Time running out on nuclear deal: US

The United States has said it is becoming increasingly unlikely that there will be enough time to push through the Indo-US civil nuclear deal once heralded as the cornerstone of a new strategic relationship.

State Department spokesman Tom Casey said that it is becoming increasingly difficult "to assume that we could be able to get an agreement through the US Congress".

US officials have said that India needs to complete its end of the pact before the US Congress starts its summer break in July because many lawmakers will be busy campaigning for crucial November elections.

Turbulent times

Analysts believe that given the sharp 47 per cent spike in ATF prices in Q1 FY09, there is little choice for carriers than raise prices. While raising prices when customer demand is dipping might be risky, what are the areas they can look at? Says Kapil Arora, partner, Risk Advisory Services, Ernst & Young, India, "On the operations front, companies can bring down the costs of ticketing, optimise the routes they fly and improve turnaround times for maintenance. On the revenues side, they could increase the value added services chunk by bundling holiday packages, selling food separately or charging for baggage clearance." He believes that companies must invest heavily on technology and maintenance, repair and overhaul (MRO) services to run a more efficient, leaner organisation. Airlines have responded by resorting to job cuts, route rationalisation, reducing or doing away with travel agent commissions and by hiking prices to offset the ATF hike. While Air India, Jet Airways and SpiceJet have increased fuel surcharge by a minimum of Rs 300, Kingfisher and Air Deccan have announced higher base fares ranging from Rs 500 to Rs 3,000. In addition to hiking prices, companies have cut operations between Tier2 and Tier3 cities and shorter haul routes. What will be the impact of the higher ATF prices on growth and expansion of operations of companies? Hazy future

The increase in ticket prices due to the rise in ATF costs have dealt a double whammy to the sector. Airlines are now having to cope with growth, which is coming in single digits as customers are leaning to cheaper modes of transport while costs are spiralling out of control. For the January-March 2008 period, passenger traffic grew at 10.5 per cent which was less than half of the 25-30 per cent achieved in the last couple of years. If fares continue to go up, growth rates are expected to be in low single digits or slip into the negative. Earlier, with high growth rates, airline companies had ordered for about 480 aircrafts, which was to be inducted between now and 2012. Analysts say the assumptions were based on demand growth, expansion into new sectors and the prevailing ATF cost structure. Companies are expected to either cancel the order or lease it out to other carriers. Analysts believe that the low cost carriers (SpiceJet, Indigo and Go Air) will be the first to be hit as they target the visiting friends and relatives or leisure segment, whereas the professionals or the business segment constitutes the bulk of the customer base for full service carriers.

BATTLING IT OUT
Market Share in CY07	(%)
Jet Airways + Jet Lite	29.8
Indigo	7.6
Air India + Indian Airlines	19
SpiceJet	8.8
Kingfisher + Deccan	29.3
Go Air	4.2
Others	1.3
Source: DGCA

The LCCs, which have about 45 per cent of the market in the country, were expected to garner 60 per cent in the next three years, but with the consolidation (Jet Airways-Sahara, Kingfisher-Deccan and Indian Airlines-Air India) this looks unlikely. Ernst and Young believes that for the sector to survive, there has to be a rationalisation of ATF prices, consolidation offering synergies in operations and distribution, and improvement in airport infrastructure, which will bring down holding times on the ground and in the air. In addition, Arora believes that companies with deep pockets, ability and patience to withstand this bad patch and good quality management will survive. And, who are these players? Analysts say that if crude stabilises at current levels, none of the airlines will make money. However, if crude prices falls below $100 levels, Jet Airways and SpiceJet are the best placed to turn corner. (See: Turbulent future) While Jet Airways has a robust business model with a good mix of domestic and international routes combined with a value-based carrier Jet Lite, SpiceJet is the lowest cost carrier in the industry currently. Even for companies which are running a tight operation it is difficult to fathom how they will fund their operations considering that the sector witnessed losses of $1 billion in the last fiscal and lenders are sitting tight. Without additional funds, the outlook for the sector looks rather bleak. Says Nikhil Vora, managing director, IDFC-SSKI, "Future prospects for the companies look dim. What can be more stark than a sector with a market capitalisation of $3 billion sitting on losses of about $1.5 billion.

Hotel tariffs to melt in slowdown heat

The country's five- and four-star hotels could soon revise downwards their tariffs as the world's second fastest-growing economy heads for a slowdown. According to Crisil Research, the average room rates in cities like Chennai, Hyderabad and Bangalore are likely to fall 5-10 per cent in the next few months. Industry experts said the occupancy rates could fall from 75-80 per cent now to 65-70 per cent soon. Hotels said this is because of companies cutting their travel budgets to deal with the slowdown in business. Some large companies are even known to have hired flats in many cities to control their hotel expenses. "The industry could face rate consolidation (slashing of rates) in the next year. The rates will be slashed when the contracting season begins from October 2008 and the impact of the same would be visible on their revenues in second quarter of 2009," said Siddharth Thaker, the executive director of HVS Hospitality Services, a hotel consultancy.

DROP DOWN
City	Current room rates (avg)	Projected	Decline	Decline %
Bangalore	14,000	12,700	1,300	9.29
Chennai	7,200	6,800	400	5.55
Hyderabad	7,500	7,100	400	5.33
Figures in Rs Source: Crisil Research

Large players like ITC Hotels and East India Hotels, which runs the Oberoi chain, denied any move to reduce their room rates, though some hotels told Business Standard that such a move was indeed on the cards. A five-star hotel in north Mumbai is mulling a rate cut, while it has added other services like free breakfast and free airport-drop for its clients. The hotel charges around Rs 12,000 per room at present. Another player in the leisure segment has already revised the rates for its properties in Goa and Kerala. This could impact the price of hotel stocks in the market. "If business recorded in the next couple of months is weaker than usual, there could be downgrading of hotel sector stocks," said a Mumbai-based investment analyst. Though hotels are unwilling to talk about it openly, several travel houses, which book hotels for customers, said they had recorded a significant drop in travel bookings. Mumbai-based Sree Raj Travels, for instance, has seen a drop of over 36 per cent in international travel bookings between January and May 2008. This comes at a time when new hotels are coming up across the length and breadth of the country. With 39 hotels under various stages of development, Bangalore will have 3,000 rooms by 2008-09, as compared with the present 2,300, an increase of 30 per cent. Hyderabad will have around 2,200 rooms by 2008-09 as compared with the existing 1,600, an increase of 38 per cent. The most dramatic increase will be in Chennai, where the supply will go up by 30 per cent in a year, while the demand is projected to rise 15 per cent. To make matters worse, the cost of building a hotel could go up by 20 per cent in the current situation, experts said. Construction of the building makes 50 per cent of the cost of any hotel.

Spain beat Germany to lift Euro Cup

Convincing victory

Spain finally ended their 44-year wait for a trophy when Fernando Torres's exquisite first-half goal gave them a deserved 1-0 victory over Germany in a fast and furious Euro 2008 final on Sunday.

Spain, appearing in their first final since 1984 and seeking only their second trophy following their 1964 Euro success on home soil, were worthy winners as their crisp passing, wonderful technique and defensive discipline left Germany flailing.

Torres's goal after 33 minutes was also fit for a final as he showed all the speed, determination and quality of finish that summed up his team's whole campaign

Left to pull out if govt goes to IAEA

A day after Sonia Gandhi asked the Congress to get ready for elections, CPM announced that it would snap support to the UPA government if it took the “harmful” Indo-US nuclear deal to the IAEA. The government can now have the deal either at the cost of elections or by getting the Samajwadi Party’s 39 members to back it in the Lok Sabha.

The government is betting on the second option because no one, neither Congress or its allies, is ready for polls with double-digit inflation expected to shoot up further. SP chief Mulayam Singh Yadav has held that he would decide on the matter when the UNPA meets on July 3.

Mulayam remained noncommittal on the issue on Sunday, when he exhorted his party workers to prepare for Lok Sabha elections. This was interpreted in political parlours as the SP chief ’s resolve to drive a hard bargain with Congress.

On Sunday, the CPM politburo, attended by chief ministers of West Bengal, Kerala and Tripura, said the decision to snap support would be taken in consonance with the other three Left parties. CPM’s partners — CPI, RSP and Forward Bloc — should be making similar pronouncements next week by when the Left, with 59 members in the Lok Sabha, would also know if SP intends to bail out the government.

Significantly, RJD chief and railway minister Lalu Prasad said at a rally in Bharuch, “The UPA government will complete its fiveyear term and the nuclear deal will also go through.’’ This is the first time that the leader of a major constituent of the UPA has asserted in public that the India-US civilian nuclear deal will go through, reflecting the progress made in Congress’s talks with SP.

CPM general secretary Prakash Karat, meanwhile, said going to the IAEA board to get the safeguards agreement approved would be a “flagrant violation” of the understanding reached at the November 2007 meeting of UPA-Left committee on the nuclear deal. “In case the government decides to go ahead with such a harmful agreement, which has no majority support in Parliament, the CPM will withdraw support to the UPA government in concert with other Left parties,” Karat said, reading out prepared statement.

The Left’s idea of what would constitute a “decision” hinges on the elusive last meeting of the UPA-Left committee, as announced on Wednesday. Left leaders insist that this meeting should pen down the committee’s finding that there is no consensus on the matter. “The result should be taken to the highest level after which the PM may clarify whether he is moving with the deal or not,” a Left leader said.

The Left’s stand is now crystal clear and a formal announcement of the committee’s futility would serve no purpose. Also, with the PM slated to attend the G-8 summit in early July and IAEA talks scheduled soon after, the government has no time for niceties.
FINAL STRAW
CPM politburo says the decision to snap support would be taken in consonance with the other three Left parties

RJD chief and railway minister Lalu Prasad says in a rally that the UPA government will complete its five-year term and the nuclear deal will also go through

Telugu Desam Party, UNPA’s second important constituent, has backed the Left stand. So, SP’s lifeline to the government may also mean the death of UNPA

Rupee to test 47-level vs USD, GDP growth 6% by year-end'

Continuing flight of foreign capital from Indian equity markets and the persisting global financial crisis, hit by surging crude oil prices, are likely to send the domestic currency crashing to 47-level against the US dollar in the coming months, the experts have warned.

Since the beginning of 2008, the rupee has depreciated by over 8 per cent against the US dollar in a downward rally, which started after a sharp appreciation of over 11 per cent in the Indian currency spanning over a year-long period.

During its last appreciation leg, the rupee rose from about 45-level to a high of close to 39 per dollar mark, while it is currently inching towards 43-level amid continuing pull- out of foreign capital from India and surge in oil price.

Global brokerage and equity research major CLSA's analyst and a renowned portfolio manager Christopher Wood has said in the latest June edition of his famed "Greed and Fear" report that further rise in oil price would continue to be particularly bad news for India.

"This is both despite and because of the Reserve Bank of India's increasingly pre-emptive monetary tightening stance. The RBI raised on Tuesday the repo rate and the cash reserve ratio (CRR) by 50 bps each to 8.5 per cent and 8.75 per cent, respectively.

"Certainly, a re-test of the 12,000 level on the Sensex cannot be ruled out in these circumstances. And that will be accompanied by a further weakening in the rupee," Wood wrote.

Separately, research and analytics firm Evalueserve's Chairman Alok Aggarwal has written in a whitepaper that the rupee is expected to fall to 47 against the US dollar and GDP growth could slow down to six per cent by the fourth quarter of this fiscal.

"Should the present global financial crisis not subside, crude oil continue to trade upwards, FII outflow from India continues unabated, and the Indian government do more harm than good to the country's fiscal health in an election year, we are revising down our earlier forecasts.

"We now believe that the Sensex could drop to 12,000 in the near term, the Rupee could depreciate by another five to six per cent against the US dollar, and the GDP growth could slow to approximately six per cent by the fourth quarter of this fiscal year," Aggarwal wrote.

He also pointed out that deterioration of external and internal factors have thrown obstacles in the country's growth story.

"We also believe that the Indian government's hands are tied in an election year and it is likely to be a net negative contributor," he said.

Noting that the Indian economy is in a tight spot in the short term, the whitepaper said a number of external and internal factors are likely to create pressure on economic growth, corporate earnings and the stock market.

Further, it added that as the country's financial markets are relatively immature, small capital inflows and outflows tend to have an exaggerated impact.

Here’s your reminder

Want to be alerted about mail or card you need to send next Thursday? Turn to these services.

Feeling rushed off your feet all the time, what with meeting needs of the present and trying to plan for future commitments? You could be wishing you had an online Jeeves of sorts, somebody who could do the groundwork, organising your schedules for you, and better still, reminding you at the right moment – send so and so this card, prepare for important meeting, and so on.

Just turn to the Internet and you might start breathing easy on this front. The Web has self-organiser tools, or e-mail scheduling services, that will act as your virtual personal assistant. Using these, you can send e-mails and files in the future — once or periodically, using flexible schedules — something our regular e-mail services don’t offer.

With such a reminder utility, we can send e-mail messages/reminders to ourselves or to others about the commitments — such as an important appointment with the boss, a business meet, interviews, your family members’ birthdays, other to-do lists.

Go on, try the following e-mail scheduling services :

www.Lettermelater.com : With this Web service, you can send e-mails to anyone you wish, with the ability to have them sent at any future date and time you decide.

Most Web-based email services don’t offer the convenience to schedule e-mail messages. If you click ‘send’, the mail is delivered instantly and a feature missing from these regular services is the ability to schedule e-mail delivery.

With this Web site, you can write e-mails with your existing e-mail address, and they will get sent at the exact date/time that you specify.

Once you get registered with the Web site, you can schedule and send reminders/e-mails by logging on to the site. The messages can be sent in ‘txt’ or ‘html’ formats.

Apart from the above, you can also send scheduled messages directly from your primary e-mail program (GMail, Outlook, Thunderbird, etc) by simply e-mailing it to ‘ me@lettermelater.com’. The Web site clearly explains the steps you need to follow to send scheduled messages from your e-mail program that has an account with LetterMeLater.

By using ‘cc’ and ‘bcc’ options, you can forward scheduled e-mails to as many people as you wish.

You can also track and manage scheduled e-mails online. Your e-mail will be the return address on the e-mails you send. Your recipient can see your e-mail address and reply.

For those averse to sign-up/registration formalities, the Web site has another user-friendly feature called ‘Quick Send’. Here, there are no sign-up procedures, you can directly go to the ‘Quick Send’ option and send scheduled messages/reminders instantly.

But the e-mails you send with this format will have the return address of webuser (at) lettermelater.com.

According to the Web site, the time zone has been auto detected. If the time given does not match your local time when the page was last loaded, you must make the necessary adjustment. It has a flexible date format. You can also enter specifications such as ‘now’, ‘next week’, or ‘tomorrow at 2 p.m.’

www.timecave.com: Want to make sure you don’t forget something, whether it’s an important date or appointment? Use Time Cave, a free reminder service, to meet your commitments.

The Web site does scheduling of your e-mail delivery, like the other one we saw.

All you have to do is get signed-up with the Web site to access this service. Just drop an e-mail message or reminder into Time Cave and instruct it when to come out. It provides options such as days, weeks, months, or even years to schedule your e-mail delivery.

The neatly-designed Time Cave will hold onto your message. Once the message’s time comes, it will be delivered to your e-mail or whomever you addressed it to. According to the Web site, all messages you send to any e-mail address, other than your own, will appear to come from your e-mail ID, not from Time Cave’s. Only messages you send to yourself appear to come from Time Cave.