The London-based Hinduja group abandoned plans to resurrect Jet Airways after showing an initial interest
Jet Airways, which had a negative net worth, had accumulated losses of more than ₹13,000 crore over the past few years
Mumbai: The Hinduja group is still open to acquiring defunct Jet Airways (India) Ltd if the conglomerate is indemnified from the airline’s legal liabilities.
“The reason we took interest was because government authorities approached us to help in survival of Jet. Even the banks approached us," said Gopichand P. Hinduja, co-chairman of the London-based group, which has presence in automobiles, financial services, and oil and gas, among other businesses. “With our good relations and contacts in the Middle East and Gulf, we took the initiative to support and help."
The Hinduja group, after showing initial interest, decided to abandon plans to resurrect Jet Airways, dealing a blow to efforts aimed at rescuing the airline that was grounded in April after running out of cash, Mint reported in June.
“Why did we back out? Because NCLT (National Company Law Tribunal) wasn’t giving us protection from past problems. So, if we were to go into Jet Airways, we would face past problems. We said we need a clean chit," said Ashok Hinduja, chairman of the group’s India operations and Gopichand P. Hinduja’s younger brother.
So far, Synergy Group, controlled and co-founded by 69-year-old Bolivian-born billionaire Germán Efromovich, has emerged as the sole bidder for Jet Airways. The South American conglomerate has sought an extension till December to submit a potential bid for the grounded airline, Mint reported on 15 November. It could not be ascertained immediately whether Synergy has made an offer so far to Ashish Chhawchharia, the resolution professional appointed by lenders to Jet Airways.
A consortium of 26 banks led by the State Bank of India had earlier approached the National Company Law Tribunal to recover dues of more than ₹8,500 crore. Jet Airways, which had a negative net worth, had accumulated losses of more than ₹13,000 crore over the past few years.
In mounting trouble for Jet Airways and its founder Naresh Goyal, the Enforcement Directorate in September initiated an independent probe into the books of the airline, which has been under the scanner for alleged diversion of funds after the agency found gaps in an audit carried out by the State Bank of India.
Citing bottlenecks in India’s policy framework and implementation, the Hinduja brothers maintained that apart from Jet Airways, the group has evaluated other distressed-asset opportunities in India, but did not get the desired level of comfort to proceed.
“We took a decision to come and acquire stressed projects. But we found so many hurdles and obstacles, and were not able to invest in anything," Gopichand Hinduja said. “The policies have to be framed in a manner that there are no ifs and buts. There should be absolute clarity in the policy. I can only say that India has a lot of opportunities. Now, if there was ease of doing business and all the vision and intention that PM (Narendra) Modi has could be implemented, India can become the third-largest economy in the world. But when we look at implementation, it hasn’t gone with the same pace. That is what is hurting us."
The Hinduja brothers, who have recently infused fresh equity into IndusInd Bank to raise their stake to permissible limits, said that restrictive policies by the Reserve Bank of India have hurt the prospects of the financial services industry. “Why is there a restriction on promoter holding in banks?" said Gopichand Hinduja. “Nowhere in the world has a regulator placed such a restriction. Because, the stronger the promoter and his shareholding, the more concerned he will be, and will be able to inject more money."
“Earlier, during downturns, banks often came to the rescue but we are increasingly seeing that the banks are only concerned about themselves," added Gopichand Hinduja.