%20LIMITED%2003-Mar-2007_files/image002.jpg)
MIRA
INFORM REPORT
|
Report Date : |
03.03.2007 |
IDENTIFICATION
DETAILS
|
Name : |
JET AIRWAYS
(INDIA) LIMITED |
|
|
|
|
Registered
Office : |
SM Centre, Near
Marol Naka, Andheri Kurla Road, Andheri (East), Mumbai – 400 059, Maharashtra |
|
|
|
|
Country : |
India |
|
|
|
|
Financials (as
on) : |
31.03.2006 |
|
|
|
|
Date of
Incorporation : |
01.04.1992 |
|
|
|
|
Com. Reg. No.: |
11-66213 |
|
|
|
|
CIN No.: |
U99999MH1992PTC066213 |
|
|
|
|
TAN No.: (Tax
Deduction & Collection Account No.) |
MUMJ00366C /
MUMJ06594A / MUMJ05793ES |
|
|
|
|
Legal Form : |
A Public Limited
Liability Company. The company’s shares are listed on the Stock Exchanges. At present, it is
quoted below offer price to the public. |
|
|
|
|
Line of
Business : |
Domestic Airline
operations in India on main Trunk routes. |
RATING &
COMMENTS
|
MIRA’s Rating
: |
B |
RATING
|
STATUS |
PROPOSED
CREDIT LINE |
|
|
26-40 |
B |
Unfavourable & favourable factors carry similar
weight in credit consideration. Capability to overcome financial difficulties
seems comparatively below average/normal. |
Small |
|
Maximum Credit
Limit : |
-- |
|
|
|
|
Status : |
Moderate |
|
|
|
|
Payment
Behaviour : |
Slow but correct |
|
|
|
|
Litigation : |
Exist |
|
|
|
|
Comments : |
Subject is an
established company in aviation industry. It’s proposed merger with another
private airlines Sahara failed and subject incurred substantial loss and invited
a lot of litigation. Due to fierce competition, the company’s profit margin
is under severe pressure. The company can
be considered normal for business dealings at usual trade terms and
conditions with slight caution. |
LOCATIONS
|
Registered/
Head Office : |
SM Centre, Near
Marol Naka, Andheri Kurla Road, Andheri (East) Mumbai – 400 059,
Maharashtra, India |
|
Tel. No.: |
91-22-28505080/4271/5627/5628/5629 |
|
Fax No.: |
91-22-28560622 |
|
E-Mail : |
|
|
Website : |
|
|
|
|
|
Branches : |
Located at:- Y Mumbai, Maharashtra Y Ahmedabad, Gujarat Y Goa Y Kochi, Kerala Y Kolkata, West Bengal Y Mangalore, Kerala Y Bangalore, Karnataka Y Hyderabad, Andhra Pradesh Y Chennai, Tamilnadu Y Coimbatore Y Delhi |
DIRECTORS
|
Name : |
Mr. Naresh Goyal |
|
Designation : |
Chairman |
|
|
|
|
Name : |
Mr. Ali Ghandour |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Victoriano
P. Dungca |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Charles A.
Adams |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. J. R. Gagrat |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Javed Akhtar |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. I. M. Kadri |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. P. R. S.
Oberoi |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Aman Mehta |
|
Designation : |
Director |
|
|
|
|
Name : |
Dr. Vijay L
Kelkar |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. S. G.
Pitroda |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Saroj K.
Datta |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Yash Raj
Chopra |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Shah Rukh
Khan |
|
Designation : |
Director |
|
|
|
|
Name : |
Dr. Pierre J.
Jeanniot |
|
Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. Naresh Goyal |
|
Designation : |
Chairman (Non Resident Indian) |
|
Date of
Birth/Age : |
64 years |
|
Experience : |
32 years |
|
|
|
|
Name : |
Mr. Steve Forte |
|
Designation : |
Chief Executive Officer |
|
|
|
|
Name : |
Mr. Narendra Mehra |
|
Designation : |
Company Secretary |
|
|
|
|
MANAGEMENT : |
|
|
|
|
|
Name : |
Mr. Wolfgang Prock-Schauer |
|
Designation : |
Chief Executive Officer |
|
|
|
|
Name : |
Mr. Saroj K.
Datta |
|
Designation : |
Executive Officer |
|
|
|
|
Name : |
Mr. Dale Moss |
|
Designation : |
Chief Operating Officer |
|
|
|
|
Name : |
Mr. Garry
Kingshott |
|
Designation : |
Chief Commercial Officer |
|
|
|
|
Name : |
Mr. Carl Saldanha |
|
Designation : |
Chief Financial Officer |
|
|
|
|
Name : |
Mr. Raja
Parthasarathy |
|
Designation : |
Executive Vice President – Finance |
|
|
|
|
Name : |
Ms. Anita Goyal |
|
Designation : |
Executive Vice President – Marketing and Sales |
|
|
|
|
Name : |
Capt. Werner
Borchert |
|
Designation : |
Vice President – Flight Operations |
|
|
|
|
Name : |
Mr. Sepp Heinrich |
|
Designation : |
Vice President – Technical |
|
|
|
|
Name : |
Mr. Sitham
Nadarajah |
|
Designation : |
Vice President – Technical (Projects) |
|
|
|
|
Name : |
Capt. Ray
Heiniger |
|
Designation : |
Vice President – Flight Operations |
|
|
|
|
Name : |
Capt. Gustav
Baldauf |
|
Designation : |
Vice President – Flight Operations |
|
|
|
|
Name : |
Mr. B. P. Baliga |
|
Designation : |
Vice President – Support Services
|
|
|
|
|
Name : |
Capt. K. Mohan |
|
Designation : |
Vice President – Flight Operations (Special Projects) |
|
|
|
|
Name : |
Mr. P. K. Sinha |
|
Designation : |
Vice President – Passenger Sales |
|
|
|
|
Name : |
Dato' K. Jeyakanthan |
|
Designation : |
Vice President – Engineering Services |
|
|
|
|
Name : |
Mr. Poh Leong Choo |
|
Designation : |
Vice President – Inflight and Catering Services |
|
|
|
|
Name : |
Mr. Prasun Sengupta |
|
Designation : |
Vice President – Corporate Administration |
|
|
|
|
Name : |
Ms. Nandini Verma |
|
Designation : |
Vice President – Corporate Affairs and Public Relations |
|
|
|
|
Name : |
Mr. N. Hariharan |
|
Designation : |
Vice President – Office of the Chairman |
|
|
|
|
Name : |
Mr. Rajesh Sharma |
|
Designation : |
Vice President – Controller |
|
|
|
|
Name : |
Mr. Ashok Barimar |
|
Designation : |
General Counsel and Vice President – Legal
|
|
|
|
|
Name : |
Ms. Ragini Chopra |
|
Designation : |
Vice President – North India |
|
|
|
|
Name : |
Mr. Gaurang Shetty |
|
Designation : |
Vice President – Marketing |
|
|
|
|
Name : |
Ms. Sonu Kripalani |
|
Designation : |
Vice President – Passenger Sales (India) |
|
|
|
|
Name : |
Mr. Sarat Chandran |
|
Designation : |
Vice President – Human Resources and Development |
|
|
|
|
Name : |
Mr. Anind Datta |
|
Designation : |
Vice President – Purchase and Properties |
|
|
|
|
Name : |
Mr. V. Raja |
|
Designation : |
Vice President – Asia Pacific |
|
|
|
|
Name : |
Mr. Mike Johnson |
|
Designation : |
Vice President – Engineering and Maintenance |
SHAREHOLDING
PATTERN
Category
|
No. of shares
|
% of shareholding
|
Promoters' holdings
|
|
|
|
Promoters |
69067205 |
80.00% |
|
Persons acting in
concert |
553 |
0.00% |
|
|
|
|
Non promoter's holdings
|
|
|
Institutional Investors
|
|
|
|
Mutual Funds and
UTI |
2503189 |
2.90% |
|
Banks, Financial
Institutions and Insurance Companies |
1898779 |
2.20% |
|
FIIs |
9074567 |
10.51% |
|
|
|
|
Others
|
|
|
|
Private Corporate
Bodies |
966268 |
1.12% |
|
Indian Public |
2632049 |
3.05% |
|
NRIs / OCBs |
58492 |
0.07% |
|
Any Other |
132909 |
0.15% |
|
|
|
|
|
TOTAL |
86334011 |
100.00% |
BUSINESS DETAILS
|
Line of
Business : |
Domestic Airline
operations in India on main Trunk routes. |
GENERAL
INFORMATION
|
Suppliers : |
|
||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||
|
No. of
Employees : |
About 8815 |
||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||
|
Bankers : |
v
Abu Dhabi
Commercial Bank Limited Rehmat Manzil, 75 – B Veer
Nariman Road, Mumbai – 400038 Tel : 91-22-22839509 Fax : 91-22-22870686 v
Barclays
Bank Plc 21/23 Maker Chambers VI,
Nariman Point, Mumbai – 400021 Tel : 91-22-56387114 Fax : 91-22-56387184 v
Calyon Bank Hoechst house, 11th
Floor, Nariman Point, Mumbai – 400021 Tel : 91-22-56319000 Fax : 91-22-56351813 v
Citibank
N.A. 7th Floor, Plot C –
61, Bandra Kurla Complex, G – Block, Bandra,
Mumbai 400051. Tel : 91-22-26535029/5030 Fax : 91-22-26535861/5862 v
Corporation
Bank Veena Chambers, 21 Dalal
Street, Mumbai – 400023 Tel : 91-22-22671715 Fax : 91-22-22672101 v
Deutsche
Bank AG Kodak House, 222, Dr. D.N.
Road, Fort, Mumbai – 400001 Tel : 91-22-22061050/22070692 Fax : 91-22-22072966/22067322 v
HDFC Bank
Limited Ground Floor, Maneckji Wadia
Building (Kalpataru Heritage), Nanik Motwani Marg, Fort,
Mumbai – 400023 Tel : 91-22-24902961 Fax : 91-22-24963994 v
The Hong
Kong and Shanghai Banking Corporation 52/60, Mahatma Gandhi Road,
Mumbai – 400001 Tel : 91-22-22681020 Fax : 91-22-22653812 v
ICICI Bank
Limited Free Press House, 215, Nariman
Point, Mumbai – 400021 Tel :
91-22-22818077/26536457/35 Fax : 91-22-26531233 v
IDBI Bank
Limited Mittal Tower, ‘A’ Wing, Nariman
Point, Mumbai – 400021 Tel : 91-22-22824057/65 Fax : 91-22-22824071 v
ING Vysya
Bank Limited Mittal Tower, ‘A’ Wing, Nariman
Point, Mumbai – 400021 Tel : 91-22-22882616/ 56666419 Fax : 91-22-22818558 v
Standard
Chartered Bank 90 Mahatma Gandhi Road, Mumbai
– 400001 Tel : 91-22-22683575 Fax : 91-22-22624912 v
State Bank
of India Overseas Branch, World Trade
Centre, Cuffe Parade Mumbai – 400005 Tel : 91-22-22181518/ 22189161 Fax : 91-22-22188343/8741 v
UTI Bank
Limited 1st Floor,
Jamnabhoomi Bhavan, jamnabhoomi Marg, Fort, Mumbai – 400005 Tel :
91-22-22835782/84/86/87/88 Fax : 91-22-22844113 v
DBS Bank
Limited v
Kotak
Mahindra Bank Limited v
Dena Bank v
Canara Bank |
||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||
|
Facilities : |
|
|
|
|
|
Banking Relations : |
-- |
|
|
|
|
Auditors 1 : |
Deloitte Haskins
and Sells Chartered
Accountants, |
|
Address : |
12, Dr. Annie
Besant Road, Opposite Shiv Sagar Estate, Worli, Mumbai – 400 018,
Maharashtra, India |
|
|
|
|
Auditors 2 : |
Chaturvedi and
Shah Chartered
Accountants |
|
Address : |
Laxmi Towers, “A”
Wing, Bandra-Kurla Complex, Mumbai – 400 051, Maharashtra, India |
|
|
|
|
Associates/Subsidiaries
: |
Ø Tailwinds Limited Ø Jet Air Skyline Transport Private Limited Activity - Travel, Ticketing and C
& F business Ø Jetair Private Limited Ø Jet Enterprises Private Limited Ø Jet Airways LLC Ø Jet Aieways of India Inc Ø Jetan Tours Private Limited Ø Vimpal Holding Private Limited Ø International Cargo Carriers Private
Limited Ø National Travel Services |
CAPITAL STRUCTURE
Authorised
Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
130,000,000 |
Equity Shares |
Rs. 10/- each |
Rs. 1300.000 millions |
|
70,000,000 |
Preference Shares |
Rs. 10/- each |
Rs. 700.000 millions |
|
|
Total |
|
Rs. 2000.000 millions |
Issued,
Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
86,334,011 |
Equity Shares |
Rs. 10/- each |
Rs. 863.340 millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE SHEET
|
SOURCES
OF FUNDS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
|
SHAREHOLDERS
FUNDS |
|
|
|
|
|
1] Share Capital |
863.300 |
863.300 |
1419.177 |
|
|
2] Reserves &
Surplus |
22195.500 |
19238.300 |
3934.993 |
|
|
4] (Accumulated
Losses) |
0.000 |
0.000 |
(1180.128) |
|
NETWORTH
|
23058.800 |
20101.600 |
4174.042 |
|
|
|
|
|
|
|
|
Subordinated Debt |
0.000 |
3341.100 |
3080.775 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
2060.200 |
600.000 |
603.433 |
|
|
2] Unsecured
Loans |
46895.800 |
25707.300 |
28415.657 |
|
TOTAL BORROWING
|
48956.000 |
26307.300 |
29019.090 |
|
|
DEFERRED TAX
LIABILITIES |
3206.600 |
1948.500 |
507.450 |
|
|
|
|
|
|
|
TOTAL
|
75221.400 |
51698.500 |
36781.357 |
|
|
|
|
|
|
|
APPLICATION OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block]
|
21224.800 |
26086.300 |
31115.966 |
|
Capital work-in-progress
|
26656.700 |
320.200 |
151.901 |
|
|
|
|
|
|
|
INVESTMENT
|
1872.300 |
15957.300 |
2334.164 |
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS &
ADVANCES
|
|
|
|
|
|
|
Inventories
|
4052.500 |
3325.200 |
3474.355 |
|
|
Sundry Debtors
|
4331.500 |
2523.100 |
2344.375 |
|
|
Cash & Bank Balances
|
21042.500 |
12242.400 |
3704.020 |
|
|
Loans & Advances
|
11348.800 |
2353.300 |
1798.801 |
Total Current Assets
|
40775.300 |
20444.000 |
11321.551 |
|
Less :
CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
10656.200 |
7731.700 |
7776.776 |
|
|
Provisions
|
4651.500 |
3377.600 |
365.449 |
Total Current Liabilities
|
15307.700
|
11109.300
|
8142.225 |
|
Net Current Assets
|
25467.600 |
9334.700 |
3179.326 |
|
|
|
|
|
|
|
TOTAL
|
75221.400 |
51698.500 |
36781.357 |
|
PROFIT &
LOSS ACCOUNT
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
Sales Turnover [including other income]
|
61354.700 |
44201.700 |
35657.394 |
|
|
|
|
|
Profit/(Loss) Before Tax
|
7222.600 |
5821.300 |
1781.425 |
Provision for Taxation
|
2702.200 |
1901.400 |
150.330 |
Profit/(Loss) After Tax
|
4520.400 |
3919.900 |
1631.095 |
|
|
|
|
|
Export Value
|
13726.600 |
6058.200 |
4465.922 |
|
|
|
|
|
Import Value
|
1420.500 |
1103.200 |
4990.330 |
|
|
|
|
|
Total Expenditure
|
54132.100 |
38380.400 |
33875.969 |
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2006 [1st Quarter] |
30.09.2006 [2nd Quarter] |
31.12.2006 [3rd Quarter] |
|
|
|
|
|
|
Sales
Turnover |
16465.400 |
16150.400 |
19356.800 |
|
Other
Income |
322.200 |
2061.900 |
943.600 |
|
Total
Income |
16787.600 |
18212.300 |
20300.400 |
|
Total
Expenditure |
15852.900 |
17392.400 |
17952.900 |
|
Operating
Profit |
934.700 |
819.900 |
2347.500 |
|
Interest |
642.400 |
578.100 |
651.000 |
|
Gross
Profit |
292.300 |
241.800 |
1696.500 |
|
Depreciation |
887.400 |
966.900 |
1077.100 |
|
Tax |
22.800 |
40.200 |
16.200 |
|
Reported
PAT |
[449.800] |
[551.300] |
400.400 |
200606
Quarter 1 –
Expenditure Includes Employees Remuneration and Benefits Rs
2290.80 million Aircraft Fuel Expenses Rs 5858.50 million Commission Rs 1547.60
million Other Selling & Distribution Expenses Rs 512.30 million Other
Operating Expenses (incl. aircraft lease rentals) Rs 5643.70 million Tax
Includes Current Tax (incl Wealth Tax) Rs 2.70 million Deferred Tax
Rs(168.10)million Fringe Benefit Tax Rs 20.10 million EPS is Basic Status of
Investor Complaints for the quarter ended June 30, 2006 Complaints Pending at
the beginning of the quarter Nil Complaints Received during the quarter 26
Complaints disposed off during the quarter 26 Complaints unresolved at the end
of the quarter Nil 1. The results for the quarter ended June 30, 2006 have been
reviewed by the Audit Committee and taken on record by the Board of Directors
at their Meeting held on July 29, 2006. 2. In view of the seasonality of the
business, the financial results for the quarter ended are not indicative of the
full years performance. 3. Jet Airways (India) Limited (Jet'), Sahara Airlines
Limited ('SAL) and the shareholders of SAL executed a Share Purchase Agreement
('SPA') on January 18, 2006, whereby Jet would acquire 100% of the fully
paid-up share capital of SAL for cash at a total consideration of Rs 20,000
million from the shareholders of SAL, subject to the requisite regulatory
approvals. In accordance with the terms of the SPA, Jet established an Escrow
Account with ICICI Bank Limited and deposited a sum of Rs 20,000 million
towards the agreed consideration for the purchase. In addition, on execution of
the SPA, Jet also provided a loan of Rs 1,000 million to SAL for its normal
business operations. An additional sum of Rs 800 million was paid in April and
May, 2006 as per the provisions of the Amendment Agreement. The SPA provided,
inter alia, that the closing of the acquisition transaction would have to be
achieved within 65 days from the date of the SPA. However, since some of the
regulatory approvals were not received, Jet, SAL and SAL's shareholders agreed
to extend the deadline by an additional 90 days i.e. until June 21, 2006 under
the Amendment Agreement. As per the Amendment Agreement, Jet has, out of the agreed
consideration of Rs 20,000 million paid Rs 5,000 million to the shareholders of
SAL as an Advance Amount out of the agreed consideration against 100% pledge of
SAL's shares and a Personal Guarantee of Mr Subrata Roy Sahara. Conditions
Precedent were not fulfilled within the extended term and, in accordance with
the provisions of the SPA, it stood automatically terminated. The shareholders
of SAL have obtained orders of injunction from the Lucknow District Court
restraning the Escrow Agent from refunding the escrow amount of Rs 15,000
million to Jet and from Jet enforcing the Pledge Agreement. Jet has filed a
petition in the Hon'ble Supreme Court to transfer the proceedings from the
Lucknow District Court to the Bombay High Court. Jet has also filed a suit to
enforce the Personal Guarantee given by Mr Subrata Roy Sahara for Rs 5,000
million in the Bombay High Court. The petition flied by Jet under the
Arbitration Act is also pending in the Bombay High Court. In the meantime, Jet
and SAL have also appointed their respective arbitrators to have the disputes
under the SPA adjudicated. 4. The Company is operating in a single business
segment i.e. Air Transportation and as such all business activities revolve
around this segment. Hence, there is no separate primary reportable segment as
required by AS - 17 on 'Segment Reporting' issued by the ICAI. 5. The Board of
Directors at their meeting held on April 29, 2006 have recommended a dividend @
60% on the Equity Share Capital of the Company (i.e. Rs 6/- per Equity Share)
for the Financial year ended March 31, 2006. 6. In the last quarter of the
Financial year 2005-06: a. The Company changed the Amortisation period in
respect of certain Landing Rights acquired at overseas airport from 10 years to
20 years. Accordingly, the amortisation charge for the quarter ended June 30,
2005 would have been lower by Rs 3 million and the Profit before tax for the
quarter higher by the same amount. b. Due to various factors including the
complex pricing structure, trend of utilization and the ticketing conditions,
credits for unutilized tickets were taken from Forward Sales Account based on
the historical statistics, data and Management's best estimates; contrary to
the earlier practice of taking the credits for unutilized tickets where claims
for refund were not made for 24 months. The impact of the above change in
policy on the Revenue for the quarter ended June 30, 2005 cannot be
ascertained. 7. In view of Accounting Standard (AS) 15 (revised 2005) Employee
Benefits', issued by the Institute of Chartered Accountants of India which is
applicable w.e.f. April 01, 2006, staff cost for the quarter ended June 30,
2006 includes additional provision for employee benefits of Rs 60.40 million.
The corresponding figure for the quarter ended June 30, 2005 has not been
re-casted as the accumulated liability or employee benefits amounting to Rs
87.40 million (net of deferred tax asset of Rs 44.40 million) upto March 31,
2006 has been charged to revenue reserves during the quarter ended June 30, 2006
in accordance with the Accounting Standard. 8. The figures for the previous
quarter & for the previous year have been regrouped / restated, wherever
necessary.
200609
Quarter 2 –
EPS is Basic Status of Investor Complaints for the quarter ended
September 30, 2006 Complaints Pending at the beginning of the quarter Nil
Complaints Received during the quarter 33 Complaints disposed off during the
quarter 33 Complaints unresolved at the end of the quarter Nil 1. The results
for the quarter and half year ended September 30, 2006 have been subjected to a
limited review by the Statutory Auditors. The same were considered by the Audit
Committee and taken on record by the Board of Directors at their Meeting held
on October 17, 2006. 2. In view of the seasonality of the business, the
financial results for the quarter ended are not indicative of the full year's
performance. 3. Jet Airways (India) Limited ('Jet'), Sahara Airlines Limited
('SAL') and the shareholders of SAL executed a Share Purchase Agreement ('SPA')
on January 18, 2006, whereby Jet would acquire 100% of the fully paid-up share
capital of SAL for cash at a total consideration of Rs 20000 million from the
shareholders of SAL, subject to the requisite regulatory approvals. In
accordance with the terms of the SPA, Jet established an Escrow Account with
ICICI Bank Limited and deposited a sum of Rs 20000 million towards the agreed
consideration for the purchase. In addition, on execution of the SPA, Jet also
provided a loan of Rs 1000 million to SAL. for its normal business operations.
An additional sum of Rs 800 million was paid in April and May, 2006 as per the
provisions of the Amendment Agreement. The SPA provided, inter alia, that the
closing of the acquisition transaction would have to be achieved within 65 days
from the date of the SPA. However, since some of the regulatory approvals were
not received, Jet, SAL and SAL's shareholders agreed to extend the deadline by
an additional 90 days i.e. until June 21, 2006 under the Amendment Agreement.
As per the Amendment Agreement, Jet has, out of the agreed consideration of Rs
20000 million paid Rs 5000 million to the shareholders of SAL as an Advance
Amount out of the agreed consideration against 100% pledge of SAL's shares and
a Personal Guarantee of Mr. Subrata Roy Sahara. Conditions Precedent were not
fulfilled within the extended term and, in accordance with the provisions of
the SPA, it stood automatically terminated. The shareholders of SAL have
obtained orders of injunction from the Lucknow District Court restraining the
Escrow Agent from refunding the escrow amount of Rs 15000 million to Jet and
from Jet enforcing the Pledge Agreement. Jet has filed a petition in the
Hon'ble Supreme Court to transfer the proceedings from the Lucknow District Court
to the Bombay High Court. Jet has also filed a suit to enforce the Personal
Guarantee given by Mr. Subrata Roy Sahara for Rs 5000 million in the Bombay
High Court. On August 28, 2006, The Supreme Court of India transferred the
proceedings at District Court Lucknow to the Bombay High Court, Bombay. The
Arbitration Petition No. 261/2006 filed by Jet Airways against Sahara India
Commercial Corporation Limited and other selling shareholders of Sahara
Airlines Limited and the Suits filed by Sahara India Commercial Corporation
Limited and others in District Court, Lucknow, and the Summary Suit were heard
together on the issue of Jurisdiction on 21st & 22nd September 2006 before
the Bombay High Court, Bombay. The Hon'ble High Court held that it has jurisdiction
to receive, entertain and determine the said matters and vide a further order
dated September 22, 2006 vacated the order of District Court Lucknow and
permitted Jet Airways to withdraw the amount deposited in the escrow account on
Jet Airways furnishing a guarantee of the ICICI Bank in the amount of Rs 15000
million payable to Sahara India Commercial Corporation Limited at Lucknow, to
the satisfaction of the Prothonotary and Senior Master of the Bombay High
Court, Bombay. Accordingly, Jet Airways has furnished a guarantee issued by
ICICI Bank in favour of Sahara India Commercial Corporation Limited and
consequently obtained release of Rs 15000 million lying in the Escrow account.
Three proceedings namely Arbitration Petition No. 261/2006 (Jet Airways India
Limited Vs Sahara India Commercial Corporation Limited and others), Suit No.
2721/2006 (Sahara India Commercial Corporation Limited and another Vs. Jet
Airways India Limited) and Suit No. 2720/2006 (Sahara India Investment
Corporation Limited and others Vs Jet Airways India Limited and others) have
been disposed off, Summary Suit No. 1832/2006 is still pending before the
Bombay High Court, Bombay and the returnable date is November 06, 2006. The
Arbitral Tribunal has been constituted and consists of the Rt. Hon'ble the Lord
Steyn (a former Lord of Appeal of the House of Lords) as the Presiding
Arbitrator, Hon'ble Justice S P Bharucha (former Chief Justice of India) and
Justice B P Jeevan Reddy (former Judge of Supreme Court of India). Arbitration
proceedings have commenced and a meeting has been held October 09, 2006 wherein
the learned Arbitrators have issued directions and the parties are inter alia
directed to file their respective Statement of Claim by November 20, 2006. In
new of the above, the Statutory Auditors in their Limited Review Report for the
quarter and half year ended September 30, 2006 have stated that they are unable
to express an option on these matters at this stage. Pending utilisation, as at
September 30, 2006 balance funds have been invested in liquid mutual funds. 5.
Other Income during the quarter and half year ended September 30, 2006 includes
profit on Sale and Lease back of three Aircraft amounting to Rs 1616.9 million.
6. The Company is operating in a single business segment i.e. Air
Transportation and as such all business activities revolve around this segment.
Hence, there is no Separate primary reportable segment as required by AS-17 on
'Segment Reporting' issued by the ICAI. 7. The dividend @ 60% on the Equity
Share Capital of the Company (i.e. Rs 6/- per Equity Share) for the Financial
Year ended March 31, 2006, approved by the Shareholders at the Annual General
Meeting held on September 20, 2006 has since been paid during the Quarter. 8.
In the last quarter of the Financial year 2005_06 (a) the Company changed the
amortisation period in respect of certain Landing Rights acquired at overseas
airport from 10 years to 20 years. Accordingly, the amortization charge for the
quarter ended & half year ended September 30, 2005 would have been lower by
Rs 3 million and Rs 6 million respectively and the profit before tax for the
quarter and half year ended September 30 2005 higher by the same amount. (b)
Due to various factors including the complex pricing structure, trend of
utilization and the ticketing conditions, credits for unutilised tickets were
taken from Forward Sates Account based on the historical statistics, data and
Managements best estimates; contrary to the earlier practice of taking the
credits for unutilized tickets where claims for refund were not made for 24
months. The impact of the above change in policy on the Revenue for the quarter
and half year ended September 30, 2005 cannot be ascertained. 9. The Figures
for the previous quarter & half year and comparative figures for the
previous year have been regrouped/ restated wherever necessary.
200612
Quarter 3 –
Expenditure Includes Employees Remuneration and Benefits Rs
2261.10 million Aircraft Fuel Rs 6115.20 million Aircraft Lease Rental Rs
1679.10 million Commission Rs 2065.20 million Other Selling & Distribution
Expenses Rs 614.40 million Other Operating Expenses Rs 5217.90 million Tax
Includes Current Tax (incl Wealth Tax) Rs 0.20 million Deferred Tax Rs 202.80
million Fringe Benefi Tax Rs 16.00 million EPS is Basic Status of Investor
Complaints for the quarter ended December 31, 2006 Complaints Pending at the
beginning of the quarter Nil Complaints Received during the quarter 48
Complaints disposed off during the quarter 48 Complaints unresolved at the end
of the quarter Nil 1. The above results for the quarter and nine months ended
December 31, 2006 were reviewed by the Audit Committee and thereafter were
approved and taken on record by the Board of Directors in their meeting held on
January 19, 2007. The statutory auditors of the Company have carried out the
limited review of the above results. pursuant to Clause 41 of the Listing
Agreement. 2. In view of the seasonality of the business, the financial results
for the quarter ended are not indicative of the full years performance. 3. Jet
Airways (India) Limited ('Jet') Sahara Airlines Limited ('SAL') of the
shareholders of SAL executed a Share Purchase Agreement ('SPA') on January 18,
2006, whereby Jet would acquire 100% the fully paid-up share capital of SAL for
cash at a total consideration of Rs 20,000 million from the shareholders of
SAL, subject to the requisite regulatory approvals. In accordance with the
terms of the SPA, Jet established an Escrow Account with ICICI Bank Limited and
deposited a sum of Rs 20,000 million towards the agreed consideration for the
purchase. In addition, on execution of the SPA, Jet also provided a loan of Rs
1,000 million to SAL for its normal business operations. An additional sum of
Rs 800 million was paid in April and May, 2006 as per the provisions of the
Amendment Agreement. The SPA provided, inter alia, that the closing of the
acquisition transaction would have to be achieved within 65 days from the date
of the SPA. However, since some of the regulatory approvals were not received,
Jet, SAL and SAL's shareholders agreed to extend the deadline by an additional
90 days i.e. until June 21, 2006 under the Amendment Agreement. As per the
Amendment Agreement, Jet had, out of the agreed consideration of Rs 20,000
million paid Rs 5,000 million to the shareholders of SAL as an advance amount
out of the agreed consideration against 100% pledge of SAL's shares and a
Personal Guarantee of Mr. Subrata Roy Sahara. Conditions Precedent were not
fulfilled within the extended term and, In accordance with the provisions of
the SPA, it stood automatically terminated. The shareholders of SAL obtained
orders of injunction from the Lucknow District Court restraining the Escrow
Agent from refunding the escrow account of Rs 15,000 million to Jet and from Jet
enforcing the Pledge Agreement, Jet filed petition in the Hon'ble Supreme Court
to transfer the proceedings from the Lucknow District Court to the Bombay High
Court. Jet also flied a suit to enforce the Personal Guarantee given by Mr.
Subrata Roy Sahara for Rs 5000 million in the Bombay High Court. On August 28,
2006, the Supreme Court of India transferred the proceedings at District Court,
Lucknow to the Bombay High Court, Bombay. The Arbitration Petition No.261/2006
filed by Jet Airways against Sahara India Commercial Corporation Limited
(SICCL) and other selling shareholders of Sahara Airlines Limited and the Suits
filed by SICCL and others in District Court, Lucknow, and the Summary Suit were
heard together On the issue of Jurisdiction on September 21, 2006 &
September 22, 2006 before the Bombay High Court, Bombay. The Hon'ble High Court
held that it had the jurisdiction to receive, entertain and determine the said
matters and vide a further order dated September 22, 2006 vacated the order of
District Court, Lucknow end permitted Jet Airways to withdraw the amount
deposited in Escrow Account on, Jet Airways furnishing a guarantee or the ICICI
Bank in the amount of Rs 15,000 million payable to SICCL at Lucknow, to the
satisfaction of the Prothonotary and Senior Master of the Bombay High Court,
Bombay. Accordingly, Jet Airways furnished a guarantee issued by ICICI Bank in
favour of SICCL and consequently obtained a release of Rs 15,000 million lying
in the Escrow Account. Pursuant to the receipt of approval from the Bombay High
Court, this Bank guarantee has since been replaced with a guarantee issued by
State Bank of India. Three proceedings namely Arbitration Petition No. 261/2006
(Jet Airways (I) Limited Vs. SICCL and Others), Suit No. 2721 / 2006 (SICCL and
another Vs. Jet Airways (I) Limited) and Suit No. 2720/ 2006 (Sahara India
Investment Corporation Limited and Others Vs. Jet Airways (I) Limited and
Others) were disposed off. Summary Suit No. 1832 / 2006 is still pending before
the Bombay High Court, Bombay and is expected to come up for the hearing on
February 06, 2007. The Arbitral Tribunal has been constituted and consists of
the Rt. Hon'ble the Lord Steyn (a former Lord of Appeal of the House of Lords)
as the Presiding Arbitrator, Hon'ble Justice S P Bharucha (Former Chief Justice
of India) and Hon'ble Justice B P Jeevan Reddy (former Judge of the Supreme
Court of India Arbitration proceedings commenced on October 19, 2006 wherein
the learned Arbitrators have issued directions and the parties were inter alia
directed to file their respective Statement of Claims by November 20, 2006.
Statement of Claims were subsequently filed by both the parties through
Arbitration Tribunal. These proceedings are ongoing and the next hearing is
scheduled in April, 2007. In view of the above, the Statutory Auditors in their
Limited Review Report for the quarter and nine months ended December 31, 2006
have stated that they are unable to express an opinion on these matters at this
stage. 4. The details of the utilisation of the net IPO proceeds are as stated
below: Utilisation: As projected in the Prospectus dated February 28, 2005:
Repayment of Debt and redemption of CCRPS: Rs 7921.00 million Capital
Expenditure: Rs 4601.00 million General Corporate purposes: Rs 2483.50 million
Total: Rs 15005.50 million Actuals as on December 31, 2006: Repayment of Debt
and redemption of CCRPS: Rs 9537.00 million Capital Expenditure: Rs 4531.90
million General Corporate purposes: Rs 936.60 million Total: Rs 15005.50
million 5. Other Income during the Quarter and nine months ended December 31,
2006 includes profit on Sale and Lease back of Aircraft amounting to Rs 482.60
million and Rs 2099.50 million respectively. 6. The Company is operating in a
single business segment i.e. Air Transportation and as such all business
activities revolve around this segment. Hence, there is no separate primary
reportable segment as required by AS-17 on egment Reporting' issued by the
ICAI. 7. In the last quarter of the Financial year 2005-06: a) The Company
changed the amortisation period in respect of certain Landing Rights acquired
at overseas airport from 10 years to 20 years. Accordingly the amortisation
charge for the quarter and nine months ended December 31, 2005 would have been
lower by Rs 3.00 million and Rs 9.00 million respectively and the Profit before
tax for the quarter and nine months ended December 31, 2005 higher by the same
amount. b) Due to various factors including the complex pricing structure,
trend of utilization and the ticketing conditions, credits for unutilized
tickets were taken from Forward Sales Account based on the historical
statistics, data and Management's best estimates: contrary to the earlier
practice of taking the credits unutlized tickets where claims for refund were not
made for 24 months. The impact of the above change in policy on the Revenue for
the quarter and nine months ended December 31, 2005 could not be ascertained.
8. The figures for the previous quarter and nine months ended December 31, 2006
and comparative figures for the previous year have been regrouped / restated
wherever necessary.
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt Equity Ratio |
2.02 |
3.47 |
72.01 |
|
Long Term Debt Equity Ratio |
1.87 |
3.47 |
72.01 |
|
Current Ratio |
1.61 |
1.39 |
1.45 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
1.24 |
0.89 |
0.75 |
|
Inventory |
15.43 |
12.76 |
10.02 |
|
Debtors |
16.61 |
17.82 |
15.07 |
|
Interest Cover Ratio |
2.65 |
3.29 |
1.46 |
|
Operating Profit Margin (%) |
18.39 |
29.80 |
27.16 |
|
Profit Before Interest and Tax Margin (%) |
11.26 |
19.27 |
12.22 |
|
Cash Profit Margin (%) |
11.45 |
19.57 |
18.45 |
|
Adjusted Net Profit Margin (%) |
4.31 |
9.04 |
3.51 |
|
Return on Capital Employed (%) |
10.90 |
20.70 |
11.69 |
|
Return on Net Worth (%) |
12.60 |
42.87 |
320.74 |
STOCK PRICES
|
Face Value |
Rs. 10.00 |
|
High |
Rs. 718.00 |
|
Low |
Rs. 704.00 |
LOCAL AGENCY
FURTHER INFORMATION
History:
Subject was
incorporated on 1st April, 1992 at Mumbai in Maharashtra having
Company Registration Number 66213 as a private limited company under the
Companies Act, 1956. the Company became a deemed public limited company on 1st
July, 1996 and was converted into a private limited company on 19th
January, 2001. The company became a public limited company on 28th
December, 2004.
Subject commence
the operations as an Air Taxi Operator on 5th May, 1993 with a fleet
of four leased Boeing 737 aircraft. They were granted scheduled airline status
on 14th January, 1995.
At the time of
incorporation of the company, its shareholders were Mr. P.V.V. Chalam and mrs.
Anita Goyal. These shares were transferred to Tail Wi9nds on 12 May, 1994, and Mr.
Naresh Goyal holds them on behalf of Tail Winds in terms of RBI approval letter
No. EC.BY.CO. (S) 250/2251/TS/93/94 dated 30th December, 1993.
Subject currently
provide regular scheduled services to 42 destinations in India and two
destinations outside India, operating 1924 flights weekly. Its aircraft fleet
has grown from four aircraft in 1993 to currently 42 aircraft comprising 34
Boeing 737 aircraft and eight ATR 72-500 aircraft. They have also accepted
delivery of one additional Boeing 737-800 aircraft, which will be included in
to services after it is refurbishing and upon receipt by them of final DGCA
approval to operate the aircraft.
Business:
Subject is engaged
in Domestic Airline operations in India on main Trunk routes.
Generic Names of
the Principal Products/Services of the company are:-
Ø Passenger Services
Ø Cargo
Ø Excess Baggage
Subject has the
following aircrafts in its' service.
|
Aircraft |
No. of services |
|
B 737-800 |
9 |
|
B 737-700 |
10 |
|
B 737-400 |
10 |
|
ATR 500 |
6 |
Subject covers the
following routes:-
- Mumbai-Delhi
- Mumbai-Kolkata
- Mumbai-Goa
- Mumbai-Hyderabad
- Mumbai-Mangalore
- Mumbai-Bangalore
- Mumbai-Coimbatore
- Mumbai-Chennai
- Delhi-Jammu
- Delhi-Guwahati-Bargoda
Subject started its
operations on 5th March, 1993.
It purchases its
requirements 100% from international market against Contract, Cash or L/C
terms.
It sells 84.73% in
local market and 15.27% in international market against Cash or L/C terms.
It imports from
U.S.A., Australia and Singapore.
Subject operates
over 225 flights daily to 44 destinations across the country. The rapid expansion of the route network has
earned the prestigious Air Transport World Award 2001 for market development.
It has 7 Nos. of
Boeing 737-300 & 300 services of which 2 are owned and 5 are wet leased and
also owns 5 Nos. of 50 senter Air-crafts, and 7 Nos. of ATR – 72 Air-crafts.
Operations :
Overview :
The
commendable financial performance of the Company reflects the continued growth
of domestic travel within India, propelled by a buoyant economy, and increased
tourist traffic both domestic and international. The number of revenue
passengers carried by the Company increased from 6.91 million to 8.14 million,
an increase of 17.9%. The Company's increased profitability reflects both
increase in yields and revenues as well as control in costs despite the
increase in Aviation Turbine Fuel costs. This has been reviewed in detail in
the Management Discussion and Analysis.
Subject has alliances
with some of the best airlines, hotels and car rental services such as :
Ø The Park Hotels
Ø The Oberoi Group
Ø The Leela Hotels and Resorts
Ø Radisson Hotels and Resorts Worldwide
Ø AVIS
Ø Citibank
Ø KLM Royal Dutch Airlines
Ø Northwest Airlines
Ø British Airways
The company has
entered into tie up for Interline agreement with 12 International Airlines to
fly their passengers in India. Some of them are British Airways, KLM Royal
Dutch Airlines, Northwest Airlines, Air-Canada, Malaysian Airways, Swiss Air,
Delta, Gulf Air, etc.
Subject is the
first Indian airline to receive the World Travel Market Global Award, the
world's premier global travel event in London.
It has also won the H & FS Domestic Airline of the year Award twice.
Employee Remuneration and Benefits :
Expenses pertaining
to Employee Remuneration and Benefits increased by 51.4% from Rs. 3747 million
in Fiscal 2005 to Rs. 5672 million in Fiscal 2006. This increase reflects
increases in salaries and benefits, as well as the increase in average headcount
from 7082 during Fiscal 2005 to 8285 during Fiscal 2006. To meet operational
requirements in Fiscal 2006, the Company employed expatriate pilots on
short-term contracts, which also contributed to the increase in payroll and
related costs.
Selling and Distribution Costs :
Selling and Distribution Costs increased by 38.4% from Rs. 5591 million in
Fiscal 2005 to Rs. 7740 million in Fiscal 2006. This increase is attributable
to:
1] increase of 29.7% in costs related to Computerised Reservation Systems (CRS)
and Global Distribution Systems (GDS) from Rs. 1036 million in Fiscal 2005 to
Rs. 1344 million in Fiscal 2006
essentially due to the increase in the number of passengers;
2] increase of 34.3% in commission costs paid to General Sales Agents (GSAs)
and travel agents from Rs. 4208 million in Fiscal 2005 to Rs. 5653 million in
Fiscal 2006. This was due to the increased passenger revenues and revised
productivity-based incentives given to travel agents. The increase was partly
offset by an agreement to reduce the overriding commission paid to our General
Sales Agent (GSA) in India from 3% to 2% for passenger revenues and from 2.5%
to 2% for cargo revenues with effect from 1st April, 2005; and
3] increase in advertisement expenses incurred in Fiscal 2006, which was in
part due to advertising for the launch of international operations to
Singapore, London (Heathrow) and Kuala Lumpur.
Aircraft Rentals :
Aircraft Rentals increased by 118.5% from Rs. 1986 million in Fiscal 2005 to
Rs. 4340 million in Fiscal 2006, due to the induction of more leased aircraft
during Fiscal 2006; including wide-bodied aircraft for long-haul international
operations. This was offset to a small extent by the reduction in lease rentals
negotiated with lessors at the time of renewal of leases of certain
aircraft.
Subject has
received the following Awards
|
February, 2004 |
Subject won all
three awards, instituted during the year by “feBusiness Traveller”, viz for “Best
Business Class”, “Best Economy Class” and “Best Service (Airport and
Inflight)’, in the Domestic Airline Category. |
|
December, 2003 |
Subject won the
first ever Galileo-express Travel and Tourism Award for “India’s Best
Domestic Airline” for the year 2003. |
|
August, 2003 |
Subject was
declared a “Superbrand” by the world’s leading authority on branding, the
Superbrands Council. |
|
May, 2003 |
Subject awarded
the Boeing Company Award for maintaining “Best Technical Despatch Reliability”
for 2002, in view of maintaining technical despatch reliability in excess of
99% during the calendar year 2002. |
|
February, 2001 |
Air Transport
World's Market Development Award |
|
March. 2000 |
H & FS – Best
Domestic Airline of the year 1999 for excellence in hospitality |
|
January, 2000 |
Vocational
Excellence Award by Rotary Club of Mumbai North End |
|
December, 1998 |
H & FS – Best
Domestic Airline of the year 1998 for excellence in hospitality |
|
November 5 to 8,
1998 |
The International
Brand Summit |
|
1996-97 |
Best Airline of
the year 1996-97 Award conducted by IATA Agents Association, Calicut,
Tamilnadu |
|
November 20 &
22, 1997 |
Best Domestic
Airline Award for Service Excellence – Key to Competitiveness |
|
September 18
& 21, 1997 |
H & FS Award
by The Rangaswamy Tourism Foundation associated wit the Karnataka State
Tourism Development Corporation |
|
December 13, 1996 |
Best Domestic
Airline of the year for excellence in hospitality |
|
November 12, 1996 |
The World Travel Market
Global Award by Reed Exhibition Companies in conjunction with Trav Talk for
contribution to travel and tourism in the respective media sponsor regions
worldwide |
|
October 24, 1996 |
The Great
Management Show Award for punctuality, safety, quality of service and
customer orientation |
|
September 12,
1996 |
Citibank Diners
Club Blue Moon Award for Service Excellence |
|
October 17, 1994 |
Service
Excellence Award at an International seminar called "Global Managers in
Jurassic Park" hosted by Global Managers. |
SOME KEY EVENTS
The chronology of
some key events since the company was incorporated on 1st April,
1992 is as follows :
|
April 1, 1992 |
Incorporated as a
Private Limited Liability company. |
|
May 5, 1993 |
Commence the operations
as an Air Taxi Operator |
|
April 4, 1994 |
First Airline in
India to operate the Boeing 737-400 aircraft. |
|
January 14, 1995 |
Granted scheduled
airline status |
|
December 30, 1996 |
First private airline
in India to execute purchase agreement for Boeing aircraft. |
|
November 12, 1997 |
First private
airline in India to acquire its own aircraft using US EXIM guarantee. |
|
September 16,
1998 |
First private airline
in India to fly Boeing 737 NG aircraft |
|
October 6, 1998 |
First private
airline in India to fly ATR 72-500 aircraft. |
|
July 1, 2000 |
Introduced “Jet
Mobile”. An online system that provides flight schedule updates to passengers
on their mobile phones. |
|
February 5, 2001 |
Won the
prestigious Air Transport World’s Market Development Award. |
|
April 22, 2002 |
30 millions
passengers flown since commencement of operations. |
|
May 14, 2003 |
First airline in India
to operate the Boeing 737-900 aircraft. |
|
March 23, 2004 |
Commenced
operations to Colombo, Sri Lanka. |
|
May 14, 2004 |
Commenced
operations to Kathmandu, Nepal |
Its major customers
include Individuals, Government Bodies and all types of passengers.
Object of the company
Subjects main
objects as contained in their Memorandum of Association are:
To established,
maintain, operate and provide safe, efficient, economical and properly coordinated
air transport services and lines of aerial conveyance (including scheduled and
chartered domestic and international services) for the carriage of passengers,
baggage, mail and freight.
To purchase, take
on lease and/or hire or otherwise acquire, own, employ, maintain, work, manage,
control, let on hire, charter, lease, demise all forms of aerial conveyance for
the purpose of transporting or carrying passengers, baggage, mail and freight,
and merchandise of all and every kind and description, whether as principals,
agents or otherwise on national and international routes.
The main objects
clause and objects incidental or ancillary to the main object of the Memorandum
of Association of the company enable them to undertake their existing activities
and the activities for which the funds are being raised through this offer.
The company’s fixed
assets of important value include:
Plant and Machinery
Furniture and
Fixtures
Electrical Fittings
Data Processing
Equipment
Office Equipment
Ground Support
Equipment
Vehicles
Aircraft and Spare
Engine
Leased Aircraft
Leased Property
Simulator
Software
Press releases
Should you ride
this Jet?
15 March 2005
No, says Rex
Mathew* to the medium to long term investor; it is a very high-risk speculator's
stock at its current price.
Those who did not
apply for the high profile Jet Airways IPO and those who applied but did not
get a good allotment must be ruing a lost opportunity. The stock opened for
trading yesterday and surprised even diehard optimists closing above Rs1,300 —
a gain of almost 18 per cent. Some investors could, perhaps, be considering
buying the stock even now after yesterday's strong showing. Should they?
Granted, the civil
aviation market in India is booming and has one of the fastest growth rates in
the world. Granted again that Jet has a dominant market share in the domestic
market. And yes, agreed, Jet has one of the fattest operating margins among all
airlines in the world. But should one be a buyer at Rs1,300 per share or more
than 20 times next year's projected earnings?
The answer,
logically becomes evident in a dispassionate dissection of the sector Jet
operates in and its own stock. First, let us look at the positives for the
stock:
v
Civil aviation
in India can be safely expected to continue its growth momentum in the
foreseeable future.
v
Jet has a very
strong brand and its service delivery matches global standards.
v
Jet has a
large number of peak hour slots at metro airports and therefore will continue
to enjoy pricing power for such flights. New airlines will not get these prime
slots till the airports increase capacity.
v
Jet is very
strong in the business travel segment, which is not as price sensitive as
leisure travel.
v
The company
will shortly mount flights to East Asia, Europe and the US.
v
The stock
offers the only option to stock market investors who desire an exposure to this
fast-growing sector, if one excludes Royal Airways which is planning to start
SpiceJet.
Now the negatives:
v
Jet is a full
service airline. Low-cost carriers are rapidly gaining market share the world
over and would become dominant players in due course. It will not be easy for
Jet to convert itself into a low-cost carrier, if it decides to, without
compromising its brand equity. The other option of launching a separate brand
for low-cost operations would entail additional investments.
v
The domestic
market will see a good number of low-cost carriers in the near future. At least
three of them, Kingfisher, SpiceJet and the one being promoted by Wadias of
Bombay Dyeing will be strong players. Along with Air Deccan, they will provide
serious competition to full service carriers like Jet. In future, expect global
majors like Virgin and EasyJet to enter the domestic market as both have
publicly stated their interest in India.
v
Though Jet
dominates the peak hour traffic from metros, this will not last forever as
airports expand and start offering additional slots for other airlines.
v
The other two
full service carriers, Indian Airlines and Air Sahara, already have aggressive
fleet expansion plans. Jet was able to gain market share from Indian Airlines
partly because the aircraft acquisition programme of the state owned airline
was stuck for almost 15 years. IA will add new aircraft starting next year.
Sahara, under Rono Dutta former president of US Airways, has vastly improved
service delivery and will offer tough competition in the business travel
segment.
v
Both IA and
Sahara will have much more flexibility in pricing as they are not listed
entities who have to worry about quarterly numbers. Once they have the
additional aircraft, expect prices to go down further thereby reducing
operating margins.
v
Entry of new
players in an industry like aviation, which requires specialized skills, would
push up personnel costs. There is already a shortage of pilots in the industry.
Expect it to worsen in future.
v
Fuel is a
major component of the operating costs of an airline. With crude prices very
close to their all time highs, fuel prices will be increased in April. Worse still,
oil analysts do not expect crude price to fall much from current levels in the
foreseeable future. A further increase in oil prices is expected to ground many
airlines across the globe.
v
Jet could have
expanded into smaller cities and developed them as a buffer against declining
margins in the metro sector. But it has been slow in seizing this opportunity
unlike Air Deccan, which has taken the lead. Air Deccan is connecting smaller
markets not serviced by other airlines and is expanding rapidly by acquiring
smaller turbo-prop aircraft.
v
Jet's overseas
forays will take a long time to break even, let alone make a profit. To start
the operations, it will have to lease wide-bodied aircraft at the current high
rates. The segments it is entering are highly competitive, serviced by large
established airlines as well as price warriors. Many of these airlines can
afford to drop prices only to kill new entrants. One can fly Sri Lankan to most
Far East destinations from Delhi and back via Colombo for under Rs10,000, hotel
accommodation at Colombo included.
v
Jet does not
have any major expansion plans for the domestic market. According to Jet's
chairman himself, the airline would expand capacity by 10 to 15 per cent over
the next few years. So there is a very real risk of Jet focusing its energies
in stabilising the international routes while competitors eat into domestic
market share.
No denying that Jet
is an efficient and well-managed company. It is reasonably certain that the company
will remain profitable in the short to medium term even in the face of
increased competition and all the risks detailed above. But it is also
reasonably certain that one or two years from now it will be extremely
difficult for Jet to maintain, if not improve, the profit margins it is
enjoying now. And there in lies the problem. The stock is just too over-priced
as profitability can at best remain static, if not decline. For a medium to
long term investor there are enough equally good and some even better stories
in the market at far lower valuations.
Naresh Goyal wins
‘Star of Asia’ award
18 Nov 2005
Close on the heels of bagging the Economic
Times ‘Emerging Company of the Year’ award Mr. Naresh Goyal, Chairman, Jet Airways
has bagged the ‘Star of Asia’ award instituted by the Business Week a leading
magazine published from United States of America, Europe and Asia.
Along with Mr.
Naresh Goyal, Founder–Chairman of Jet Airways India Limited other Indians who
won the award are ICICI Bank chief executive KV Kamath, Council for Scientific
and Industrial Research (CSIR) director general R Mashelkar and Petroleum
Minister Mani Shankar Aiyar.
The Indians are
among the 25 Asians who were presented the award ‘Stars of Asia’ in a
glittering function in Beijing, Republic of China, on November 16, 2005 by Mr.
George Bush, former President of the United States.
On winning this
honour, Mr. Goyal said, “It is truly rewarding to be recognized in the category
of Global Managers, with so many Asian business houses emerging as global
conglomerates. I owe this to each and every member of our staff and colleagues
in junior, middle and senior Management levels, whose dedication, hard work,
focus on the Customer and passion for service excellence, have given life to
our vision.”
Other Asians
who won the honour are Chen Tianqiao, Founder and Chief Executive, Shanda
Interactive, China; Katsuhiko Machida, President, Sharp Corp., Japan; Katsuaki
Watanabe, President, Toyota Motor Corp., Japan; Yin Yimin President, ZTE Corp.,
China and Ho Kwon Ping, Founder and Chairman, Banyan Tree Holdings, Singapore.
KV Kamath was
recognized in the category of Financiers, R Mashelkar in the category of
Innovators and Mani Shankar Aiyar in the category of Agenda Setters.
Naresh Goyal
has had over 37 years of experience in the Civil Aviation industry. He is the
recipient of several national and international awards. Some of them are
‘Entrepreneur of the Year Award for Services’ from Ernst & Young and also ‘Distinguished
Alumni Award-2000 for meritorious and distinguished performance as an
Entrepreneur’ and also the ‘most respected company in travel and hospitality
sector’.
Other awards
conferred on Mr. Goyal include the ‘Outstanding Asian-Indian’ award for
leadership and contribution to the global community given by the Indian
American Centre for Political Awareness, ‘Aerospace Laurels’ for outstanding
contribution in the field of Commercial Air Transport twice, in April 2000 and
February 2004. Recently he received the citation of ‘Emerging Company of the
Year’ award of the Economic Times for Corporate Excellence.
Mr. Goyal has been elected to the Board of
Governors of the International Air Transport Association (IATA), at its 60th
Annual General Meeting held in Singapore in early June 2004. As part of the
31-member Board Mr. Goyal will serve a two-year term until the close of IATA’s
62nd AGM in June 2006. This is the first time that the Chairman of a private
airline of India has been elected to IATA’s prestigious Board of Governors.
About Jet
Airways (India) Limited
Jet Airways currently operates a fleet of 40
classic and next generation Boeing 737-400/700/800/900 aircraft, 3 A340-300 E
aircraft and 8 modern ATR72-500 Turboprop aircraft. With an average age of a
little over 4.6 years, the airline has one of the youngest aircraft fleet in
the world. Approximately 24,000 passengers travel daily on Jet Airways' 285
flights to 48 destinations that span the length and breadth of India and
beyond, including Colombo in Sri Lanka, Kathmandu in Nepal, Singapore, Kuala
Lumpur in Malaysia and London Heathrow, UK. Since inception in May 1993 until
end-October 2005, Jet Airways has flown over 57.2 million passengers.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guilty or against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper payments
to government officials for engaging in prohibited transactions or with
designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.44.56 |
|
UK Pound |
1 |
Rs.85.79 |
|
Euro |
1 |
Rs.58.40 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
4 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
4 |
|
--PROFITABILIRY |
1~10 |
3 |
|
--LIQUIDITY |
1~10 |
4 |
|
--LEVERAGE |
1~10 |
3 |
|
--RESERVES |
1~10 |
4 |
|
--CREDIT LINES |
1~10 |
4 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
36 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|