Civil aviation in India highly underpenetrated

Ravi Nedungadi, President & CFO, The UB Group, says civil aviation in India is highly under-penetrated. He says it will take off in India only with the right policy framework.

Would you want to see a change in ATF duty? If the sale tax is reduced, how much would the cost benefit?
Nedungadi: The sales tax issue is a critical matter. It is something that the industry is talking to the government for more than a year. Today, we are paying different sales tax in each state, averaging to nearly 26%. It is double the price in India. We have asked that it should be given declared goods status, under which it would only attract 4% sales tax across the board.

What is the total debt and leverage posting at the company?
Nedungadi: Well, we are still deciding on the quantum of both the offerings. We are in talks with bankers and looking out at the markets. We will take a decision in a few weeks time.

What is the overall equity requirement at the company at this point in time?
Nedungadi: The nature of debt we have is for a fairly long term. So, there is not so much of pressure in terms of meeting repayment obligations. Civil aviation in India is highly under penetrated. We are still probably among the four to five least penetrated countries in the world. In an era when you talk about having fast economic growth, we think civil aviation really needs to take off. It will take off, given the right policy framework. I think we will look at alternatives where we will do a small rights issue and a GDR. If the government changes regulations and permit investments by international airline companies, we will take a different view, which could be based on strategic tie-ups.
22/09/09 UTVi

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Categories: Indian Aviation- In General Sep 2009, Kingfisher Sep 2009