After various media reports suggested its possible sale to SpiceJet founder Ajay Singh, the NDTV has denied reports saying that the promoters of the company have not entered into any agreement for sale of their stake in the company to any person. The clarification to the stock exchanges comes hours after media was abuzz with NDTV's possible takeover by SpiceJet owner Ajay Singh, who is also the chairman and managing director of the low-cost carrier.
The company is mindful of its obligations under Clause 30 of the Listing Regulations and shall promptly intimate you of any event required which is required to be disclosed under the said regulations, NDTV said in a BSE filing.
Here's how Ajay Singh turned around SpiceJet from a struggling carrier to a profit-making airline.
1) In May 2015, SpiceJet posted its first net profit - of Rs 22.51 crore - in eight quarters. A major contributor to the bottom line was the income - Rs 61.35 crore - that the airline earned from the insurance claim on the damaged aircraft.
2) Ajay Singh, who had started the airline in 2005 before selling his stake to media baron Kalanithi Maran in 2010, returned while SpiceJet was stumbling from one crisis to another with losses mounting to Rs 1,003 crore in 2013/14.
3) Spice Jet was crippled with shortage of cash to pay off debt and dues. In fact, in December 2014, the airline was grounded after oil companies refused to refuel its aircraft due to non-payments.
4) That's when Singh stepped in. After getting speedy approvals from the government, he acquired 58.46 per cent shareholding in SpiceJet from Kalanithi Maran and Maran-owned Kal Airways Private Ltd in February 2015.
5) Singh didn't invest a penny out of his pocket in the airline until he had a fair idea of the challenges before him. Singh nearly camped in the SpiceJet office in Gurgaon for weeks doing due diligence and taking stock of liabilities.
6) Once he had made a detailed assessment of the airline's problems, he devoted time to convincing the government about his Rs 1,500-crore revival plan. "The DGCA (Directorate General of Civil Aviation) passed an executive order asking SpiceJet not to make advance booking of tickets. It is like the Reserve Bank [of India] saying this bank is going to fail. It was a sure shot way of making an airline collapse," Singh told Business Today in 2014.
7) Also, the rise of IndiGo coincided with the fall of SpiceJet. The SpiceJet management went overboard with staff hiring till the end of 2103. At one point, SpiceJet had employed some 140 employees per aircraft as compared to about 100 for IndiGo.
8) It's an important metric to look at because the moment an airline breaches the 90 employees per aircraft ratio, it is seen to be overspending on staff salaries which can affect profitability. Clearly, the new SpiceJet management realised that it has to prune its staff strength if it is to become profitable.
Singh also focused on improving the on-time performance (OTP) record of the airline. The airline fared poorly on the OTP parameter in four metros - Delhi, Mumbai, Bangalore and Hyderabad - in contrast to IndiGo.
9) Overstaffing took its toll on SpiceJet. Its employees eventually were not paid salaries on time last year, leading to mass exodus of pilots and cabin crew. Singh said that staff rationalisation was his top priority when he joined the airline. In 2014, the airline had 5,500 employees. When Singh took over, he brought it down to less than 4,000 people.
10) But that was not enough, there was more pruning at the top as Singh assessed the performance of senior staff who were hired by the previous management at "exorbitant" salaries.
11) In the absence of Singh, SpiceJet's market share between July 2014 and February 2015 had dropped every month, sliding from 20.9 per cent to 9.2 per cent. Which picked up after he made a return to the company.
12) SpiceJet had made consecutive losses worth Rs 604 crore, Rs 192 crore, Rs 1,001 crore and Rs 747 crore during FY12, FY13, Fy14, and FY15. After Singh's takeover in January 2015, the airline reported Rs 450 crore profit in FY16 and Rs 431 crore in FY17.
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