Mumbai : The Tata group said there have been preliminary discussions on the acquisition of struggling Jet Airways but it has not made any formal proposal for buying out the 51 per cent stake held by the Naresh Goyal family in the airline which has accumulated losses of over Rs 12,000 crore till the September 2018 quarter.
While the board of Tata Sons, the holding company of the group, discussed the acquisition of the airline, sources said both the parties are going slow as the broad contours of the deal, especially on the continuance of Goyal on Jet board after the takeover and other issues, have not been thrashed out.
Indicating that they are moving cautiously, Tata Sons issued a statement after the board meet, saying, “Over the last few days there has been growing speculation in the print and electronic media about Tata’s interest in Jet Airways. We would like to clarify that any such discussions have been preliminary. No proposal has been made.”
Jet Airways said in a stock exchange filing, “Reports (on merger of Vistara with Jet) is purely speculative in nature and that there are no discussions or decisions by the Board, which would require a disclosure.”
Sources said Tata Sons Chairman N Chandrasekaran had a preliminary discussion and an understanding over the broad contours of the deal with Jet Airways promoter Naresh Goyal for a possible share swap agreement between the Tata and its foreign joint venture partner Singapore International Airlines, Vistara, and also exit of Abu Dhabi based carrier Etihad that holds 24 per cent in Jet Airways.
Sources aware of the talks said that Tatas would definitely want a non-compete clause that bars Goyal and family from entering aviation business for a substantial period of time. However, sources say Goyal might have reservations over exiting the airline that he has created over 25 years and made it as a formidable brand in full service space and agree to a non-compete clause and complete exit.
The Tatas are looking at dilution of Goyal’s shareholding which is currently 51 per cent. A possible preferential allotment of shares might be looked at triggering an open offer as cash strapped Jet needs equity infusion on an immediate basis. “Liquidity continues to be worrisome, and Jet Airways earnings are most levered to oil prices and rupee depreciation. A potential entry of a strategic buyer would address the current liquidity crunch. Jet’s liquidity concerns are unlikely to dissuade a well-capitalised group like Tata, which has a track record of mega acquisitions. A prospective deal may involve a notable control premium,” said a report by Edelweiss equity research.
However, Jet Airways acquisition will not come cheap for the Tatas as the airline has accumulated losses of Rs 10,772 crore till FY18 with another reported loss of Rs 2,620.46 crore till the first half of FY18/19. Its other liabilities stack up to a staggering Rs 11,000 crore. It has immediate vendor payments that are stretched and lease rentals that are due. The airline has 16,000 employees .
Aviation analysts say it is the immediate scale that an acquisition of Jet Airways by Tatas will give to a fledgling Vistara that the Tatas are eyeing along with slots, that are at a premium for expanding Indian carriers as most of the metro airports are slot constrained restricting expansion of the airlines. “It is a billion dollar deal for the Tatas,” said an investment banker who has background in cutting out aviation deals in the Indian aviation market. Tatas have already accumulated losses of Rs 2,100 crore on account of both its airlines — Vistara and budget carrier AirAsia. It might not have the appetite to take over huge losses of Jet.
“It is all in the structuring of the deal. There are a lot of complications and also regulatory compliance issues in a deal such as Tata-Jet Airways. It will take time for the final proposal to be put on table,” said a person familiar with the ongoing discussions.
Jet’s share closed at Rs 346.85, up 8 per cent from its previous close of Thursday. The stock continued its four day rally, soaring 43.3 per cent over the past four days on the deal buzz with Tatas.
RBI needs to ensure stability: Shaktikanta Das
New Delhi: The head of the Reserve Bank of India (RBI) said he would take the steps necessary to maintain financial stability in the country and help create favourable conditions for growth.
India’s economy has grown because of measures such as the nationwide goods and services tax and the insolvency and bankruptcy code that prevents wilful defaulters from bidding for stressed assets, Shaktikanta Das said in his address to an investor roundtable.
The country’s growth story is backed by its strong domestic fundamentals, he said, citing lower inflation.
Annual retail inflation rate dropped to an 18-month low of 2.19 per cent in December, strengthening the views of some economists that the central bank could ease monetary policy next month.
India’s top business groups on Thursday urged the central bank to cut its benchmark interest rate by at least half a percentage point and lower the cash reserve ratio it imposes on banks.
The country also needs to watch out for any sudden turbulence in the gloal financial market, Das said.
Centre removes two PNB executive directors for lapses in Rs 13,500-cr fraud
Chennai:The Central government has removed two Punjab National Bank (PNB) Executive Directors — Sanjiv Sharan and K.Veera Brahmaji Rao — for the lapses in the Rs 13,500 crore fraud allegedly perpetrated by absconding diamantaire Nirav Modi.
The PNB has intimated the action to the stock exchanges.
“We welcome the Central government’s action to dismiss the two Executive Directors. The scam of such proportions could not have happened without the knowledge of the top management,” C.H. Venkatachalam, General Secretary, All India Bank Employees’ Association (AIBEA), told IANS.
“Perhaps for the first time, the Centra has removed the Executive Directors of a nationalised bank under the Nationalised Banks (Management and Miscellaneous Provision) Scheme, 1970. All these days it was said the top management of government-owned banks — Chairman, Managing Director, Executive Directors — are governed only by the contract of appointment.
“It is also good that the central government has followed the due process of giving the two PNB Executive Directors opportunity to put forth their views before dismissing them,” Venkatachalam added.
According to the Central government’s notification, on July 3, 2018, Sharan and Rao were issued a show cause notice as to why they could not be removed from office for having failed to exercise proper control over the functioning of PNB, thus enabling the fraud through the misuse of SWIFT at the bank’s Brady House branch in Mumbai.
After considering Sharan and Rao’s replies and the comments of the bank’s Board, the Centre removed them from office as it found it was expedient in the interests of PNB.
According to the notification, the dismissal of Rao is subject to the outcome of a plea in the Delhi High Court.
“We are happy to see some action being taken. Whether it is only the two Executive Directors and other officials are also involved in the scam has to be probed in full,” Venkatachalam said.
According to him, in the past, low-level officers would have been the scapegoats for such massive scams.
“With the action taken on the top management, people will be satisfied that public sector bank officials are answerable for their lapses,” Venkatachalam added.
In this new world, data is the new wealth: Ambani
Mumbai: Reliance Industries chairman and managing director Mukesh Ambani urged Prime Minister Narendra Modi to take steps against ‘data colonisation’, specially by global corporations, stating that Indian data must be owned by Indians.
Invoking Mahatma Gandhi’s movement against political colonisation, Ambani said India now needs a new movement against data colonisation.
“Gandhiji led India’s movement against political colonisation. Today, we have to collectively launch a new movement against data colonisation,” he said Gandhinagar at the Vibrant Gujarat Global Summit.
Stressing that, in this new world, data is the new wealth, Ambani said, “India’s data must be controlled and owned by Indian people and not by corporate, especially global corporations.”
He further said, “For India to succeed in this data driven revolution, we will have to migrate the control and ownership of Indian data back to India. In other words, give Indian wealth back to every Indian.”
Stating that the “entire world has come to recognise” Modi “as a man of action”, Ambani said, “Honorable Prime Minister, am sure you will make this one of the principal goals of your digital India mission.”
Later in the day, countering Ambani’s call, Governor – Commonwealth of Kentucky, Matthew Griswold, asked Modi “to think in the opposite” in order to realise the tremendous opportunity that lies in Indo-US partnership.
“Honorable prime minister you have been asked from this stage to think about limiting the amount of competition, limiting the exchange of ideas, information and goods. I would encourage you to think in the opposite,” he said.
While stating that it is important to put the people of India first, Griswold said, “It is also important to put their opportunity and our opportunity as citizens of the world to trade with one another and exchange ideas because iron sharpens iron.”
The greatest possibility comes from the exchange of these idea, he added.
“If we can cut the regulations, cut the bureaucracy, cut the red tape, the opportunity is enormous between our nations,” he added that India is now the 10th largest trading partner for the US and “climbing quickly”.
“The opportunity before us between India and the United States is incredible, but responsibility falls on each of one us, those of us in elected positions, those of you in the industry, those of you who represent various constituencies, we have much work to do…we must do this, ” Griswold said.