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Domestic air passenger traffic surges in May 2024: ICRA report

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New Delhi, June 6 (IANS) Domestic air passenger traffic in India saw a notable increase in May, reaching approximately 138.9 lakh passengers, marking a 5.2 per cent rise from April’s 132.0 lakh passengers, according to a recent report by ICRA, a leading credit rating agency.

This figure represents a 5.1 per cent year-on-year (YoY) growth compared to May 2023, and is significantly higher by 14 per cent when compared to pre-Covid levels.

According to the report, the airlines in India expanded their capacity deployment by 6 per cent compared to May 2023, and by 2 per cent over April 2024.

For the fiscal year 2024 (FY2024), which runs from April to March, domestic air passenger traffic totalled approximately 154 million, showing a YoY growth of 13 per cent.

The report indicated that the international passenger traffic for Indian carriers also demonstrated remarkable growth. For FY2024, it stood at approximately 296.8 lakh, reflecting a 24 per cent YoY increase.

This figure is 30 per cent higher than the pre-Covid levels of 227.3 lakh, and it has surpassed the previous peak of 259 lakh recorded in FY2019.

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In the first two months of FY2025 (April-May 2024), domestic air passenger traffic reached around 270.9 lakh, indicating a 3.8 per cent YoY growth over the same period in FY2024.

The report further said that despite a healthy recovery in air passenger traffic and improvement in yields, the movement of the latter will remain monitorable amid elevated aviation turbine fuel (ATF) prices and depreciation of the INR vis-à-vis the USD over pre-Covid levels, both of which have a major bearing on the airlines’ cost structure.

The average ATF price stood at Rs 103,499/KL in FY2024, which was lower by 14 per cent than Rs 121,013/KL in FY2023, but significantly higher by 58 per cent than the pre-Covid levels of Rs. 65,368/KL in FY2020.

In Q1 FY2025, the average ATF price remained higher by 5.4 per cent on a YoY basis. However, in June 2024, it declined by 6.5 per cent sequentially.

“Fuel cost accounts for 30-40 per cent of the airlines’ expenses, while 45-60 per cent of the operating expenses—including aircraft lease payments, fuel expenses and a significant portion of aircraft and engine maintenance expenses—are denominated in dollar terms,” said the ICRA report.

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It said that while domestic airlines have a partial natural hedge to the extent of their earnings from international operations, overall, their net payables are in foreign currency.

“The airlines’ efforts to ensure fare hikes, proportional to their input cost increases, will be the key to expanding their profitability margins,” the report said.

The report further said that some airlines have adequate liquidity and/or financial support from a strong parent, supporting their credit profiles, the credit metrics and liquidity profile of others will remain under stress over the near term, despite some improvement relative to the last few years.

–IANS

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Corporate Infotech bags Rs 114 crore project with Indian Oil for IT infra maintenance

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New Delhi, June 12 (IANS) IT Solutions Provider Corporate Infotech Pvt Ltd (CIPL) on Wednesday said it has secured a three-year contract worth Rs 114 crore from the Indian Oil Corporation Limited (IOCL) for the comprehensive annual maintenance of IT infrastructure across all divisions of the state-owned firm.

CIPL said in a statement that it will deploy more than 400 engineers to manage the regular comprehensive maintenance of IT infrastructure across 131 locations of Indian Oil nationwide.

“The landmark contract with IOCL is a remarkable achievement for the company. This exhibits CIPL’s credible track record and commitment to successfully deliver projects for our clients,” said Vinod Kumar, MD and CEO of CIPL.

The maintenance will include corrective and preventive services for a range of IT hardware, said CIPL which is a leading player in the IT and ITeS sector.

Headquartered in Noida, the company reported Rs 650 crore in turnover in FY24, and aims a total turnover of Rs 1,000 crore in FY25.

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The company has delivered several projects for public sector undertakings (PSUs) like ONGC, SPMCIL, PFMS, NTPC and Airport Authority of India (AAI), among others.

–IANS

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Production capacity of India's paint sector will double by FY27: CRISIL

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New Delhi, June 12 (IANS) Paint sector capacity is set to double to nearly 7.8 billion litre per annum (blpa) between financial year (FY) 2024 and 2027 with capital expenditure (capex) of Rs 19,000 crore by organised players including new entrant, as per the CRISIL Ratings.

According to the report, due to new entrants, competition has increased between the key players for market share and marketing expenses are likely to hit the profitability of the companies.

A large chunk of the capacity expansion, nearly 2.4 blpa, is anticipated to become operational in the current financial year. The new entrant alone will add 1.3 blpa capacity.

The expansion is dominated by the decorative segment, which accounts for 70 to 80 per cent of the total capacity.

The reports add that capex will be a mix of cash, debt, and surplus liquidity.

CRISIL expects volume capacity to continue to rise at 10 to 15 per cent annually. while operating profitability is moderate to 15-17 per cent due to intense competition among the market players.

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Overall revenue growth is increasing at a pace of 7-10 per cent in FY25.

Poonam Upadhyay, Director, CRISIL Ratings said that the volume growth of 10-15 per cent in the current financial year will be driven by sustained demand from retail and B2B (Business to Business) segments such as construction, real estate, and automobiles.

“However, pressure on realisations will partially offset the benefit of higher volume, tempering revenue growth this fiscal,” Poonam Upadhyay said.

–IANS

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Real estate and construction stocks jump after announcement of 3 crore houses under PMAY

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Mumbai, June 12 (IANS) Real estate and construction sector shares were trading in the green on Wednesday after Prime Minister Narendra Modi’s new cabinet announced the construction of 3 crore additional houses in rural and urban areas under the Pradhan Mantri Awas Yojana (PMAY).

This is the third consecutive session when real estate and sector stocks have remained bullish.

Shares of Godrej Properties, UltraTech Cement, Mahindra Lifespace, LIC Housing, ShreeCement and NCC were in the green.

In the last five trading sessions, UltraTech Cement shot up nearly 10 per cent, Ambuja and Shree Cement each rallied 6 per cent, Godrej Properties soared 5 per cent, Mahindra Lifespace Jumped 9 per cent, LIC Housing shot up 11 per cent and NCC soared nearly 10 per cent.

Buying is seen in the broader market. At 1 p.m., Sensex was up 399 points or 0.52 per cent, at 76,855 and Nifty was up 134 points or 0.58 per cent, at 23,399.

ALSO READ:  Domestic market remains range-bound

–IANS

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Govt’s push on Infra and manufacturing to continue: Vikas Khemani

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New Delhi, June 12 (IANS) Vikas Khemani, Founder of Carnelian Asset Management, on Wednesday, said that the government policies have remained focused on infra and manufacturing reform after the coalition government was formed at the Centre.

“Our investment strategy isn’t going to change with the formation of a coalition government. We believe that we will see major reforms in critical sectors of the economy,” Vikas Khemani said.

Khemani said that Prime Minister Narendra Modi has already made it clear what he has to do in the next five years.

“There has been no major reshuffle in the new cabinet, which shows that the government’s policies will continue. This is a very positive message for the market,” Khemani said.

He said the Prime Minister has also talked about becoming self-reliant many times. “I think the ongoing reforms in key sectors like power and infrastructure will continue. Our focus will be more on power because India will need more electricity in the next few years,” he said

ALSO READ:  Domestic market remains range-bound

He added that due to structural reforms done by the government, the shares of government companies are rising.

“In the last year, HAL has given returns of 164 per cent, BHEL 242 per cent, BEL 143 per cent, and SBI 45 per cent,” Khemani said.

–IANS

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Indian tyre exports bounce back in second half of 2023-24

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New Delhi, June 12 (IANS) India’s tyre exports surged in the second half of 2023-24 to touch the Rs 23,073 crore mark for the full financial year, to match the figure for the previous year, according to a statement issued by the Automotive Tyre Manufacturers’ Association (ATMA).

In the first half of the year, tyre exports were severely impacted by declining demand due to the slowdown in advanced economies, geopolitical uncertainties and inflationary pressures, ATMA said.

Indian tyres are being exported to over 170 countries including advanced markets such as the US and EU countries.

Tyre exports from India made a sharp recovery in the second half of FY2023-24 to go up by 12 per cent in value terms compared to the previous year, according to data compiled by the Ministry of Commerce.

“The resurgence witnessed in tyre exports in the second half of the year despite a tough external environment is a testament to the resilience of the Indian tyre industry to ride through challenging times and carve a niche for itself,” ATMA Chairman Arnab Banerjee said.

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“With a turnover of approximately Rs 90,000 crore and exports of over Rs 23,000 crore, the Indian tyre industry is one of the few manufacturing sectors having a high export-to-turnover ratio,” ATMA said.

ATMA sees the improvement in economic activity worldwide as offering a further opportunity for Indian tyre manufacturers.

However, ATMA claimed that certain roadblocks, especially with regard to accessing natural rubber, need to be removed to facilitate exports.

The tyre industry needs to meet pre-import conditions for natural rubber import against (tyre) export obligation. This makes the operations very constrictive and affects export performance, it said.

“The export obligation period needs to be restored to 18 months. The export obligation period (for tyres) was reduced from 18 to 6 months a while ago making it tough for the industry to access a raw material which is in short supply domestically,” ATMA added.

–IANS

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