Gopinath’s Deccan Charters says SBI overstepping its brief

Lender asks aviation ministry to withhold new airline permit till Gopinath’s firms clear all outstanding dues
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First Published: Mon, Jul 08 2013. 11 39 PM IST
A file photo of G. R. Gopinath. Deccan has asked the aviation ministry to ignore SBI’s letter. Photo: Bloomberg
A file photo of G. R. Gopinath. Deccan has asked the aviation ministry to ignore SBI’s letter. Photo: Bloomberg
New Delhi: G.R. Gopinath’s Deccan Charters Ltd said State Bank of India, the nation’s largest lender, had overstepped its mandate in opposing the grant of a new airline license to his company until other firms founded by him clear their dues.
State Bank of India has opposed a move by Gopinath, the founder of India’s first low-fare airline Air Deccan, to seek a national airline permit on the grounds that Deccan Cargo and Express Logistics Pvt. Ltd, a company he founded, had defaulted on loans worth more than Rs.200 crore to SBI alone. The company owes Syndicate Bank Rs.140.5 crore and Axis Bank’s Rs.270.38 crore.
SBI wrote to aviation regulator Directorate General of Civil Aviation (DGCA) not to award a license to Deccan Charters. Mint had first reported the contents of the letter on 6 June.
Deccan has asked the aviation ministry to ignore SBI’s letter as Deccan Charters and Deccan Cargo are two separate entities. “The banks are custodians of public money and are required to act in a responsible manner. They cannot overstep their bounds,” Deccan Charters said in a letter.
Deccan 360, operated by Deccan Cargo and Express, was a cargo airline that Gopinath set up in 2009 after selling Air Deccan to Kingfisher Airlines Ltd. A year later, Reliance Industries Ltd bought a 45% stake in the company. The company has since stopped operations. Last year, Gopinath started Deccan Shuttles, a regional service in Gujarat that sought to connect small cities. This too failed to take off.
Gopinath didn’t have a controlling stake in Deccan Cargo and Express and Reliance Industries had an equal representation on the board of the failed cargo airline, said Jayanth Poovaiah, CEO of Deccan Charters.
Deccan Cargo failed as “it was an idea ahead of its time and did not prosper as planned,” Poovaiah said. “If SBI wants to recover money, there are several avenues open under the law.”
Gopinath declined to comment. Reliance and SBI also declined to respond to comments made in the Deccan letter. “The SBI letter appears motivated and ‘mala fide’ as they have selectively named directors who should not be allowed to start an airline... SBI has deliberately omitted the names of the Reliance directors,” Poovaiah said.
Besides Gopinath, K.J. Samuel and Mohan Kumar (Gopinath’s colleagues), Deccan Cargo and Express also had Reliance’s Tarun Kumar Jhunjhunwala and Sanjay Shamrao Kulkarni on the company’s board.
“By this logic offered by the SBI, Reliance Industries Ltd should be stopped from starting any new ventures as well... To demand that the directors should not start any other company in the future because one of their ventures failed and not be allowed by any independent statutory authority to issue clearance is misplaced zeal, mala fide and violates the fundamental rights of the company,” Deccan wrote in the letter.
The civil aviation ministry is considering the merits of the Deccan Cargo letter and it is unclear if the ministry will ask Gopinath to submit no-objection certificates from all the vendors and lenders as it had sought from Vijay Mallya’s Kingfisher Airlines.
In March, aviation minister Ajit Singh had said that Deccan has been given a “regional licence and they have not activated that. We will consider that application only after they acted on the license they already have”.
“Gopinath has already failed twice. He started an airline which ran into problems and sold it off to Kingfisher and then he started another company,” said Sudhakara Reddy, the Chennai-based head of consumer group Air Passengers Association of India (APAI). “Their are instances of airlines closing down which owe a lot of money to passengers. The government should give license to those entrepreneurs who have a proven track record of successful ventures.”
Remya Nair in New Delhi and Aveek Datta in Mumbai contributed to this story.
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First Published: Mon, Jul 08 2013. 11 39 PM IST
More Topics: gr gopinath | deccan charters | SBI | DGCA | air deccan |