Sun Group on Wednesday said its aviation venture SpiceJet
needs capital for expansion
and would explore options including equity contribution from existing shareholders and raising debt, but promoters have no plans to sell
Sun Group chief Kalanithi Maran and his wife Kavery Maran have resigned from one of the promoter entities of SpiceJet, triggering speculations about a possible sale of Maran family's majority stake in the air carrier.
The group has, however, denied any plans for promoters' stake sale in SpiceJet, saying it could consider various other options to raise capital to finance fleet expansion plans.
"We certainly need funds for fleet expansion and whenever there is an attractive opportunity (for partial stake sale), we will definitely look at it, but there is nothing on cards as of now," Sun Group CFO S L Narayanan said over phone.
Asked about the available financing options, Narayanan said it can look at debt, lease finance and funding from existing shareholders, among others.
"We will go for right type of financing at right time and right cost. We do not want risky and costly funding, but as we go into 2013-14, we will definitely require capital," he said.
SpiceJet has been working on adding new destinations in domestic markets as well as on international routes to its network. It currently commands a market share of 19.1 per cent among the domestic players in the country.
It is operating more than 300 daily flights to 38 Indian cities and 4 international destinations through a fleet of 36 Boeing and 12 Bombardier planes. Recently, it was allowed to operate flights to some new international destinations.
SpiceJet shares were trading 3.3 per cent higher in mid-day trade at Rs 36.10 at the BSE.
Asked about the size of capital required by the airline, Narayanan said the quantum of funding requirement would be clear by March next year, as SpiceJet is currently having a re-look at its fleet plans, as the growth has slowed down a bit, although load factor has improved.
Narayanan said Kalanithi and Kavery Maran have resigned from Kal Airways to organise the board structures of various group companies.
"It is part of a reorganisation to free up time for promoters for other duties... Maran has checked out from some boards where he was not able to provide ample time anyway.
"But his resignation from Kal Airways board should not be inferred as promoters planning to exit or even dilute their stake in Spice Jet," he said, adding that Maran remains Chairman of SpiceJet board and continues to provide leadership and strategic direction to the airline.
"There are no plans to induct any strategic partner or sell equity stake to any financial investor at the moment," he said.