.24pm, data available on ‘Bloomberg’ showed. The buyer and seller weren’t immediately known.

At close, Mumbai-based SCI fell 0.84% to Rs77.



Property prices, rents fall to 30%: Goldman

Mumbai: Property prices and rents in India may be poised for a “major correction" as supply of affordable housing remains limited and office space exceeds demand, according to Goldman Sachs Group Inc.

Prices and rents in some regions could fall as much as 30%, Goldman said in a report on Wednesday. “We believe affordability is low in the residential market with a lot of supply targeting high income households," analysts Vishnu Gopal and Shruti Gandhi wrote in the note. Goldman reiterated its “cautious stance" on the industry and maintained its “sell" ratings on DLF Ltd as well as for Parsvnath Developers Ltd and Sobha Developers Ltd.



DLF-Fortis hospitals venture in trouble

New Delhi: There could be some trouble brewing with the potential joint venture between DLF Ltd, India’s largest developer by market value and Fortis Healthcare Ltd.

“The JV is probably not a priority for DLF," Shivinder Mohan Singh, Fortis managing director said. “The deal has not fallen through but we are yet to finalise the terms of the joint venture," he said. Fortis is in dialogue with DLF to decide the model for setting up hospitals, Singh said.

DLF and Fortis had signed a memorandum of understanding in January 2007 to set up 15 hospitals in townships being developed by DLF. The companies had planned to invest Rs6,200 crore. Under the agreement, Fortis will hold 74% stake in the joint venture while the rest would be with DLF.

CNBC had first reported that the DLF-Fortis potential JV could be on shaky grounds.

According to DLF’s spokesperson Sanjey Roy, the MoU with Fortis is on and the hospitals would be set up once DLF starts work on its townships. DLF’s stock closed up 0.13% at Rs224.40 on the Bombay Stock Exchange.

—Shabana Hussain


Essar Comm to expand in 6 African markets

Johannesburg: Telecommunications subsidiary of privately held Essar Group of India, Essar Communications Holdings, “intends to expand to five or six markets," in Africa. The global financial crisis had created opportunities with “distressed properties" that can’t raise capital, Michael Foley, chief executive officer of Essar Communications, said at a conference in Cape Town on Wednesday.