Ajay Singh's investments into SpiceJet to get delayed as airline awaits CCI nod

Competition watchdog's approval likely next week; scrutinizing ownership change from Maran to Ajay Singh

Troubled low-cost carrier SpiceJet will have to wait at least a week more for new investments from founder-promoter Ajay Singh to come in. Business Standard has learnt the airline is unlikely to see any fund infusion this week, with its proposal to change ownership back to Singh from current promoter Sun Network’s Kalanithi Maran awaiting a green signal from India’s anti-trust watchdog, the Competition Commission of India (CCI).

With several vendors awaiting payments, SpiceJet was expected to receive Rs 100 crore in end-January and the second tranche of Rs 400 crore from Singh on February 15 under the revival plan approved by the civil aviation ministry on January 22. However, it will now have to rely on internal accruals for working capital, generated largely through forward bookings.

“The funds are ready to come in as soon as the last remaining regulatory approval from CCI for ownership change is in,” a SpiceJet official told Business Standard.

Confirming the development, a CCI official said: “We received Spicejet’s application 10-12 days ago; it will take us more than a week to clear it.”

The airline cleared the last part of January salary dues on Monday. In all, SpiceJet is expected to receive a total of Rs 1,500 crore by April from investors led by Singh. On January 29, the SpiceJet board also approved the transfer of Maran and associate firm KAL Airways’ entire 58.46 per cent stake to Singh. The board meeting also noted that Maran would invest Rs 375 crore through existing warrants, while Maran, his wife Kavery Kalanithi and S Natrajhen would quit the board.  Incidentally, SpiceJet was expected to produce a payment schedule to state-owned Airports Authority of India (AAI) on Monday. However, it has not been able to do so because of its pressing problems regarding investments. Of its total liabilities of Rs 1,400 crore to several vendors, the airline owes Rs 330 crore (including penal interest) to AAI.

“A decision on SpiceJet will be taken on Tuesday. They may be put on cash-and-carry since they have submitted a payment plan despite warnings. They are making part-payments right now - about Rs 50 lakh of the Rs 80 lakh daily bills,” said a ministry official.

Among other problems, SpiceJet, which currently has 17 Boeing B737 aircraft, has also been dragged to court by three aircraft lessors - BBAM, AWAS and BOC Aviation. While the first lessor is seeking return of six B737s and has sought payment of $100 million, the other two lessors are seeking return of five more aircraft.

The SpiceJet scrip closed 2.29 per cent up at Rs 20.10 a share at the BSE on Monday.