Indian aviation: passengers, position, profits

This piece originally appeared on Livemint.com

 

In a year in which new-economy sectors made all the news, one old-economy business finally delivered a maturing it had been promising for two decades now: domestic aviation. The stage for this coming of age was set in 2015, when the price of aviation fuel—the biggest cost head for an airline—tumbled and the sector started turning in 20%-plus growth in passengers. But 2015 was also coming off a turbulent 2014. In comparison, 2016 was challenged by a high base and it bested that, as airlines steadily added routes, flights and passengers—catapulting India up the global ranks in domestic aviation.

 

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News in Numbers, May 26, 2016: Capital goods policy, SEBI’s push to delist 4,200 firms…

Rs 7.5 lakh crore

What is it? The expected value of capital goods made in India in 2025 from Rs 2.3 lakh crore in 2014-15.

Why is it important? The government, which on Wednesday approved a policy on capital goods, hopes to generate more jobs in this sector: 30 million by 2025 from 8.4 million now. It’s in line with the government’s  ‘Make in India’ programme, which aims to increase the share of manufacturing sector as a percentage of GDP from around the current 17% to 25% by 2020.

Tell me more: The policy seeks to increase exports from 27% to 40% of production and to up the share of domestic production in India’s capital goods demand from 60% to 80% by 2025, which would make India a net exporter of capital goods. Capital goods production, which is 8.8% of the Index of Industrial Production and is a proxy for industrial and investment demand, contracted for the fifth straight month (as of March) year-on-year.

 

4,200

What is it? The number of companies the markets regulator is pushing for delisting from the stock exchanges.

Why is it important? This is to prevent price manipulation through firms that are not actively traded, which would improve governance of public markets and the listed companies. It would also help in reducing regulatory burden. However, firms could misuse this to become non-compliant in order to delist themselves instead of following the proper delisting norms.

Tell me more: Of the 4,200, there are 1,200 companies that have been suspended from trading for seven years (typically, for non-compliance of rules) and 3,000 that are only listed on regional exchanges, some of which cease to exist. The Securities and Exchange Board of India has also warned strict action against auditors if they are found to play a role in market manipulation.

 

54%

What is it? The percentage of ICICI Bank’s bad loans on the account of the Reserve Bank of India’s (RBI) asset quality review in the last six months of 2015-16.

Why is it important? Shows the extent to which banks have been under-reporting their bad loans. ICICI Bank is not the only one. For Punjab National Bank, Bank of Baroda, Axis Bank and Yes Bank, the equivalent numbers are: 45%, 41%, 30% and 24%. Of the large banks that have declared their results so far, about 44% of their bad loans is due to the central bank’s asset quality review.

Tell me more: The gross bad loans of 39 listed banks was Rs 4.3 lakh crore at the end of December 2015. In April, it was reported that over Rs 3 lakh crore were classified under a category where repayments were overdue by 30-60 days while another Rs 3.17 lakh crore had repayments overdue by 60-90 days, and a portion of this may turn into bad loans during the year.

 

Rs 184.96 crore

What is it? Online restaurant discovery/food ordering service firm Zomato Media’s revenue in 2015-16 from Rs 96.73 crore the previous year.

Why is it important? Despite almost doubling its revenue from last year, it recorded loss before tax of Rs 492.27 crore in the year ended March 2016. Food startups have been facing problems including slowdown in funding, with many of the firms either closing down, getting acquired or reducing their operations.

Tell me more: Last month, HSBC Securities and Capital Markets reduced Zomato’s valuation by $500 million, about half the valuation at which it had raised its last round of funding in September 2015.

 

$50

What is it? Price of Brent crude oil per barrel, an increase of 79% from a 12-year-low of $27.88 a barrel in January.

Why is it important? This is the first time oil has breached the $50-mark. This means higher fuel prices for motorists and reduction in savings for the Indian government due to a likely increase in oil subsidies. In Delhi, fuel prices have increased by over 7% this year. India’s crude oil import bill has almost halved to $64 billion in 2015-16.

Tell me more: The basket of crude oil India imports averaged $105.5 per barrel in 2013-14, $84.2 a barrel in 2014-15 and $46.2 per barrel in 2015-16.

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