The finance ministry today cleared the investment proposal of Malaysian budget carrier AirAsia which seeks to enter India through a joint venture with Tata Group and another company. On the sideline of the development, Shereen Bhan spoke to Arun Bhatia of Telestra Tradeplace Pvt Ltd to get more insight on the development.
The finance ministry today cleared the investment proposal of Malaysian budget carrier AirAsia which seeks to enter India through a joint venture with Tata Group and another company. On the sideline of the development, Shereen Bhan spoke to Arun Bhatia of Telestra Tradeplace Pvt Ltd to get more insight of the development.
After receiving FIPB's nod, Ratan Tata tweeted, "FIPB approval of the airline project between Tatas, Air Asia and Bhatia's reflect the true investor friendly policies of the government. This and other similar actions will, without doubt, reinforce investor confidence in India. I applaud the government for its transparency and its principled implementation of the stated policy."
Below is the edited transcript of the interview.
Q: We understand that the FIPB has cleared your joint venture (JV) application. But we are getting conflicting reports because sources within the civil aviation ministry still insist that there is no clarity on whether FDI can be brought into a carrier that doesn’t actually exist on the ground. You and your colleagues have had consultations with ministry officials, we understand Ratan Tata also met with the civil aviation minister do you have any clarity on this front?
A: FIPB will give green signal only if they are clear that it can be done. We are happy that FIPB has approved it, so what clarity can one have.
Q: So you mean that FIPB has approved it and hence that proves that there is clarity on the issue of FDI coming into a not existing carrier but in terms of further regulatory approvals you will need to go to the DGCA to seek license to fly in this country. The road is not over yet in terms of the regulatory clearances ?
A: True. We need to obtain clearances from other regulatory bodies as well.
Q: You are one of the investors along with the Tata’s. The Tata’s have made it very clear that this is a financial investment as far as they are concerned, but the role that you are going to play in this tripartite joint venture you have nothing to do with the aviation business, you know Tony Fernandes and your families had close relationships with him but from the real estate business to the aviation business what exactly is your interest at being a part of this joint venture?
A: We have some interest in the aviation business. We have a factory where we produce equipment for the aviation industry, my son runs it. We have been looking at the aviation industry for a while. It is in the initial stages and there is a lot of scope in it. So, we ventured into this business.
Q: Tony Fernandes said that whatever role Ratan Tata wants to play we would be happy to offer him that role. Is there any clarity amongst the three investors on the role that Ratan Tata, if any, is likely to play in this joint venture?
A: We will be very happy if Ratan Tata joins in. I am sure he will look into this matter very carefully. There is no clarity as yet but I am sure he will look into it very carefully and probably join.
Q: By when do you expect that decision to be taken and are we looking at the chairmanship role being taken by Ratan Tata, is that being discussed at this point in time?
Q: So, he could be the chairman of the joint venture?
Q: I also want to talk to you about the fact that Tony Fernandes yesterday tweeted that he has already found a CEO. Do you know anything about the CEO that apparently has already been hired by Tony Fernandes to run AirAsia’s Indian operations?
A: It is a bit premature but I don’t know much about it. Nobody has been hired as yet.
Q: What will be your role in this joint venture? If the Tata’s say that they want to play a passive role are you happy with playing just a passive role because then that throws into question the Indian ownership and the Indian control angle which the regulatory authorities will want clarity on?
A: No, it has not been read correctly. Everybody will play a role. The board will take all the decisions and everybody will play an active part in it. It is not that either Tata’s or ourselves will be passive players. The board will consist of two-third of Indian which will take all the decision.
SpiceJet stock price
On July 24, 2014, SpiceJet closed at Rs 17.35, down Rs 0.3, or 1.7 percent. The 52-week high of the share was Rs 28.90 and the 52-week low was Rs 12.50.
The latest book value of the company is Rs -22.24 per share. At current value, the price-to-book value of the company was -0.78.
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