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Domination March 2012
Domination March 2012
VOLUME-III ISSUE-03
MARCH 2012
Editorial
Dear Readers, The month of March has seen a lot of activity on campus in the form of Cognizance and is all set to witness Regalia, an upcoming event of the Alumni Committee to be held in April. With the onset of spring and a new financial year around the corner, this issue of Domination is all about past learning and new beginnings. Garnishing this issue is a beautiful piece of writing Ek Taara that is sure to touch your heart. Through an in-depth of a new customer base proves pivotal in catapulting a business into the star league of performers. Unlike the equity market, investors are grappling with an immature bond market in India. Reforms in the positive direction have managed to give the Indian Bond Market a long awaited push, but further structural and regulatory changes that can speed up the process are yet to be seen. The world has come a long way from signing the Kyoto Protocol in 1997. Initially aiming for sustainable development, the global market is now confronted with the question Is Carbon Market Dead?. While not completely discarding the stagnating volumes, this article discusses possibilities of global inclusion and revamping of the Carbon Market. The aviation industry is one of the more sensitive industries that follow a cyclical trend, only with sharper decline rates. With An overview of Indian Aviation Sector, funding issues and global learning, we have attempted to address the issues that the sector is struggling with by drawing a comparison with its global counterpart. Stepping into the spring with a new zest, we hope to deliver to you a fresh start with this new edition of Domination!!
analysis of current global scenario and the scope of expansion into foreign lands, Spreading wings in a new world is a must read for those who dare to dream beyond borders. Creation
Happy Reading ! ! !
Contents
Team DoMination
Aditi Joshi Anuj Mody Anurag Agrawal Chetna Yadav Jubin Mohapatra Manav Kaushik Mukesh Rathi Pawan Upadhyay Rajneesh Kumar Ruchi Gupta Saumya Dani Saumya Verma Sayantan Shibi Singh Shruti Goel
Spreading Wings in New World Organizational Citizenship Bonds Market in India Carbon Credit Market - Is It Dead?
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04
17
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Design Team
Anurag Agrawal Saumya Verma
Qutopia
DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE
22
25
Roorkee - 247 667, India Tel: +91-1332-285014, 285617 Fax: +91-1332-285565 Email: domination.doms.iitr@gmail.com Website: www.iitr.ac.in/departments/DM/Pages/Index.html Success Story
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DoMS da Evince
Perspective
schemes need a lift up and reforms are needed to scale up the required investments level for reducing emission reduction. What can be the future of carbon trading will depend on the integration of schemes over the long term to reach an effective global carbon market. Some of the steps that can be taken are: 1. Strong price signal in Emission trading schemes which create enough demand and supply and decrease price volatility prevalent in Europe due to economic crisis and fixed quota of allowances. If government succeeds in controlling volatility; it will increase investors confidence in carbon markets.
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Perspective
with liberalization came more liberal imports which impacted profitability of many industries assisted by DFIs in the past. Hence DFIs were getting saddled with increasing level of NPAs. This retreating of DFIs left a gap, and the Govt. realized that there is an urgent need of an alternative supply of term finance to industry and infrastructure. Then it was realized the best course of action for the Govt. would be to strengthen capital and, in particular, encourage active bond market. Present Scenario: The two important pillars of the Indian capital market are-equity and bond market. While the equity market has expanded in leaps and bounds, the bond market is poorly developed and lacks enough depth as it formed merely 41.6 percent of the GDP as of 2007 (38.3 per cent in government debt and 3.2 per cent in corporate debt). Also in India the average daily trading in debt is insignificant compared to equity segment. The bond market in India is typically classified into three categories viz. the government, the corporate and the financial, where the government bond market constitutes 85% of total DCM followed by the financial 10% and corporate market 5%. The issuers of these securities are mostly the central and state government, government agencies, corporate and private sector banks. The investors mostly consist of RBI, banks, individuals, PFs and MFs with the whole system coming under the purview of SEBI, RBI and the Ministry of Corporate affairs. The most underdeveloped part remains the corporate debt market, where even today more than 95% of the debt being issued are in the form of private placements. Irony of Indian Bond Market: The government of India is planning an ambitious $1 trillion infrastructure program in five years through 2017. We need huge investments in sectors like mining and manufacturing for creation of capacity if India wants to be a major manufacturing hub. But with conversion of 2 of the DFIs, namely IDBI Bank and ICICI Bank, into commercial banks we are left with IFCI ,which ran into the problem of NPA and total mismanagement, for long
term financing. On the other hand there are investors, who can't find enough Indian corporate bonds which is apparent from the deals like that of Infrastructure Development Finance, a company formed by the Indian government to lend to energy and road projects, which sold 29.3 billion rupees in 10-year taxexempted bonds last year. The sale closely followed Indian Overseas Bank's successful issuance of 15-year debt. As on October 31, 2011, FIIs have invested more than Rs 41,000 crore in government papers and Rs 68,000 crore in corporate bonds and the only deterrent for further investment is the cap put by the government and the lack of mature bond market. Hence, we can see that Indian DCM is caught in something of a chicken-or-egg dilemma that limits its growth potential. Some attribute the market immaturity to limited demand, while others blame limited supply. We see obstacles and opportunities in both, but view improvements in the market structure as the most critical step. Reasons for underdeveloped Bond market: Structural shortcomings: 1. Difficulties in dematerializing bonds and other corporate debt instruments by NSDL (National Securities Depository Limited) as they are not exempted from stamp duty on transfer of bonds. 2. High transaction costs in the secondary markets for private securities. 3. Long gestation periods to bring the bond issuances into the market. Regulation hindrances: 1. Upper cap on pension funds and insurance companies which are typically among the biggest buyers of corporate debt in other countries. 2. Corporate bond deterrent: Rigorous or onerous regulatory requirements including quality and the type of disclosures in the case of public issues. Positive changes in the scenario: Govt. Reforms: Increase in cap by $5 billion each, the limit is $15 billion for government securities and $20 billion for corporate debt during the 2011-12 budget. Relaxing norms for FII investment in long-term infra-
-structure bonds, reducing the residual maturity period to one year for investments of up to $5 billion. Sophistication of the markets for bonds such as inflation indexed bonds will help in maintaining investor confidence against the unpredictable inflationary movement. Initiatives like simplification of the Debt listing agreement, rationalization of stamp duty and introduction of Repos on Corporate Bonds have also been taken by SEBI. Availability of high yielding Indian Bonds: The Indian benchmark 10-year bonds yield about 8.72%, indicating the government is paying more than troubled Italy or Spain, without adjusting for currency risk. The 10 -year German Bunds fetch 2.3% ,10-year US treasury bonds yield 2.08%. The triple Arated Indian corporate bonds yield about 9.70%.This attractive returns have resulted in the overseas investors paying premium to enable them to purchase these bonds in the market, reflecting the attractiveness of bonds in India. Future of Indian Bond Market: Various agencies and Central govt. have predicted a phenomenal growth in the market through effective and gradual reforms by 2016. Goldman Sachs has estimated nearly fourfold growth of Indian debt market over the next decade bringing it to $1.5 trillion, or about 55% of GDP, by 2016 from roughly $400bn, or around 45% of GDP, in 2006. The Way Ahead: Despite some recent successes, the reform effort in Indias DCM has not yet reached critical mass. Some of the imminent steps like streamlining the issuance process, strengthening of the trading platform and settlement and clearing systems, taking forward plans to allow securitization would surely result in momentum that would help to push through the harder and politicized reforms. In all, we can say that Indian Bond Market has already got the momentum but the speed with which it will follow the path will rest with policymakers and authorities willingness to contribute towards the changes.
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Perspective
Organizational Citizenship
According to Organ, Organizational Citizenship Behavior is individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization. By Discretionary, he means that the behavior is not an enforceable requirement of the role or the job description, sons that is, clearly contract specifiable terms of the peremployment with the organization; the behavior is rather a matter of personal choice, such that its omission is not generally understood as punishable. Organizations always need employees who do the job that are not the part of job description and organizations having such employees always outperform those which do not have such employees. Thus, concept of organization citizenship behavior is gaining importance. As defined by Organ (1988), OCB reflects a good soldier syndrome which is necessary for the prosperity and good functioning of every organization. It means doing a better job, making an effort above and beyond formal requirements, and filling the gap between procedures and regulations on the one hand, and dynamic reality on the other. These are the behaviors that all the organizations want their employees to exhibit but cant make them do so. Also the managers cannot guarantee any rewards for these behaviors except appreciation. The different facets or factors of organizational citizenship as given by Organ are: altruism, courtesy, civic conscientiousness, sportsmanship, virtue,
It has been observed that different people exhibit different levels of organizational citizenship behavior. Many studies have been conducted to find out the determinants of organizational citizenship behaviors. Some studies have shown that personality traits, such as agreeableness or conscientiousness, are related to these behaviors. Some other research has shown how characteristics of the tasks, such as freedom of work in ones own way, might correspond to organizational citizenship behavior. Also, the behavior of leaders and managers also affects the occurrence of these acts. Lastly, employee attitudes towards the job and organization, as well as perceived justice and fairness also affect the incidence of organizational citizenship behavior. According to findings by Morrison (1994) and others, the extent to which an individual exhibits OCB depends on the breadth of the perceived job i.e. the responsibilities that an individual considers to be the moral obligations of the job and that need not to be the part of contractual agreement of the job. Some employees, for example, see it as a part of the job to come early to work or to volunteer to take the work no one wants. Others consider it a nice thing to do and would even applaud others to do it but they wont themselves indulge in these behaviors. Still others would say that they have no incentives to do such things. One important determinant is the relationship with people at work or how an individual is treated at work. When an employee has good relationship with the people around him i.e. he is supported by his manager, he trusts his colleagues and has affection with his peers, he cannot just maintain those relationships by doing his regular job. In order to sustain a high quality relationship, he has to do the extra things to help the people around him. Our personality is yet another explanation of why some people perform citizenship behaviors. Personality is a modest predictor of actual job performance but a much better predictor of citizenship. People who are conscientious, agreeable, and have positive affectivity tend to perform citizenship behaviors more often than others do. Also, individuals with high collectivism and propensity to trust are more likely to believe that they can be a valued part of the organization, and because of this belief, they engage in citizenship behaviors to make themselves a valued part of the organization. Job satisfaction also has a positive relationship with organizational citizenship behavior. Employees having more job satisfaction will exhibit more OCB. Nevertheless, the precise relationship differs between affective and cognitive job satisfaction. Some studies have shown organizational citizenship is more related with cognitive, rather than, affective job satisfaction (Moorman and Blakely (1995) ) while others have shown, it is relative with affective job satisfaction (Lee and Allen (2002) ). It is presumed that positive feelings motivate individuals to show organizational citizenship. In contrast, the belief that such
Organizational Citizenship
behavior would be reciprocated with awards also motivates organizational citizenship. Another aspect that determines the OCB might be the level of pay. If an organization offers pay that exceeds level of remuneration in the market, then employees are motivated to show high level of discretionary effort or optional activities that enhance the effective working of organizations. Interestingly, age sometimes also determines the frequency with which people show citizenship behavior in the organization. In general, people who are old become better citizens. It may be possible because with age, people gain more experiences to share and it becomes easier to help others because they have more accumulated company and life experiences to draw from. Thus, organizational citizenship behavior is inevitable for the effective working of an organization and must be promoted in the employees. Successful organizations need emArticle By - Ruchi Gupta ruchigupta.iitr@gmail.com Ambika Garg ambika.nitj@gmail.com ployees who will do more than their usual job duties and provide performance that is beyond expectations. In short, this can be achieved by hiring employees having personality traits that goes with the organizational behavior, creating a positive work environment, increasing job satisfaction, broadening the perceived roles of employees, motivating them and paying them remuneration better than the market.
Organizational Citizenship
Perspective
costs. Financial stability of the target country. Ability to import and export and laws governing them. Potential Sales/market and product demands etc. Before planning the concrete strategy of the business expansion plan to an international level, the organization must do its internal assessments. Within the organization, it needs to understand its key competencies, strengths and weaknesses. However, the most important question for the expansion that the firm needs to work upon is the nature of business it would start in the foreign country and the location (foreign country) where it wants to expand the business. The inflow of Foreign Direct Investment is a very crucial factor to determine the economic potential of a country. It needs to decide, whether it would like to just expand its current business in the target country or it would start a new business depending upon the scope of growth and development in the target country. While formulating the strategy, a lot of organizations often commit a few general mistakes which should be taken care of. Some of them are as follows: Firms often are unclear about their missions and objectives which lead to poor strategic decisions, adverse resource allocation and its management. The goal should be crystal clear before entering a new market as it is the only hub which will drive the entire mission. Risks present in the new country should be analyzed properly. Success in the home market need not entail the same in the foreign market. There should be a proper bonding between the strategies formulated and the actions taken during its implementation. The structure and the culture of the organization should be molded in the framework of the target countrys culture. It is also necessary to remain updated about the latest global trends Legal Issues The legal system in the target country should maintain a perfect balance between the safeguarding of commercial interests of the firm and the rights of the end customer. It will help the firm to legally enforce the trading agreements in the foreign country. Several laws like Common law, Civil Law, Customary Law as well as mixed system prevail in different parts across the world. Common law helps in a broader manner to understand the trading environment and the outcomes. Civil law is In effect in much of European countries. Some countries like India have a common mix of these laws known as the mixed system. Legal system affects the business expansion plan very seriously. It may affect during any merger and acquisitions actions. It regulates all the guidelines pertaining to trade within the jurisdiction of the host country. Issues tions To provide the people with their basic rights, which may be civil, political, cultural, social or economical rights, a lot of rules and regulations have been formulated. There are a lot of Relating to Human Rights and Child Labor Viola-
countries where, within the organizations workers face human rights violations. . In many incidents workers find themselves in the middle of nowhere without being paid their wages for months and even years. Physical and sexual violence were also not very far. (Cherribi, 2011, pp.29)These companies lose all their public trust and soon it sees its dead end. Also the companies who trade with the company which is involved in such activities starts losing their public image. As a measure to protect the peoples from human right violations certain countries introduce trade restrictions with the countries where actually these violations occur. These restrictions may be introduced in certain type of goods also whose production promotes the rights violations. For example, the imports of goods produced by children are banned in a lot of countries as a measure of protecting budding children from getting abused in the society as well as the workplace. In the first place child labor is illegal and then their abuse is a very serious offense to the law. On the basis of ethics, trade restrictions with all these countries where firm violations
occur are justified. But when we change our angle to the economic viewpoint, these restriction not only harm the economy of the country with whom the embargo has been done but also the country which imposes the ban also suffers more downward trend in the economy than it actually helps in improving the condition of human rights violations. So, expanding the business in these areas may be done considering the profits but necessary rules should be formulated within the organization to not to indulge in any such activities. Intellectual Property and Copyright Infringement Intellectual property refers to the particulars of information or knowledge which can be used anywhere and anytime depending upon the requirement. The international expansion of the business may require the shifting of the intellectual property of the organization from host country to the target country. Certain issues relating to the copyright infringement may remain in the foreign country. During the start-up, many local firms might violate the copyright of the Parent firm but as the firm establishes itself there would be awareness among the customer as to genuineness of the firms product or services. Conclusion In the present era of globalization, every organization wants to outperform its competitors. To hold a strong position and to increase its growth rate, one of the most favored ideas is to spread the wings of the firm in foreign countries which will attract an entirely new customer base thereby adding to the revenues of the company. However, proper planning and development of strategies is necessary in order to achieve success.
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Its wise to learn, its GOD like to create
Chlorophyll
Poem By -
Qutopia
Its Exquizite, Kills your Quriosity and adds to your Quizdom. Need we say more? Qutopia A Utopia of the
best Biz Quiz Tidbits to wreck your brains! Rush in your answers to domination.doms.iitr@gmail.com or anu-
rag242@gmail.com before 31st March, 2012. The winner will have their names published in the next issue.
Also, person getting the highest score in the current quarter (Jan-June 2012) will get a gift voucher. Answers in the next issue of DoMination.
Section A
(1 Point for each correct answer)
1) According to PM David Cameron, economic growth in the UK is being held back by________. 2) Who has topped the league table of the worlds richest football clubs for the seventh straight year? 3) Since Stephen Elop has become the CEO, how many job losses has NOKIA announced? 4) Tesco, Burger King and several other big firms have withdrawn from what? 5) What happened to RBSs profitability in 2011?
Section B
(1 Point for each correct answer)
1) Which country launched the Postal Stamp of Migration of the first Indian Labor around 150 years ago?
Qutopia
2) Identify this logo.
3) In US it is legally allowed to sell only 5 times a year. It is said that the banks charge only the processing fee. But actually it is worth over 100 thousand dollars of business. What is it?
Section C
(3 Point for each correct answer)
Answers to Jan12 Qutopia Section A: 1. $1 2. Fred The Shred 3. Competition from smartphones 4. Advocates Copying/Piracy 5. TESCO Section C 1. Donald Trump Winner of Qutopia (Feb 2012)
1. Garima Lakhanpal (Batch of 2011-13, DoMS IIT Roorkee) 2. Prateek Jain (Batch of 2008-10, DoMS IIT Roorkee)
DoMS-da-Evince
Deepak Shakya is 2001 batch pass out of DoMS, IIT Roorkee and presently working as Business Development Manager at Subhiksha .
1. What are the common challenges faced in the retail sector? Initially there were many challenges e.g Existing Kirana dukan wale were in favor of this kind of concept. Customers had to wait for billing , etc. But right now customers and Market both have understood the importance of Organized retail. Even existing Govt. wants 100 % FDI in retail sector. So, opportunities are huge. 2. What are your roles and responsibilities MTS ? I am taking care of Branded Retail Division MTS in NCR. My working with
primary job is to the take the businesses a step ahead with existing Retail and Opening up new Branded Retail in my Zone to grow the business of MTS and Brand presence as well. 3. How was your experience working with Tata Indicom and Oxigen and how it is different from Subhiksha? For Tata Indicom and Oxigen, I launched the product and set up the channels in Delhi and UP West. But in Subhiksha it was totally different since it was organized retail. 4. What has been the most Challenging role in your career so far?
In Oxigen where i had to launch a concept which was very new in India so it was difficult to understand the concept. 5. How has DoMS, IIT Roorkee contributed to your success? I have learnt many things from DoMS but most important thing that i have learnt and i am using is that we should always have more knowledge than our competition. 6. Any message for the readers, especially the current batches of DoMS? Be bold in life, it always pays and guys, wish you all best wishes for your career ahead.
Kalandar
Gaurav Jain, along with his wife Pallavi Jain, dreamt of doing something of their own during their IMT Ghaziabad days. After 5 years of working as IT professionals and officially travelling across Asia-pacific region, they felt stagnant and decided to follow their dreams of entrepreneurship. In 2004, they came back from Australia from a one year assignment, and typically like an MBA started working on market research, excel work and related financials on three ideas. Out of the three ideas namely, fresh vegetables and fruit chain, selling fruit juice and the last connected with fresh Indian food, they zeroed on the last one. The couple invested their personal saving of Rs 20 lakh to get started with. In Feb 2005, they opened the first restaurant on Bannerghatta Road in Bengaluru. Now, as a part of Spring Leaf Retail Pvt. Ltd., Mast Kalandar currently has 22 branches (18 in Bengaluru, 1 in Chennai and 3 in Hyderabad) across south India and has expansion plan of 100 branches in upcoming years. With 22 outlets at present, Mast Kalandar revenues are close to Rs. 18.7 crores. Recently, Mast Kalandar has raised its Series B round of funding from Helion Venture Partners, Series A backer Footprint Ventures and Salarpuria Group, an angel investor in the company. The USP of Mast Kalandar, to deliver with the promise of authentic, tasty and healthy north Indian food, has made Mast Kalandar customers happy eaters who often come back for more. Jains positioned the food as Authentic, vegetarian, homemade style North Indian food and targeted the working professionals looking for regular eating out options, light on their stomachs and wallets. To fulfil the positioned product of homemade food, they decided to use only quality ingredients which we use at home. Their decision to offer freshly cooked food everyday is the biggest differentiator and also the biggest challenge. This means the Jains have had to evolve their own supply chain. Mast Kalandar calls it Hub and spoke model, having four steps to fresh food. Starting from sourcing, where in the centralized kitchen in every city they operate in, fresh ingredients and vegetables are sourced and mixed with spices to form a partially cooked and unfinished product. These unfinished products are then
Success Story
shipped to outlets, where meals are put in final stage of cooking before serving to customers or being home delivered. The food is transported in special hot boxes, that keep food from spoiling up to 10 hours. To make every customer eat happy, Mast Kalandar ensures the authentic taste of north Indian food by striking partnerships with vendors across India like its papads come from Rajasthan, pickles from Meerut and Jaipur to count a few. Another differentiator of this QSR (Quick Service Restaurant) is preplated meals, which allows Mast Kalandar to create more saleable menu options out of fewer ingredients or dishes. The next challenge to Mast Kalandar is its decision to expand to 100 QSR , which includes north India too. But Gaurav firmly believes that he will find customers for his geek food in North India too. According to Gaurav, there is no right time in your life to do something you are passionate about. The right time is all when you jump into it.
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Regardez Ieconomie
Kingfisher Red etc; dominating Indian Market with nearly half the market share. Mergers & Acquisitions: The M& A in Indian Civil Aviation Air India has serious implications for air travellers as well as airline employees. The important issues with airline merger and acquisitions are time, approvals, efficiency, competition, passenger benefits and strife. The State owned international flag carrier Air India has merged with all state owned airlines under the brand name of Air India. Jet airways acquired Air Sahara (now known as JetLite) in April 2008; Air Deccan-Kingfisher Merger took place in December 2007. All Mergers & acquisitions took place to enjoy the economies of scale and to make the operations more efficient and cost saving. Growth Aspects: India is one of the fastest growing economies and aviation is an important part of the national infrastructure and one of the prime movers for economic growth. The international passenger growth has been growing at CAGR of over 14% and domestic growth has been impressive 22% for last 6 years. During the year 2007-08, the domestic cargo traffic grew by 11% while international cargo traffic grew by 15%. Debt Issues in Indian Aviation Sector: Indian Airlines Industry is on the verge of crisis. Among the three main issues namely Capacity, Debt and Fuel Prices the airline industry faces today, the growing debt of the airlines may be among the most serious issues. Since global economic recession of 2008, the economy was not very supportive to Indian Civil Aviation. Air India was the only player which bought aircrafts directly, but due to introduction of stiff competition from low cost carriers and inadequate management, it is facing the huge debts of Rs.69000 Crore. The three listed airlines -Jet Airways, SpiceJet and Kingfisher lost 60% of their market value in 2011. Funding Indian Aviation Sector: Though Government has intervened many times to bail out the state run Air India, but the current situation demands a concrete action plan to fund Indian Civil Aviation as a whole. In November 2011, a consortium of banks whose lead lenders are SBI, IDBI, and Bank of Baroda had given an in principle nod for financial restructuring of the loss making Air India. The banks agreed to convert 40% of short terms debt or Rs. 7000 crore in to equity. The debt restructuring plan is being reviewed by a Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee. The GoM suggested equity infusion of Rs 23,000 crore in the airline till 2021. The introduction of foreign investments can also help the dwindling situation of Indian Aviation Sector. A government backed panel recommended a radical reform early this year that would allowed foreign carriers like British Airways, Lufthansa and Singapore Airlines to invest up to 49% in domestic carriers. Till now, foreign investments are not allowed, but if the government starts to lift these restrictions, it could provide a vital lifeline to the Indian Aviation Sector.
Example from Abroad (Debt Restructuring of Japan Airlines Corp-2010): In January 2010, Japan Airlines Corp. filed for bankruptcy protection with liabilities of 2.3 billion yen, as the countrys largest ever corporate failure. The government was quick to supervise the restructuring of the national airline, and provided huge sum of capital and legal support to minimise the effect of JALs collapse on the economy. Several out-of-court debt adjustment procedures have been adopted to reform the insolvency and restructuring regime, and proother mote clear and transparent processes for all creditors. One example is the use of turnaround alternative dispute resolution (ADR), established in 2008. Under Turnaround ADR, all creditors must unanimously consent to the proposed business revitalisation plan in order to effectuate a change in the terms and conditions of the debt. Future Outlook: According to the analysis of aircraft manufacturers and industry bodies, the world passenger traffic is expected to grow at 5% p.a. in the medium to long-term. The primary reason for the increase in passenger traffic over the years has been decline in airline passenger yields which has almost halved since 1970. During the same period, the real revenue growth has averaged only 2-3%. Small increase in operating costs, like high fuel prices, congestion cost, higher security and insurance cost can have a sharp impact on the profitability of the companies, thus impacting the demand for air travel services. However, there is room for cost reduction in the form of distribution cost and cost synergies from industry consolidation.
India needs to come up with new reforms for funding aviation sector. Our nation has surfaced as one of the fastest and most promising aviation markets in the world. Forecasts by AAI for the next 5 years have projected a sustainable growth rate of 16% for international and 20% for domestic aviation sector. Recognizing the exponential growth of air traffic in India, the Ministry of Civil Aviation has been following a very liberal policy in the exchange of capacity entitlements / traffic rights. To follow up with other nations; Indian Aviation sector requires more capital for placing orders to expand their ambitious fleets. With respect to the current scenario, the Indian aviation has to tap more conventional and cost effective methods of aircraft financing. India can take lessons from its global counterparts on the funding aspects. The example from Japan displays a proactive and mature effort from the Japan Government. The need of the hour is to efficiently utilize the existing resources and at the same time commission the planned infrastructure in a timely manner to provide the end user a memorable travel experience. A collaborative effort must be started involving all the stakeholders concerned to draw out framework detailing the measures, Indian Aviation Sector needs to pursue in next 10 years. This framework would act as the platform to make India one of the leaders in the global aviation industry and to scale new heights.
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Department of Management Studies, IIT Roorkee Roorkee - 247667, INDIA Comment/Feedback Mail to : - domination.doms.iitr@gmail.com Contacts: Anurag Agrawal (+917579072360), Shibi Singh (+918958055603) Follow us :Blog Page- http://domsiitroorkee.blogspot.com/ Twitter Page- http://twitter.com/#!/doms_iitroorkee Facebook Page- https://www.facebook.com/pages/DoMS-IIT-Roorkee/156383884413349