6  Corporate THE ECONOMIC TIMES | | THURSDAY | 23 FEBRUARY 2012 * RIL Moves SAT CRISIS CONTINUES TO TAKE A TOLL ON AIRLINE PE Fund Redclays Over Takeover Code Probe Kingfisher may Lose Some Tailors Deal to

ASHWIN MOHAN ET NOW Buy Deccan 360 Reliance Industries (RIL) has challenged of its Prime Slots to Rivals market regulator the Securities and Ex- change Board of ’s (Sebi) probe into After the reduction of flights since No- Cayman Islands’ Package Deal its alleged violation of takeover norms KFA cancelled over 30 vember, eight of Kingfisher’s slots at the over a promoter stake purchase in 2000. second busiest airport in the country, fund has offered to The plea was filed before the Securities more flights on Wednesday; Mumbai International Airport, are al-  IF THE DEAL IS FINALISED, IT and Appellate Tribunal (SAT) on ready taken over by IndiGo (two flights), buy Deccan 360 will mean that Gopinath and Wednesday, two people close to the develop- (three), (two) and Airline now left with Mukesh Ambani-controlled ment said. SpiceJet (one). for between “The Sebi internal order of 2010 appoint- only 28 aircraft Kingfisher has already pulled flights out RIL, the main shareholders, ing an adjudicating officer to probe the from several cities like — since, $2 m and $5 m will have to cede ownership matter and the subsequent show-cause no- partially reinstated them — besides re- tice issued by the adjudicating officer, have MANISHA SINGHAL ducing the number of flights from other ci-  GIVEN RELIANCE’S MUMBAI BISWARUP GOOPTU been challenged in the RIL plea filed in Ja- ties as well as from international routes. priorities and Deccan 360’s nuary. The plea argues that both the order ingfisher Airlines may lose some of Aviation experts say that vacant slots performance, there is a good and show-cause notice were not issued its prime slots in the country’s major will only help rival airlines, especially at A Cayman Islands-domiciled pri- within a reasonable time-frame,” said one K airports to rivals as a severe finan- crowded airports like Mumbai or at air- vate equity fund has offered a chance that Mukesh Ambani of the two individuals cited above. cial crunch forces it to cut flights further ports like Goa and Pune where there are package deal which could result will be willing to write off his The show-cause notice had said that RIL weakening its competitive position. The restrictions by the armed forces on the in it acquiring Deccan 360, the ail- investment, sources say had violated rules regulating the manner airline is now left with only 28 aircraft and number of flights that can operate. ing air cargo operator founded by in which promoters can raise their stake in the company submitted a revised schedule “Kingfisher would try and protect its pre- low-cost aviation pioneer GR  FUNDRAISING WILL BE Indian companies. The notice had ques- comprising 170 flights against the 400 that cious slots at airports like Mumbai and Gopinath, a person directly in- completed by June and mon- tioned the manner in which 12 crore it was originally supposed to operate. The as it cannot afford to cancel them. volved in the negotiations said. shares were allotted in 2000 to 38 promoter- surplus slots across the country will then The airline might, however, give up slots in Redclays Capital has offered to ey will be used for expansion related entities, another person added. go to rivals. The airlines cancelled more smaller cities or excess ports where they help raise $50 million (`. 250 crore) RIL officials were immediately unavaila- than 30 flights again on Wednesday. will still find them vacant once they stabil- for Gopinath’s aviation services ble for an official comment to ET NOW’s “They need to come up with a new sched- ise and want to resume,” said Kapil Kaul, company and in India has been slow compared queries. The case is likely to come up for ule, otherwise their [flying] slots will be CEO, South Asia, Centre for Asia Pacific buy Deccan 360 for between $2 to neighbouring China. Accord- hearing towards the end of March. cancelled and given to other airlines,” Brit- Aviation, an aviation consultancy and ad- million and $5 million, the person ing to industry estimates, vol- ish newspaper Financial Times reported visory firm. said, requesting anonymity. umes in India are not expected to on Tuesday, quoting EK Bharat Bhushan, Also, it is important that the airlines If the transaction is finalised, it cross 2.6 million tonne, a number director general of civil aviation chief. that pitch in to fill Kingfisher’s slots must will mean that Gopinath and Mu- handled by Hong Kong and In a Nutshell Industry experts say that it will be diffi- have the requisite number of planes kesh Ambani-controlled Re- Shanghai alone. Operators have cult for Kingfisher to hold on to slots when they commence their summer liance Industries, the main share- also suffered from the lack of crit- even if it submits a revised schedule as schedule and also for the rest of the win- holders in the moribund freight ical infrastructure in the coun- technically to do that — a privilege re- ter schedule. The Indian aviation market and logistics company, will have try, such as warehouses, a situa-  Econet Seeks $3.1 b in ferred to as grandfather rights — an air- currently has a problem of over-capacity to cede ownership in what will es- tion that has often nullified the Damages from Bharti Airtel line needs to fly at least 80% of its sched- and there is a supply-demand mismatch sentially be a fire sale. advantages of air cargo shipping. ule for the entire year, which is not the where, according to Kaul, 25% seats are Reliance, which paid about `. 110 Gopinath, who LAGOS Econet Wireless is seeking at least $3.1 case with Kingfisher. still going vacant. crore in April 2010 for a 26% stake founded low-cost billion in damages from Bharti Airtel in a dis- in Deccan 360, declined to com- Redclays carrier Air Dec- pute over ownership of its subsidiary Airtel Ni- ment for this story, as did Red- Capital has can that merged geria, according to a suit filed on Wednesday. clays managing director Srini offered to with Kingfisher Chakwal. Gopinath, too, did not Airlines, also The move follows a Nigerian court ruling on Ja- help raise Lenders yet to Decide on KFA Loans reply to an email and phone calls. `. 250 crore for owns Deccan nuary 30 that Bharti’s ownership of its subsidi- Deccan 360 has been in a limbo Gopinath’s Charters, the ary Airtel Nigeria is “null and void” because co- Plan to impose strict conditions to ensure their funds don’t go down the drain for nearly a year. Three Airbus aviation company for founder and 5% shareholder Econet was not A-310 aircraft leased from Mauriti- services co which Redclays consulted on the transfer. South Africa-based due with the airports author- ability to give additional funds GOVT DENIES BAILOUT us-based Veling have been return- Deccan is raising $50 mil- OUR BUREAU Econet Wireless is disputing Bharti’s own- ity, oil companies for fuel and to on the grounds that the ac- The government has not ap- ed to the lessors; nearly 600 em- Charters lion. The amount MUMBAI income tax department which count is classified as non-per- proved a bailout for the belea- ployees were asked to look for jobs is being raised ership of one of its top Africa operations. Lenders to has frozen the accounts. forming loan after it failed to guered Kingfisher Airlines and two ATR aircraft have been from a syndicate of wealthy indi- are yet to decide on how much Banks, which have lent pay its dues. and no state-run bank has giv- grounded as the company has not viduals, private placements and  Shell makes Agreed Bid to to lend to keep the carrier around `. 7,000 crore to Vijay “Any addition- en it a fresh loan, a finance min- been accepting new orders. “If family trusts. Germany’s Buy Cove Energy for $1.6 b afloat, but will impose strict Mallya-promoted Kingfisher, Bankers are al funding will istry official said on Wednes- Redclays has to pick up a majority Deutsche Bank and Swiss private conditions to ensure that their are still debating on the of the view require the day. “There has been no fresh stake in Deccan 360, Gopinath and bank Julius Baer have confirmed LONDON Royal Dutch Shell has made an agreed funds don’t go down the drain, amount they should lend to sal- that the board approval sanction by any PSU bank till Reliance have to walk away. that they will invest in Deccan £992.4 million ($1.6 billion) bid for Mozam- two bankers familiar with the vage the situation. “Although additional and it will have date. If the consortium decides Given Reliance’s priorities and Charters, the source said. bique-focused Cove Energy, offering a full plans said. the exact amount of fresh loan loans should to be a consor- on fresh lending, it will be their Deccan 360’s performance, there Fundraising will be completed price to open up a new gas frontier for the An- The lending, which will be and new conditions are yet to be given tium-led ap- decision. We are not involved,” is a very good chance that Mukesh by June, with the money used for mostly working capital loans, be decided, bankers are of the proach. Sec- the official said. Ambani will be willing to write off expansion and acquisition of new glo-Dutch oil major in East Africa. Shell has of- on a pro-rata may resume soon since the air- view that the additional loans basis ondly, since the Finance Minister Pranab his investment,” the source said. aircraft by the air charter, mainte- fered 195 pence per share in cash, which Cov- line has been forced to cancel should be on a pro-rata basis,” account has Mukherjee, too, refused to Redclays’ portfolio in India in- nance and technical services com- e’s directors said they would recommend to scores of flights leading to said a senior bank official who slipped into a non-performing comment on whether SBI has cludes Indian Ambience Vine- pany. The private equity fund is al- shareholders. On Tuesday, Cove’s shares widespread public disenchant- did not want to be quoted. category, we have to impose given a loan to the airline. “I yards, the Rajpur Hydropower so expected to take a 10% stake in closed at 154.5 pence, and analysts at Ci- ment and staff exodus, which During the meeting with the stringent conditions to ensure cannot comment on it now. As project in HP and IT consulting the company once it receives the tigroup said the “valuation looks stretched” in may threaten the revival of the Kingfisher management, sev- that discipline is maintained,” and when events take place you firm Sparc Technologies. status of foreign venture capital company. Payments are over- eral banks expressed their in- added the above quoted banker. will come to know.” The growth of air cargo traffic investor from Sebi. a research note. The price is an over 70% pre- mium to Cove’s closing share price on Jan 4, when Cove announced plans to sell.  Dunlop Suspends Work Top Guns Turn on the Etisalat Deletes India at Ambattur Factory Tyre manufacturer Dunlop India on Wednesday suspended operations at its facil- ity at Ambattur near here due to labour unrest Power, Seek Tariff Hike No. from Phonebook and said it planned to go in for a restructuring exercise. In a filing to the BSE, the company 43% stake in mobile phone compa- OUR BUREAU said it suspended operations at the plant with ny S Tel back to its Indian affiliate. NEW DELHI Second foreign co Etisalat owns 45% stake in Swan immediate effect, as it has incurred heavy loss- Eight industrialists, including after Bahrain Telecom Telecom, which has been renamed es due to labour unrest. Dunlop in a statement Cyrus Mistry, Anil Ambani, as Etisalat DB. claimed the workers union continued placing Gautam Adani and GM Rao, to exit India after apex It is learnt that both Etisalat and S all types of obstacles, restrictive practices and met principal secretary in Tel plan to claim damages from the manipulated attendance, despite giving an as- PMO Pulok Chatterjee to de- court ruling on Feb 2 government on the grounds that surance to adhere to a Long-Term Settlement mand higher tariff for power they had invested in mobile per- produced at their plants as mits granted by the Centre as per for cooperation “which turned out to be detri- they fear that coal imports by OUR BUREAU the existing policy and also that mental to the survival of the company”. Coal India would substantially NEW DELHI they entered this market only after raise their costs of production. United Arab Emirates’ telecom op- the licences had been awarded. en its telecom towers on lease in a  Rel Infratel Moves TDSAT to The industrialists had earlier erator Etisalat on Wednesday said Earlier this month, Etisalat said 10-year deal. The tribunal is expect- persuaded the PMO to direct it would shut down its India joint it was taking $829-million hit on its ed to hear the matter on Thursday. Recover `. 1,200 cr from Etisalat Coal India to deliver at least venture, making it the second for- Indian earning after the Supreme The Arab world's second largest NEW DELHI Anil Ambani group firm Reliance In- 80% of committed supplies to eign company after Bahrain Tele- Court had cancelled 122 licences, telecom company by market value their plants to ease fuel scarci- com to exit the country following including 15 permits held by the said its board had ‘unanimously fratel approached telecom tribunal TDSAT, ty. But even this is not enough to the Supreme Court’s decision Gulf carrier's JV. The telco said it resolved’ on Wednesday evening to `. seeking to recover 1,200 crore from Etisalat run the plants at optimal capac- (Clockwise from top left) Cyrus Mistry, Anil Ambani, Ashok Hinduja early this month to cancel 122 tele- will take a call on coming back in reduce operating costs and sus- DB which had taken its telecom infrastructure ity. The industrialists told and Naveen Jindal come out after meeting Planning Commission com licences issued by govern- the Indian market when it sees pend services. “The decision has on lease. The matter will come up for hearing to- Chatterjee that Coal India sup- deputy chairman Montek Singh Ahluwalia in New Delhi ment of India in 2008. clarity on the auction process, sta- been taken in order to protect the day before the Telecom Disputes Settlement ply will be enough to run the While the decision will impact ble policy, legal and regulatory interests of all stakeholders and to and Appellate Tribunal bench, headed by its projects at 68% capacities. latory change in Indonesia, proposal given by the delega- about 1.7 million customers, who framework in the telecoms sector. avoid incurring further costs at They said they will have to im- which made imports costly. tion and assured that since the have time till June to migrate to a Etisalat DB’s services had col- this time of rapid change and con- Chairman Justice SB Sinha. In 2009, Etisalat DB port about 17% of their coal re- The power producers, led by recommendations made by the new operator, over 2,000 employees lapsed in most parts of the country tinued uncertainty in the Indian had entered into 10-year pact with RITL for quirement. the Association of Power Prod- APP are genuine and practical, would also be laid off, executives last month, after it company failed telecommunications sector,” the leasing infrastructure to provide GSM services “The companies have asked ucers (APP), also demanded sig- it would be addressed immedi- linked to the company told ET. to clear its due to Reliance Commu- telco said in a statement. after getting 2G spectrum. for policy intervention to reme- ning of long-term gas supply ag- ately,” the director of the Asso- The move comes within a day of S nications (RCOM), with which it The telco shelved its expansion dy the impact on tariff,” indus- reements, reallocation of gas ciation of Power Producers, Tel, which has about 3.5 million us- has an infrastructure sharing ar- plans after DB Realty’s promoters try sources said. About 37,600 supply meant for steel and fertil- Ashok Khurana said. Two se- ers, deciding to shut operations. rangement, and so far it had not re- were arrested in the 2G spectrum  Mohandas Pai Picks Up MW projects are run on coal iser units to power plants, and nior government officials said ET had reported on Wednesday vived operations. In a related devel- allocation scam in February last Stake in InGovern supplied by Coal India. bulk coal and LNG imports to Chatterjee agreed to go that both S Tel and Etisalat were opment, Reliance Infratel, the year. The CBI in its chargesheet The companies suggested set- fulfill short-term demands of through the industry wish list. shutting down operations in India. infrastructure arm of RCOM, has said that Swan Telecom was a front MUMBAI Former Infosys board member and ting up an expert body to evolve the power sector. The companies also sought The cancellation of licences also approached the telecoms tribunal for Reliance Telecom, a subsidiary chairman of Manipal University Learning TV mechanisms to review con- Pooling of imported coal, priv- permission to divert surplus resulted in Bahrain Telecommuni- on Wednesday to recover `. 1,200 of Reliance Communications own- Mohandas Pai has picked up an equity stake in tracts impacted due to changes atisation of distribution firms, coal from captive blocks and cations exiting India by selling its crore from Etisalat DB that had tak- ed by the Reliance ADA Group. India’s first proxy advisory services company in law in other countries, a fall fast-tracking of regulatory cl- exemption from proposed im- InGovern Research Services. Pai, who has in supply by Coal India and any earances, speeding up of hydro- port duty on power equipment, delay or denial in environment power plants in the north-east, besides presenting their wish served as member on several committees clearances to captive coal and reviewing documentation list for this year’s Budget. The formed by the government, the RBI and Sebi, blocks. Over 14,000 MW pro- to bid for power projects were al- delegation later met Planning Hero Signs Tech Pact with will be on the advisory committee of the in- jects based on imported coal so on the agenda. Commission deputy chairman stitutional advisory firm. are likely to be hit due to a regu- “Chatterjee agreed with the Montek Singh Ahluwalia. US Motorcycle Co Erik Buell EBR, a specialist in customised su- cash reserves of more than `. 4,000 OUR BUREAU perbikes, is already working on crore, plans to enlarge its R&D set- ‘Focus on Well-being of Local Cos’ NEW DELHI some of Hero’s products and will de- up at Daruhera into a full-fledged Hero MotoCorp, the world’s largest velop new bikes and scooters that design and engineering centre with Cipla’s Hamied says any shift from current FTA stand will kill generic cos two-wheeler maker, has signed a are likely to hit the market in 2013. EBR’s help. “We are open to all op- technology-sharing deal with US Hero doesn’t intend to launch tions as we move into being a diver- mohan Singh had said talks be- said Hamied. Under the enforce- motorcycle firm Erik Buell Racing 1,000cc and above superbikes imme- sified automotive company,” Mun- DIVYA RAJAGOPAL tween both nations on FTA have ment of intellectual property, an (EBR), a year after ending a 27-year- diately and will gradually move up jal said. EBR has already developed MUMBAI intensified with substantial pro- innovator company can sue the en- old pact with Japan’s Honda Mo- the value chain. a hybrid scooter concept, Leap, India should be more transparent gress on different areas. However, tire chain of suppliers of a generic tors. The Munjals-owned Hero Mo- Hero MotoCorp, which was showcased by Hero at the in its negotiations on Free Trade a joint statement released after drug company for patent infringe- toCorp will buy technology from US co is earlier known as Auto Expo earlier this year. Agreement (FTA) with the Eu- the summit did not specify details ment, which means a drug whole- EBR without sharing profits or already Hero Honda, com- “We are already customising tech- ropean Union, said YK Hamied, of the negotiations, sparking re- saler to active ingredient manu- ownership. After its December 2010 working on petes with Bajaj, nologies for Hero MotoCorp using chairman of Cipla, India’s sec- actions from leading domestic facturers can be charged under break-up with Honda, the Indian some of Hero’s TVS, Honda and the frugal Indian engineering ex- ond-largest drug company. The drug-makers and health activists. patent infringement. It further company had been scouting for new products Yamaha in the do- pertise that would be available for government should not compro- Under the FTA agreement, EU seeks for data exclusivity, a provi- technology to compete better in the mestic two-wheel- developing different kinds of two mise on interests of domestic wants India to change its patent sion where innovator pharma The Indian government domestic two-wheeler segment er segment, which is forecast to wheelers,” EBR chairman Eric companies by shifting from its law. It seeks stringent enforcement companies get additional market has an obligation towards where it holds 56% market share. grow 10-12% in the next fiscal. It had Buell said, adding, “After Leap, we current stance on the generic and investment provisions, which protection, and prevents health the well-being of its own “It’s a very flexible partnership grown into the world’s largest-sell- plan to bring in some bikes that pharma industry, he said. have raised protests from domestic authorities from accepting appli- people. It should decide where they will develop cutting- ing bike brand on the back of tech- would have a global appeal and can “The Indian government has an pharma companies and health ac- cations from generic medicines, edge technology based on our nology from the Japanese automak- be locally manufactured.” what is in the best interest obligation towards the well-being tivists, who view them as detri- during the period of exclusivity. needs and market demands,” Hero er, with which it was sharing equity Separately, Hero also announced of its own people. It should decide mental to the domestic industry. The India-EU FTA negotiations of the country MotoCorp managing director and and paying royalty. Honda, which plans to enter motorcycle racing by what is in the best interest of the “The Indian government should began in 2007 and since then both CEO Pawan Munjal said, adding operates its own subsidiary in In- sponsoring two teams — Hero and country,” Hamied told ET. not compromise on these issues. parties have stuck to their posi- that the company would first devel- dia, is currently Hero’s closest rival AMSOIL Hero — in the AMA Pro At the 12th India — EU summit Any shift from its current stand tions on intellectual property and YK HAMIED op bikes bigger than its top-end in the domestic market. Racing National Guard Superb- last week, Prime Minister Man- would kill the generic industry,” data protection norms. Cipla, chairman 225cc Karizma ZMR. Hero, which is reported to have ikes Championship in the US.