Indian aviation: passengers, position, profits

This piece originally appeared on


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 6, 2016: New proposals for bank licenses, Tamil Nadu’s freebies…

10 years

What is it? The minimum number of years a resident individual should have worked in banking and finance to apply for a bank license in India, per Reserve Bank’s proposed guidelines.

Why is it important? An example of the balance the banking regulator seeks to achieve in its new set of proposals to encourage more players in the banking sector. It also proposes to issue bank licences throughout the year instead of issuing them periodically. These changes are expected to increase the reach of formal banking.

Tell me more: Large business houses are still excluded from applying for bank licenses but can hold up to 10% in banks and a financial holding structure is optional if the promoters are individuals or standalone entities and do not have other group entities. RBI will accept comments on these guidelines till June 30.

Rs 1-100 crore

What is it? The penalty for wrongful depiction of India’s map, which may include jail term of up to seven years, according to the draft ‘Geospatial Information Regulation Bill 2016’.

Why is it important? This is likely to prevent repeat of instances where social networking sites showed Indian territories (Kashmir in China and Jammu in Pakistan) as part of neighbouring countries. The draft bill makes it mandatory to get permission from a government authority before acquiring, disseminating, publishing or distributing India’s geographical data. This means firms such as Google would need to apply for licenses to run Google Maps and Google Earth in the country.

Tell me more: The bill proposes the setting up of an enforcement authority to ensure compliance of these rules.

Rs 96.7 crore

What is it? BSE Ltd’s consolidated net profit for 2015-16, a drop of Rs 155.5 crore from the previous year.

Why is it important? The drop in profits could affect its valuation as it readies itself for an initial public offering by the end of 2016 to reportedly raise Rs 700-800 crore. It would be India’s first equity exchange to get listed.

Tell me more: The board of directors of BSE approved the public listing on Thursday.


What is it? The number of units of free electricity promised by the J Jayalalithaa-led AIADMK in its manifesto released on Thursday.

Why is it important? It would exempt 78 lakh consumers from paying electricity bills, and comes at a time when the state’s power generation and distribution arm is reeling under debts of Rs 80,000 crore. Its power deficit was predicted to be 4.5% in 2015-16. It’s just one of the several freebies AIADMK and its rivals have promised ahead of the state elections.

Tell me more: AIADMK’s other promises include: 50% subsidy on scooters for working women, free Wi-Fi at public places and a Rs 50-crore Amma venture capital fund for first generation entrepreneurs. DMK, the other major political party in Tamil Nadu, has offered freebies ranging from tablets and laptops with 3G/4G connections, smartphones, rice and lower milk prices.

30 lakh

What is it? The number of students who could potentially appear for the second phase of nationwide common test for undergraduate medical and dental courses to be held on July 24 – some of whom might have taken the test already in phase 1, per Supreme Court’s request.

Why is it important? If accepted, this would help those who appeared for the first phase of the test on May 1, which was converted from being the All India Pre-Medical/Pre-Dental Entrance Test (AIPMT) to an all-India common entrance exam on April 28. The students may not have prepared seriously for AIPMT as it offered them only 15% seats allotted under the all-India quota and may have been banking on state entrance exams.

Tell me more: The court reiterated that private medical colleges and its associations cannot conduct any entrance exams for medical courses while there is some uncertainty if states can do the same.

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Are CEOs in India paid in line with the performance of their companies?

This piece originally appeared on


In the last few years, there has been much controversy, especially in the US, over the sharp increases in the salaries of chief executive officers (CEOs) of large corporations. According to a study by the Economic Policy Institute in the US, CEOs in America’s largest companies were paid an average of $16.3 million in 2014. Between 1978 and 2014, CEO annual compensation adjusted for inflation rose by 997% compared with 10.9% in the annual pay of workers over the same period and at double the rate of growth in the stock market.

The differential in the increases in salaries of CEOs and the rank and file is one way to look at such compensation. Another is performance. So are the salaries of Indian CEOs in line with their performance?

We looked at the salaries of the highest-paid executives at India’s top 100 listed companies, as represented by the BSE-100 share index, and how that changed between 2010-11 and 2014-15. The link between pay and performance, whether measured in terms of net profit growth or share price increases, is weak at best. Between 2010-11 and 2012-13, the median share price grew slowly, or even fell, yet the pay of CEOs grew much faster. But in the last couple of years, the increase in net profit growth or share price growth has been strong and has risen well above the increase in CEO compensation.

As the data visualization below shows, there are interesting differences between the growth in the salaries of chief executives at promoter-run companies, and those at multi-national companies, or Indian companies run by professional managers who are not promoters. Year-on-year increases in pay in promoter-run companies tends to be more strongly related to net profit growth, while in MNCs or professionally-run companies, that link is weaker. In these companies, chief executive pay is more closely related to share price performance.

Companies that saw the biggest rise in the pay of senior executives between 2010-11 and 2014-15 included GMR (over 1,000%), TCS (527%) and Bajaj Auto (426%). If we normalize CEO compensation to the size of the company, by calculating the pay for every thousand crore in net sales by a company, it’s interesting to note that the list changes to an extent. Companies like Divis Laboratories, HDIL and Jindal Steel and Power feature more prominently in this list.



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