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Public issue of LIC expected shortly, says Nirmala Sitharaman

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Union Finance Minister Nirmala Sitharaman on Tuesday announced that Initial Public Offering (IPO) of Life Insurance Corporation of India (LIC) is expected shortly.

Presenting the Union Budget 2022-23 in Parliament Sitharaman said the strategic transfer of ownership of Air India has been completed towards implementation of the new Public Sector Enterprise policy.
“The strategic partner for NINL (NeelanchalIspat Nigam Limited) has been selected. The public issue of the LIC is expected shortly. Others too are in the process for 2022-23,” she said.

Later replying to a question at the post-budget press conference, Sitharaman said the IPO of LIC is likely in the current financial year. “In all probability, it is going to be held this year,” she said.

Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) said LIC is likely to file Draft Red Herring Prospectus with the market regulator SEBI in the next two weeks. (ANI)

 

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Industry & Commerce

Indian cotton yarn spinners to see margin improvement after low profitability

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After a challenging year marked by low profitability, the cotton yarn spinning industry is poised for improvement this financial year, according to a report by Crisil Ratings. Operating margins for cotton yarn spinners are expected to rebound by 150-200 basis points from the decadal lows experienced last year, reaching around 10.5-11% in the current fiscal. Stable cotton prices, supported by better availability during the 2024 cotton season, alongside improved cotton yarn spreads, are cited as key factors driving this margin recovery. The stability in cotton prices is anticipated to persist, remaining below international levels, further contributing to the improved operating margins.

Revenue projections also indicate a positive trajectory, with an estimated growth of 4-6% expected this financial year. This growth is attributed to moderate expansion in downstream demand, particularly from segments such as readymade garments and home textiles. Domestic sales volume, constituting a significant portion of the industry’s revenue, is forecasted to drive this growth.

Despite a remarkable recovery in exports witnessed last fiscal year, with an 80-85% increase, export growth is expected to taper to 3-4% in the current fiscal due to sluggish global economic conditions. However, with the revival in demand and operational performance, the industry’s capacity utilization levels have already reached 80-85%, with further improvement anticipated this year.

Pranav Shandil, Associate Director at CRISIL Ratings, highlighted that while capacity utilization levels are improving, capital expenditure (capex) for cotton yarn spinners is expected to remain moderate in the near term. This cautious approach to capex reflects a recovery phase from the lows experienced in the previous fiscal year, mitigating the need for significant debt additions on already deleveraged balance sheets.

The positive outlook for the cotton yarn spinning industry suggests a gradual recovery from the challenges of the past year, with improved margins and revenue growth expected to support the sector’s resilience amidst evolving market conditions.

The anticipated improvement in the cotton yarn spinning industry, as outlined by the Crisil Ratings report, heralds a promising turnaround from the difficulties encountered in the preceding year. This shift towards a more favorable landscape is underpinned by several factors, each contributing to the industry’s resilience and potential for growth.

Firstly, the stabilization of cotton prices, coupled with enhanced availability during the current cotton season, is a pivotal driver behind the projected margin recovery. The ability to maintain cotton prices below international levels fosters a conducive environment for spinners, alleviating input cost pressures and bolstering operating margins. This stability not only fortifies the financial health of spinners but also instills confidence in their ability to navigate future market fluctuations effectively.

Moreover, the anticipated rebound in operating margins by 150-200 basis points signifies a significant uptick propelled capacity utilization levels to 80-85%, with further improvement anticipated. This upward trajectory not only augurs well for the industry’s growth prospects but also underscores its ability to capitalize on emerging opportunities amidst evolving market dynamics.

The cautious approach to capital expenditure (capex) reflects a prudent stance adopted by spinners as they navigate the recovery phase. While capacity utilization levels improve, a moderate capex outlook mitigates the need for significant debt additions, thereby preserving the deleveraged balance sheets of industry players. This disciplined approach to capital allocation underscores a commitment to long-term sustainability and resilience in the face of uncertainties.

Overall, the positive outlook for the cotton yarn spinning industry signifies a gradual yet robust recovery from the challenges of the past year. With improved margins, revenue growth, and prudent financial management, the industry is well-positioned to thrive amidst evolving market conditions, reaffirming its status as a cornerstone of the textile ecosystem.

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Due to scale-down operations, Vistara fares rise by up to 25% on major routes

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Just ahead of the peak summer travel season, travel industry insiders reported a surge of approximately 20-25% in fares across key routes such as Delhi-Goa, Delhi-Kochi, Delhi-Jammu, and Delhi-Srinagar, said in a news report.

Vistara’s decision to reduce operations by 25-30 flights daily, approximately 10% of its capacity, has led to a 20-25% increase in airfares on major routes. Ahead of the peak summer travel season, insiders in the travel industry noted a surge of around 20-25% in fares on key routes like Delhi-Goa, Delhi-Kochi, Delhi-Jammu, and Delhi-Srinagar, according to the national daily.

On average, the airline conducts approximately 350 flights daily. However, since April 1, Vistara has been forced to cancel more than 150 flights cumulatively due to pilots unexpectedly reporting sick at the end of March. Given the ongoing demand-supply mismatch leading to higher airfares, Vistara’s move has exacerbated pressure, particularly on routes affected by cancellations.

While Vistara has not specified the duration of the capacity cut, indications suggest it will likely remain in effect until at least the end of April, keeping fares high on affected routes during this period, the report said.

Notably, in the Indian airlines’ summer schedule for 2024, Vistara showed significant growth in approved domestic flights compared to the previous winter schedule and last year’s summer schedule.

This year’s summer schedule, spanning March 31 to October 26, featured 2,324 weekly domestic departures by Vistara, marking a 25.2 per cent increase over last year’s summer schedule and 22.2 per cent over the recently concluded winter schedule.

Overall, the current summer schedule for all Indian carriers combined exhibits a 6 per cent year-on-year increase in domestic departures and a 2.3 per cent sequential increase.

Facing significant disruptions and numerous flight cancellations and delays last week amid several pilots taking sick leaves as part of a protest over a new pay structure, concerns have also arisen about Vistara’s impending merger with Air India.

The carrier has tried to resolve the issues. As part of mitigation efforts, the Tata Group airline last week announced a reduction in operational capacity, primarily in its domestic network, to provide “much-needed resilience and buffer” in its crew rosters.

Vistara also announced a new salary structure for its pilots. Under this arrangement, pilots will receive a fixed salary for 40 hours of flying time instead of the current 70 hours. Additionally, they will receive compensation for extra flying hours and a reward based on their years of service with the airline.

This new salary structure was offered as Vistara, which is a 51:49 joint venture of the Tata Group and Singapore Airlines, is in the process of being merged into Air India, which is wholly owned by the Tata Group.

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Industry & Commerce

Pilots flag burnout as vistara tackles flight crisis

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The meeting centered on resolving issues regarding new contracts and scheduling. Pilots were assured of a more thoughtful utilization of their time.

Vistara airline anticipates resuming regular flight operations by the weekend following an agreement with pilots who raised concerns about fatigue. The joint venture between the Tata Group and Singapore Airlines saw pilots operating close to maximum flight duty limits, discussing health issues with management. Despite these challenges, the Directorate General of Civil Aviation (DGCA) postponed implementing revised flight duty norms, originally set for June 1, citing the necessity for further consultations. 125 Vistara Flights Cancelled More than 125 Vistara flights have been cancelled since April 1. The cancellations were attributed to a surge in pilot sick leave requests.

The most affected routes included Delhi-Indore, Delhi-Srinagar, Mumbai-Kochi, and Bengaluru-Udaipur. Spot airfares on these routes also surged by up to 38 per cent following the flight cancellations earlier this week. Vistara-Air India Merger The Competition and Consumer Commission of Singapore granted approval for the merger of Vistara with Air India in March 2024. Vistara’s CEO, Vinod Kannan, indicated plans for operational integration with Air India by mid-2025, with expectations of receiving legal clearances by mid-2024.

Vistara’s management, including chief executive Vinod Kannan, held discussions with pilots during a virtual town hall, The meeting focused on addressing concerns related to new contracts and roster. The pilots were promised more considerate utilization of their time. Kannan appealed to pilots for support in ensuring smooth operations. To alleviate the strain on resources during the crisis, Vistara reduced daily flights.

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Business News

Over 150,000 jobs created in Apple’s Indian ecosystem since Aug 2021, says report

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In a recent development, it has been reported that Apple has significantly bolstered employment opportunities within India’s tech sector since its participation in the country’s production-linked incentive (PLI) scheme for smartphones in August 2021. According to insights from an Economic Times report, Apple’s direct employment within its ecosystem in India has surged to an estimated 150,000 individuals. Remarkably, the majority of these employed individuals are young first-time job seekers aged between 19 and 24 years, as highlighted by estimates from government officials and industry experts.

Moreover, the report indicates that an additional 300,000 individuals have found indirect employment opportunities through companies benefiting from the PLI scheme. Apple’s direct employment within India currently stands at 3,000 individuals, with its iOS application development alone supporting over 1 million jobs, as per officials familiar with the matter. This signifies a substantial contribution to the Indian job market over the past 32 months, with the Apple ecosystem estimated to have created over 400,000 jobs, both directly and indirectly.

Despite facing challenges in key markets such as the United States and China, Apple has strategically intensified its focus on India, which ranks as the world’s second-largest smartphone market. Since commencing iPhone manufacturing operations in India back in 2017, Apple has steadily expanded its local production activities in alignment with the PLI scheme. Collaborating with renowned suppliers such as Foxconn, Wistron, and Pegatron, Apple has played a pivotal role in enhancing manufacturing capabilities within the country.

According to the report, Apple has cultivated a robust supplier ecosystem across various states in India, generating over 77,000 direct jobs. Leading collaborators include Foxconn, which has created 41,000 jobs, followed by Wistron with 27,300 jobs and Pegatron with 9,200 jobs. Additionally, other significant contributors such as Tata Electronics and Salcomp Technologies have played integral roles in the production of essential iPhone components, resulting in the creation of over 70,000 direct jobs.

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Industry & Commerce

HAL Achieves Double-Digit Revenue Growth with Rs 29,810 Crore in FY2023-24

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HAL’s order book surpasses Rs. 94,000 crores as of March 31, 2024, with significant orders expected for FY 2024-25, including fresh manufacturing contracts exceeding Rs. 19,000 crores and ROH contracts totaling over Rs. 16,000 crores secured in FY 2023-24.

Indian Defense Exports Surpass Rs 21,000 Crore Mark: Defense Minister
NEW DELHI: India’s Defense Minister Rajnath Singh announced on social media that the nation’s defense exports have surged past the milestone of Rs 21,000 crore for the first time, reaching Rs 21,083 crore in the fiscal year 2023-24, marking a remarkable growth rate of 32.5% over the previous year. This achievement reflects strategic initiatives by the Defense Ministry, particularly under Prime Minister Narendra Modi’s leadership, to boost indigenous defense production. About 50 Indian companies, spanning public and private sectors, have contributed to this success story, showcasing innovation and quality standards. Defense exports now span 84 countries, with major items including Personal Protective Items, Offshore Patrol Vehicles, and ALH
Helicopters, highlighting India’s growing reputation as a reliable supplier of defense equipment globally.

In a remarkable achievement, Hindustan Aeronautics Limited (HAL) has reported its highest-ever revenue from operations for the financial year ending March 31, 2024. Preliminary and unaudited figures indicate a staggering revenue of over Rs. 29,810 crores, marking a substantial growth of approximately 11 percent compared to the previous year’s 9 percent. This achievement comes despite significant challenges in the supply chain resulting from geopolitical tensions. As of March 31, 2024, HAL’s order book surpasses Rs. 94,000 crores, with expectations of further major orders in the fiscal year 2024-25, as revealed by C.B. Ananthakrishnan, CMD (Additional Charge) of HAL.

Notably, the company secured fresh manufacturing contracts exceeding Rs. 19,000 crores and Repair and Overhaul (ROH) contracts totaling over Rs. 16,000 crores during the fiscal year 2023-24. One notable highlight of the year was the signing of an export contract with the Guyana Defense Forces for the supply of 2 Hindustan-228 aircraft. Remarkably, HAL managed to deliver both aircraft within a record time of one month from the signing of the contract, showcasing the company’s proactive approach and efficiency. HAL’s performance was further underscored by significant achievements, including the successful maiden flight of the first production series fighter of LCA Mk1A on March 28.

Throughout the fiscal year 2023-24, HAL experienced a series of high-profile visits and achievements, enhancing customer satisfaction, branding, recognition, and stakeholder trust and confidence. In its pursuit of innovation and technological advancement, HAL continued to seek opportunities for collaboration and the development of newer technologies by forming alliances with both global and Indian technology partners. Noteworthy collaborations include an MoU with General Electric, USA for Transfer of Technology (ToT) and Manufacturing of GE-414 aero-engines in India for LCA MK2 Aircraft, aiming to bolster India’s Aero Engine Manufacturing Eco-system.

Additionally, a Joint Venture named SAFHAL Helicopter Engines Pvt. Ltd. was established with Safran Helicopter Engines, France for the indigenous design and development of Engines for IMRH and DBMRH. Moreover, HAL and Airbus inked a contract for the establishment of Maintenance, Repair, and Overhaul (MRO) facilities for the A-320 family of aircraft in New Delhi. This collaboration not only contributes to the Make-in-India mission but also enhances export potential. With a robust order book and an accelerated delivery plan, HAL is poised to sustain and improve its growth trajectory, thereby supporting the Indian Defence services in bolstering the country’s defense preparedness.

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Wipro GE Healthcare announces Rs 8,000 cr investment in Medical devices and R&D

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Wipro GE Healthcare on Tuesday said it will invest over Rs 8,000 crore in India over the next five years to increase local manufacturing and research and development (R&D) initiatives. The company, a leading global medical technology, pharmaceutical diagnostics, and digital solutions provider, said as a part of the investment, its ‘Made in India’ PET CT Discovery IQ scanner will be exported to 15 countries.

Additionally, locally produced Revolution Aspire CT, Revolution ACT and MR breast coils will be manufactured ‘In India for the World’, the company said in a statement. The strategic investment bolsters the company’s local manufacturing footprint to address the growing domestic and international market. It will also build supply chain resiliency for the organisation, it added.

Wipro GE Healthcare Chairman Azim Premji said India is riding the resurgent growth in the healthcare industry and rapidly expanding MedTech sector. “With ‘Make in India’, we are witnessing an exponential expansion of manufacturing footprint in the country, strengthening India’s capability as the MedTech hub of the world. “Wipro GE Healthcare has been committed to this localisation journey for over three decades and this strategic investment is testament to our vision for this sector,” added Premji, who is also the Chairman of Wipro Enterprises and the Azim Premji Foundation. GE HealthCare President and CEO Peter J Arduini said India is a high potential, high priority market for GE HealthCare globally. “In fact, we are among the first MedTech companies to ‘Make in India – for India and the World’. We will continue to invest in expanding India’s domestic capabilities and its global footprint in MedTech manufacturing and R&D,” he said. Further, Arduini said, “Today’s announcement is aligned with our strategic vision to deliver precision innovation globally and accelerate India’s position as ‘MedTech innovation and manufacturing hub for India and for world markets.”

Wipro GE Healthcare Managing Director and President & CEO, GE HealthCare South Asia Chaitanya Sarawate said, “As a local partner we are bullish about India’s potential and its journey to be ‘Atmanirbhar’ and a key cog in the resilient global supply chain. “As India envisions to be among top five global manufacturing hubs in terms of value and technology for medical devices in the coming years, we are committed to the national healthcare agenda.”

At present, Wipro GE Healthcare has four manufacturing plants in Bengaluru. All these plants are export plants and the latest one was established in March 2022, with an investment of a little over Rs 100 crore, under the Indian government’s production-linked investment (PLI) Scheme, the company said. Wipro GE Healthcare is a joint venture between GE Precision Healthcare LLC, USA, and Wipro Enterprises Ltd established in 1990. Its operations spread across India, Bangladesh, Sri Lanka, Nepal, Maldives, and Bhutan.

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