Even as the beleaguered SpiceJet piles on its dues and grounds its fleet forcing thousands of travellers to shell out exorbitant fares, the promoter of the airline, Kalanithi Maran, seems to have given his parent company Sun Group saccharine deals while on his way out.
Even as the beleaguered SpiceJet piles on its dues and grounds its fleet forcing thousands of travellers to shell out exorbitant fares, the promoter of the airline, Kalanithi Maran, seems to have given his parent company Sun Group saccharine deals while on his way out.
Documents accessed by dna show that even while SpiceJet’s finances were bleeding, the Kalanithi Maran-led airline was giving business worth several hundred crores to his parent company Sun Group.
Maran’s deal-awarding frenzy to his own companies started in 2012, two years after he had taken over the profit making airline. In 2012, the airline had posted a loss of Rs 605 crore. In one of the many deals that year, SpiceJet gave a deal worth Rs 300 crore for three years to Sun Direct TV Private Ltd (Sun Direct), which controls 17% of India’s DTH service market.
What was the Rs 300-cr contract for?
According to the draft agreement, the Rs 300-crore contract was to place SpiceJet advertisements on Sun Direct platforms, provide discount coupons to each other’s customers and share resources with each other. In a year when SpiceJet made a massive loss of Rs 605 crore, it signed similar deals with other companies also owned by Maran.
Was CEO Mills against all this?
During the same board meeting in which SpiceJet’s CEO Neil Raymond Mills’ resignation was made public on August 3, 2013, SpiceJet also announced another string of deals with a host of other Maran-controlled companies. Mills was only half way in his tenure with 18 months still left in his contract. Mills quit despite the fact that his salary had been almost doubled during his stint with SpiceJet.
What's the company response?
SpiceJet’s COO Sanjeev Kapoor or the airline’s company secretary Chandan Sand failed to answer dna's specific queries on the deals with Maran’s own companies. Kapoor, however, sent the following response on email, “You might find it useful to study data points for other airlines as well to get an overall perspective rather than just launching what appears to be a motivated attack on one airline.”
Did Maran gain more and lose little?
The airline now has an accumulated loss of over Rs 3,000 crore, but has so far failed to submit a revival plan to the government. The grounding of its fleet has forced thousands of passengers to spend crores on bloated flight tickets. Maran has refused to scrape a fraction of his $2.3 billion net worth to bail out his bleeding airline. But if the deal book is anything to go by, Maran has more to gain by selling an airline he never could really run.
Why the bleeding airlines was crazy about ads?
All the firms to which the airlines’ money flowed to had Kalanithi Maran and his wife Kavery Kalanithi on the board of directors, as was in the case of SpiceJet. And all firms - Udaya FM, Kal Airways, Kal Communications, Kal Media Services and Sun Distribution Services - were to be paid by SpiceJet Rs 50 crore each for five years for one common service in particular – for placing the airline’s advertisements.
What were Maran’s plans to tackle fund crunch?
At the time the deals were announced, SpiceJet was desperately looking for funds infusion to tackle the looming crisis in its balance-sheets. There were reports that Maran was looking to offload his stake to a foreign airline. SpiceJet was also in talks with Singapore-based Tiger Air for a possible stake sale. Maran was keen to sell his stake. Reports suggest that by August 2014 he was already in talks with SpiceJet’s original founder Ajay Singh to sell out.
SPICEJET DEALS WITH MARAN COMPANIES
- Sun Direct: Rs 500 crore
- Sun Business Solutions: Rs 75 crore
- Kal Publications: Rs 50 crore
- Udaya FM Private Ltd : Rs 50 crore
- Kal Airways Private Ltd : Rs 50 crore
- Kal Communications Private Ltd : Rs 50 crore
- Kal Media Services Private Ltd : Rs 50 crore
- Sun Distribution Services Pvt Ltd : Rs 50 crore
TOTAL: Rs 875 crore
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