Saturday, 2 March 2013
If Dr Vijay Mallaya, Sahara, Gopal Kanda cheated you That dosen't mean that whole Aviation Industry is Bad Remember Aviators like Captain JRD Tata too :-)
Friday, 1 March 2013
The carrier has lost its traffic rights allowing it to fly 21 times a week into the UAE.
India’s Kingfisher Airlines has ceased serving the UAE after the Indian Ministry of Civil Aviation withdrew the carrier’s international flying rights and domestic slots on Tuesday.
The airline had been allocated traffic rights by India’s aviation governing body around five years ago to fly 21 times a week into Dubai.
A statement issued by the ministry said that Shri Ajit Singh, minister of civil aviation, “has decided to withdraw all International Bilateral Traffic Rights allocated to Kingfisher Airlines with immediate effect”.
As well as Dubai, the carrier will no longer service Bangladesh, Hong Kong, Nepal, Singapore, Sri Lanka, Thailand and the UK. The traffic rights will be handed over to other Indian carriers.
“These international traffic rights have been withdrawn from Kingfisher Airlines on account of non-utilisation by the airlines,” the statement read.
“This would give additional availability of approximately 25,000 seats per week for use by other Indian carriers to these eight countries, some of which are much in demand by these carriers.”
The revoking of its international flying rights is the latest blow to the carrier after it lost its license at the end of last year.
The airline has been grounded since October 1 following staff protests and refusal of banks to grant fresh loans.
The carrier has been in discussion with various investors, including Gulf carriers, for equity investments but so far nothing has materialised.
Kingfisher, which launched in 2005, had been due to join the Oneworld alliance, but its membership was put on hold.
|Kingfisher Airlines slides 5%; hits lower circuit|
Shares of Kingfisher Airlines continued its downslide on the bourses on Wednesday and tanked a further 5% after the government withdrew international bilateral traffic rights and domestic slots ofKingfisher Airlines. Spelling more trouble for ...
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|Kingfisher Airlines Loses Rights To Fly To Dubai|
Gulf Business News
India's Kingfisher Airlines has ceased serving the UAE after the Indian Ministry of Civil Aviation withdrew the carrier's international flying rights and domestic slots on Tuesday. The airline had been allocated traffic rights by India's aviation ...
See all stories on this topic »
|Kingfisher Airlines share continues to slide; hits lower circuit|
After the Government withdrew international bilateral traffic rights and domestic slots of KingfisherAirlines, shares of the beleaguered Airlines fell as much as five per cent on the bourses on Wednesday and got stuck in the lower circuit limit of Rs ...
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|UBL introduces 'Kingfisher Blue' in Andhra Pradesh|
United Breweries Limited (UBL), which commands over 50 per cent share of the Indian brewing market, as part of its expansion plans recently launched its beer range - 'Kingfisher Blue' in Andhra Pradesh, according to a Hindu Business Line report ...
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India Capital Market Regulator SEBI Cautions Investors from Dealing with Subrata Roy Sahara, Issues Public Notice
India Capital Market Regulator SEBI Cautions Investors from Dealing with Subrata Roy Sahara, Issues Public Notice Taking head-on, the might and influence of Subrata Roy the
When irresistible force collides with an immovable object, something has to give. In the coming weeks, we will know whether the political heft of Subrata Roy of the Sahara Group can save him from the combined might of two of India’s most powerful regulators – the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi).
The short message from the two regulators to Sahara is simple: return the money to investors and depositors and get out. Your money-raising business is risky for investors.
Regulators being regulators, that’s not the actual language used, but it’s a plain-English translation of their stance.
The Sahara Group – which is into various kinds of barely-legal fund-raising schemes that have shocked the regulators – was asked three years ago by the RBI to wind down the deposit-taking operations of Sahara India Financial Corporation (SIFC), a residuary non-banking finance company. It was forced to stop accepting deposits maturing after June 30, 2011, and has been asked to return all remaining deposits by June 30, 2015. But it did not do so – as we shall see later.
Now, Sebi, in an order dated June 23, has ordered two other Sahara companies – Sahara Commodity Services Corporation and Sahara Housing Investment Corporation (SHIC) – to return the money collected through the issue of optionally fully convertible debentures (OFCDs) from investors with 15% interest. SHIC was formerly called Sahara India Real Estate Corporation (SIREC).
The two companies, which had minuscule net worth of a few lakh rupees when they started passing the hat around to investors in 2008 and 2009, had the gumption to target a collection of a humongous Rs 40,000 crore – yes, Rs 40,000 crore – for vague purposes before Sebi stepped in. And, curiously for an OFCD issue involving 6.6 million investors, the issues were to be kept permanently open. Something unheard of in the capital market. OFCDs are debentures which investors can convert into shares at their option.
According to a calculation by Business Standard, the amount to be disgorged following the Sebi order would be in excess of Rs 4,383 core. The order is subject to confirmation by the Supreme Court.
The Sebi order also bars Subrata Roy and his aides from accessing the capital market till the money is returned.
Among other things, Sebi has found that the two companies did not have proper lists of investors, were raising money from the public by pretending it was a private placement of shares when it was actually a public offer, had filed red herring prospectuses with the Registrar of Companies with the deliberate idea of excluding Sebi’s jurisdiction, and were planning to operate bank accounts of different companies as though they were one. In short, it has accused Sahara of a potential failure of fiduciary responsibility.
If we connect the dots, the fact that the RBI had asked SIFC to wind down and return the deposits ties in well with the fact that two other Sahara companies were trying to raise ultra-large amounts of money on various pretexts. It is not difficult to imagine that the money could flow from these two companies to the one under pressure from the RBI.
The Sebi order, written by wholetime member KM Abraham, hints at the possibility of the Sahara Group running a Ponzi scheme. A Ponzi scheme is one where the operator relies on new investors to pay off older investors. Bernie Madoff got 150 years in prison for running a Ponzi scheme in the US.
Was (or is) Sahara running one? Sebi doesn’t say so. The reference to Ponzi comes in this context. When Sahara’s legal eagles were given a chance to air their views on why the two companies should not be asked to return the money collected to investors, they pointed out to Sebi that there were no complaints from investors at all.
To which Abraham says: “Most major ‘Ponzi’ schemes in the financial markets, which have finally blown up in the face of millions of unsuspecting investors, have historically never been accompanied by a gradual build up of investor complaints. But when financial catastrophes have indeed finally erupted, they do so with little warning and lead to major collapses in the financial markets with disastrous consequences to investors.”
Ponzi or not, both the RBI and Sebi are clearly worried about the systemic risks of allowing Subrata Roy to run his financial schemes.
Two things are clear: for whatever reason, Roy seems to need a lot of money pronto; and there are enough gullible investors out there who don’t check to see whether companies raising money are even allowed to do so. Which is why the regulators have taken pre-emptive steps.
But from here on the battle lines get blurred. Once the Supreme Court confirms the Sebi order, the man who counts many top Uttar Pradesh politicians (Mulayam Singh, among them), showbiz celebrities (Amitabh Bachchan and many Bollywood stars) and the cricketing fraternity (he is the official sponsor of the Indian cricket team and owner of the Pune IPL franchise) as his friends will need all the support they can give.
But political clout has not worked so far. In the growing climate of public anger against corruption and official wrongdoing, the courts and regulators have found the courage to plod on against people tilting against the law. Subrata Roy’s companies are up against it precisely because of this climate where an A Raja or Kanimozhi cannot get bail easily.
Pushed to the wall by the RBI, Roy’s companies have been raising money through various means. But the RBI struck back in January, when it released notices in newspapers saying they were not supposed to raise money. The notice said that of the three Sahara companies registered with it, one (SIFC) had been asked to wind up its deposit taking business, and the other two – Sahara India Corp Investment and Sahara India Infrastructure Development – had no business raising deposits.
But thanks to the wide enough public recognition the Sahara Group enjoys through its para-banking arm and association with two Indian passions – cricket and films – money was being raised anyway in the name of the Sahara Parivar.
This forced the RBI to warn that “it does not guarantee the repayment of deposits accepted by SIFC or any other company in that group.” Strong words from a regulator.
But the war is far from over. While Abraham has delivered his order, by a curious coincidence, he has complained to Prime Minister Manmohan Singh that tax officials are harassing him at the instigation of some officials in the finance ministry. In his letter, he has also alleged that similar treatment was being meted out to a colleague, MS Saboo. Both Saboo and Abraham apparently bought apartments in Mumbai in 2009.
Equally curiously, neither Abraham nor Saboo has been given an extension by the finance ministry though both were eligible. Abraham retires as Sebi member on July 30 this year. Sebi’s previous Chairman, CB Bhave, who too was not given an extension after being widely presumed to have the finance ministry’s nod, is also being probed by some agencies.
But his parting kick to the Sahara Group is reminder enough of the diligence he has brought to investigating the affairs of a controversial group with friends in high places.
Thursday, 21 February 2013
The United Breweries Group, which controls debt-ridden Kingfisher Airlines Ltd, said on Thursday that it has approached the Supreme Court on the summons issued to the airline by the Special Court for Economic Offences earlier in the day.
The court had issued the summons to Kingfisher head Vijay Mallya on a complaint from the Income-Tax (I-T) Department on Tuesday that the company had not remitted Rs 74.94 crore which it deducted as tax deducted at source in 2009-10 from employee salaries. The I-T department also slapped on interest of Rs 23.70 crore on the airline for not meeting its deadline for payment.
A UB Group spokesman said in a statement late on Thursday that the I-T department’s demand of Rs 74.94 crore on salary TDS has already been paid by the company to the tax authorities. Following various appeals against the I-T department’s tax demand, the company has approached the Supreme Court by means of a special leave petition and the hearing on the same has been posted to March 8, 2013, the spokesman said.
“The (I-T) demand has in fact been set aside by the Income Tax Appellate Tribunal, Karnataka, and it is the company’s considered view that currently no demand exists,” he affirmed, adding that the case filed by the I-T department is “infructuous and needs to be withdrawn”.
The I-T Department had also complained that Kingfisher owes the government Rs 401 crore by way of TDS deducted from salaries of its employees and from payments made to others in the financial years 2008-2012.
Kingfisher, which has not flown a single flight since October 1 last year, currently carries debt of nearly Rs 8,000 crore and accumulated losses and liabilities of like amount on its wings. The airline was grounded after its pilots and engineers went on a strike over non-payment of salaries and is now under threat from lenders who plan to start recovering their dues.
Last week, UB said that it has not hypothecated or pledged the “Kingfisher” brand or shares in the company to any lender to secure its loans.
|Kingfisher moves SC on tax demand|
The court had issued the summons to Kingfisher head Vijay Mallya on a complaint from the Income-Tax (I-T) Department on Tuesday that the company had not remitted Rs 74.94 crore which it deducted as tax deducted at source in 2009-10 from employee ...
See all stories on this topic »
|Kingfisher Predicts Profit at Consensus After U.K. Sales Decline|
Kingfisher Plc (KGF), Europe's largest home-improvement chain, said adjusted annual profit will match analysts' expectations after reporting a sales decline in France, its biggest market, that eased in the fourth quarter. Sales at French stores open at ...
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|Kingfisher sees efficiencies helping meet forecasts|
LONDON (Reuters) - Kingfisher Plc (KGF.L), Europe's No. 1 home improvements retailer, is looking to further efficiency savings to offset a worse than expected sales fall and allow it to meet forecasts for yearly profit. The group, which runs market ...
See all stories on this topic »
|Kingfisher Slips on Poor B&Q Sales|
LONDON -- Kingfisher (LSE: KGF ) this morning released a trading update for the fourth quarter, which saw the company suffer after a tough period. Although total sales for the 14 weeks to 2 February 2013 against the 13-week period last year were up 1.5 ...
See all stories on this topic »
|Kingfisher endures 'tough' year|
B&Q's owner Kingfisher said the UK and Ireland performance was offset by better trading at Screwfix, where sales rose 10.3% on a year ago due to new outlets and the roll-out of its "click, pay and collect" initiative. Kingfisher chief executive Ian ...
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Wednesday, 20 February 2013
Citi Bank already discontinues Jet Airways co-branded Credit Card
'The ICICI Bank Kingfisher Airlines credit card will be valid till March 31, 2013'
Top private sector lender ICICI Bank has decided to discontinue its co-branded credit card with Kingfisher Airlines in the wake of continued grounding of the debt-laden air carrier.
“ICICI Bank and Kingfisher Airlines co-brand credit card programme has been discontinued due to discontinuation of Kingfisher Airlines services,” the bank said in a communication to its customers.
“As a result, the ICICI Bank Kingfisher Airlines credit card will be valid till March 31, 2013,” it said, while asking the card users to opt for another credit card from the bank.
The bank further said it will issue an ‘ICICI Bank Platinum Visa Credit Card’ to the users of ICICI-Kingfisher card without any annual fees from March 15 onwards with same interest rate and credit limit as that on the existing card.
The customers would, however, be free to opt for any other card available with the bank as per their requirements.
ICICI Bank used to be a major lender for the ailing airline, but later sold off its entire Kingfisher debt of Rs 430 crore loans to a debt fund managed by SREI Infra Finance in July 2012.
Engulfed in a major crisis involving huge debts of over Rs 7,500 crore and non-payment of staff salaries, Kingfisher Airlines had to ground its services last year and the carrier is still struggling to revive its operations.
The airline has never posted a full-year profit and it has accumulated losses of about Rs 8,000 crore.
A host of lenders, including public sector giant SBI, recently decided to start the process of recalling their loans to Kingfisher after months of discussions with the airline management for recovery of their debt and revival of the carrier’s flight operations failed to yield desired results.
|Hidden message behind Jet fare cut: Kingfisher RIP|
This week has brought several signals in the Indian aviation market, and all point to the same conclusion: there ain't no signs of a long-term revival in the industry, despite some recent profit reports. Yesterday, Firstpost reported the relaunch of ...
|Kingfisher Airlines shares hit upper circuit in afternoon trade|
Kingfisher Airlines shares today surged as much as five per cent to hit the upper circuit limit in afternoon trade on the bourses after the cash-strapped carrier started paying salaries to some of its employees. According to sources, Kingfisher ...
|Queen Victoria exhibit is extended at Chisholm Trail Museum in Kingfisher|
Museum director and curator Adam Lynn stands between a print from the 1800s of Queen Victoria and a display case with ceremonial robes belonging to the Burns family of Scotland on display at the Chisholm Trail Museum in Kingfisher. The exhibit has been ...
One of the Biggest reason for
Global Aviation Recession
Why some Airlines Owners Cheats ?
Mr Subrata Sahara,
Dr Vijay Mallya,
Gopal Goyal Kanda
Gopal Goyal Kanda wanted Geetika back to exploit her
Delhi Police told a trial court that investigations showed that former Haryana minister Gopal Kanda tried to get back airhostess Geetika Sharma from Emirates Airlines with the ulterior motive of sexually exploiting her.
In a supplementary chargesheet submitted against Chanshivroop Singh, an aide of Kanda, before the court of additional chief metropolitan magistrate D K Jangala, police said "the facts emerged against Chanshivroop during further investigation. Kanda and (his aide Aruna) Chaddha tried to get back Geetika from Emirates Airlines with the ulterior motive of sexually exploiting her.
"When Geetika refused to come back to India and join MDLR Airlines (floated by Kanda), Kanda used other nefarious tactics to mount pressure on her", said the chargesheet filed on Tuesday.
"In pursuance of criminal conspiracy, Kanda and Chaddha appointed Chanshivroop Singh as assisstant HR manager in MDLR group with the sole objective of ensuring that Geetika remained under the control of Kanda," it said.
"Chanshivroop went to Dubai to compel Geetika to resign from Emirates Airlines and created fake e-mail ID for sending documents given by Kanda. Investigation discloses that accused Chanshivroop joined the conspiracy (hatched by co-accused Kanda and Aruna Chaddha) and committed offences under section 471 IPC (using forged documents as genuine) and 66A IT Act (sending false messages). It is requested that he be summoned to face the trial," the chargesheet said.
The chargesheet has been filed over three months after the main chargesheet was filed against Kanda and Aruna Chaddha in October 2012. The chargesheet said that at the instance of Kanda and Chaddha, Chanshivroop went to Dubai under the garb of investigating the issue of forged NoC furnished by Geetika to ensure she is removed from her job with Emirates Airlines.
Most of the Sahara Group properties that Sebi has ordered to be attached have already been pledged. Sebi may not be able to sell many of these properties to recover funds to repay bondholders as they have been pledged by the Sahara Group to raise funds.
The regulator had also ordered its promoters to restrain from disposing or in any manner encumbering their movable and immovable properties.
Sebi, however, has created more trouble for the Subrata Roy-led Sahara Group, which may find it difficult to do many of its businesses as it will not be able to use these attached properties.
"Sebi has attached properties based on our affidavit in Supreme Court dated January 4, 2012. Since then, a lot of things have changed. After the Supreme Court judgment in August 2012, we have redeemed most of the bondholders. I am aware a part of the money was raised by pledging these (attached) properties as securities with the banks and financial institutions," Sahara counsel Kishore Lahiri told TOI.
Sahara claims that most of the bondholders' money has been paid and it has deposited Rs 5,120 crore with Sebi , which is more than enough to pay the remaining bondholders.
"If that be the case (Sahara assets already being pledged) I doubt if Sebi will be able to recover the funds by attaching these properties as it would lead to further litigations. If there is a third party interest already created in these attached properties, Sebi just can't sell them to recover money," said another senior counsel, who is not involved in the case, on condition of anonymity.
However, Ashwin Mathew, consultant with Khaitan & Co, differs. "The regulators will have an upper hand on the attached property compared to the third parties, who are bound by agreements with Sahara. No doubt, it will lead to litigations and further complicate the matter but the creditors will have to recover their dues from Sahara firms."
Harish Salve, a senior Supreme Court counsel and former Solicitor General, told TOI, "It's not whether Sebi can recover or not recover the dues by attaching the Sahara properties. The exact values of these properties are not known. The Supreme Court has taken the matter very seriously and it's the liability of the Sahara firms to repay bondholders or they will be inviting serious problems."
But the Sahara counsel is livid. "I just can't understand how Sebi can do that (attach properties), when these properties do not belong to the two companies in question. You can't attach properties of promoters of company, which is limited by liability. The details of the assets were furnished for different reasons as the court wanted to know where the investors' funds have been invested," said Lahiri. Sahara senior counsel Ram Jethmalani, however, declined to comment as the matter was sub judice.
Two of India's most prominent businessmen-- Sahara Group chief Subrata Roy and Kingfisher Airlines owner Vijay Mallya-- are in for some troubled times.
SEBI today asked banks to freeze the assets and bank accounts of two Sahara group companies, saying they had failed to heed a Supreme Court order to repay investors in a case involving more than Rs 24,000 crore.
Meanwhile, Dr Vijay Mallya stands the risk of losing ownership of a range of possessions and assets including his Goa-located villa and the Kingfisher brand.
Taking stern action against Sahara in the high-profile investor refund case involving over Rs 24,000 crore, market regulator Sebi today ordered freezing of bank accounts and attachment of all properties of two group firms and top executives, including Subrata Roy.
Sebi’s action follows directions from the Supreme Court, which had said last week that the market regulator was free to freeze accounts and attach properties if Sahara group firms were not depositing the money with it for refund to investors.
Passing two separate orders against Sahara Housing Investment Corporation Ltd (SHICL) and Sahara India Real Estate Corporation Ltd (SIRECL), Sebi said that the two companies had raised Rs 6,380 crore and Rs 19,400 crore respectively from bondholders and “various illegalities” were committed in raising of these funds.
Sebi today ordered freezing of bank accounts and attachment of all properties of two group firms and top executives, including Subrata Roy.
The Supreme Court in August last year had asked Sahara group firms to refund the money with 15 per cent interest and had asked Sebi to facilitate the refund.
However, the group in December, 2012 was allowed to pay the money in three instalments, including an immediate payment of Rs 5,120 crore, followed by an installment of Rs 10,000 crore in the first week of January and remainder by the first week of February 2012.
In its orders passed today, Sebi said that neither of the two instalments was paid and therefore it is constrained to take necessary action as per the Supreme Court orders.
With regard to the payment of Rs 5,120 crore also, Saharas have claimed that only Rs 2620 crore remained to be refunded to investors and it has already paid Rs 19,400 crore to the bondholders.
The properties being attached by Sebi include the land owned by Sahara group firm Aamby Valley Ltd, which has set up a resort village near Pune, development rights of land at prime locations in Delhi, Gurgaon, Mumbai and various other places across the country.
Besides, Sebi has also ordered attachment of equity shares held in Aamby Valley Ltd, units of mutual funds, bank and demat accounts and investments in all the branches of all banks. Sebi has asked all the banks to transfer the amounts lying in those accounts to its Sebi-Sahara Refund Account.
With regard to Subrata Roy and three other directors, namely Vandana Bhargava, Ravi Shanker Dubey and Ashok Roy Choudhary, Sebi ordered freezing of all bank and demat accounts of these four persons, as also attachment of all moveable and immoveable properties in their name with immediate effect.
Sebi directed them to furnish details of all moveable and immoveable properties in their name within 21 days, pending which they can not alienate, dispose or encumber any of their assets.
The regulator said it is seeking attachment of all other movable and immoveable properties owned and/or held by the two companies SIRECL with immediate effect and asked them not to “alienate, dispose or in any manner encumber the same”.
Sebi also directed the two firms to furnish details of any other investments within 21 days and restrained them with immediate effect from operating their bank and demat accounts and from withdrawing of any investments.
The two companies have also been asked to deposit cash, bank balances and fixed deposits in their names to Sebi and have also been barred from transferring any shares held by them.
Sebi said it has informed RBI and Enforcement Directorate as well regarding its actions against Sahara group firms.
Sahara Airlines: Sahara Airlines The airlines was established on 20 September 1991 and began operations on 3 December 1993 with two Boeing 737-200 aircraft as Sahara Airlines. Initially services were primarily concentrated in the northern sectors of India, keeping Delhi as its base, and then operations were extended to cover all the country. Sahara Airlines was rebranded as Air Sahara on 2 October 2000, although Sahara Airlines remains the carrier's registered name. On 22 March 2004 it became an international carrier with the start of flights from Chennai to Colombo. It is part of the major Sahara India Pariwar business conglomerate. The uncertainty over the airline's fate has caused its share of the domestic Indian air transport market go down from approximately 12% in January 2006 to a reported 7% in January 2007.
Pre Acquisition Review: Pre Acquisition Review Jet Airways’ Scheme of things In 2003, Jet Airways had a 44% market share which reduced to 33% market share in 2006 due to competition by low cost airlines so Jet Airways wanted to maintain the leadership position in the industry To reduce the congestion time in Airports To enter into the low cost Airlines business in a big manner To avoid the delay to purchase new airlines which typically had a waiting time of 2-3 years. To diminish the number of aviation companies in the market, thereby achieving a pricing power in the market
Pre Acquisition Review: Pre Acquisition Review Air Sahara’s Scheme of things The mismanagement of the airlines was adding burden to the group. It was making losses It wanted to exit airlines business and focus more on its booming Real Estate Business Their was a huge liability both long term as well as short term and its aircrafts were also on lease or on loan. So, it wanted some quick money to pay off its mounting debts. Solution a merger with Jet Airways was an attractive and an easy bailout for Air Sahara from the aviation industry.
Screening Target: Screening Target Target Company: Air Sahara Strategic Fit Air Sahara as on 2006 has a market foothold of 12%, which will increase Jet’s market share to 45% if acquired. Air Sahara had a vast parking bays at important metros, which can be used by Jet to reduce congestion time and reduce fuel burning up to a large extent. Air Sahara was mostly servicing the domestic market (24 domestic and 4 international) and this will increase the domestic share of Jet Air Sahara had a fleet strength of 26 which if acquired will drastically increase Jet’s Fleet strength, without purchasing any new airplanes.
Screening Target: Screening Target Target Company: Air Sahara Operational Fit The load factor of Jet in its international flights was 73% and in domestic flights was 72%. Air Sahara had a load factor of 72% on domestic route and 65% in international flights. So, using the expertise of Jet, Air Sahara could gain. Sahara had 4 international destination, Jet Airways also had international flights to those destinations from the same source. So, efficiency and monopoly could be increased. Air Sahara had an identical fleet as the Jet’s consisting mostly of B737. Maintenance in case of merger would be easy and effective Analysts estimate that a cost saving of Rs. 150 crore -200 crore is achievable due to acquiring of parking bays
Target Valuation: Target Valuation Valuation of Air Sahara The entire business of Air Sahara was valued at Rs. 2300 by Jet Airways, whereas the valuations by E&Y for Air Sahara was done at Rs 3382 crores The valuation has been made on the comparable value with respect to the valuations of Jet Airways. Only the assets will be acquired, liabilities to be borne by Air Sahara itself Nikhil Garg from Edelweiss Capital said that if Jet Airways pays Rs. 2300 crore to Air Sahara, then Jet would be overpaying by 35%, as because the valuations of Jet dipped by 35% within months of deal talks
Slide 13: Target Acquisition Strategy Jet Airways had a debt equity ratio of 7:1 in 2005. It was already leveraged. It already had in mind an inorganic growth to capture its depleting market share It came up with an issue of equity on March, 2005, which was oversubscribed 16 times, thereby having a comfortable debt equity ratio of 1:1 post issue. The entire deal was done through debt, majority from IDFC, the company’s long standing banker.
Slide 16: New Acquisition: April 12, 2007 Air Sahara got a beating on its valuation, due to the failure of the deal, so it proposed new negotiations at revised valuations. Air Sahara’s market share dimished to 7% Valuations made are comparable with the Jet’s market valuation. As Jet’s valuation plummeted by around 35%, so the new valuation of Air Sahara was done at 35% lower valuation of Rs. 2300 crore i.e. Rs. 1450 crore . On the day of signing the bill, INR 400 crores exchanged hands with addition of Rs. 500 crore in the ESCROW account equals 900 crores upfront. The balance of INR 550 crores were payable in four interest free annual equal installments which was supposed to be ending in April, this yr. NPV= Rs. 1200 crores
Jet Lite: Jet Lite Sahara Airlines Limited became a 100% subsidiary of the Company. From 15th May, 2007 Sahara Airlines Limited has been renamed JetLite (India) Limited. Jet Airways on a whole now had 42% of the total Airlines Market.
Post Merger Integration: Post Merger Integration Moderate Integration Operational Integration- Stage I (FY 2007-08) Jet Airways and Air Sahara had an identical fleet consisting of B737. So, after the merger the Air Sahara planes were immediately brought into service. Only 20 of the 26 of Sahara are actually flying. So, Jet infused another Rs. 200 crore for refurbishing the entire fleet Bulky insurance policies were removed to short term cost efficient policies. Released premises and office spaces not required
Slide 19: Moderate Integration Operational Integration- Stage II (FY 2008-09) 2 CRJs were removed and ATRs were leased to reduce maintenance costs of a different aircraft. The ticketing costs were reduced for JetLite by moving to web platform Food and Cabin Amenities were reduced Loss making flights discontinued Business class services withdrawn
Monday, 18 February 2013
Kingfisher Airlines Ltd.'s lenders plan to soon start a process to sell 5 billion rupees ($93 million) worth of shares deposited by parent UB Group as collateral against Loans.
Kingfisher Airlines Ltd.'s (532747.BY) lenders plan to soon start a process to sell 5 billion rupees ($93 million) worth of shares deposited by parent UB Group as collateral against loans.
In the first of several planned moves likely to cause severe financial strain across the UB conglomerate, the lenders will sell shares in group companies Mangalore Chemicals and Fertilizers Ltd. (530011.BY) and United Spirits Ltd. (532432.BY), said a senior State Bank of India (500112.BY) executive.
"Kingfisher had told us to wait as there was some money coming from the Diageo deal. That hasn't happened," Shyamal Acharya, deputy managing director at SBI, told The Wall Street Journal.
He was referring to a United Spirits plan to sell a 53.4% stake to British liquor company Diageo PLC (DGE.LN) for up to $2 billion. Part of the proceeds were expected to come to Kingfisher, but the deal hasn't come through yet.
Mr. Acharya separately said on television that a consortium of lenders to Kingfisher will try and recover some of the total 70 billion rupees of loans in the current quarter through March itself.
His comments come a day after the consortium decided to recall all loans to Kingfisher, which has been grounded since October.
The recall is a demand for immediate repayment, failing which the banks will take control of any assets deposited as collateral.
The consortium has appointed a core team of four banks -- SBI, IDBI Bank Ltd., Bank of India and Punjab National Bank -- to take the recall process ahead and deal with legal issues.
Mr. Acharya said that the major chunk of the collateral held by the consortium is in shares and in guarantees from group companies including United Breweries (Holdings), United Breweries and United Spirits. It also includes the Kingfisher brand, its office in Mumbai and a villa owned by the UB Group.
The total value of the collateral, excluding Kingfisher Airline's brand, is 65 billion rupees, Mr. Acharya said.
In the first response since news of the recall broke late Tuesday, a senior Kingfisher executive said the company is "aware of the situation and is doing what we can."
"Fifteen days earlier, I would have given a confident answer. Today I have none," he said when asked whether the airline has any chance of flying again.
Analysts said the recall will hurt investor sentiment for all UB Group companies.
A sale of stocks in Mangalore Chemicals and United Spirits will cause a "significant fall in share value, more so if they are sold in the open market," said Ambareesh Baliga, an independent investment consultant.
"While guarantees and other assets may take time and involve legal proceedings, banks don't need legal approval for selling shares," he added.
Kapil Kaul, South Asia chief executive at Sydney's CAPA-Centre for Aviation, warned that the process of selling assets could take a while. It will likely involve "a lot of haggling over asset value," which means that the banks may not be able to recover the full value of the loans.
Apart from the shares and guarantee, the UB Group also stands to lose the 10 billion rupees it has pumped into Kingfisher.
The airline, which has made losses since its inception in May 2005, now owes more than $2.5 billion to its lenders, suppliers, leasing companies, airport operators, other airlines, employees and to the government in taxes.
Kingfisher and most of India's other airlines have been hit by rising fuel prices, high interest rates and a slowdown in economic growth which has curbed demand for air travel.
Run by flamboyant liquor baron Vijay Mallya, Kingfisher began by expanding aggressively. But the plans backfired in the face of a slowdown in traffic during the 2008 global economic crisis.
On Oct. 1 2012, its employees went on strike because they hadn't been paid in months, forcing the airline to cancel all flights. The government later deactivated its license.
Kingfisher has been trying without success in the last few years to raise cash. It was recently in talks to sell a stake to Abu-Dhabi-based Etihad Airways, but lost the race to rival Jet Airways (India) Ltd., which is expected to soon announce its own stake sale to Etihad.
Reacting to news of the loan recall, shares of UB Group companies tanked Wednesday.
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