Operational efficiency and the ability of a low-cost airline to turn around faster and

RELATED ARTICLES Bain, TPG's Lilliput woes a warning on India investing Banks may need up to $50b extra equity: Fitch Kingfisher in talks with developers to avoid eviction

the acumen to spot an opportunity against general public perception were the factors that led to the acquisition of 37.7 per cent equity stake in SpiceJet by Kalanithi Maran, the CMD of Sun TV Network.

SpiceJet, India’s second largest low-cost airline, told the stock exchanges on Monday that Maran and his entity Kal Airways would acquire the shares held by original promoter Bhulo Kansagra’s Royal Holdings Services and US investor WL Ross.

Maran has also come out with the mandatory open offer to pick up an additional 20 per cent stake as per Indian acquisition norms. The total outlay, including the money paid to Ross and Kansagra, is estimated at around Rs 900 crore.

“SpiceJet is a very tightly run ship and made profit. Moreover, it is a near-zero debt company and its Ebitda was a healthy 19 per cent for FY10. That helped me to decide in favour of it, even though we had held talks with a few other airlines over the past few months,” Maran told Financial Chronicle on Monday.

Moreover, Maran firmly believes that the Indian aviation sector, flying around four million passengers a month and growing at around 15 per cent a year, is bound to enter a greater growth phase sooner than later.

“I am seeing a higher purchasing power percolating down to even smaller cities in the country. With more airports coming up, there is a greater opportunity for growth if one prices the tickets affordably to enable a larger number of people take to the skies,” he said.

Once the open offer ends and Maran gets majority stake in SpiceJet, the airline’s board will undergo a change with the Sun TV chief becoming its chairman.

“However, the management has run the company well and I do not see any reason for effecting changes in that,” he said.