Chairman of transport and logistics firm VRL Logistics Vijay Sankeshwar is planning to start a regional airline alongwith the company’s Managing Director Anand Saneshwar. Reacting to the news of promoters going into the airline business, the stock today tanked 20 percent. Speaking to CNBC-TV18, Vijay Sankeshwar said that aviation is his passion and he intends to follow it. The investment for the project is expected to come partly from dilution of his shares in VRL and the rest from other sources. “We will enter the airline business with a small investment of Rs 1,400 crore,” he said, adding that he will dilute Rs 300-400 crore worth shares in VRL over the next three to four years. He hopes to still hold a majority stake in VRL post dilution. When asked about resistance from other shareholders over the plan, Sankeshwar said: “Whether my shareholders are liking or not liking, I am not bothered. I am very clear about that”Sankeshwar further said that aviation business plans are not finalised yet and it is just ‘one’ of the ideas company is mulling. Below is the transcript of Vijay Sankeshwar's interview with CNBC-TV18's Anuj Singhal, Ekta Batra and Varinder Bansal.
Anuj: Why this development of getting into the aviation business? What has aviation business got to do with your business? The markets fear that you will have to dilute some of the stake in listed company, if you could clarify on that?
A: Aviation is one of my passion. Since last 25 years it is one of my dream project. When I was member of parliament I was in the aviation committee also. I have been observing the aviation sector very closely. Some are doing good, some are not doing good and same thing in media and logistics sector.
We want to start a very small airline by forming a private limited company with maybe an investment to the extent of Rs 1400-1500 crore.
Anuj: Where is that investment money going to come from?
A: The total investment will be about Rs 1400-1500 crore. Out of that I may dilute to the extent of Rs 300-400 crore worth of shares over a period of next 3 years. The remaining finance will be arranged by the aircraft seller. I have to still workout the price of the aircraft, which aircraft I am buying, everything is still not decided, meanwhile so many questions are arising. Once the whole homework is done then only I will be able to answer that question.
Ekta: Your shareholders are concerned, you have a listed equity stock that you are dealing with as well and the markets are not liking this.
A: I am holding 69 percent, I will be holding majority stake. I may reduce over a period of 4 years to the extent of 10 percent.
Anuj: Rs 300-400 crore would be somewhere around 10 percent of your stake. I know you will be still holding majority stake but the markets fear is genuine that why do you need to dilute stake in a listed company to fund your passion. It is understood that you have a passion for aviation but why use the other vehicle?
A: All entrepreneurs and promoters have lot of passions. Other big promoters are doing hundreds of business, why I should not do one or two businesses?
Ekta: Would you take your plan back in terms of equity dilution or aviation, if in case your shareholders don’t like it, which they clearly don’t? Would you go back on your plans?
A: Either my shareholders are liking or don’t liking I am not bothered. See I have a passion, I have to do lot of things and lot of business. It is nothing to be the somebody’s business to ask.
Varinder: When the initial public offering (IPO) came for our company VRL Logistics, in the DRHP or nowhere it was even mention that your passion of aviation or there was no intention that going ahead you may open or you may want to go ahead with the aviation?
A: Many, many questions are raised, in many places questions were raised and at many places I answer to this also and many have appreciated also. When I started logistics and also media the same question was asked. Now everybody is keeping quite now. When I came for an IPO everybody was describing my logistic as a heavy asset model. Now everybody is appreciating because we are the only company in India who are making 18 percent earnings before interest, taxes, depreciation and amortization (EBITDA). Not this quarter you see after post the IPO I have done all 4 quarters wonderfully well and ahead of what I promised.Watch video for more...
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