| | | Question of the Week IndiGo co-founder Rakesh Gangwal is considered an aviation industry veteran after successful stints with Air France and US Air before he set up the Indian market leader. Name the first airline he worked for? | | |  | Here's a great value proposition A digital subscription to Mint plus WSJ can be yours at just ₹292 per month. Check out the convenient and affordable plans we have for you here. | | Good Morning Prefer audio? Now you can listen to your favourite newsletter. | | The News in Summary As evidence of the talent war that has engulfed the aviation business in India, hundreds of employees from IndiGo reported sick on 2 July, delaying several of the airline’s flights. However, what will be a bigger worry for the Indian market leader is their presence on that day at the Air India recruitment fair. Meanwhile, another market leader, Tata Power, stepped up its expansion plans for the green energy business with its chairman, Natarajan Chandrasekaran, announcing a Rs 75,000 crore investment to expand capacity. Elsewhere, Cognizant’s India chairman Rajesh Nambiar received an unexpected snub when the IT services firm announced he would no longer be an executive officer of the firm. However, he would continue to head the India business. In the same industry, TCS posted disappointing first-quarter growth and margins. No such problems for Reliance Industries, whose stock price took a hit after the government announced a windfall tax on fuel exports, but with oil prices staying strong, its soaring profits are likely to remain unaffected. | | | | IndiGo Faces Heat from Brewing Talent War  In what could serve as a warning for the future, hundreds of IndiGo’s cabin crew members took sick leave on Saturday last, with sources in the industry saying they went for an Air India recruitment drive. This ended up delaying 55% of IndiGo’s domestic flights on a day when the on-time performance of Air India, SpiceJet, Vistara, Go First, and AirAsia India ranged between 77.1% and 92.3%, respectively. IndiGo’s staff and pilots had been unhappy ever since its CEO Ronojoy Dutta told employees through an email that raising salaries is a complex and thorny issue. However, the airline would constantly review and adjust wages based on its profitability and the competitive environment. The airline, in the middle of an ownership restructuring, with co-founder Gangwal stepping down from the board and deciding to pare his 36.6% stake, had earlier suspended a few pilots planning to organize a protest against pay cuts implemented during the pandemic’s peak. The unrest at IndiGo comes when Air India, under its new owner, the Tata group, is beefing up operations through fresh recruitments triggering a talent war among airlines. In the event, Saturday’s development seemed to galvanize IndiGo into hiking the salaries of pilots and cabin crew. | | |  | | | | Tata Power Flexes its Green Energy Muscle Tata Power plans to spend Rs 75,000 crore in the next five years to expand the capacity of its renewable energy business, its chairman N. Chandrasekaran told shareholders at its recent annual general meeting. Of this, Rs 10,000 crore would be spent in 2022-23 to take the total capital expenditure (capex) during the financial year to Rs 14,000 crore. While all attention has been on the green energy forays of the Adani Group and Reliance Industries, Tata Power, India’s largest integrated power company, has achieved the renewable energy target it had set for itself by adding 707 MW of renewable capacity during FY22. With this, the company’s clean and green portfolio now stands at 34% of the 13.5 GW of total generation capacity, a number it plans to increase to 60% in the next five years and 80% by 2030. Last week, Tata Power signed a Memorandum of Understanding with the Tamil Nadu government to set up a solar cell module manufacturing unit in Tirunelveli, with an investment of about Rs 3,000 crore. Earlier, in pursuit of these ambitious plans, the company had entered into a strategic partnership and raised Rs 4,000 crore in investment from Blackrock Real Assets and Mubadala Investment company. | | |  | | | | | | | | N. Chandrasekaran, the man at the helm of the vast Tata group, is known for the clarity of his vision. In this interview with Anant Maheshwari, president of Microsoft India, Chandra talks about the key trends that will shape this decade: | | | | Cognizant Reshuffles India Chairman Rajesh Nambiar’s Position In what would appear to be a major snub, Cognizant has decided that Rajesh Nambiar, chairman of Cognizant India, will no longer be an executive officer of the company. Nambiar will, however, continue as executive vice-president, chairman and managing director of Cognizant in India, where it employs 240,000 people. The company, which has been under pressure following recent underperformance even as it faces a series of exits by top-tier executives, said that it would be simplifying its internal operating structure around practice areas and delivery operations. Last June, Cognizant named Nambiar to replace digital business & technology (DB&T) president Malcolm Frank, who was retiring. The announcement that he would cease to serve in these two roles thus comes as a surprise, as did the organizational rejig. The key question is, can any of these moves help the company improve its flagging performance. | | |  | | | | Even Windfall Tax Can’t Dent Reliance’s Profit Gusher  It isn’t often that the Reliance share price drops 9% in a day as it did last week following the government’s imposition of a steep windfall tax on fuel exports. But the news couldn’t dampen analysts’ expectations of the company, with good reason. The Russian invasion of Ukraine, which has sent energy prices soaring, has also meant bumper profits for Reliance’s energy business, with its gross refining margin (GRM) up to $24 to $26 per barrel against the $9.7 per barrel in the fiscal year 2022 and $5.9 per barrel in the fiscal year 2021. Even as Western nations placed a near-ban on oil imports from Russia, Reliance’s Jamnagar refinery increased its crude imports from the country substantially in the past three months. With 58% of its refined output exported, mainly to energy-starved markets, it is among those hardest hit by the windfall tax. But so long as oil prices continue at these elevated levels, any dip in the stock price is nothing more than a blip. | | | | Narrowing Margins at TCS Suggests Points to End of IT Party Indian IT market leader TCS posted disappointing first-quarter results with a 5.2% rise in quarterly profit from a year earlier. The company’s net profit rose to Rs 9,478 crore in the quarter ended 30 June from Rs 9,008 crore in the year-ago, trailing the Rs 9,907 crore consensus profit estimates by analysts. Rising employee costs and pricing pressures also saw the company’s margin narrow to 23.1% from 25.5% a year ago. Attrition too was up hugely, despite generous salary hikes. With growth moderating at the country’s biggest IT services firm and results of the other big companies likely to follow in the same vein, the sector’s bull run over the last year looks to be coming to an end. | | | | Last Word After the cost rationalization over the previous two years, Indian companies are now seeing manpower costs scaling new highs. Employee costs of Nifty 500 companies clocked an eight-year high growth rate of 12.4% year-on-year after single-digit growth in FY20 and FY21. The charge was led by the technology sector, which accounted for 31% of overall employee costs among Nifty 500 companies. This was followed by the banking, financial services and insurance sector, which accounted for over 22% of the employee costs. But while listed companies are seeing improved hiring trends, the unorganized sector is hurting, with small and regional companies in various sectors such as pipes, wood panels, and tile makers having to battle rising competition from larger companies. | | Answer to the Question Rakesh Gangwal’s association with the airline industry began in September 1980, when as an associate of Booz Allen & Hamilton, Inc, he worked closely with United Airlines. Subsequently, in 1984, he joined United as manager of strategic planning. | | | Do you have any questions? Send in your queries to sundeepkkhanna@gmail.com Were you forwarded this email? Did you stumble upon it online? Sign up here. | Please share your feedback with us What do you think about this newsletter? | | Written by Sundeep Khanna. Edited by Saikat Chatterjee. Produced by Samiksha Khanna. 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