One of the Biggest reason for Global Aviation Recession
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
Slide 20: Moderate Integration Human Resource Integration- Stage I (FY 2007-08) In case of Staffs integration, Jet Airways was quick to lead the Air Sahara employees through a 90 day period training. Lufthansa Technik team provided support Deal to absorb any excess employee back to Sahara Group To avoid Cultural Clashes, Air Sahara was converted to JetLite , having a different philosophy from its parent, so that a low cost structure can be developed.
Slide 21: Moderate Integration Human Resource Integration- Stage II (FY 2008-09) Reduction of staffs due to synergies was made close to 50% reduction in headcount for the entire group. Jet was faced with immense criticism and opposition by various organizations and political parties Jet’s chairman, Naresh Goyal reinstated the employees a day later saying he was not aware of these sackings. So, the HR integration was not smooth enough.
Post Merger Performance: Post Merger Performance
Slide 23: Particulars FY 2008-09 FY 2007-08 Variance Number of Departures 45528 40020 14% Passenger load factor 73.7 72.1 2.4% Block Hours 84688 77100 10% Revenue Passenger(in mn .) 4 3.2 19% From the Operating Performance data, we see that, the number of departures have increased by 14% YOY basis while Block hours have increased by only 10%, this shows lower higher efficiency being achieved. The number of passengers have increased by 19% because of better brand management
Slide 24: Legal Issues Jet Airways and Air Sahara made a pact outside the court that all the contingent liabilities has to be borne by Air Sahara itself. But then, the Income Tax Dept. raised certain tax obligations against Air Sahara of Rs 87 crore . Air Sahara refused, hence Jet was obliged to pay. Jet and Sahara rang the court for non payment of Rs 87 crore . The High Court ordered Jet on May 4, 2011 to pay the remaining 478 crore including 9% interest on the same within 2 days Jet Airways paid Rs. 900 crore upfront and already deposited Rs. 275 crore with the court in installments. So, it paid another Rs. 203 crore within the May 5 th , 2011. Jet’s stock fell 6% after the court ruling.
Current Position: Current Position
Slide 26: Today, Jet Airways is still the market leader, but its share has depleted to 25.5% out of which JetLite contribution remained stable at 7.7%. The low cost airlines like Spice Jet, Go air, IndiGo are giving stiff challenge to Jet Airways dominance Kingfisher also took the M&A route for inorganic growth and took over Air Deccan to strengthen its foothold in the aviation industry
Conclusion: Conclusion After considering the state of Jet Airways and Air Sahara along with the scenario of the Indian Aviation Industry this acquisition was a good decision taken at the right time. This move further strengthened the position of Jet Airways and helped it fight with the other competitors and maintain its market leadership. Also Air Sahara found an easy bailout option to clear its debts. Thus this deal was beneficial for both Jet Airways and Air Sahara.
Sahara is an emotionally integrated family. We not only believe but practice No Discrimination, Justice and High Quality--which means enthusiastic, productive performance of duty, "KARTAVYA," towards the consumers' and workers' genuine satisfaction. Our objective is to provide warm, safe, efficient, reliable and environment friendly air transport services. We at Air Sahara consistently strive to review and improve our standards of quality and productivity, by way of adopting best practices, learning from others and constantly innovating to deliver "Customer Delight" making Air Sahara customers' preferred choice.
Air Sahara Limited is a leading private airline in India, owned by the diversified Sahara India Parivar group. It flies 115 flights on a network of 20 destinations, operating a dozen Boeing 737 airliners and seven regional jets. It also operates four helicopters on charter flights between Delhi and Mumbai (Bombay). The carrier was allowed to begin flying to neighboring countries in the spring of 2003.
Origins
The Indian government opened its domestic air market to private carriers in the early 1990s. One of the first to create a new airline was the diversified conglomerate Sahara India Pariwar. The Pariwar had been formed in northern India in 1978 as a small finance company with just INR 2000 in start-up capital. As noted by Air Transport World, the name "Sahara" means shelter or support in Hindi.
Air Sahara began operations as Sahara Airlines Limited on December 3, 1993. A single Boeing 737 airliner made up the fleet. This aircraft crashed on a training flight in February 1994.
Most of the new start-up airlines--East West, Damania, ModiLuft, and NEPC--folded within a few years. Sahara Airlines held on. It earned INR 23.37 crore ($1.2 million) on revenues of INR 424.36 crore ($78.7 million) in the 1997-98 fiscal year ("crore" is a traditional term meaning 10 million).
Sahara began a charter service with four new helicopters in 1999. The late 1990s were characterized by fare wars as Sahara struggled to lift its market share and build its fleet. In April 1999, the airline cut fares again by 10 to 20 percent.
Parvez Damania, who had founded Domania Airways and sold it to NEPC Group in 1995, became director of Sahara Airlines in February 1999. Chief Controller Uttam Kumar Bose, who had been with Sahara Airlines since it was founded, left the Airline in August 2000 and joined start-up Crown Express. He was soon back with Sahara, however, in the position of chief executive officer.
Rebranded in 2000
On October 2, 2000, Sahara Airlines was rebranded as Air Sahara. A frequent flier program called "Sahara Club Crown" had been launched the previous month. At the time, the airline operated eight Boeing 737s. Earlier in the year, the company dropped a plan to introduce a feeder airline called "Sahara Connect" using a dozen turboprop aircraft. The airline had a rather large workforce for the size of its fleet, 1,600 employees. Calcutta became the airline's third hub in October 2000.
Air Sahara reported a turnover of INR 40 crore in the 2000-01 fiscal year, and was profitable. The airline faced competition from the larger Jet Airways, and more new carriers like Royal Air and Visa Air were being launched. An e-commerce unit was established in 2001 to develop links with travel sites, and in March Air Sahara began booking flights over the Internet. Travel packages, particularly to resort destinations, were becoming more important. Air Sahara sold an estimated 10,000 packages from Delhi and Mumbai (Bombay) to Goa. In the fall of 2002, Air Sahara bought the Centaur Hotel in Mumbai from Air-India.
Revamped in 2001
A major revamp of the airline was launched in July 2001, Bose told the Financial Express. To improve reliability, the Dutch global airline KLM was tapped for maintenance support. On-time performance was raised from 57 percent to 96 percent.
While other airlines were scaling back during the post-9/11 slowdown in international travel, Air Sahara CEO U.K. Bose told Business Line it was a perfect time to increase market share. The airline actually increased frequencies on certain routes. Air Sahara went into November 2001 operating 37 flights and ended the month operating 53, to 12 destinations. The company spent INR 5 crore on promotions during the month.
To attract passengers, Air Sahara offered to accept frequent flier miles earned on other airlines in its own rewards program. Users had to earn an equal number of miles on Air Sahara, however, before they could be exchanged for free travel or consumer goods. According to the company, 1,000 people signed up for the program in the first two weeks.
Air Sahara brought a live acoustic band on board certain long-haul flights during February 2002. In another marketing scheme, the company teamed with Standard Chartered Bank to offer fliers the "Instabuy" program providing interest-free credit for air travel.
Air Sahara aggressively marketed itself toward corporations. It had package deals with 500 companies. The airline was earmarking one of its newly ordered Regional Jets for corporate charters, with a special 18-passenger VIP seating configuration--a "sky limousine." In September 2002, Bose told Financial Express that 40 percent of the company's passengers were business travelers.
Boosting the Fleet in 2002
Air Sahara began 2002 with just five aircraft; the fleet doubled in size within a few months, and doubled again by the beginning of 2004. A new, smaller aircraft type, the 50-seat Bombardier Canadair Regional Jet, bolstered the airline's regional connections beginning in January 2003. Sahara was the first privately owned airline in India to operate regional jets.
The added capacity allowed the airline to increase flight frequency, Bose told Business Line. This helped appeal to the business travelers who made up 80 percent of the company's market. The company also established business lounges in major cities across India.
Sahara aggressively marketed the new flights with its "Cosmos" frequent flyer programs, "Steal-a-Seat" auctions, and discounted advance tickets, allowing the airline to compete with trains in price and to grow the domestic air market as Southwest Airlines had in certain U.S. markets. For a 20 percent premium, U.K. Bose told Business Line, rail users could shorten a 36-hour trip to 2.5 hours. Sahara was supporting its expansion in capacity with an upgraded web site.
New Horizons in 2003 and 2004
In the spring of 2003, Air Sahara connected 13 destinations with 63 flights per day. It operated hubs at Mumbai (Bombay), Delhi, Kolkata, and the recently added Chennai.
In 2003, only Jet Airways was larger among private airlines in India. Both it and state-owned Indian Airlines had a domestic market share of about 45 percent, while Air Sahara was claiming 12 percent of the market. There was plenty of room to grow the market; according to CEO U.K. Bose, only 0.75 percent of the population flew.
Air Sahara launched an unprecedented 24 new flights on a single day, September 7, 2003. This expanded the route network to 20 destinations. Most of the new flights originated in Chennai.
The Indian government, pursuing an open skies policy, then began allowing the country's private airlines to operate limited international flights to six neighboring countries forming the South Asian Association of Regional Co-operation (SAARC): Nepal, Bangladesh, Bhutan, Maldives, Pakistan, and Sri Lanka. These routes traditionally had been reserved for the state-owned carriers Air-India and Indian Airlines.
Air Sahara was the first of the private airlines to launch such long awaited service with a flight from Chennai (Madras) to the Sri Lankan capital of Colombo on March 22, 2004. Business Line reported that CEO U.K. Bose told the first passengers, "This is a flight which will be cherished and remembered by all." Rival Jet Airways was inaugurating its own Chennai-Colombo service.
Air Sahara added flights to Nepal, Bangladesh, and the Maldives in April 2004. The airline soon teamed with Cathay Pacific to offer service through Colombo to Hong Kong and Singapore. Air Sahara added two widebody jets to accommodate traffic to Colombo.
According to the Economic Times, Air Sahara CEO U.K. Bose expected flights to neighboring countries to account for up to 12 percent of revenues. There were plans to open up the broader ASEAN region to services from India's private carriers within a few years, increasing the possibilities for Air Sahara even more.
Principal Subsidiaries: Centaur Hotel.
Principal Operating Units: Aviation Academy; Cargo.
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