Yes, BCCI runs its own show and it doesn't depend upon government grants for funding. Without a doubt, BCCI, as the apex cricket body in this country, should retain its independence and autonomy as far as functional activities are concerned. It is also true that BCCI does market and monetise cricket well and it deserves credit for the same. But the fact is that BCCI's marketing and monetisation efforts lead to drawing its operational funding from people of this country - sometimes directly and mostly indirectly. BCCI also generates sponsorship funding from various business organisations in this country and abroad.
In fact, BCCI is a commercial sporting body. It is significantly run and funded - directly or indirectly, through people's money and government's help - be it match ticket/entry fees, government's tax exemptions at both Centre and State levels, free use of stadiums built on government land, advertisements and promotions in the stadiums during matches, and utilisation of free government services - like security during international/domestic matches, other local administrative help, etc. Use of DD/AIR airwaves (another public asset) for match telecast/broadcasts, satellite rights - thanks to people driven TRP ratings, etc. are some other indirect benefits that BCCI draws from the people and government. It would be impossible for BCCI and its affiliates to carry out their primary sporting activity i.e. organising matches, without the aforementioned help (involving use of public assets and costing taxpayer's money and time).
More importantly, BCCI's cricket team is recognised as the National cricket Team - irrespective of the format. By virtue of being the sole representative body for cricket in India and by virtue of representing India at the International Cricket Conference (ICC), it becomes obligatory upon BCCI to be accountable to the people and government of this country. Indian embassies and consulates around the world provide logistics support and help, as required, to BCCI's cricket team/s on tours abroad. Such eminent privileges, for sure, do bring responsibility and carry accountability towards the nation.
The fact that BCCI runs on people's money and government's help, clearly, there is a case for some regulation that makes BCCI accountable – at least for the financial side of its business. It must be transparent in the way it handles money received from the people and from domestic commercial public organisations. Secondly, BCCI also receives money from international organisations against sale of TV / promotional rights, IPL Team ownerships, various sponsorship related contracts and bids, etc. As a responsible national sports body, BCCI must be transparent and be accountable for the funds that go into its coffers from abroad. Any funding received from abroad without proper authentication and money trail could result in a serious breach of government regulations or a potential national security threat.
Moreover, when even small private autonomous NBFCs (leave aside banks) which directly collect money from the people for deposits, etc. are regulated by the government ( through RBI), why shouldn't BCCI's financial transactions be regulated under appropriate laws of this country. If a NBFC markets and monetises its products well and successfully collects deposits from the people, does this mean that it should not be held financially accountable and be unregulated under prevailing laws. Should the depositors and their interests be left unprotected at the hands of such successful NBFCs? If people are contributing from their pockets, they have a right to know what happened to their money, how and where their money got spent, who made the decisions about their money, was the expense justified or not, etc. Clearly, people's interests need to be protected.
It is difficult for people in this country to have a sense of assurance that everything is fine in BCCI. There is no way to find out whether BCCI is spending its money in a dutiful, appropriate and accountable way or not. There is very little transparency except that its final accounts are made public post-facto. Yes, BCCI does have an internal audit and it does file its Income Tax returns. However, BCCI, neither makes its audit reports public nor does it inform on actions taken against major violations or wrongful deviations unearthed during those audits. The general public perception is that there are too many things - hidden and under wraps today, within the secretive fiefdom named BCCI.
Today, people have no clue to questions like how and why BCCI spent a particular amount under an expense head; what was the justification behind a major financial decision; were the transactions (credit or debit)- especially the big ticket ones executed appropriately, lawfully and as per BCCI rules; whether procedural and process compliance - right from approvals to payments, strictly followed or not; whether due diligence was done especially in financial transactions like bids, auctions, awarding of contracts; was there any case of conflict of interest amongst the administrative office holders; were the rules subverted or manipulated in any way to favour any specific party or individual and who was the culprit; who amongst the BCCI folks were parties to any particular big ticket transaction that went wrong; and so on and so forth.
BCCI can run its operations independently but it must be financially accountable under the relevant laws of this country. What if, required oversight or appropriate control mechanism in a critical area of their financial system is absent; what if, a group or a powerful individual in BCCI is cooking up a big scam there; what if, somebody with active connivance of others within the system is swindling money; what if a powerful individual and his cronies are exploiting and manipulating the system without getting caught; etc. Is there a way to get clear answers to such questions under the existing BCCI framework. It is quite doubtful.
BCCI has had an unregulated run for long. It's time now that it is brought under some kind of effective financial regulation [and not functional) without impacting its independent functioning so that it truly acquires a national representative character, proper compliance is ensured and people's interests are well protected. Else, it should lose the status as India's only representative cricket body and its teams shouldn't be called as Team India.
Aug 31, 2011
Aug 11, 2011
Let's wish Air India's Maharaja the best....
With Air India’s accumulated losses reportedly touching a whopping Rs.23000 crores, its working capital debt reaching a high of Rs.14000 crores, its total debt progressively climbing to a high of Rs.45000 crores and the daily operational deficit hitting Rs.26 crores per day mark, there is no doubt that India’s national carrier is now in dire straits. Recent defaults on interest payments, lack of available cash to pay even operational costs, piled up fuel dues, delayed employee salaries, extremely low employee morale, worsening employee-management conflicts and a half cooked merger that never took off clearly give us a snapshot of the poor health that this company is in now. It is an unfortunate story of a company which used to be India's pride just until a decade ago.
Serious management deficit, financial mess, ageing fleet, low load factor, poor aircraft capacity utilisation, corruption, operational inefficiencies, poor vision, ill-conceived policies, absence of a sound business plan, lack of readiness to combat onslaught of competition, loss of traffic on account of rationalisation of air traffic routes, loss of home country advantage, continuous neglect, bloated wage bill, huge and unsustainable workforce (mostly non-critical), political interference and powerful unions in perennial conflict are some of the reasons that appear to have contributed to the ever declining fortunes of Maharaja's empire.
Instances like Air India/IA’s decision to buy more than 100 planes in one go on unfavourable contractual and financial terms (poor purchase deals, costlier loans, escalated payments, faulty financing), delays in return of leased aircrafts, postponement of delivery of new Boeing aircrafts for months due to lack of proactive planning and absence of organisational preparedness in areas of route and fleet planning, hiring and reallocation of crews, financial planning, etc. are some glaring examples of shallow planning, directionless and inconsistent business strategy, mismanagement and poor execution.
Air India has about 32000 employees. As per reports, out of Air India’s wage bill of around Rs.3700 crores, pilots’ wages account for about Rs.800 crores i.e. about 22%. The wage share of non-critical employees is way too high. If we compare the cost structure of Air India with other top airlines like Jet and Spice, the wage bill looks extremely disproportionate. Air India’s reported employees cost is about 35% of the total costs compared to 9% at Spicejet and 13% at Jet Airways.
Government’s policy decisions and external factors like mandated high sales tax and surcharges on Aviation fuel, removal of routes with heavy loads and opening them up to private airlines, significant aviation fuel price hikes, government's disallowing of hedging and forward purchases of aviation fuel, past global economic and airline downturn, fare regulation by DGCA on some routes, government's policy of 35% capacity commitment on international routes, forced maintenance of untenable regular full time jobs due to existing labour laws, etc. have also significantly contributed to this mess of gigantic proportions.
It is also alleged by some that the ill-conceived merger of Air India with Indian Airlines also contributed to and hastened the airlines downfall. Both entities have had their own cultural DNAs such as internal processes, procedures, systems, and the ways to do their internal businesses. Post-merger, the worsening trust deficit between crew and management, unkept promises of parity between Air India and Indian Airlines pilots, strikes, poor execution, etc. didn't help either.
However, whether this merger should have taken place or not could be a new subject of conversation given the inherent opportunities of compatibility, operating synergies, economies of scale and integration that could be availed out of this merger. For instance, the benefits of compatibility of (nature of) both businesses, utilisation of unused capacity, supply chain integration, enhanced purchasing power, assets reallocation and utilisation, realignment of internal systems, reduction in operational costs, rationalisation of organisational structure and employees in merged entity, leveraging strengths of merged entities, etc. were on the table.
Operationalising of mergers between entities needs a clear and consistent vision, management's immense skill and commitment, a defined integration path with milestones, proactive planning, adequate organisational preparedness, process and systemic integration, employee integration, proper inter-cultural and information dissemination and a conflict resolution mechanism. And mergers, of course, are a time consuming process.
What needs to be done from here on in order to save our national carrier is a million dollar question. Some of the solutions are no brainers but require leadership, maturity, immaculate planning, commitment and execution. Privatisation - reducing government's stake to a minority - say 20%, running the organisation on purely business principles, appointing business like professional board members and management, having zero tolerance for political interference and indiscipline, restructuring the business plan, realigning business strategy to meet competition, rationalising and optimising costs across the company, strategic modernising of fleet in phases, inculcating a culture of professionalism and performance, initiating customer centric policies and strategies, shedding off the flab in workforce through job rationalisation and cuts in both non-critical full time and contract labour, slashing pay and entitlement cuts as required, driving austerity initiatives across the organisation, establishing performance linked incentives, retaining pilots and talent, engaging employees and their participation in decision making, honouring past pledges, renegotiating contracts with Unions and Vendors, etc. are some of the apparent measures that come to mind. There could be several other measures if this revival exercise is pragmatically thought through.
The recent decision to infuse fresh equity of Rs.1200 crores at PM's behest and a bailout package of Rs.5000 crores looks another doze of oxygen for this dying entity. Yesterday's news that Government aims to revamp Air India board and management by bringing in "fresh" talent - appointing three new independent directors from corporate world and a new CMD - from IAS who would be operating under the overall supervision of present Civil Aviation Secretary appears to be another half-hearted attempt by the government to set things right. Under the proposed dispensation, it is difficult to believe that the so called “independent’ directors on board would have the required operational freedom to execute what they think is best for the airline. This policy decision doesn’t seem to have been thought through and do not exude enough confidence.
In the aftermath of this policy decision, government today sacked the existing CMD - a Karnataka cadre IAS officer and appointed a Jt.Secretary rank IAS officer as the replacement. It is interesting to note that the new CMD is a 1982 batch officer armed with a MBA from University of Hull and has about two years of experience in Civil Aviation. Based on the available information, between 2000 and present, i.e. after his MBA in year 2000 and prior to his two year stint in Ministry of Civil Aviation, incoming Air India CMD has worked in State government departments of Welfare and Rural development. Prior to his MBA in 2000, several of his assignments have been in State government marked with some stints at Centre in Departments of I&B and Culture. It is one thing to run a small department in a State Secretariat of few hundred employees and another to run a large, complex, global commercial organisation.
It is hard to comprehend that a person with so little functional / technical experience and national exposure has been given the charge to turnaround an ailing national behemoth like Air India (NACIL). Such an appointment in private sector would be akin to committing “business hara-kiri”. His appointment is surely a backward step and another shooting in one's foot exercise. Moreover, this is another example of Air India being allowed to become a training ground for IAS officers who have no or little knowledge of the aviation sector and have no experience of running a large international commercial enterprise. Furthermore, this appears to be another blatant attempt to maintain a stranglehold over the Airlines by Ministry of Civil Aviation.
To everybody’s bewilderment, the outgoing CMD Arvind Jadhav –another IAS officer who miserably failed as Air India boss and who was hugely responsible for escalating the recent mess, was simply and quietly repatriated to his parent cadre, Karnataka. How about the accumulated losses of thousands of crores that he supervised during his three year tenure, how about several permanent damages that he caused to the organisation due to his non-experience, lack of skill, reported dictatorial approach and high handed attitude. How about the AI-IA merger that he couldn’t execute and which added to the accumulation of losses and to the damage of airlines future. How about the reported low employee morale and perennial conflicts in the organisation that he caused and was majorly responsible for during his tenure. The question now is how and when the government will hold him accountable for his actions. Will he be dismissed from service (that he deserves) or will he be forced to retire and tried in a court for his illogical decisions is something that the government needs to give a thought over. It will be interesting to see if our Parliamentarians raise Mr.Jadhav’s accountability issue in both Houses for the government to reply and act. By the way dismissal from service would be the least punishment that is meted out in a comparable situation in any private sector enterprise - big or small.
The person who is entrusted to oversee and supervise the new revival team of CMD and three "independent" Directors, interestingly, remains the same. The present Civil Aviation Secretary, Mr.Naseem Zaidi - a 1976 batch IAS officer has also been a DGCA and a Jt.Secretary in Ministry of Civil Aviation for several years. Having held such critical positions in the Ministry of Civil Aviation since mid-1990s, Mr.Zaidi would definitely be considered a part of the policy making team which supervised [notwithstanding political interferences] the progressive downfall of Air India. In other words, we have a unique situation here. We have the same person entrusted now to oversee Air India's revival who, as part of the policy making team, was responsible in many ways for bringing it down. Perhaps, Mr.Zaidi would be the one, who, the employees and unions, may trust the least in this revival process.
It is also worthwhile to mention here that Mr.Zaidi led the Civil Aviation Directorate until recent past. The organisation under his tenure saw its credibility diving to its lowest ebb. The office of DGCA, according to public perception, is considered to be a den of corruption, mismanagement, nepotism and unprofessionalism. The recent startling revelations about a number of illegal and fake pilot training institutions in operation across the country, instances of fake pilots being certified by training institutes in collusion with DGCA officials for a price, lack of firm action for years against such fake institutions and against colluding DGCA officials despite string of clinching evidences, poor aviation safety management, etc. speak a lot about the rot that DGCA is in today.
So where is the infusion of professionalism, new vision, fresh talent, vigour and energy, corporate culture, operational independence, and business like orientation in this government strategy? The government doesn't seem to be learning from its past mistakes and looks determined to let Air India bleed further towards bankruptcy. Cynics would opine that this could perhaps be a secret government policy to take Maharaja’s empire further down the dumps so that it can be privatised easily and sold cheap at throwaway price to a favourable party/s. Who knows?
Anyways, now that a new CMD has already been appointed, one can only wish him good luck and pray for his success as we want him to revive Air India. The odds though are heavily weighed against him.
Serious management deficit, financial mess, ageing fleet, low load factor, poor aircraft capacity utilisation, corruption, operational inefficiencies, poor vision, ill-conceived policies, absence of a sound business plan, lack of readiness to combat onslaught of competition, loss of traffic on account of rationalisation of air traffic routes, loss of home country advantage, continuous neglect, bloated wage bill, huge and unsustainable workforce (mostly non-critical), political interference and powerful unions in perennial conflict are some of the reasons that appear to have contributed to the ever declining fortunes of Maharaja's empire.
Instances like Air India/IA’s decision to buy more than 100 planes in one go on unfavourable contractual and financial terms (poor purchase deals, costlier loans, escalated payments, faulty financing), delays in return of leased aircrafts, postponement of delivery of new Boeing aircrafts for months due to lack of proactive planning and absence of organisational preparedness in areas of route and fleet planning, hiring and reallocation of crews, financial planning, etc. are some glaring examples of shallow planning, directionless and inconsistent business strategy, mismanagement and poor execution.
Air India has about 32000 employees. As per reports, out of Air India’s wage bill of around Rs.3700 crores, pilots’ wages account for about Rs.800 crores i.e. about 22%. The wage share of non-critical employees is way too high. If we compare the cost structure of Air India with other top airlines like Jet and Spice, the wage bill looks extremely disproportionate. Air India’s reported employees cost is about 35% of the total costs compared to 9% at Spicejet and 13% at Jet Airways.
Government’s policy decisions and external factors like mandated high sales tax and surcharges on Aviation fuel, removal of routes with heavy loads and opening them up to private airlines, significant aviation fuel price hikes, government's disallowing of hedging and forward purchases of aviation fuel, past global economic and airline downturn, fare regulation by DGCA on some routes, government's policy of 35% capacity commitment on international routes, forced maintenance of untenable regular full time jobs due to existing labour laws, etc. have also significantly contributed to this mess of gigantic proportions.
It is also alleged by some that the ill-conceived merger of Air India with Indian Airlines also contributed to and hastened the airlines downfall. Both entities have had their own cultural DNAs such as internal processes, procedures, systems, and the ways to do their internal businesses. Post-merger, the worsening trust deficit between crew and management, unkept promises of parity between Air India and Indian Airlines pilots, strikes, poor execution, etc. didn't help either.
However, whether this merger should have taken place or not could be a new subject of conversation given the inherent opportunities of compatibility, operating synergies, economies of scale and integration that could be availed out of this merger. For instance, the benefits of compatibility of (nature of) both businesses, utilisation of unused capacity, supply chain integration, enhanced purchasing power, assets reallocation and utilisation, realignment of internal systems, reduction in operational costs, rationalisation of organisational structure and employees in merged entity, leveraging strengths of merged entities, etc. were on the table.
Operationalising of mergers between entities needs a clear and consistent vision, management's immense skill and commitment, a defined integration path with milestones, proactive planning, adequate organisational preparedness, process and systemic integration, employee integration, proper inter-cultural and information dissemination and a conflict resolution mechanism. And mergers, of course, are a time consuming process.
What needs to be done from here on in order to save our national carrier is a million dollar question. Some of the solutions are no brainers but require leadership, maturity, immaculate planning, commitment and execution. Privatisation - reducing government's stake to a minority - say 20%, running the organisation on purely business principles, appointing business like professional board members and management, having zero tolerance for political interference and indiscipline, restructuring the business plan, realigning business strategy to meet competition, rationalising and optimising costs across the company, strategic modernising of fleet in phases, inculcating a culture of professionalism and performance, initiating customer centric policies and strategies, shedding off the flab in workforce through job rationalisation and cuts in both non-critical full time and contract labour, slashing pay and entitlement cuts as required, driving austerity initiatives across the organisation, establishing performance linked incentives, retaining pilots and talent, engaging employees and their participation in decision making, honouring past pledges, renegotiating contracts with Unions and Vendors, etc. are some of the apparent measures that come to mind. There could be several other measures if this revival exercise is pragmatically thought through.
The recent decision to infuse fresh equity of Rs.1200 crores at PM's behest and a bailout package of Rs.5000 crores looks another doze of oxygen for this dying entity. Yesterday's news that Government aims to revamp Air India board and management by bringing in "fresh" talent - appointing three new independent directors from corporate world and a new CMD - from IAS who would be operating under the overall supervision of present Civil Aviation Secretary appears to be another half-hearted attempt by the government to set things right. Under the proposed dispensation, it is difficult to believe that the so called “independent’ directors on board would have the required operational freedom to execute what they think is best for the airline. This policy decision doesn’t seem to have been thought through and do not exude enough confidence.
In the aftermath of this policy decision, government today sacked the existing CMD - a Karnataka cadre IAS officer and appointed a Jt.Secretary rank IAS officer as the replacement. It is interesting to note that the new CMD is a 1982 batch officer armed with a MBA from University of Hull and has about two years of experience in Civil Aviation. Based on the available information, between 2000 and present, i.e. after his MBA in year 2000 and prior to his two year stint in Ministry of Civil Aviation, incoming Air India CMD has worked in State government departments of Welfare and Rural development. Prior to his MBA in 2000, several of his assignments have been in State government marked with some stints at Centre in Departments of I&B and Culture. It is one thing to run a small department in a State Secretariat of few hundred employees and another to run a large, complex, global commercial organisation.
It is hard to comprehend that a person with so little functional / technical experience and national exposure has been given the charge to turnaround an ailing national behemoth like Air India (NACIL). Such an appointment in private sector would be akin to committing “business hara-kiri”. His appointment is surely a backward step and another shooting in one's foot exercise. Moreover, this is another example of Air India being allowed to become a training ground for IAS officers who have no or little knowledge of the aviation sector and have no experience of running a large international commercial enterprise. Furthermore, this appears to be another blatant attempt to maintain a stranglehold over the Airlines by Ministry of Civil Aviation.
To everybody’s bewilderment, the outgoing CMD Arvind Jadhav –another IAS officer who miserably failed as Air India boss and who was hugely responsible for escalating the recent mess, was simply and quietly repatriated to his parent cadre, Karnataka. How about the accumulated losses of thousands of crores that he supervised during his three year tenure, how about several permanent damages that he caused to the organisation due to his non-experience, lack of skill, reported dictatorial approach and high handed attitude. How about the AI-IA merger that he couldn’t execute and which added to the accumulation of losses and to the damage of airlines future. How about the reported low employee morale and perennial conflicts in the organisation that he caused and was majorly responsible for during his tenure. The question now is how and when the government will hold him accountable for his actions. Will he be dismissed from service (that he deserves) or will he be forced to retire and tried in a court for his illogical decisions is something that the government needs to give a thought over. It will be interesting to see if our Parliamentarians raise Mr.Jadhav’s accountability issue in both Houses for the government to reply and act. By the way dismissal from service would be the least punishment that is meted out in a comparable situation in any private sector enterprise - big or small.
The person who is entrusted to oversee and supervise the new revival team of CMD and three "independent" Directors, interestingly, remains the same. The present Civil Aviation Secretary, Mr.Naseem Zaidi - a 1976 batch IAS officer has also been a DGCA and a Jt.Secretary in Ministry of Civil Aviation for several years. Having held such critical positions in the Ministry of Civil Aviation since mid-1990s, Mr.Zaidi would definitely be considered a part of the policy making team which supervised [notwithstanding political interferences] the progressive downfall of Air India. In other words, we have a unique situation here. We have the same person entrusted now to oversee Air India's revival who, as part of the policy making team, was responsible in many ways for bringing it down. Perhaps, Mr.Zaidi would be the one, who, the employees and unions, may trust the least in this revival process.
It is also worthwhile to mention here that Mr.Zaidi led the Civil Aviation Directorate until recent past. The organisation under his tenure saw its credibility diving to its lowest ebb. The office of DGCA, according to public perception, is considered to be a den of corruption, mismanagement, nepotism and unprofessionalism. The recent startling revelations about a number of illegal and fake pilot training institutions in operation across the country, instances of fake pilots being certified by training institutes in collusion with DGCA officials for a price, lack of firm action for years against such fake institutions and against colluding DGCA officials despite string of clinching evidences, poor aviation safety management, etc. speak a lot about the rot that DGCA is in today.
So where is the infusion of professionalism, new vision, fresh talent, vigour and energy, corporate culture, operational independence, and business like orientation in this government strategy? The government doesn't seem to be learning from its past mistakes and looks determined to let Air India bleed further towards bankruptcy. Cynics would opine that this could perhaps be a secret government policy to take Maharaja’s empire further down the dumps so that it can be privatised easily and sold cheap at throwaway price to a favourable party/s. Who knows?
Anyways, now that a new CMD has already been appointed, one can only wish him good luck and pray for his success as we want him to revive Air India. The odds though are heavily weighed against him.
Subscribe to:
Posts (Atom)