Since 2004, Capt Gopinath and Capt K J Samuel, who together used to hold around 51% stake, have been diluting their shareholding in the airline, to raise funds.
BANGALORE: Who’s in charge at Deccan Aviation? Vijay Mallya alludes it’s him. “With a majority stake that’s pretty inevitable, isn’t it?” Mallya told John Elliott, writing for CNNmoney.com
That’s not all. Elliott said Mallya may soon ground Deccan founder Capt G R Gopinath’s low-cost dreams after acquiring 26% stake in the carrier.
“The low-cost model doesn’t work in India. There is no question of cut-prices continuing in India — everyone wants to raise fares. Deccan is widely regarded as a market spoiler and that will stop.”
That puts to rest any confusion over who is in control at Deccan Aviation. It also undermines all claims of Capt Gopinath (who held 22.11% stake along with two other promoters before the sale of stake to Mallya) that he would continue to be in the driver’s seat.
After acquisition of 26% stake by Mallya, the share of Capt Gopinath and other promoters would come down to 16%. Mallya’s offer to pick up another 20% opens on June 26.
UB Group chief financial officer Ravi Nedungadi says: “The control has shifted from Capt Gopinath - individually - to the board.
The appointed CEO would report to the board instead of Capt. We came to the conclusion that this would be best way to achieve the benefits.”
Industry observers say, with a minority stake, it would be impossible for Capt Gopinath to have much say in major decisions of Air Deccan.
“How much control Capt Gopinath has in Air Deccan would depend on what is the personal equation between him and Mallya,” said an industry expert. “Even before Mallya’s acquisition, he had a minority stake (10.92%), but the shareholders liked and valued him and that is why let him continue. If Mallya feels the same, then there is no threat to Capt Gopinath’s position.”
Since 2004, Capt Gopinath and Capt K J Samuel, who together used to hold around 51% stake, have been diluting their shareholding in the airline in order to raise funds to expand their business.
And now that Mallya is at the helm, there would be a lot of tweaking in Air Deccan’s current model. Both Capt Gopinath and Mallya have categorically said that fares would be hiked. This process has already begun with the revival of congestion charge.
A senior UB Group official said the writing was already on the wall. “It is his (Mallya’s) style to be in control of everything. He would do anything to remain ahead of the pack, but he will not upset the apple cart abruptly.
He values Capt Gopinath’s experience, so I don’t see Captain’s role diminishing so soon. Captain’s public face would remain the same, but behind the scene, things would be different,” he said.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}