FINANCIAL DERIVATIVES & RISK

MANAGEMENT
On
CEMENT INDUSRTY

Submitted in Partial Fulfilment of the

Requirements for the award of Post Graduate Diploma in Management

Submitted by:
Francis Johnson
1810127

Under the Guidance of:

Dr. Sanjay Rastogi
OVERVIEW OF CEMENT INDUSTRY

The Aviation sector in India currently contributes $72 bn to GDP.

India has 464 air terminals and airstrips, of which 125 air terminals are claimed via
Airport Authority of India (AAI). These 125 AAI air terminals oversee near 78%
of household traveler traffic and 22% of universal traveler traffic.

The common flight industry in India has developed as one of the quickest
developing businesses in the nation during the most recent three years. India is at
present considered the third biggest residential common flight advertise on the
planet. India has become the third biggest household avionics showcase on the
planet and is required to surpass UK to turn into the third biggest air passenger*
advertise by 2024.

The common avionics industry in India has risen as one of the quickest developing
ventures in the nation during the most recent three years. India is at present
considered the third biggest household common aeronautics showcase on the
planet. India has become the third biggest local aeronautics showcase on the planet
and is relied upon to overwhelm UK to turn into the third biggest air passenger*
advertise by 2024^.

Market Size
India's passenger* traffic developed at 16.52 percent year on year to arrive at
308.75 million in FY18. It developed at a CAGR of 12.72 percent during FY06-
FY18.
Household traveler traffic developed YoY by 18.28 percent to arrive at 243 million
in FY18 and is required to get 293.28 million in FY20E. Global traveler developed
YoY by 10.43 percent to arrive at 65.48 million in FY18 and traffic is relied upon
to get 76 million in FY20E.
In FY18, household cargo traffic remained at 1,213.06 million tons, while global
cargo traffic was at 2,143.97 million tons.
India's local and global flying machine developments became 7.93 percent YoY
and 6.36 percent YoY to 2,153 thousand and 453.61 thousand during 2018-19,
individually. In FY19, passenger* traffic in India remained at 344.70 million. Out
of which household traveler traffic remained at 275.22 million while universal
traffic remained at 69.48 million. All out cargo traffic dealt with in India remained
at 3.56 million tons during a similar time.
In FY19, residential airplane development remained at 2.15 million while
worldwide air ship development remained at 0.45 million.
To take into account the rising air traffic, the Government of India has been
progressing in the direction of expanding the quantity of air terminals. As of March
2019, India has 103 operational air terminals. India has imagined expanding the
quantity of operational air terminals to 190-200 by FY40.

Further, the rising interest in the segment has pushed the quantity of planes
working in the division. Starting at July 2018, there were about 620 airplane being
worked by booked carrier administrators in India. The quantity of planes is relied
upon to develop to 1,100 planes by 2027
Investment
As indicated by information discharged by the Department of Industrial Policy and
Promotion (DIPP), FDI inflows in India's air transport area (counting airship
cargo) came to US$ 1,817.23 million between April 2000 and December 2018. The
legislature has 100 percent FDI under programmed course in planned air transport
administration, provincial air transport administration and local booked traveler
aircraft. Be that as it may, FDI more than 49 percent would require government
endorsement.
India's avionics industry is relied upon to observe Rs 35,000 crore (US$ 4.99
billion) interest in the following four years. The Indian government is wanting to
contribute US$ 1.83 billion for advancement of air terminal foundation alongside
flight route benefits by 2026.
Government Initiatives

Some significant activities attempted by the administration are:

• In February 2019, the Government of India authorized the advancement of

another greenfield air terminal in Hirasar, Gujarat, with an expected venture of Rs
1,405 crore (US$ 194.73 million).

• As of January 2019, the Government of India is chipping away at a diagram to

advance household assembling of flying machines and air ship financing inside the
nation.

• In January 2019, the administration composed the Global Aviation Summit in

Mumbai which saw support of more than 1,200 representatives from 83 nations.

• In January 2019, the Government of India's discharged the National Air Cargo
Policy Outline 2019 which conceives making Indian air payload and coordinations
the most productive, consistent and cost and time powerful comprehensively
before the finish of the following decade.

• In November 2018, the Government of India endorsed a proposition to oversee

six AAI air terminals under open private organization (PPP). These air terminals
are arranged in Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and
Mangaluru. AAI got 32 specialized offers from ten organizations.

• In February 2018, the Prime Minister of India propelled the development of Navi
Mumbai air terminal which is required to be worked at an expense of US$ 2.58
billion. The principal period of the air terminal will be finished by end of 2019.

• The Government of Andhra Pradesh is to create Greenfield air terminals in six

urban areas Nizamabad, Nellore, Kurnool, Ramagundam, Tadepalligudem and
Kothagudem under the PPP model.

• Regional Connectivity Scheme (RCS) has been propelled.

India's aeronautics industry has only a 2% share in the $470-billion worldwide
industry, yet represents 33% of its absolute misfortunes. Accuse the fuel cost
instability and high capital use.

On the off chance that the market choppiness keeps going longer, local bearers will
be unable to support their business except if major basic changes are completed.
Intrigue and fuel costs need to balance out. This will enable transporters to modify
tolls and along these lines keep request stable for an extensive stretch.

In a falling economy, the flight business would typically be one of the prompt
risers to hit the air pocket. The explanation is serious challenge from other
transportation modes and the developing ICT framework that can to some degree
forestall travel.

As of now, the aircraft business in India is experiencing a strongly focused stage

on account of new participants and development of tasks by existing players.
Rising fuel costs, which represent 35-50 % of working expenses, are adding to its
hardships. Ease carriers that have a higher flexibility of interest can be particuraly
hit.

Fuel cost increments are given to travelers as rising admissions or fuel additional
charges. This would drive the marginal customers of full help aircrafts to move to
minimal effort bearers. In any case, this woud scarcely compensate for the
disintegration in the limit usage of the ease aircrafts because of their minimal
voyagers moving to different methods of transportation.

The administrators would normally take cost-cutting estimates, for example, course
legitimization and HR cost cut. In any case, this would not counterbalance the high
and unstable fuel costs. In such an outcome, industry development would start to
ebb out as is going on this moment.

Numerous carriers have just retired their development plans, compelling a few
players to delay the conveyances of new air ships, give up a couple of their rented
air ships or sell their air ship conveyance rights to other people.
Role of derivatives

Accessibility of fitting subordinates and a strategy of utilizing them effectually

have helped global flying players remain showcase fit. While dealing with the
financing cost hazard is beyond the realm of imagination in India because of
absence of a subsidiary, the fuel expenses could obviously be settled through raw
petroleum subordinates, for example, the one on MCX with great liquidity to
empower their investment.

This is on the grounds that the fuel utilized via carriers is a subsidiary result of
unrefined petroleum and their costs, in like manner, share a high relationship of
over 90%. In MCX is fluid raw petroleum fates contract, Indian aircrafts have the
alternative to cover their whole fuel value hazard at the local level without
presenting themselves to the remote trade chance.

Air choppiness makes uneasiness among travelers, particularly, those sitting at the
last part of the plane, oil disturbance can make money related issues to directors of
carrier organizations and all the more so for those sitting on slight financials. The
vulnerability in oil markets would be apparent from the clingy $50 per barrel oil
costs in spite of the memorable OPEC consent to cut yield by 1.8 million bpd in
the principal half of 2017. Then again, Asian interest has been demonstrating an
expanding pattern over the most recent three months. Unpredictability, in this
manner, is the request for the day and the partners will better stay ensured. With 28
to 42% (current fuel costs) of their operational costs inferable from one of the
unrefined subordinate, to be specific the Aviation Turbine Fuel (ATF), Indian
carrier segment is no exemption to it. While the great occasions (low oil costs)
enhance the financial specialists in the aircraft business stocks, awful occasions
(high oil costs) lead to helpless administrators surrendering to cost pressures and
leaving the business sectors other than leaving NPAs.
Regularly, aircraft organizations are required to run into supporting in a low yet
rising unrefined petroleum value condition. Then again, flooding oil costs
frequently lead to loss of purchaser base and business certainty prompting
moderate down of financial movement, and consequently a decrease popular
except if it is remunerated by aggressive air travel costs. As fuel costs expand and
travel request vacillates simultaneously it prompts a benefit dive. In such a
situation, supporting remains the unavoidable formula as the additions from having
obtained oil fates gives not exclusively to more readily cost control, yet in addition
for aggressive estimating of tickets. With benefits of the carrier business all the
more powerfully connected to the general monetary circumstance, different
methods of transportation, other than oil costs, the main factor that is under the
influence of aircraft organizations would be that of ATF which can be secured
through unrefined petroleum subsidiaries.