Accounting & Reporting Practices

Of Aviation Sector

A Mini Project submitted in the fulfillment of the requirement of the

internal assessment.

Subject: - MBN 505: Financial & Management Accounting.

By
1. Srinivasan
2. K.Srinivasa Uma Shankar
3. K.Sriram
SRM B – School

SRM University – Vadapalani

August - 2010

Ind
ian
 Aviatio
n
Secto
r
Contents:

1. INTRODCUTION TO THE SECTOR

2. OVERVIEW O F THE A VIATION S ECTOR

 • 2 A .C LASSIFICATION OF AVIATION S ECTOR
• 2 B .C HALLENGES OF AVIATION S ECTOR
• 2 C .S WOT ANALYSIS OF AVAITION S ECTOR
• 2 D .R EASONS FOR B OOM IN AVAITION

S ECTOR
• 2 E .T RENDS IN A VIATION I NDUSTRY
• 2 F .C ONTRIBUTION TOWARDS I NDIA GDP

3. TOP PLAYERS O F THE A VIATION

S ECTOR
4. FINANCIAL POSITION O F THE
SEVERAL PLAYERS OF A VIATION S ECTOR

5. SUMMARIZATION

INTRODUCTION
The Indian aviation industry is one of the fastest-growing
aviation industries in the world with private airlines
accounting for more than 75 per cent of the sector of the
domestic aviation market (as of 2006). With a compound
annual growth rate (CAGR) of 18 per cent and 454
airports and airstrips in place in the country, of which 16
are designated as international airports, Union Civil
Aviation Minister Mr.Praful Patel has stated that the
aviation sector will witness revival by 2011.

The Airport Authority of India (AAI) manages a total of

127 airports in the country, which include 13 international
airports, 7 custom airports, 80 domestic airports and 28
civil enclaves. There are over 450 airports and 1091
registered aircrafts in the country. The genesis of civil
aviation in India goes back to December 1912 when the
first domestic air route between Karachi and Delhi
became operational. In the early fifties, all airlines
operating in the country were merged into either Indian
Airlines or Air India. and, by virtue of the Air Corporations
Act 1953, this monopoly continued for the next forty
years.

The Directorate General of Civil Aviation(DGCA)

controlled every aspect of aviation, including granting
flying licenses, pilots, certifying aircrafts for flight and
issuing all rules and procedures governing Indian airports
and airspace. Finally, the Airports Authority of India (AAI)
was assigned the responsibility of managing all national
and international airports and administering every aspect
of air transport operation through the Air Traffic Control.

With an increase in traffic movement during December

2009 and increase in revenues by almost US$ 21.4
million, the Airports Authority of India seems set to
accrue better margins in 2009-10, as per the latest
estimates released by the Ministry of Civil Aviation. This is
being primarily attributed to increase in the share of
revenue from Delhi

International Airport Limited (DIAL) and Mumbai

International Airport Limited (MIAL).

Passengers carried by domestic airlines from January-

February 2010 stood at 8,056,000 as against 6,761,000
in the corresponding period of 2009—a growth of 19.2
per cent, according to a report released by the Ministry of
Civil Aviation.

The Hyderabad International Airport has been ranked

amongst the world's top five in the annual Airport Service
Quality (ASQ) passenger survey along with airports at
Seoul, Singapore, Hong Kong and Beijing. The Hyderabad
International Airport is managed by a public-private joint
venture consisting of the GMR Group, Malaysia Airports
Holdings Berhad and both the State Government of
Andhra Pradesh and the Airports Authority of India (AAI).

The US Ambassador to India Timothy J Roemer, has said

that the US will work with the Indian government and the
domestic private sector to make the country an aviation
hub. Speaking at India Aviation 2010, Roemer said that
the public-private initiative, US-India Aviation Programme,
would work together with the Directorate General of Civil
Aviation on helicopter aviation security.
The Airports Authority of India (AAI) is set to spend over
US$ 1.02 billion in 2010, towards modernisation of non-
metro airports. AAI is planning the city-side development
of 24 airports, including those at Ahmedabad and
Amritsar. Additionally, 11 new greenfield airports have
been identified to reduce passenger load on existing
airports, according to operations, AAI.

SECTOR OVERVIEW

The Indian aviation market is booming. The estimated growth of

domestic passenger segment is at 50% per annum and growth for
international passenger segment is 25%. The international cargo
is likely to grow at a rate of 12%.

During the period April-September, 2006, international and

domestic passengers recorded a growth of 15.8 per cent and 44.6
per cent respectively, leading to an overall growth of 35.5 per
cent. Moreover, the international and domestic cargo recorded
growth of 13.8 per cent and 8.7 per cent respectively, resulting in
an overall growth of 12.0 per cent.

According to Ministry of Civil Aviation, India will need 1,500 to

2,000 passenger planes in next 10 years. Over 135 aircrafts have
already been added in the last two years alone. By 2010, India's
fleet strength will stand at 500-550. It is also estimated that the
domestic market size will cross 60 million and the international
traffic will reach 20 million in the same period. By 2020, Indian
airports are estimated to handle 100 million passengers, including
60 million domestic passengers. The amount of cargo handled will
fall in the range of 3.4 million tonnes per annum.
AIRLINES: CURRENT FLEET AND ACQUISITION &
INVESTMENT PLANS

Airlines Current fleet Acquisition plans Investment in US $billion)

Jet Airways 62 30 by 2012 2

Air Deccan 43 79 by 2010 2.7

Kingfisher 11 100 by 2012 4.5

Spice Jet 6 38 by 2010 1.9

Go Air 4 33 by 2008 2.4

Classification of Indian Aviation

Sector

The Indian aviation sector can be broadly divided

into the following main categories:

1. Scheduled air transport service, which includes

domestic and international airlines.
2. Non-scheduled air transport service, which includes
charter operators and air taxi operators.
3. Air cargo service, which includes air transportation of
cargo and mail.

Scheduled air transport service: It is an air transport

service undertaken between two or more places and
operated according to a published timetable. It includes:
1. Domestic airlines, which provide scheduled flights
within India and to select international destinations. Air
Deccan, Spice Jet, Kingfisher Airline and IndiGo are some
of the domestic players in the industry.
2. International airlines, which operate scheduled
international air services to and from India.

Non-scheduled air transport service: It is an air transport

service other than the scheduled one and may be on
charter basis and/or non-scheduled basis. The operator is
not permitted to publish time schedule and issue tickets
to passengers.

Air cargo services: It is an air transportation of cargo and

mail. It may be on scheduled or non-scheduled basis.
These operations are to destinations within India. For
operation outside India, the operator has to take specific
permission of Directorate General of Civil Aviation
demonstrating his capacity for conducting such an
operation.

At present, there are 2 scheduled private airlines (Jet

Airways and Air Sahara), which provide regular domestic
air services along with Indian Airlines. In addition there
are 47 non-scheduled operators providing air-taxi/non-
scheduled air transport services.

Apart from this, the players in aviation industry can be

categorized in three groups:
 Public players
 Private players
 Start up players

There are three public players: Air India, Indian Airlines

and Alliance Air. The private players include Jet Airways,
Air Sahara, Kingfisher Airlines, Spice Jet, Air Deccan and
many more. The start up players are those planning to
enter the markets. Some of them are Omega Air, Magic
Air, Premier Star Air and MDLR Airlines

Challenges for Aviation Industry

The growth in the aviation sector and capacity expansion

by carriers have posed challenges to aviation industry on
several fronts. These include shortage of workers and
professionals, safety concerns, declining returns and the
lack of accompanying capacity and infrastructure.
Moreover, stiff competition and rising fuel costs are also
negatively impacting the industry.

1. Employee shortage: There is clearly a shortage of

trained and skilled manpower in the aviation sector as a
consequence of which there is cut-throat competition for
employees which, in turn, is driving wages to
unsustainable levels. Moreover, the industry is unable to
retain talented employees.
2. Regional connectivity: One of the biggest challenges
facing the aviation sector in India is to be able to provide
regional connectivity. What is hampering the growth of
regional connectivity is the lack of airports.

3.Rising fuel prices: As fuel prices have climbed, the

inverse relationship between fuel prices and airline stock
prices has been demonstrated. Moreover, the rising fuel
prices have led to increase in the air fares.

4.Declining yields: LCCs and other entrants together

now command a market share of around 46%. Legacy
carriers are being forced to match LCC fares, during a
time of escalating costs. Increasing growth prospects
have attracted & are likely to attract more players, which
will lead to more competition. All this has resulted in
lower returns for all operators.

5. Gaps in infrastructure: Airport and air traffic control

(ATC) infrastructure is inadequate to support growth.
While a start has been made to upgrade the
infrastructure, the results will be visible only after 2 - 3
years.

6. Trunk routes: It is also a matter of concern that the

trunk routes, at present, are not fully exploited. One of
the reasons for inability to realize the full potential of the
trunk routes is the lack of genuine competition. The entry
of new players would ensure that air fares are brought to
realistic levels, as it will lead to better cost and revenue
management, increased productivity and better services.
This in turn would stimulate demand and lead to growth.

7. High input costs: Apart from the above-mentioned

factors, the input costs are also high. Some of the
reasons for high input costs are:-

Withholding tax on interest repayments on foreign

currency loans for aircraft acquisition. Increasing
manpower costs due to shortage of technical personnel
 SWOT Analysis

Strengths:

1. Growing tourism: Due to growth in tourism, there has

been an increase in number of the international and
domestic passengers. The estimated growth of domestic
passenger segment is at 50% per annum and growth for
international passenger segment is 25%

2. Rising income levels: Due to the rise in income levels,

the disposable income is also higher which are expected
to enhance the number of flyers.

Weaknesses:

1.Under penetrated Market : The total passenger traffic

was only 50 million as on 31st Dec 2005 amounting to
only 0.05 trips per annum as compared to developed
nations like United States have 2.02 trips per annum.

2.Untapped Air Cargo Market: Air cargo market has not

yet been fully taped in the Indian markets and is
expected that in the coming years large number of
players will have dedicated fleets.

3. Infrastructural constraints: The infrastructure

development has not kept pace with the growth in
aviation services sector leading to a bottleneck. Huge
investment requirement for physical infrastructure for
airports.

Opportunities:

1.Expecting investments: investment of about US $30

billion will be made.

2.Expected Market Size: Average growth of aviation

sector is about 25%-30% and the expected market size is
projected to grow upto100 million by 2010.

Threats:
Huge investments are expected to take place in aviation
sector in near future. It is estimated that by 2012.

1.Shortage of trained Pilots: There is a shortage of trained

pilots, co-pilots and ground staff which is severely limiting
growth prospects.

2.Shortage of Airports: There is a shortage of airport

facilities, parking bays,air traffic control facilities and
takeoff and landing slots.

3. High prices: Though enough number of low cost

carriers are already existing in the industry, majority of
the population is still not able to fly to other destinations.
 Reasons For Boom In Aviation
Industry

1.Foreign equity allowed: Foreign equity up to 49 per

cent and NRI (Non-Resident Indian) investment up to 100
per cent is permissible in domestic airlines without any
government approval. However, the government policy
bars foreign airlines from taking a stake in a domestic
airline company.

2.Low entry barriers: Nowadays, venture capital of $10

million or less is enough to launch an airline. Private
airlines are known to hire foreign pilots, get expatriates
or retired personnel from the Air Force or PSU airlines in
senior management positions. Further, they outsource
such functions as ground handling, check-in, reservation,
aircraft maintenance, catering, training, revenue
accounting, IT infrastructure, loyalty and programme
management. Airlines are known to take on contract
employees such as cabin crew, ticketing & check –in
agents.

3.Attraction of foreign shores: Jet and Sahara have

gone international by starting operations, first to SAARC
countries, and then to South-East Asia, the UK, and the
US. After five years of domestic operations, many
domestic airlines too will be entitled to fly overseas by
using unutilised bilateral entitlements to Indian carriers.

4.Rising income levels and demographic profile:

Though India's GDP (per capita) at $3,100 is still very low
as compared to the developed country standards, India is
shining, at least in metro cities and urban centres, where
IT and BPO industries have made the young generation
prosperous. Demographically, India has the highest
percentage of people in age group of 20-50 among its 50
million strong middle class, with high earning potential.
All this contributes for the boost in domestic air travel,
particularly from a low base of 18 million passengers.

5.Untapped potential of India's tourism: Currently

India attracts 3.2 million tourists every year, while China
gets 10 times the number. Tourist arrivals in India are
expected to grow exponentially, especially due to the
open sky policy between India and the SAARC countries
and the increase in bilateral entitlements with European
countries, and US.

6.Glamor of the airlines: No industry other than film-

making industry is as glamorous as the airlines. Airline
tycoons from the last century, like J. R. D. Tata and
Howard Hughes, and Sir Richard Branson and Dr. Vijaya
Mallya today, have been idolized. Airlines have an aura of
glamour around them, and high net worth individuals can
always toy with the idea of owning an airline. All the
above factors seem to have resulted in a "me too" rush to
launch domestic airlines in India.

Trends in Indian Aviation Industry

1. Consolidation in aviation sector:

The rise in the number of alliances in aviation industry
will help in further growth of aviation sector in India. The
Jet-Sahara merger is probably just the beginning. The
recent 26% stake acquisition by the Dr. Vijay Mallya
(United Breweries group) in the low-cost carrier Deccan
Aviation is further confirmation that the Indian aviation
industry is looking forward to more consolidations.

2. The number of passengers traveling by air is on

the rise:
With passenger boardings expected to double by 2025,
and aircraft operations expected to triple by the same
time, the number of passengers traveling by air is on rise.
3. For the traveling public, price is paramount in
choosing a carrier:
Due to the Internet and round-the-clock search capability,
airfares are fully transparent to the public and travelers
are choosing the lowest price option. Air travel is now a
commodity business, and legacy carriers will have to
adapt further to a low-cost/low-fare environment in order
to survive. Even business travelers, who have been less
price-sensitive, are resisting fare increases. The only
premiums that travelers are willing to pay for are time-of-
day and direct flights, not the brand.

4. Capacity is growing without much constraint.

Indian carriers are placing orders for new aircraft for
delivery in the coming period, without clear plans to retire
older planes. They are also adding significant numbers of
regional jets. The air taxi fleet is also expanding rapidly.
Kingfisher Airlines has already ordered 5 Airbus A380
aircrafts that will operate on international routes.

5. Cost structures will continue to handicap legacy

carriers as they compete with newer airlines, as well as
with overseas carriers.
Low cost carriers are posing great threats to legacy
carriers, as a result of which they are restructuring their
pricing policies. Apart from this, they are also facing
competition from overseas players.
6. Oil prices are not expected to fall.
The public sector oil marketing companies (OMCs) have
raised the prices of Aviation Turbine Fuel (ATF) by 3.5 per
cent, in line with the rise in international oil prices. This is
likely to trigger a marginal increase in airfares.

7. Outsourcing:
Private airlines are known to hire foreign pilots, get
expatriates or retired personnel from the Air Force or PSU
airlines, in senior management positions. Further, they
outsource such functions as ground handling, check-in,
reservation, aircraft maintenance, catering, training,
revenue accounting, IT infrastructure, loyalty and
programme management. Airlines are known to take on
contract employees such as cabin crew, ticketing and
check-in agents.
 Role of Aviation Industry in India
GDP

The Role of Aviation Industry in India GDP in the past

few years has been phenomenal in all respects. The
Aviation Industry in India is the most rapidly growing
aviation sector of the world. With the rise in the economy
of the country and followed by the liberalization in the
aviation sector, the Aviation Industry in India went
through a complete transformation in the recent period.

Role of Aviation Industry in India GDP-Facts

• With the entry of the private operators in this sector

and the huge cut in air prices, air travel in India were
popularized
• On February 18, 1911, the first commercial flight was
made from Allahabad to Naini by a French pilot
named Monseigneur Piguet

Role of Aviation Industry in India GDP-Growth

Factors

• The growth in the Indian economy has increased the

Gross Domestic Product above 8% and this high
 growth rate will be sustained for a good number of
years
• Air traffic has grown enormously and expected to
have a growth which would be above 25% in the
travel segment
• In the present scenario around 12 domestic airlines
and above 60 international airlines are operating in
India
• With the growth in the economy and stability of the
country India has become one of the preferred
locations for the trade and commerce activities
• The growth of airlines traffic in Aviation Industry in
India is almost four times above international
average
• Aviation Industry in India have placed the biggest
order for aircrafts globally
• Aviation Industry in India holds around 69% of the
total share of the airlines traffic in the region of
South Asia

Role of Aviation Industry in India GDP-Future Challenges

• Initializing privatization in the airport activities

• Modernization of the airlines fleet to handle the
pressure of competition in the aviation industry
• Rapid expansion plans for the major airports for the
increased flow of air traffic
• Immense development for the growing Regional
Airports
Role of Aviation Industry in India GDP-FDI Policy
The Reserve Bank of India (RBI) announced that foreign
institutional investors might have shareholdings more
than the limited 49% in the domestic sector.

Airports
 Foreign equity up to 100% is allowed by the
means of automatic approvals pertaining to
establishment of Greenfield airports
 Foreign equity up to 74% is allowed by the
means of automatic approvals pertaining to the
existing airports
 Foreign equity up to 100% is allowed by the
means of special permission from Foreign
Investment Promotion Board, Ministry of
Finance, pertaining to the existing airports

Air Transport Services

 Up to 49% of foreign equity is allowed by the
means of automatic approvals pertaining to the
domestic air transport services
 Up to 100% of NRI investment is allowed by the
means of automatic approvals pertaining to the
domestic air transport services.

Foreign Equity Participation in Air Transport

Services

The Domestic Air Transport Policy approved by the

government provides for foreign equity participation up
to 49% and investment by Non-Resident Indians (NRIs) up
to 100% in the domestic air transport services. Foreign
airlines are, however, not permitted to pick up equity
directly or indirectly.

Moreover, the flow of foreign investment into aviation is

likely to get smoother as the government is planning to
fix a higher foreign direct investment (FDI) ceiling for five
sub-sectors of the industry. The FDI ceiling for the sectors
would be higher than the 49% allowed in airlines now.
The five categories proposed in the Cabinet note for FDI
review include maintenance, training facilities, cargo
handling, passenger handling and chartered services.

TOP PLAYERS

Players in Indian aviation industry can be

categorized in three groups:

• Public players
• Private players
• Start up players
There are three public players: Air India, Indian Airlines
and Alliance Air. The private players include Jet Airways,
Air Sahara, Paramount airways, Go Air Airlines, Kingfisher
Airlines, Spice Jet, Air Deccan and many more. The start
up players are those which are planning to enter into the
markets. Some of them are Omega Air, Magic Air, Premier
Star Air and MDLR Airlines

Top Aviation Companies in India

• Air Charter Services Pvt Ltd: Air Charter Services

Pvt. Ltd. performs its business operations with
private business aircrafts, executive and corporate
air charters, helicopter tours, VIP charter flights, and
photo and video flights. Its client list incorporates
VIPs, corporate firms, tour co-coordinators, travel
agents and air medical evacuation professionals. It
provides services such as relief, VIP, air ambulance
and privacy services.
• Air Charters India: Air Charter India is owned by
the STIC Travel Group and has around 100 airplanes
in India. It covers several international destinations
with an unmatchable logistics support. The aviation
company has 40 offices with a highly skilled
manpower of above 1000 people. It offers services
like heli-skiing, charter flights for pilgrimage in India,
heli-sightseeing, corporate jets, executive jets, etc.
Air Charter India provides airplanes such as
helicopters, business aircrafts, aircrafts for
corporates, individuals and group travelers.
• Air India: National Aviation Company of India
Limited (NACIL) was the first Indian aviation company
which led the way for other companies in the aviation
sector. It was initiated before the India gained its
independence. Later it collaborated with Indian
Airlines and gained the reputation of being the
largest airline in South Asian airline. Air India Cargo,
Air India Express and Air India Regional are its
subordinates in aviation market. It offers First class,
Executive class and Economy class services and has
codesharing pacts with companies like Air France,
Austrian Airlines, Aeroflot, Air Astana, Emirates
Airline, Air Mauritius, Kuwait Airways, etc.
• Aviation India: Aviation India provides services like
cargo services, flight operation, air charter services,
passenger services, freight control, advisory and
consultancy, aircraft preservation and renovation,
international flight operation, air supervision and
helipad engineering, etc. The airlines has skilled
workforce and offers total control and functional
back-up to several international schedule / non-
schedule operations.
• Indian Airlines: Indian Airlines was inaugurated on
1st August, 1953 and in collaboration with its fully
governed subordinate in aviation market Alliance Air,
it takes pride in being recognized as one of the
biggest regional airline systems in Asia. It has a fleet
of 70 airplanes and covers 76 destinations, 58 Indian
destinations and 18 foreign destinations. Globally it
covers Oman, UAE, Kuwait, Qatar, Singapore,
Yangon, Pakistan, Maldives, Bangladesh, Sri Lanka,
etc.
• Deccan Aviation Ltd.: The aviation company has
its presence in 8 places namely, Mumbai, Ranchi,
Surat, Hyderabad, Bangalore, Katra, Colombo (Sri
Lanka) and Delhi. It has 350 daily departures and
covers 65 destinations in India. It offers the benefit of
no-cost travel to infants, ticketing counters, lavish
aircraft interiors and ticketing flexibility.
• Indigo: Indigo is a utilitarian low-price domestic
airline which offers feasible flying alternatives for
millions. The airline was facilitated by the Air
Passengers Association of India (APAI) as the “Best
Low-Fare Carrier in India for the year 2007”. Indigo
has 120 daily departures and a fleet of 19 Airbus
A320. The airline covers 17 destinations namely,
Agartala, Bangalore, Bhubaneshwar, Ahmedabad,
Delhi, Chennai, Guwahati, Hyderabad, Goa, Imphal,
Kolkata, Mumbai, Vadodara, etc.
• Paramount airways: Paramount Airways is a
business class airline which has its base in India and
headquarters at Chennai. Endorsed by Madurai-
based Paramount Group and Paramount Railways
was inaugurated in 19th October 2005. Its fleet
comprises 5 aircrafts and it operates in 8
destinations.
• Go Air Airlines: Like SpiceJet, a Go Air airline is also
a low price airline endorsed by the Wadia group. It
was inaugurated in Mumbai in June 2004. It operates
in 11 cities with 61 daily departures. It has started its
functions in Ahmedabad, Chennai, Bangalore,
Coimbatore, Goa, Cochin, Jaipur, Mumbai, Pune,
Delhi, Srinagar, etc.
 • Kingfisher Airlines: It is the one and only 5-star
airline in India which offers excellent first class
service on domestic itineraries also. A part of UB
group, Kingfisher Airlines has received 30 awards for
its novelty and customer satisfaction. After its tie-up
with Deccan, the airline covers 64 cities and has 484
daily departures.
• Spice Jet: Spice Jet is basically a low cost airline
which incorporates many Boeing 737-800 airplanes
in its fleet. It covers 14 destinations in India.
• Air Sahara: Air Sahara was inaugurated on
December 3, 1993 with a fleet of only two Boeing
737-200s. Now it comprise of 27 aircrafts, 135 daily
departures and availability of 16500 seats on regular
basis. It reaches various Indian destinations like
Bangalore, Kolkata, Delhi, Lucknow, Mumbai,
Chennai, etc.
• Jet Airways: Jet Airways was established on May 5,
1993. It earns yearly revenue of Rs 2502.89 and total
income of approx Rs. 117868.8 Million. At present it
id India's biggest private domestic airline with 62
aircrafts and a market share of 25%. It covers 50
destinations with 340 regular departures. Jet Airways
has pacts with foreign airlines, such as Lufthansa,
Swiss, Gulf Air, Austrian Airlines, Qantas and Thai.

Market share of key players in the Indian aviation

sector
Name of the players Market
Share

Kingfisher Airlines and Kingfisher Red 28%

(previously Air Deccan)

Jet Airways and Jet Lite (previously Air 25%

Sahara)

Air India and Indian (previously Indian 16%

Airlines)

IndiGo 14%

SpiceJet 12%

GoAir 3%

Paramount Airways 2%

MDLR Airlines 0.004%

Logos and pictures of the players
of Indian Aviation sector
Proud Owners of The Indian
Aviation Sector

From Top left to Bottom:

1.Naresh Goyal MD of Jet
airways
2.Vijjaya Mallya MD of King
Fisher
3.Jeh Wadai MD of Go Air
4.Siddhanth Sinha MD of Spice Jet
5. Owner Of Upcoming MDLR Airlines
 Summarization

Indian Aviation has seen high growth on account of

sustained Indian socio economic growth and liberalized
Government initiatives

Airport Infrastructure needs to improve significantly to

meet the current and future demand of the Indian
Aviation Sector

Authorities have initiated various steps to implement

modernization, reconstruction and development of
airport infrastructure to implement infrastructure
development plan

Provides a huge opportunity for private players operating

in Aerospace and allied industries

Significant opportunity for foreign companies as Indian

companies not technologically equipped to cater to
requirements.