SpiceJet co-founder Ajay Singh said on Monday that the second tranche of Rs 400 crore to be infused into the airline would come in by Wednesday. Singh said the first tranche of Rs 100 crore has been paid and the money has already been invested. He was speaking on the sidelines of a roundtable conference on the budget.
The investments went towards clearing income tax dues of Rs 100 crore, said a source in the know of things. The next tranche will be used for clearing salaries and making vendor payments, the source confirmed.
Ajay Singh jumped in to buy the loss-making airline after Kalanithi Maran’s Sun Group expressed that it will be unable to support the airline financially anymore. When Singh had exited SpiceJet in 2010, the company had a cash reserve of Rs 450 crore, but when Maran hung his boots, the dues were Rs 1,300 crore.
The third tranche from Singh and his private equity partners will be of Rs 500 crore, expected to come in March.
That will again help Singh clear debt and make vendor payments. The company, which has Rs 700 crore in debt, has already got the approval of the Competition Commission of India for the stake sale, and Singh is now awaiting clearance from the home ministry for his appointment as a director.
Meanwhile, the restructuring programme has already started. The source didn’t disclose the details, but said Singh was focusing on cutting costs. “It was part of the board meeting discussion,” the source added.
SpiceJet will continue to focus on discounts and offer tickets. Since January 28, it has already announced four rounds of sale. The first one, where 5,00,000 seats were on offer, Spice Jet saw a 400% jump in bookings.
In the quarter ended December, the company announced that there was a capacity reduction of 31%, with revenue dipping 27% and losses swelling to Rs 275 crore, mainly due to the exceptional cost of fleet reduction and early termination of contract. The press statement mentioned that if not for the exceptional cost, the company would have made a profit of Rs 20 crore.