New Masters of the Universe (1)

8/13/2019 New Masters of the Universe (1)

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New Masters of the UniverseThe World is their Oyster

Prepared By:

Aaditi BatraAkanksha BansalDeepanshuHarjot DhawanSaransh Anand


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State Owned Enterprises(SOEs)

State owns more than10%of the shares

Account for 28of theemerging worlds 100biggest economies

SOEs are becomingwealthier and powerfuleven as the overall state

sector shrinks

Forming alliances withprivate sector specialists to

increase their access toexpertise and ideas


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Present Scenario

Financial crisis of 07- 08 shifted the

interest of SWFs intoDevelopment

Funds

Petrostate SWFsincreased their

emphasis oninvesting in Science

And Research

Taking active interestin managementof

companies


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Although it has some of the worlds

biggest state owned companies, Indias

public sector is a leftover of theLicence Raj rather than thrusting new

national champions.. Do you agree?


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License Raj

Initiated by Nehru after Independence

Lasted unto early 90s

All private companies had to get licenses andapprovals from Govt. and work under theirsupervision

National Champions


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Problems to be addressed in SOE

Extent to which Public SectorEnterprises are falling short of their

maximum possible output fromexisting set of Input & Technology.

They have failed to achieve

maximum output at the sametime have declined in technicalefficiency over time.


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Solutions to these problems:

Upgradation ofexisting technology.

Hardening thebudget option usingInput and technology

more efficiently.


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Do you thinkAir India should be

privatized?


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Glorious Past of Air India

It was the 3rd best airlines in the world 50years ago.(market share 60%)

Other Airlines used to ask AI for help inhelping them set up airlines in their home

countries (like Singapore airlines and Koreanair)

Indian Airlines which always made a profit &was a threat to Jet , Kingfisher and the otherprivate players was closed down and merged

with AI.


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Current ScenarioAir India has the fourth largest share in India's domestic air

travel market, behind Jet Airways, IndiGoand SpiceJet.

Facing financial losses(Debt of Rs. 42,570 cr)

Discontent among employees.

Poor customer service.

Market share of 14%.
http://en.wikipedia.org/wiki/Jet_Airwayshttp://en.wikipedia.org/wiki/IndiGohttp://en.wikipedia.org/wiki/SpiceJethttp://en.wikipedia.org/wiki/SpiceJethttp://en.wikipedia.org/wiki/IndiGohttp://en.wikipedia.org/wiki/Jet_Airways


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Factors affecting Air India

High Fuel Cost

High Interest Rates for external borrowings.

Cancelling of all Ai's profit making routes and giventhem to private airlines.

Problems after merger with IA.

Tough Competition.

Cronyism.


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A regrettable move?


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Solutions to this problem

Air India has never been known for best

management practices. Private sector - better equipped with CRM

strategies and implementation. Government should focus more on public welfare

services rather than running an airline Heavy bailouts is it in public interest to let tax

payers bear the brunt?

Air India- the national carrier Invalidargument

Successful examples of national airlines privatisedAustrian airlines by lufthansa

Privatizationof Air India


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The case against Privatization

Who will buy AI? - With its current level of losses and debt, AIcannot be a good business proposition for a potential buyer.

Is privatization a real solution? (Private airlines like Kingfisherare in the same boat as AI)

What is really required is professional managers, a strongleadership and structural changes in management. ( If stateowned banks can be successful, then why not state owned

airlines?)


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Bibliography http://www.dailymail.co.uk/indiahome/indiane

ws/article-2144334/Privatising-Air-India-

obvious-option.html#ixzz23iqRgbeD

http://articles.economictimes.indiatimes.com/2012-05-31/news/31922058_1_tax-on-air-

tickets-aviation-service-tax http://www.economist.com/node/21559372
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THANK

YOU!!!

New Masters of the Universe (1)

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