Naresh Goyal’s resignation a wake-up call for policymakers: SpiceJet chief

SpiceJet chief Ajay Singh on Monday said that it was a “sad day” for Indian aviation as Naresh Goyal and his wife Anita Goyal stepping down from the board of Jet Airways.
Naresh Goyal is the Founder and Chairman of Jet Airways, a full-service airline that has been flying for more than 25 years.
Referring to the latest developments, Singh, who is the Chairman and Managing Director of budget carrier SpiceJet, also said it was a wake-up call for the country’s policymakers to address structural challenges that is making domestic airlines uncompetitive.
ALSO READ: Naresh Goyal quits Jet board, lenders take over cash-strapped airline
Goyal and his wife will step down from Jet Airways’ board under a resolution plan piloted by its lenders.
“Today is indeed a sad day for Indian aviation. By launching a truly world class airline, Naresh and Anita Goyal made India proud,” Singh said in a statement.
ALSO READ: Good outcome from Jet, lenders’ talks better than insolvency: Govt official
He also said that it was a wake-up call for Indian policy makers.
“We urgently need to address structural challenges that make India’s airlines uncompetitive to airlines around the world,” he added.
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Naresh Goyal’s resignation a wake-up call for policymakers: SpiceJet chief

Naresh Goyal quits Jet: How aviation legend reached end of the road

Naresh Goyal, a former ticketing agent who went on to build one of India’s biggest airlines, has stepped down as chairman of cash-strapped Jet Airways India Ltd. after caving in to pressure from creditors.
Jet’s board approved the resignation of Goyal, 69, and his wife Anita, the second biggest full-service airline in India said in a filing on Monday. Banks, which will get 114 million new shares in the company, will provide the carrier with immediate funding of as much as Rs 15 billion in debt.
The resignation marks the end of an era as Goyal, once ranked as one of India’s 100 richest people, who is widely seen as a pioneer in India’s fast-growing aviation industry. The move comes after his flagship company, partly owned by Abu Dhabi’s Etihad Airways PJSC, fell victim to the emergence of budget carriers offering base fares as low as 2 cents.
His departure removes a potential obstacle for creditors, who are seeking to overhaul the company and salvage a carrier that’s grounded about two-thirds of its fleet. Jet is currently 24 per cent owned by Etihad, but the shareholding pattern will change after issuance of shares. Lenders will now own more than 50 per cent of the carrier.
ALSO READ: Jet Airways surges 13% as Naresh Goyal steps down from the board
“The Jet Airways debt saga has entered a decisive phase,” said Rajesh Narain Gupta, Managing Partner of law firm SNG & Partners. “Banks have no other option but to pick up the major stake and find a new promoter for the debt-laden airline. However, it remains to be seen how successful banks become in managing an airline, going beyond their core competence.”
Lenders led by government-owned State Bank of India, have proposed an intricate bailout package, under which banks have a majority of the company for 1 rupee — less than one U.S. cent — while giving the ailing airline time to arrange fresh equity. Jet shareholders approved the plan last month, allowing banks to nominate their representatives to the board, but there’s no progress in getting new investors.
The banking consortium will appoint merchant bankers to sell the stake in Jet, Rajnish Kumar, SBI’s chairman told BloombergQuint in an interview. Everyone including Goyal and Etihad will be allowed to bid, he said.
Little is known about Goyal’s childhood but he began his career in aviation as a ticketing agent for Lebanese International Airlines, according to his company’s website. In 1991, he started Jet Airways after India opened up its economy, and the airline started flying two years later. Over the years, he would expand Jet, then part-owned by Gulf Air and Kuwait Air, into the country’s second-largest airline behind flag carrier Air India.
ALSO READ: Naresh Goyal’s resignation a wake-up call for policymakers: SpiceJet chief
Then budget airlines such as InterGlobe Aviation Ltd.’s IndiGo and SpiceJet Ltd. began emerging more than a decade ago, roiling the industry with discounted prices for no-frill services. Compounding Jet Airways’ woes were a depreciating Indian rupee and surging oil prices. The harsher competitive environment forced Air India to seek multiple taxpayer-funded bailouts and the likes of Kingfisher Airlines Ltd., headed by fugitive tycoon Vijay Mallya, went out of business.
As a result, Jet Airways posted losses in nine of the past 11 years and struggled to pay its debt. Cumulative losses bloated to about $1.6 billion as of the end of March 2018.
Indian government officials have said they were trying to revive Jet Airways by changing its management but the carrier’s future will be a commercial decision taken by the lenders. The government, as well as lessors, have already asked rivals like budget carrier SpiceJet Ltd. to take over some of the grounded Jet Airways planes, as Prime Minister Narendra Modi seeks to save jobs ahead of a general election starting next month.
Banks and Etihad wanted Goyal to step down before a bailout, people familiar with the matter have said. Lenders have also sought a reduction in Goyal’s stake to less than 10 per cent as a condition before they infuse fresh capital, a person familiar with the matter said last week. With lenders taking a stake, Goyal’s stake will halve to 25.5 per cent.
Naresh Goyal quits Jet: How aviation legend reached end of the road

Streaming videos, credit cards? Here’s what to expect from Apple’s event

When Apple boss Tim Cook (pictured) takes the stage at the Steve Jobs Theater in Silicon Valley on Monday, he will usher in a new era for the world’s largest technology company.
The chief executive officer is expected to unveil streaming video and news subscriptions, key parts of Apple’s push to transform itself into a leading digital services provider.
The company may even discuss a monthly video games subscription. Likely absent from the event: Any new versions of the gadgets that have helped Apple generate hundreds of billions of dollars in profit since 1976.
It’s a particular challenge for Cook, who took over after Jobs died in 2011. The current CEO is an expert in hardware supply chains who spent years wrangling eager component manufacturers
in Asia to assemble the company’s blockbuster iPhone. Apple’s newer partners — Hollywood studios, movie stars, newspapers and magazine publishers — are more wary of working with tech giants, or have already teamed up with rivals like Netflix and Amazon.com.
“This is a pivotal shift for Apple,” said Dan Ives, an analyst at Wedbush Securities.
On Monday, Apple will add video and news subscriptions, and could unveil a similar offering for credit cards.
Streaming videos, credit cards? Here’s what to expect from Apple’s event

Uri to Thackeray: Bollywood’s bet on political movies gets mixed response

The first quarter for Bollywood is traditionally a weaker one; however, this time the outlook was optimistic, given the slew of topical films set for release in the light of the upcoming general elections. Starting with Uri, which recounted the surgical strike conducted by the Indian armed forces, to biopics on political stalwarts like Balashaeb Thackeray and former prime minister Manmohan Singh, Bollywood had ample to offer.
However, a look at the box-office collections of the various political/nationalist-themed movies proves something that experts from the film trade have been observing over the past few years. In this age of social media reviews and increasingly content-conscious cine-goers, just releasing a topical film does not work. While Uri hit the mark with its offering, becoming the first superhit from the Bollywood stable in 2019, others like The Accidental Prime Minister and Manikarnika failed to impress.
Vicky Kaushal-starrer Uri, was one of the first releases of the year and hit the screens on January 11. It is still running in theatres, a rare feat for a movie that released more than eight weeks ago (the typical lifetime of a Bollywood film is six to eight weeks). It has so far collected Rs 240 crore (net of taxes), a massive collection, given that its production budget was Rs 45 crore. The film has not only broken even at the domestic office, but managed to earn nearly Rs 200 crore in profits at the box office.
Other films like Manikarnika managed to nearly hit the Rs 100-crore mark (it has made Rs 94 crore so far), but being saddled with huge production costs (reported cost of production is Rs 100-110 crore), it failed to book profits. On the other hand, films like Thackeray and The Accidental Prime Minister failed to impress audiences enough to garner the footfall required to book profits.
“With the video streaming boom, audiences have ample choice of content. Just releasing a topical film will not work. Script, production quality, and intelligent marketing, not to mention budgeting, are still important for the success of a film. A look at the winners and losers tells us that the topic of the film is but one factor in ensuring success, whatever the socio-political environment in the country may be. Good content has more or less managed to fill theatres, no matter the theme of the film,” says an executive from a cinema exhibition chain.
chart The latest film in the ‘India’-themed releases is Akshay Kumar-starrer Kesari , which premiered on March 21, a holiday on account of Holi (and Navroz). The film started its box office campaign with a healthy Rs 21-crore collection, the highest for a Bollywood film in 2019, and is expected to perform well in the coming few days. Made at an estimated Rs 80 crore, it tells the story of the Battle of Saragarhi, fought in 1897. The film has collected Rs 57 crore in the first three days of its box-office journey.
The next similar offering is the Vivek Oberoi-starrer PM Narendra Modi, slated for release on April 5.
The film is directed by Omung Kumar (Mary Kom and Sarabjit), and also stars Boman Irani. This is perhaps the first time a biography of a sitting prime minister is being made, and the release is slated a mere week before the Lok Sabha elections. The trailer was released late last week, and met with trolling on social media. Whether the film will make a dent at the box office, remains to be seen. However, the release may have to be delayed since competing political parties of the Bhartiya Janata Party (BJP) have raised objections to the release of the film so close to the polls.
chart Other hits of the year include a variety of films from Zoya Akhtar’s Gully Boy (Rs 139 crore), romantic comedy Luka Chuppi (Rs 86 crore), and Amitabh Bachchan-starrer thriller Badla (Rs 67 crore). All these films were made at modest budgets ranging from Rs 20 crore to Rs 40 crore.
Among the Hollywood releases (there have been two significant ones so far) January release Bumblebee failed to make waves, but Disney’s Captain Marvel has done well, collecting Rs 74 crore since its release on March 8.
Uri to Thackeray: Bollywood’s bet on political movies gets mixed response

Logistics firm Delhivery turns unicorn as SoftBank couriers $413 million

Delhivery has become the first Indian logistics company to enter the coveted unicorn club (companies valued over $1 billion) after SoftBank invested $413 million from its Vision Fund into the company on Sunday.
Valuing the delivery firm at close to $2 billion, SoftBank picked a massive 22.4 per cent stake.
According to sources in the company, this stake buy gives SoftBank a seat on the board of Delhivery. This would help the Japanese major use Delhivery in its grand plans of creating a bigger logistics network for cab aggregating major Uber as well as Paytm.
“A strong logistics player is what SoftBank needed. Uber plans to get into delivery of groceries as well as start a concierge service. Paytm has been looking for a partner as well for its e-commerce play. Delhivery can help both the firms as SoftBank would to an extent call the shots in the company,” said a source close to Delhivery.
In February, the Competition Commission of India gave SoftBank the approval to buy 22.44 per cent stake on a fully-diluted basis.
Aggressive growth plans
With these funds, Delhivery plans to rapidly scale up its reach from 15,000 pin codes to 20,000 by the June quarter of 2019-20. The firm said it would also aggressively grow e-commerce market share investment and expand its end-to-end supply chain platform to enterprise customers and SMEs.
Private equity firm Carlyle Group and Chinese conglomerate Fosun International, both existing investors in Delhivery, also participated in the latest round of financing. The company, whose investors include Tiger Global Management, Nexus Venture Partners and Times Internet, was founded in 2011 by Mohit Tandon, Sahil Barua, Bhavesh Manglani, Kapil Bharati, and Suraj Saharan.
“We will be scaling up our newer warehousing and freight services through large investments in infrastructure and technology and global partnerships in addition to improving the reach, reliability and efficiency of our transportation operations,” Sahil Barua, chief executive of Delhivery, said.
IPO plan may be shelved
The company was, till recently, planning to launch an IPO, but experts believe those plans would be put on the backburner.
“More funds mean that the company would be going for hyper expansion now and burn a lot of cash. They will get into new areas, lease more warehousing and logistics space as well as increase the head count on the ground. All this means at least for the next 3-4 years Delhivery would not go for an IPO. That is how it happens. Flipkart, Policy Bazaar, were all talking about IPO exits before SoftBank put money into these firms,” said a source who was till recently part of Delhivery’s senior management.
To work closely with SoftBank’s investee firms
SoftBank will also ensure a lion’s share of Delivery’s resources is used to work closely with the other firms SoftBank has invested in.
“Any company where logistics play a role, SoftBank will use the expertise Delhivery has. Uber has been trying on its own to expand UberEats and plans to get into new verticals such as grocery delivery and concierge service this year. While Uber has a lot of local data, it does not have the hyperlocal capabilities Delhivery has. This fund infusion would help Uber get that expertise,” the source said.
Delhivery claims it is growing at 65 per cent since FY15. “Almost one in four packages ordered online in India go through Delhivery’s network, which accounts for more than 500,000 parcels a day and over 450 million transactions to date,” the company said.
Parcel pick-ups
May 2011: Delhivery established
April 2012: Series A funding led by Times Internet
September 2013: Series B funding led by Times Internet and Nexus Venture Partners
September 2014: Series C funding led by private equity firm Multiples Alternate Asset Management with participation from existing investors
April 2015: Series D funding led by Tiger Global with participation from existing investors
May 2017: Series E funding led by Carlyle Group, Tiger Global, and Fosun with participation from existing investors
March 2019: Funding round led by SoftBank with participation from existing investors
Logistics firm Delhivery turns unicorn as SoftBank couriers $413 million

I saw the underbelly of the US justice system, says Rajat Gupta

The cheekbones are more sharply defined, the hair tinged with grey. Those could be signs of natural ageing for Rajat Gupta, 70, the first Indian Managing Director of McKinsey, rather than the result of 17 months in prison for insider trading. The real difference is that Gupta, trim and dapper as ever, is far more forthcoming an interviewee than he was in the early 2000s. Then, at the height of his powers, even innocuous questions about his creation, the Indian School of Business, yielded non-committal answers. Now, out of prison since 2016, he has plenty to say: Principally, that his conviction for insider trading in a scandal involving the flamboyant Sri Lankan-origin hedge fund manager “Raj” Rajaratnam was a miscarriage of justice. The result is this memoir, Mind Without Fear, the title drawn from the much-quoted English translation of a poem by Rabindranath Tagore.
For someone whose life story was a model of the Great American Dream – an Indian of modest means who rose to the highest circles of politics and business, mingling with the White House and Davos crowd – his indictment in 2012 marked a stunning fall from grace. Many ascribed it to the hubris of the rich and powerful. But as Gupta writes ruefully, the critical error of judgement on his part was to not tell his story. He never spoke to the press, those writing books on the subject nor, most crucially, did he testify at his trial.
“Consequently,” he says in the preface, “the jury, the press and the public saw only… a ‘cropped picture’. The judge went out of his way to block any reference to my character and to those aspects that mattered most to me…. [And] I missed the opportunity to tell my own story and to let the jury, and the public, see who I am directly.” He helpfully etches a self-portrait in the first sentence to the Preface: “I am an orphan. Immigrant. Businessman. Leader. Philanthropist. Role model. Convicted felon.”
The burden of his readable autobiography, written with understated bitterness but no false sense of modesty, is that he was the victim of a justice system that was searching for villains to assuage public anger when none of the high-profile investment bank CEOs suffered for the global financial crisis they had precipitated. “I saw the underbelly of the US justice system,” he says in a pre-launch interview to Business Standard.
His book offers an interesting alternative insight into the storied US justice system, hinting at collusion between the justice department and the Securities Exchange Commission. And he is less than complimentary about Preet Bharara, then the famous crusading US attorney for the Southern District of New York. “Typically, the prosecutors are political animals, so they’re all about winning at all cost, not finding the truth,” he says.
Proving insider trading, he points out, demands three criteria: the transmission of market-moving information, criminal intent and a quid pro quo or meaningful benefit from the tip-off. The trial established that Gupta did not benefit from allegedly passing on information to Rajaratnam, whom he says he knew only on a professional basis. So poor judgement, maybe? A rush of blood to the head?
Gupta’s specific defence is that phone calls, involving Goldman Sachs and Procter & Gamble, on which his convictions hinged, were made to inquire about the fate of a Galleon fund in which he had invested called Voyager; he had discovered Rajaratnam had closed the fund without informing him or paying him his due share.
The fact that these calls were placed immediately after those board meetings Gupta ascribes to his ultra-hectic globe-trotting schedule as a high-powered consultant to Fortune 500 corporations and a sprawling agenda of voluntary work, which the book describes in detail. As a consequence, he used the brief breaks between meetings to make calls.
His September 23, 2008, call to Rajaratnam immediately after a Goldman Sachs board meeting (which he attended via a phone-in) approving a game-changing $5-billion investment by Warren Buffet, therefore, was one of many he had made to follow up on his Voyager investment, he says.
The call lasted less than a minute. It was, according to phone records, the only call on Rajaratnam’s direct line (which was not tapped at the time) that day. After that, Rajaratnam called an aide into his office, who reappeared minutes later on the trading floor shouting, “Buy Goldman Sachs”. Four minutes before the New York Stock Exchange closed, Rajaratnam bought $25 million worth of Goldman stock, the value of which soared after news of the Buffet investment broke.
The circumstantial evidence was strong, was it not?
Rajat Gupta “So here’s what I remember about what happened,” Gupta replies. “In the morning, I had a discussion with Raj because by then I knew he had taken money out of Voyager and I had asked him for details. He said he would send all the information that day. When the [Goldman] board call finished I asked my secretary to call him. Why would I ask my secretary to do this if I wanted to pass on insider information? I can’t remember if I even got to him or not. Probably not. Because two hours later I made another call and left a message saying, ‘I am trying to catch up with you’. Why would I leave a message two hours later saying this if I had already caught up with him at 4 pm?”
So how does he explain the bulk-buying of Goldman stock minutes after his call? “I don’t know. But I know why I called and it had nothing to do with insider trading. Raj got information from all kinds of people. The other thing is, the Goldman stock started going up at 1 or 2 pm, well before the board meeting. Obviously, there must have been something in the market; why should the stock be going up when no board decision had been made?”
(It is worth noting that the name of a Goldman salesman and Managing Director David Loeb did come up in Gupta’s trial. Loeb was never charged but he abruptly quit the investment bank in 2013 for reasons that were never fully explained.)
Gupta offers a similar explanation for an October 23 call following a Goldman board meeting called to discuss laying off 10 per cent of its staff. The morning after, Galleon dumped a hefty amount of stock. In his book, Gupta writes that the information about the lay-offs had been leaked to the Wall Street Journal before the board meeting. “…[I]n this instance, Rajaratnam didn’t need an insider at all to have known that dumping the stock was a wise move – the leak had made that clear”.
Gupta does, however, recall the contents of a January 9, 2009, call following a P&G audit meeting to discuss declining sales growth. He says Rajaratnam asked him to call. When he did, it was to be told that the Voyager money was gone. After that, Galleon shorted a chunk of P&G stock but Gupta says he was not the source of this information. In fact, that was the last time he spoke to Rajaratnam – he was to meet him later in prison, where they played the occasional game of cards, chess or scrabble.
As he points out, Rajaratnam, who was sentenced to 11 years in prison, was never charged on the Goldman or P&G transactions. “So why was I the centrepiece of his case? The prosecutors were trying to get it out into the press because I was more visible and well-known.” Rajaratinam later also told Gupta that federal agents had come to prison to persuade him to testify against Gupta, which he refused to do.
With a counter-narrative like this, why didn’t Gupta take the stand? Partly on the advice of his lawyer, the highly-regarded litigator Gary Naftalis, who suggested that doing so would be “naïve and stupid”. And later, having witnessed the prosecutors at work, his wife, too, advised him against doing so. “With unchecked powers and resources and unbridled access to the media, prosecutors can manipulate witnesses,” he says.
He described how two former McKinsey colleagues, Pramath Sinha and Ashok Alexander, were subjected to FBI questioning when they came forward as character witnesses. (These facts are not in the book but Sinha confirmed them, saying there were no direct threats but the tone of questioning was intimidating; ultimately, he says, only Alexander was able to testify, because the judge chose to drag out the prosecutorial process).
For all his tribulations, Gupta retains his faith in his adopted country. Now into his eighth decade, he claims there is “a certain amount of money I can afford to lose” (insurance covered most of the $60 million legal fees that Goldman demanded, but he had to pay $26 million in fines and restitution, which was “financially quite expensive”). His prison regimen kept him fit, but he is trying to slow down. But then, you know, there’s this project in Gujarat, and another fascinating one in Nigeria…
I saw the underbelly of the US justice system, says Rajat Gupta

Lenders to cash-strapped Jet Airways weigh open auction process

Lenders to cash-strapped Jet Airways plan to sell their stake in the airline through an open auction processover the next two months, seeking maximum value for the asset.
In the meantime, the consortium led by State Bank of India will provide emergency funding of around Rs 1,500 crore to bring operations back to normal, in phases. A senior executive of a large public sector bank said this is a transitory arrangement in which the lenders will acquire control, run the process of transparent bidding, and receive final bids by the end of April.
The bids will then be evaluated according to guidelines by the civil aviation ministry, following which a buyer will be selected. The outer limit for the process is May-end. Transfer of control to the buyer will be effected by June-end.
The resolution is being overseen under the framework of the Reserve Bank of India’s February 12, 2018 circular for dealing with stressed assets, which mandates the lenders to complete resolution within 180 days of default. In case of Jet, the 180-day period had begun from January 1, 2019.
ALSO READ: Jet’s new flight path
The open auction process will be similar to what is followed under the National Company Law Tribunal, but will be outside the insolvency code and tribunal. It is being done in this manner given Jet is a service sector enterprise with little or no assets. If lenders take the NCLT route, the airline will be grounded with practically no chance of revival. The cases referred to NCLT have taken a long time for resolution, said one private banker.
Asked about the hit banks will have to take on exposure, a senior banker said: “The extent of write-downs we may have to take will become clear from the bids (price indicating expected haircuts) during the auction.”
During the two-month period, lenders will control the airline but will run it with the help of airline industry professionals and turnaround experts, backed by active oversight of the board of directors. Naresh Goyal and his nominees will exit the board.
ALSO READ: Crisis-hit Jet Airways’ lenders struggle for consensus on revival plan
Lenders said they would prefer to have an experienced banker as chairman of the board.
Banks will provide emergency funding of about Rs 1,500 crore to the airline and want it to return to 100 per cent operating capacity.
A large number of planes in Jet’s fleet have been grounded due to non-payment of lease rentals. Lenders (consortium members) are approaching the Union civil aviation ministry with a plea not to take away the airline’s landing rights, slots and traffic rights, as it is necessary for protecting the economic value of the enterprise and attracting bidders, the bankers added.
The government was toying with the idea of providing unused airport slots of Jet Airways to other domestic airlines on an interim basis, a senior civil aviation ministry official had said on Wednesday, with a view to minimise flight disruptions.
ALSO READ: Jet Airways needs at least Rs 10,000 crore to stay afloat: Industry
The ministry has also held interactions with representatives of carriers such as Air India, SpiceJet, GoAir and IndiGo, to discuss issues such as augmentation of fleet and utilisation of existing planes.
The domestic carriers will add 20-25 more planes by April-end. Jet Airways as an entity is still a good asset with a strong brand, and evokes huge investor interest, said a senior public sector bank executive.
The carrier’s international network and slots at key airports, too, are an attraction and lenders will be able to draw interest if they are successful in restoring the airline to its earlier strength.
ALSO READ: How Etihad and Abu Dhabi too are bleeding in the Jet crisis
“The airline has a well-balanced international network and serves all main markets from India, Hong Kong and Singapore in the east, several cities in West Asia, and London. Its partnership with Air France-KLM and Delta has enabled it to tap into Europe and North America and garner corporate traffic from those countries. The other key attraction is slots, especially at Mumbai airport, where it continues to be the dominant carrier,” said an aviation expert.
With the fund infusion, the airline will be able to partially clear dues on lease payments and then negotiate a fresh payment plan to get the fleet operational, said people in the know.
Lenders to cash-strapped Jet Airways weigh open auction process