THE PROBLEM OF BEING NARESH GOYAL
Alook-out circular by the Ministry of Home Affairs (MHA), a probe by the Serious Fraud Investigation Office (SFIO) and an income tax investigation— Naresh Goyal, former chairman of Jet Airways, has received a lot of attention since he was ousted from the now-grounded airline in March this year.
In May, as a result of the MHA’s notice, Goyal was deboarded from a flight to Dubai. On July
9, in response to his plea challenging that notice, the Delhi High Court directed him to deposit Rs 18,000 crore as guarantee against Jet Airways’ unpaid loans to have his travel privileges reinstated. The odds of this happening are low—in May, Goyal had already offered Rs 250 crore as capital infusion from Jetair Pvt Ltd (one of his group companies)
to placate lenders.
Meanwhile, on July 4, the Ministry of Corporate Affairs gave the SFIO a free hand to investigate Goyal’s alleged misappropriation of funds. This probe, beginning on July 10, is to be concluded within six months. Analysts believe that the MHA’s travel ban was a pre-emptive move to prevent a Nirav Modi-/ Vijay Mallya-like situation. However, others are circumspect. “For some reason, business failure is equated with criminal action. Businesses fail for a variety of reasons, including bad decisions,” says Devesh Agarwal, an aviation expert.
The grounding of Jet Airways has also led to an imbalance in the aviation sector—fares have been high for over three months, though Jet’s rivals are aggressively adding new
capacity. SpiceJet added 25 aircraft to its fleet over April and May and says it plans to add another 35 in less than a year, while IndiGo will reportedly increase its fleet by 65 aircraft in that time. Jet Airways’ market share and airport slots have already been absorbed— IndiGo now carries 49 per cent of the domestic market, with SpiceJet the next largest at 14.8 per cent. However, analysts say the redistribution of Jet’s airport slots has been ad hoc, with GoAir submitting a protest to the Prime Minister’s Office on the issue. “Jet Airways’ grounding has exposed the lack of a structured policy in civil aviation. The airline’s slots were redistributed to favour select carriers,” says an aviation consultant.
In June, after a failed months-long effort to find a buyer for the airline, Jet Airways’ creditors submitted an insolvency application to the National Company Law Tribunal (NCLT). On June 20, the NCLT admitted the application, setting a three-month deadline to complete proceedings.
There is already a confirmed bidder for the defunct airlines’ assets— a consortium of Jet employees and Londonbased AdiGro Aviation. Other groups reportedly mulling bids include a Hinduja-Etihad consortium, the Tata Group and Qatar Airways. However, given the scale of Jet Airways’ debt, the fact that its assets are limited to just 16 aircraft, and with its airport slots already distributed, it is unclear what kind of bids will ultimately materialise.
GOYAL WAS ASKED TO COUGH UP Rs 18,000 CRORE TO HAVE HIS TRAVEL PRIVILEGES RESTORED