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Business Briefing 03/10

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Maharaja’s privy purse; and a pay cut you wouldn’t mind

Stop the Maharaja’s Privy Purse

The business of running India’s national carrier, Air India, is now turning into an obscene farce. At the cost of the taxpayer’s money in a year that India faces a drought, the airline keeps spilling cash into a bottomless pit: an estimated $870 million in the last year alone. Crippling strikes have become routine. While the striking pilots and the management have thrashed out a compromise, the truce may not last long. But whatever the compromise, the loss of whatever remains of its credibility will be massive. Is there no leadership at the Aviation Ministry? Is no one in control? These are not rhetorical questions. Your money is going into this unsustainable operation. The latest flare-up is the pilots’ stand that they are being unfairly pushed into performance-based pay, while the entire board and Ministry have plundered the airline and got away scot free. The instinct of the Government will be to opt for a stop-gap measure. Some say that all airlines are going through a rough patch and Air India will weather the storm. That’s not the point. Other airlines are businesses. If they fail, they fold. Air India runs on national resources that can be better spent. Aviation Minister Praful Patel has talked of tough decisions and a complete overhaul of the airline to bring it back to financial sustainability. But tough talk has not been accompanied by action. Maybe it’s too late now.

NINAD D. SHETH

A Pay Cut You Wouldn’t Mind

Public perception clearly means a lot to Reliance ADAG Chairman Anil Ambani. When the much awaited country’s largest public listing of Reliance Power fell below investor expectations, Ambani diluted his personal holding in the company and doled out bonus shares to retail investors.Even in the messy Krishna-Godavari Basin gas feud with his elder brother Mukesh, he employed an advertising blitzkrieg to swing public opinion to his side.

Now, in tough economic climes, when austerity is the buzzword, Ambani has decided to take a pay cut. That doesn’t mean he’s taking home a smaller sum than last year, though. Confused? Here’s how he’s worked it out: the second richest Indian has forgone salaries and commissions from his group companies for 2008-09, which amount to about Rs 50 crore. Had he not, his modest package of Rs 100 crore would have made him by far India’s highest paid executive, surpassing the pay package of his elder brother.

The total amount, a princely sum of Rs 52 crore paid to Anil Ambani in 2008-09, tops the salary of any other Indian executive or promoter. In 2007-08, Mukesh Ambani, the big chief of Reliance Industries, was the highest-paid Indian executive with a packet that was worth Rs 44 crore. Kalanidhi Maran, the promoter of Sun TV network, former Ranbaxy CEO Malvinder Singh and Bharti Chairman Sunil Mittal were the other highly paid executives—with annual salaries of Rs 20 crore or more.

In 2008, when the economy was doing relatively well, Anil Ambani bought a luxury yacht worth Rs 200 crore—apparently a gift for his wife Tina. However, even with a halved salary, he can still afford a whole new fleet. Did you say life is unfair?