Saturday, March 26, 2016

A Flight Into The Shadows

When Ajay Singh ­acquired SpiceJet in February 2015, many uncomfortable questions were raised about his white knight deal with Kalanidhi Maran of Sun TV. Then there was criticism over the exemption given to the airline from making an open offer to other shareholders not to mention the lack of clarity of Singh’s sources of funds, and the puzzling silence of political and regulatory bodies on the matter. This was a deal shrouded in secrecy—no one knew the final deal price—because it had the approval of the Narendra Modi government.
Now, thanks to a fresh controversy between Singh and the Marans (there has been an inordinate delay in SpiceJet issuing stock warrants to Maran) we know that the airline was sold for the rather princely sum of Rs 2. If that isn’t shocking enough, there has also been zero investigation by any authority into the delay by SpiceJet on the issue of these warrants. “The contours of the deal are unknown and have not been made public” argues a Chennai-based chartered accountant who has been following the case closely. “Wasn’t there a case of violation of the takeover code here? Besides, why are the Marans coming up to claim the warrants now?” he wonders.
Earlier this month, the Marans ­approached the Delhi High Court against Spicejet stating the airline had not issued the warrants. Interestingly, Spicejet had already obtained shareholder approval for the issue of the warrants, yet they were not issued even 13 months after the airline changed hands. While Spicejet did not speak to Outlook, company officials talking on the condition of anonymity said that Spicejet was now waiting for approval from the Bombay Stock Exchange.
Market experts however differ on the need for obtaining BSE approval for issue of warrants of this kind.
04/03/16 Arindam Mukherjee/Outlook
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