Tuesday, November 20, 2018

Tata Group-Jet Airways talks: Take your time, cautions board to N Chandrasekaran

Mumbai: The Tata Sons board has cautioned the management against rushing into any deal with Jet Airways amid concerns of rise in the Naresh Goyal-promoted airline’s liabilities and said that it should carry out a proper and thorough due diligence.
Some Tata Sons board members urged chairman N Chandrasekaran and his team to appoint external consultants to aid in the due diligence process and make it as comprehensive as possible, two people with direct knowledge of the matter said. “Many board members have suggested to the management to be cautious and not to rush to do the deal…the board will discuss the due diligence report and will later take a call,” one of the two persons said.
The Tata Sons board needs to ratify any investment of more than Rs 100 crore by group companies under its Articles of Association. “Two external agencies will be appointed apart from the in-house team of the Tatas,” the same person said.
“A preliminary report is expected in a few weeks.’’ When contacted, a Tata Sons spokesperson said, “We do not comment on market speculation.” Last Friday, the Tata Sons board met to discuss a possible investment in Jet Airways and take over the airline.
The group issued a statement that it is in preliminary talks with Jet but said no formal proposal has been made. Jet is saddled with heavy debts and operational losses. ET learns that some board members urged caution and wanted the group to be sure of all facts before investment.
“While Ratan Tata is keen on aviation business, he is not keen on a deal at any cost…. if that was the case, Tatas would have gone ahead with the Air India deal where the guarantor was the government,” the second person said. “Jet is not a bad airline but we have to be careful of risks involved with the deal and asses the cultural fit between the two airlines.’’
20/11/18 By Kala Vijayraghavan, Indulal PM,Baiju Kalesh/Economic Times