NEWS & VIEWS TODAY = MOST POWERFUL CEOs = JET AIRWAYS RESULTS (Dismal); Govt Holds the Key to success = 25-05-2012

NEWS & VIEWS TODAY

25^th,MAY,2012

MOST POWERFUL CEOs – JET AIRWAYS RESULTS

1.       NEWS :-ECONOMIC TIMES has declared the list of Most Powerful CEOs. Of course, the list has all the predictable Names in it. The first ten are (1) Ratan TATA, Chairman, TATA SONS, (2) Mukesh D Ambani ,Reliance Industries (3) Kumara Mangalam Birla, The Aditya Birla Gropup  (4)Azim H Premji, Wipro; (5) Chanda Kocchaar, ICICI Bank (6)Deepak Parekh, HDFC (7) A.M.Naik, Larsen & Toubro (8)Anand G Mahindra, Mahindra Group (9)Adi Godrej,  Godrej Group (10) KV Kamath, Infosys & N.E.Chairman, ICICI. 

VIEWS : The CEOs deserve their Place well. Yet, there could be some differences of opinion. If TCS as a company is head and shoulders above Infosys for last several quarters – in fact, years, how can TCS’s Chandrasekharan be out of top 10 while Infy CEO is in. Agreed that KV Kamath proved himself already at ICICI and is brought into Infy only now. But the performance – and the CONFIDENCE in the future – exhibited always by the TCS CEO is way above the rest of the IT Pack. 

If Mukesh’s KG Basin had been a success, things would be different for the Reliance CEO. In my view, he has made the right moves. But, a big success in oil and Gas still eludes him. It might be any time ;Today; Or Tomorrow; Some tomorrow in near future anyway. 

Anil’s(at rank.11) fortunes are tied to Telecom sector’s fortunes. This is the popular opinion. I differ. Telecom is a dead sector for Anil. He will be there. But, can’t beat his telecom rivals easily. His fortunes are more tied up to Power generation sector. He is a sufferer there – solely because of Government’s mishandling of the power sector’s problems – and partly due to failure of KG Basin Gas supply. Government is neither passing a Good, efficient, effective Land acquisition Bill, nor making Coal India efficiently cater to the requirements of Power sector. 

Coal India’s motivation in serving the Power sector, steel sector etc remains dismal. Even NTPC has criticized it and rightly so. Government has to do something effective to push Coal India. If Coal India does not perform, hand over Coal India Management to the user Industries  in public and private sectors. At the minimum, there should be 3 directors from Power sector and 3 from steel sector on Coal India Board, if Coal India must  perform. Let someone from the user sectors be its CEO as well.

Sunil Mittal’s (at rank 16)shine is taken off by A.Raja and all those who are now grappling with 2 G issues. TRAI and DOT, which were the bulwarks of Telecom Revolution so far, are now aiming to strike a death blow on the same sector. Will India continue to have world’s lowest Tariffs or jump suddenly to the world’s HIGHEST TARIFF  regime? Reader’s can see yesterday’s article in this blog on the same. Today’s Economic Times Editorial has echoed approximately the same views.

Rajiv Bajaj of Bajaj Auto- is UNNECESSARILY TIED UP (EMOTIONALLY) to  Motor Cycles. His decision to drop off from Scooters in which Bajaj was numero Uno was BAD BUSINESS DECISION. Popular Management Dictum is – drop off from a sector, where you are not No.1,2, or 3. When Bajaj was No.1, it dropped off from scooters segment and almost handed it over on a platter to Honda, which is gunning for No.2 spot now in 2 wheelers solely on its scooters performance. Bajaj and Hero must both be in scooters as well. And, aim for world Market – not just Indian Market. If not now, when? If not YOU, who else?

2.       NEW-II : Jet Airways has released its results for Q4 and FY 2012 both. Some analysts frequently say that  – Jet has benefitted from KFA and AI’s plight. Nothing of the sort is visible in its results. From operational level, it is all in RED. The Net loss of Q4 is Rs.298.12 cr. The Net loss for FY 12 (on consolidated basis) isRs.1420.13 Cr.

VIEWS : Unless Government drastically reduces (a) the ATF price (and associated taxes) ; (b) huge other taxes on airlines by central and state Governments and (c) huge airport charges etc – All Airline companies will continue to be in trouble. Even the Airport entry fee is RIDICULOUSLY high. Government must have its vision very clear. It must enable more Indians (say, at least 3%) to travel by Air by reducing taxes and charges and forcing the FARES down to comfortable level. Then only, it becomes possible to run any airline Company- profitably-and with adequate capacities (filled). 

If AI is in trouble, the same reasons apply. Plus the Pilots, which comes last of all. Without reducing taxes and charges, whatever money Government pumps into AI, it will be waste of money.

If KFA dies, not all blame can be put on Mallya. 50 % blame lies on Governments too.

If Jet is running in losses too – ditto for reasons. 

If the TOP 3 AIRLINES of India, including that Air India of Government, are in huge losses – it must be the most serious concern of the Government.

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Jet Airways (India) Limited - QTRLY RESULTS - Q3 FY 2012 - Q/E DEC,2011 - NET SALES UP BY 32%; LOSSES FOR 3 QTRS CONTINUE

Jet Airways (India) Limited

NSE Symbol        JETAIRWAYS

JET AIRWAYS has declared results for the third quarter ending Dec,2011.

Net Sales for Q3 FY 12 stands at Rs.3696.26 Cr – up by 18.38% from Q2 FY 12 and up by 31.89% from Q3 FY11.

Other Operating Income for Q3 FY 12 stands at Rs.242.90 cr – up by  41.83% from Q2 FY 12 and Down by -19.73% from Q3 FY 11.

Raw Materials consumption stands at Rs.1999.82 cr – up by 17.68% from Q2 FY 12 and up by 65.28% from Q3 FY 11/

Other Expenditure stands at Rs.1553.50 Cr – up by  27.1% from Q2 FY 12 and up by 40.79% from Q3 FY 11.

Total Expenditure stands at Rs.4215.33 cr – up by 18.52% from Q2 FY 12; and up by  46.97% from Q3 FY 11. Raw Material consumption and other Expenditure together have boosted the total Expenditure –even beyond the NET SALES value.

Profit from Operations stands at Rs.(-)276.17 cr in Q3 FY 12 – compared to Rs.(-)263.20 cr in Q2 FY 12 and Rs.236.83 cr in Q3 FY 11. There is a Net loss from Operations in the last 3 Quarters.

Other Income stands at Rs.226.72 cr – up by 488.42% from Q2 FY 12 and up by  536.85% from Q3 FY 11.

Interest stands at Rs.237.39 cr in Q3 FY 12 – up by 10.92% from Q2 FY 12 and down by  -4.78% from Q3 FY 11.

 Loss (-) from Ordinary Activities before tax stands at Rs.(-)101.18 cr – compared to Rs.(-)713.57 Cr in Q2 FY 12 and Rs.(+)        12.43 Cr profit in Q3 FY 11.Higher other income and a negative exceptional Expense have reduced the loss to some extent in the current quarter.

Net Loss(-) in Q3 FY 12 stands at Rs.(-)101.22 cr –compared to Rs.(-)713.60 cr in Q2 FY 12  and a profit of Rs.12.40 cr  in Q3 FY11.

Face Value of the share is Rs.10 and Paid Up Equity is Rs.86.33 Cr.

Basic EPS  is Rs.(-)11.72 in Q3 FY 12 compared to Rs.(-)82.66 in Q2 FY 12 ;Rs.(-)14.27 in Q1FY11; and Rs.1.44 in Q3 FY 11.

The Nine months Position also is summarized Below :

Comparison

9 M/E DEC,2011 vs 9 M/E DEC,2010

Ø  JET AIRWAYS says that –

Ø  In 9m/e dec,2011, Income from operations was Rs.10139.47 cr compared to 8810.99 cr in 9m/e dec,2010.

Ø  Total income was Rs.10774.30 cr against Rs.9508.34 cr.

Ø  AirCraft fuel expenses was Rs.4808.21 cr against 3086.96 cr

Ø  Other operating expenses was 3037.31 cr against Rs.2396.25 Cr

Ø  Total Expenditure was Rs.11413.26 cr against Rs.8693.90 cr.

Ø  Profit from operations was Rs.(-)332.92 cr against Rs.948.79 cr.

Ø  Interest and finance charges stand at Rs.665.63 cr – against Rs.793.32 cr.

Ø  Profit before tax amounted to Rs.(971.52)Cr – against Rs.233.84 cr

Ø  Net Profit is Rs.(937.98)cr against Rs.134.15 cr.

Ø  Basic EPS is Rs(108.65) against Rs.15.54

RESULTS  TABLE

JET AIRWAYS	31-Dec-11	30-Sep-11	%DIF1	30-Jun-11	31-Dec-10	30-Sep-10	%DIF2
Net Sales	369626	312228	18.38	332093	326156	280245	31.89
Other Oprtng Income	24290	17126	41.83	22067	21306	30259	-19.73
Raw Materials	199982	169933	17.68	177094	131445	120994	65.28
Employees Cost	42240	40715	3.75	36140	33508	32086	31.65
Depreciation	23961	22799	5.1	22347	23052	23396	2.41
Other Expenditure	155350	122227	27.1	128788	119161	110345	40.79
Total Expenditure	421533	355674	18.52	364369	307166	286821	46.97
Profit from Operations	-27617	-26320	4.93	-10209	40296	23683	-216.61
Other Income	22672	3853	488.42	4079	4055	3560	536.85
Interest	23739	21401	10.92	21423	25059	24930	-4.78
Exceptional Items	-18566	27489	-167.54	-11876	-2495	1070	-1835.14
/ Loss (-) from Ordinary Activities before tax	-10118	-71357	-85.82	-15677	21787	1243	-914
Tax expense	4	3	33.33	-3361	9964	3	33.33
Net Loss(-)	-10122	-71360	-85.82	-12316	11823	1240	-916.29
Face Value (In Rs	10	10	0	10	10	10	0
Paid Up Equity	8633	8633	0	8633	8633	8633	0
Basic EPS	-11.72	-82.66	-85.82	-14.27	13.69	1.44	-913.89
Public holding (%)	20	20	0	20	20	20	0

The Company had changed the method of Depreciation for Simulators and other owned tangible assets other than aircraft from Written Down Value to Straiht Line method w.e.f.1stApril,2010. The retrospective impact on account of this change amounting to Rs.5,393lakh and Rs.12,225 lakh has been reflected appropriately in Nine Months ended 31stDecember, 2010 and Year ended 31st March, 2011.

Profit on Sale & Leaseback of aircraft engines - amounting to Rs. 7,609 lakh.

During the quarter, the company finalized an agreement with Godrej Buildcon PrivateLimited, Mumbai(GBPL) for the development of its land situated at Bandra-Kurla complex, Mumbai. This land has been taken on long term lease from MMRDA. Consequent to the said agreement, the Company has been reimbursed all cost incurred till date and to the extent such  cost were charged to the Profit & Loss account in earlier years the same has now been credited to Profit & Loss account amounting to Rs. 10,286 lakh.

During the F.Y.2009-

the company entered into "Power by the Hour"(PBTH) engine maintenance arrangement with as service provider. Subsequent to which the PBTH cost are being charged to the profit and loss account and the variable rentals payable to the Lessors, based on maintenance plan, are being recognized as "Receivable From Lessors". Based on a joint validation of the Company's maintenance plan with the service provider, in the Quarter ended 30^th June, 2011, the Company has recognized the expected refunds of variable rentals amounting to Rs. 11,866 lakh towards engines accrued till 31st March, 2009 as "Contribution receivable from Lessors towards maintenance".

In view of the seasonality of the business, the financial results for the Quarter and Nine Months ended 31st December, 2011 are not indicative of the full year's performance.

Other Operating Income includes income from leasing of aircraft. For the Quarter ended 31stDecember,2011 and 30thSeptember,2011 and Nine Months ended 31stDecember,2011, income from such activity stood at Rs.9,869 lakh, Rs.10,604 lakh and Rs.34,141lakh respectively. The corresponding income for the Quarter and Nine Months ended 31st December, 2010 was Rs. 14,005 lakh and Rs. 38,040 lakh respectively. Income from such activity for the year ended 31st March, 2011 was Rs.51,724 lakh.

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