First Vijay Mallya. Second, (possibly) Kalanithi Maran. And next, it could be Naresh Goyal. Indian civil aviation’s big private sector promoters are, one by one, looking to bow out of an industry that has only bled them dry.
While Mallya’s Kingfisher is dead and gone, Maran’s SpiceJet is in the ICU, seeking to induct a new partner, preparatory to a possible exit.
Will Goyal, Jet Airways boss, also be elbowed out of the business he pioneered in the private sector in the early 1990s?
A report in The Economic Times today (14 January) wrongly stated that Goyal had pledged his entire shareholding of 51 percent with the Punjab National Bank (PNB). In a statement, Jet said Goyal had merely given PNB an undertaking that he would not dilute his equity below 51 percent through a sale. The statement noted that “it is thus an undertaking of non-disposal of any further equity and not a matter of pledging of his shares.” The confusion probably arose because of this disclosure made to the Bombay Stock Exchange.However, the fact that the shares have not been pledged means little when the value of the company’s debt is two times its current market value and nearly four times Goyal’s personal stake. At last count, the airline was valued at just over Rs 5,100 crore, while its debt was just under Rs 10,000 crore. Goyal’s 51 percent stake thus offers only a fig-leaf to cover the airline’s high exposure to debt. The undertaking to PNB is thus needed to give banks an additional layer of protection beyond the enterprise value of Jet Airways. In the year to March 2014, Jet had a negative net worth of Rs 2,227 crore.
14/01/15 R Jagannathan/First Post
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While Mallya’s Kingfisher is dead and gone, Maran’s SpiceJet is in the ICU, seeking to induct a new partner, preparatory to a possible exit.
Will Goyal, Jet Airways boss, also be elbowed out of the business he pioneered in the private sector in the early 1990s?
A report in The Economic Times today (14 January) wrongly stated that Goyal had pledged his entire shareholding of 51 percent with the Punjab National Bank (PNB). In a statement, Jet said Goyal had merely given PNB an undertaking that he would not dilute his equity below 51 percent through a sale. The statement noted that “it is thus an undertaking of non-disposal of any further equity and not a matter of pledging of his shares.” The confusion probably arose because of this disclosure made to the Bombay Stock Exchange.However, the fact that the shares have not been pledged means little when the value of the company’s debt is two times its current market value and nearly four times Goyal’s personal stake. At last count, the airline was valued at just over Rs 5,100 crore, while its debt was just under Rs 10,000 crore. Goyal’s 51 percent stake thus offers only a fig-leaf to cover the airline’s high exposure to debt. The undertaking to PNB is thus needed to give banks an additional layer of protection beyond the enterprise value of Jet Airways. In the year to March 2014, Jet had a negative net worth of Rs 2,227 crore.
14/01/15 R Jagannathan/First Post
