THE ENEMY WITHIN: Bogus attendance, inflated bills and overtime claims were among the malpractices unearthed during the investigation. Photo: Mohammed Yousuf

Even as Air India struggles to survive on the back of an Rs.30,000 crore government bailout, investigations conducted by its vigilance wing have unearthed over 160 cases where employees milked the airline by stealing liquor, caviar and other luxury goods from aircraft.

The cases, Union Civil Aviation Minister Ajit Singh has said in response to a question in the Lok Sabha, included a flight purser who was dismissed from service after he was apprehended with 372 mini-liquor bottles by customs at Delhi's Indira Gandhi International Airport. Similarly, a catering officer was found with Rs. 20,200 worth of caviar tins that were missing from a special charter flight.

Large scale malpractices, the Minister said, ran through the airline. Air India officials selected five-star hotels in New York, Chicago and Mumbai for cockpit crew without following the tender procedure, while the bills were raised at a Delhi airport restaurant for delayed departure even though the flight was on time.

Bogus attendance, inflated bills and overtime claims were also unearthed during investigations. For instance, two senior officers were found guilty of procuring portable entertainment appliances and ground pods through a middleman, thus causing loss to the tune of $1.6 million besides a recurring cost of over Rs. 7 crore per annum for equipment which were hardly used.

Mr. Singh said even highly-paid pilots had engaged in malpractices, with several found to have been claiming allowances to which they were not entitled. In one case, a pilot was actually found to be working for another airline while continuing to draw a salary from Air India. Air India officials, the Minister said, made payments of allowances linked to time spent for flying aircraft from the date their contracts began--whereas they were only certified to fly aircraft a month later.

Junior staff at Air India were not far behind in following their seniors. Air India officials, the Minister said, frequently misused their position to get their relatives and friends upgraded.

MUMBAI: The Indian equities markets' benchmark indices declined nearly one per cent in a volatile trading this week as a record drop in the value of rupee and lingering eurozone crisis weighed heavily on the investors' sentiments.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange ( BSE) ended the week at 16,152.75 points, down 0.86 per cent or 140.23 points from its previous week's close at 16,292.98 points.

The markets started the week on a negative note and selling pressure intensified towards the middle of the week. The benchmark Sensex slipped below the psychological resistance level of 16,000 points Wednesday.

Finance Minister Pranab Mukherjee blamed uncertainties in global economy, especially in the eurozone, for the sell-off in the Indian markets.

Mukherjee also said early this week that India's growth story was intact and the government would introduce new austerity measures to bring discipline in government spending.

The wide-based 50-scrip S&P CNX Nifty of the National Stock Exchange also witnessed volatile trading and ended the week nearly one per cent down at 4,891.45 points.

The Indian rupee slumped to record low this week. It hit an intra-day record low of 54.91 against a dollar Friday.

In fact, the rupee hit intra-day record lows during the last three trading sessions. The rupee had hit a low of 54.60 against a dollar Thursday, surpassing previous day's record of 54.52.

It also hit a new closing low of 54.49 against a dollar Wednesday and ended the week at 54.42.

Analysts said the rupee might soon touch 55 to a dollar due to grim economic outlook and limitation of options left with the central bank to intervene in the market.

"Rupee is driving the markets. Traders and investors are keeping a close eye on the RBI action, though it seems the RBI is running out of options," said Kishor P Ostwal, chairman and managing director of CNI Research Ltd.

He said the rupee was heading towards 55 to a dollar which would keep the Indian equity markets on edge.

Poor growth and inflation data also dampened sentiments at the market.

The official data released this week showed that inflationary pressure persisted in the economy. The headline inflation based on the Wholesale Price Index ( WPI) accelerated to 7.23 per cent in April as compared to 6.89 per cent in the previous month.

Inflation based on retail prices entered into double-digit largely due to a sharp increase in the prices of vegetables and food items. Consumer Price Index based inflation grew to 10.36 per cent in April as compared to 9.38 per cent in the previous month.
The latest data released by the Central Statistics Office showed that India's industrial output shrank by 3.5 per cent in March due to poor show of manufacturing and mining sectors. It was the first contraction in the factory output since October 2011, when it shrank by 4.7 per cent.

As the strike by Air India pilots entered the 12th day, government on Saturday promised to sort out problems of pilots within three months and appealed to them to join work. Civil aviation minister Ajit Singh said that whatever problems pilots have they should come forward and discuss.

"But it is not possible by creating loss or causing inconvenience to the passengers. The government will not adopt a victimisation policy, whatever problems they have will be sorted out in three months," he told reporters after inaugurating the new terminal at Chaudhary Charan Singh Airport in Lucknow.

On the issue of reinstating sacked pilots, he said, "The pilots should come back to work there will be no victimisation by the government".

"Efforts are being made to resolve the situation. It's my appeal to the pilots that they should think about the passengers," he said.

"If passengers get unhappy, it would create more problems in days to come. If the airline does not survive then there is no meaning of other things like salary, promotion or increment," he said.

As the Justice Dharmadhikari committee report is expected, there is no reason behind the strike and the pilots should come back to work, he said.

"Dharmadhikari committee was constituted to look into the problems of the pilots, their problems would be considered," he said.

The minister noted that the Delhi High Court had already declared the ongoing strike as illegal.

"The court had said the strike is illegal and they (pilots) must abide by the law," he said.

"The government has given a package of Rs. 30,000 crore for the revival of AI but money alone would not make a difference. The airline has to be competitive and pay attention to the cost," he said.

The agitation has led the ailing national carrier to drastically curtail its international flight operations, particularly those to North America and Europe.

The airline has already lost over Rs. 190 crore due to the stir.

On the financial problems being faced by the aviation sector, the minister said that cost of ATF with taxes in India was 40-50%, whereas in foreign countries it was 30-35%.

"If the cost is not reduced the problems will continue, but the manner is which passenger traffic and trade is increasing, future of the sector is bright," he said.

The BSE benchmark Sensex continued its downslide for the fourth week in a row, shedding another 140 points to finish at 16,152.75 due to persistent selling pressure in view of various negative external as well as internal factors.

Global debacle on eurozone worries amid rupee falling to

fresh historic low cast a pall over the benchmark Sensex which tumbled below 16,000-mark after four months.

The main reason for the world stock markets disaster was Greece which failed to form a government, pushing the country to new elections amid concerns that elections will ultimately lead to the country leaving the eurozone, sending global stocks to a tail-spin.

Asian shares fell steeply on eurozone debt worries after more signs emerged of growing instability among Spanish banks and political turmoil in Greece with the latest sluggish economic data from the United States adding to the list of risks for investors.

Internal factors like rise in inflation (WPI), retail inflation and fiscal deficit amid falling Indian rupee to a new historic low further aggravated the situation. High inflation dashed hopes of rate cut by the central bank.

Inflation, as measured by the Wholesale Price Index (WPI), moved up to 7.23% in April from 6.89% in March on account of spurt in prices of vegetables, meat, milk and pulses, although onion and fruits showed a declining trend. Retail inflation also spurted to double digit mark to 10.36% in April from 9.38% in March.

Fresh capital outflows too added to the woes, a broker said, adding that more outflows are expected in near term looking at the bearish tone of the market.

Sustained fall in the rupee to a new historic low to 54.91 during intra-day trading also hurt the market sentiment as importers continued to bear the brunt as depreciating rupee raises import costs, thereby impacting their bottomline.

The BSE 30-share barometer resumed higher at 16,318.36 but declined afterwards to a 19-week low of 15,809.71, before bouncing back on excellent SBI Q4 results announced Friday to settle at 16,152.75, still showing a loss of 140.23 points or 0.86% from its last weekend's level.

Similarly, the NSE broad-based Nifty also touched a low of 4,788.95, before recovering to settle at 4,891.45, still showing a loss of 37.45 points of 0.76%.

Selling was seen in auto, consumer durable, power, refinery, PSU, capital goods and banking sectors.

However, FMCG counters were in demand after weather department early this week forecast that the southwest monsoon will arrive in time.

Fall in heavyweights like Tata Motors, BHEL, Maruti Suzuki, Hindalco, Coal India, HDFC Bank, ONGC, HDFC, NTPC, Tata Steel and few others mainly weighed on the Sensex.

Contrary to the market sentiment, country's second software exporter Infosys ended with 3.18% gains after a member of company's board yesterday said early signs of business picking up in the world's largest economy US.

Construction and engineering giant from capital goods, L&T also spurted by two% after strong Q4 results and also robust future outlook.

Country's largest lender State Bank of India (SBI) ended higher by 4.85% as bank reported a forecast beating net profit of Rs. 4,050 cr for the fourth quarter (January-March) of FY12 as against Rs. 21 crore a year ago, aided by higher interest income and lower provisioning for non-performing loans.

The current situation indicated that operators and retail investors are still wary about the present uncertain scenario and preffered to stay away from the market or book profits even at current lower levels, trying to shift away from riskier assets like stocks.

Major losers from the sensex pack were Tata Motors (12.54%), BHEL (8.93%), Maruti (5.58%), Hindalco Ind (4.85%), Coal India (3.59%), Bharti Airtel (3.19%), Tata Steel (2.89%), ONGC (2.32%), Wipro (2.50%), NTPC (2.09%), TCS (1.63%) and Tata Power 1.51%.

Among the major indices, the BSE-Auto fell by 5.60% followed by the BSE-Consumer Durable 2.83%, the BSE-IPO 2.52%, the BSE-Power 2.30%, the BSE-Oil&Gas 1.09%, the BSE-PSU 1.04% and the BSE-Capital Goods 1.03% and the Bankex 1%.

However, the BSE-FMCG rose by 1.72% followed by the BSE-Healthcare by 0.66% and the BSE-IT 0.55%.

The total turnover at BSE and NSE dropped to Rs. 9,325.12 crore and Rs. 49,556.42 crore from the last weekend's level of Rs. 10,116.53 crore and Rs. 52,549.60 crore, respectively.

MUMBAI: Gold prices maintained its firmness at the domestic bullion market here today on consistent demand from stockists as well as good retail buying interest, supported by buoyant global cues.

Silver, too rallied further on renewed speculative demand amidst higher industrial off-take.

Standard gold (99.5 purity) strengthened by Rs 150 to finish at Rs 28,990 per 10 gm from overnight closing level of Rs 28,840.

Pure gold (99.9 purity) also hardened by a similar margin of Rs 150 to close at Rs 29,130 per 10 gm from Rs 28,980.

Silver ready (.999 fineness) jumped by Rs 665 per kg to conclude at Rs 54,750 from Friday's close of Rs 54,085.

On the global front, gold extended pull-back momentum on safe-haven buying as US dollar lost steam following disappointing economic data.

Gold for June delivery rose USD 17 to settle at USD 1,591.90 an ounce on the Comex division of the NYMEX.

Silver for July contract added 70 cents to USD 28.72 an ounce.

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Ajay Piramal, chairman, Piramal Group speaks to CNBC-TV18 on closing the USD 635-million deal to buy Decision Resources Group, a US-based healthcare information data provider, his interest in high-growth areas that are knowledge-based with intellectual property.

He explains his focus on the financial services sector, interest in the defence sector and lack of regret about investing in Vodafone. Piramal calls the lack of firm decision-making in government and bureaucracy to be the real challenge that India faces. 

Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying videos. 

Q: The deal comes just a month after you closed an acquisition with Bayer. Can you explain the rationale behind this particular deal, because I understand that the healthcare information industry is pegged at about USD 5.7 billion and you believe that there is a critical need for specialist information providers?

What is the kind of opportunity that you are hoping to seize with the company for which you have paid a price that's almost four times the sales and 12 times more than the EBITDA?

A: The Decision Resources Group is a company involved in providing proprietary information and analytics to the pharmaceutical and healthcare industry. The reason for our foray into this segment because it is a segment where leaders are at a premium and DRG is a leader of the segment.

As complexity in the pharmaceutical and medical tech industry keeps increasing and as growth becomes more personalized, this market is going to grow. The whole pharmaceutical market is about USD 850 billion and medical tech market is about USD 350 billion.

They are both growing and the complexities are increasing. And this calls for the requirement for high quality information.

Q: Does this acquisition meet with your 18-20% return-on-investment criteria that you have held out so far for all your other deals?

A: This will meet the criteria of investments that we have made, but do remember that this is in the US and therefore the dollar returns would be a little lower than the 18-20% of the Indian rupee. This is a business which is profitable. The company has a CAGR growth of 20% and its customers include 48 out of the top 50 healthcare companies in the market. Its rate of customer retention is 95% and has a platform of solid growth

Q: You were talking about the kind of clients that you will now get on account of this acquisition. Can you tell us about the kind of margins and that will accrue due to this acquisition? I understand that for 2012 the expected sales of USD 160 million. What is the boost in growth that you expect this company to offer?

A: The sales, as you said, for the year is expected to be in the USD 160-million range. The company has grown through a combination of organic and inorganic routes. There are enough opportunities to grow organically and target M&As.

The company has a successful track record of acquiring businesses and integrating them. So, I expect both combinations to give healthy topline and bottomline growth.

Q: In terms of acquisitions, the acquisitions that you plan to bolster the Decision Research  Group portfolio, what are the gaps currently that you hope to plug and how soon can we see you embark on an inorganic growth strategy for Decision Research?

A: We have not even acquired the company yet. I think we will complete the acquisition by the end of June and then we will look at other acquisitions which will be particularly in the same segment. They need not be necessarily large companies and could be in the USD 5-10 million range and upwards.

Q: Have you already identified any because you sound like you have set your sights on some potential targets that fit in with your larger strategy for acquiring this particular company?

A: No, we have not identified any yet. Yes, we have had a preliminary look at some of these opportunities but as I said, only when we takeover the management and get ownership of the company, is when we would look around seriously.

Q: There was a lot of talk on DRG launching an IPO. Has the IPO plan been put on the backburner or is it something that you would consider for the future?

A: We have no plans for an IPO. We believe that this business has a high potential to grow within our system and also that we have adequate funds if and when we need it. So a good free cash flow has been generated in this business. So we don’t have any plans in the near future of an IPO.

Q: What is your own opinion about the economic climate and what is the kind of war-chest that you are now working with for potential acquisitions?

A: As far as the economic environment is concerned, there is no doubt that it is very challenging whether in India country or overseas. The reason for our exit out of the domestic business was also to invest in certain high growth areas with a lot of knowledge based and intellectual property.

We invested in molecular imaging which will still require investment for a couple of years before we see any revenues sometime in 2014 or 2015 and DRG is quite the opposite where revenues will come in immediately.

Q: Your areas of focus, I understand, include OTC, research and development, healthcare information management, financial services and defence. Have you firmed up your plans on financial services? Is there any truth about the speculation in the market about your conversation with Biyani over Future Capital?

A: Let me not comment on market rumours because they surround almost every transaction we have put on the table somewhere or the other. So I don't want to comment on rumours because that has always been our policy.

But let me share with you my thinking on financial services. We have forayed into financial services in three different blocks. The first block, is the non banking financial companies (NBFC) sector and we have started an NBFC with focus on real estate and education.

This is because we believe we can offer some value, thanks to our domain knowledge of the real estate business being adequate to assess the risk is in the sector and do business where banks have not invested.

The second foray is through our private equity fund, Indiareit, is probably one of the best performing funds in the real estate sector.

The third is opportunistic investments, like the investment in Vodafone. I don't foresee going beyond these blocks in the near future.