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Media tycoon Kalanithi Maran, who has for years made news for paying himself and his wife the highest salaries in India, is now facing turbulent times.
SpiceJet, the budget airline that the 50-year-old chairman and managing director of Sun Group owns, is in trouble.
The cash-strapped airline has cancelled over 1,800 flights in December alone. Its revenues have plunged from Rs 14-15 crore to Rs 50 lakh a day. And with lenders playing tough, the airline is facing serious headwinds.
Maran acquired SpiceJet for Rs 750 crore in 2010 and, along with KAL Airways (also controlled by him), infused another Rs 550 crore.
People asked him why he wanted to risk investing in a bleeding sector. A close associate recalls having this conversation with "Kala" (as Maran is called by people close to him) and his reply was that the worst was over and that from now on, the industry would only grow.
Within a year, the industry bounced back and SpiceJet made profit for one year. But high fuel costs and competition soon forced the airline to start offering huge discounts, thus bringing its profits down.
Text: Business Standard
Image courtesy: Reuters