Mumbai: Ajay Singh, the man who has stepped in to save SpiceJet Ltd, is one of the airline’s original promoters.
With close ties to the ruling Bharatiya Janata Party (BJP), Singh is said to have coined the 2014 general election slogan, Ab Ki Baar, Modi Sarkar. (This time, Modi government.)
Singh, an alumnus of the Indian Institute of Technology, Delhi, has an MBA from Cornell University, and was once a director in the state-run Delhi Transport Corp. He was also an advisor to Pramod Mahajan, the late BJP leader and former telecom minister.
“He is passionate about airlines,” said a close associate of Singh. “Singh is confident about breaking the monopoly of IndiGo and Jet Airways. He showed how to run an airline profitably and efficiently. When he exited SpiceJet, the airline had cash reserves of nearly ₹ 800 crore,” this person added, speaking on condition of anonymity.
The associate said Singh wants to return to the aviation business because he sees demand picking up at a time when oil prices are low.
“Singh is a non-conventional, street-smart investor. He does not have an institutional approach to things but very hands-on like a typical Indian promoter. He was there to take calls even at 4am when a deal was in the making,” said Amitabh Malhotra, managing director of investment banking firm NM Rothschild and Sons (India) Pvt. Ltd, who had worked with Singh in the past.
Since 19 June, the price of crude oil has fallen by 58.8%.
A 4% reduction in the cost of jet fuel may potentially add around 2% to an Indian airline’s operating margin.
He said Singh maintains good relations with investors as he was a serial entrepreneur, associated with companies such as SpaceAge Internet, Cranes Software International Ltd and Argentum Electric Vehicles Pvt. Ltd.
“Singh believes there is a good story playing out in the Indian airline industry with oil prices heading south,” said another associate of Singh. “He may have started many companies, but his airline venture was the most successful one.”
Along with the London-based Kansagra family, Singh helped revive defunct airline Modiluft in 2005 and renamed it SpiceJet.
When most airlines were posting losses, SpiceJet managed to secure investments of as much as $118 million from the Tata Group, private equity firm Istithmar PJSC and investment bank Goldman Sachs.
It was Singh who helped the airline find investors when it ran into financial difficulty after the global financial crisis in 2008.
He then persuaded distressed buyout firm Wilbur Ross of the US to invest $80 million in SpiceJet.
Finally, in 2010, Singh and Ross sold their stake to the Marans.
“When SpiceJet ran into financial trouble, it was again Singh who walked into the ministry of civil aviation to offer help. He told civil aviation ministry officials whether he can be part of the solutions, as grounding of an airline will be a dampener to the industry and government’s initiative of ‘Make In India’,” the second associate said.
Singh, a Bollywood buff, wanted to position SpiceJet as an airline that could offer a rich flying experience at low fares.
Another associate of Singh, who knows him for more than 16 years, said Singh is not a person of “meetings” but a firm believer in taking quick decisions.
“He does not believe in conducting long sessions of meetings. He takes quick decisions. Most of them click. Indeed, some have backfired,” he said.
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