In what comes as the final nail in the coffin for beleaguered low-cost airline SpiceJet , oil marketing companies' have decided to stop fuel supply over a payment default. This is but unfortunate, says SL Narayanan, group chief executive officer, Sun Group.
In an interview to CNBC-TV18, Narayanan says the company has never defaulted on payments in the past and has infact paid more than Rs 3000 crore last fiscal for the same.
"This is just a situation that arose for 2-3 days of overdues" he adds.
The strapped-for-cash airline was rescued by the Civil Aviation Ministry as it said it would request Indian banks/financial institutions to extend loans of upto Rs 600 crore to the airline as part of measures to keep the carrier functional.
"We need Rs 600 crore to get going. I am confident we will turn things around," says Narayanan confidently before adding that the promoter- the Maran family- is not shying away from its responsibility to the company, but it has already infused as much capital in the company as it could.
So, is the company shutting shop now? Narayanan says not if they can help it.
"We don't want to shut down, the government doesn't want us to shut down. We merely need some assistance to fly out of these turbulent times," he highlights.
Below is the edited transcript of SL Narayanan's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: What is the latest, oil companies have stopped fuelling, have all your flights or many of your flights been grounded?
A: That is the fact unfortunately. We have had a situation, which has been forced on our hands as a result of lack of fuel supply. I just want to put this in a bit of a historical perspective. We have never defaulted on fuel payments, we have always paid in advance and in the last financial year, if my memory serves me right, we paid more than Rs 3,000 crore to the oil marketing companies (OMCs). So, what we have had as the situation is just two-three days of overdues and the whole house has come crashing down on us.
I do acknowledge that people have to work within systems and processes laid down by their respective managements. But we have been a very consistent customer of all these companies and at a time when we needed this succour, it was not forthcoming, which is why we went to Delhi to seek for assistance.
Sonia: We were given to understand that a request would be made to the OMCs to extend the credit line to SpiceJet for about 15 days. That has not come through?
A: I am not privy to internal correspondence between the organs of the government but clearly, the indication that was given to us, I must acknowledge here the ministry of civil aviation has been exemplary. I cannot thank the secretary and his staff enough. They have been outstanding and I saw the speed with which the government of India moved on Monday.
In fact, I went and told the people in the government that we are unable to raise financing from the banking system because there is almost fear, I wouldn't even say risk-aversion, people are living in mortal trade off lending to airline companies and I don't blame the banks. This is a sector, which has been extremely stressed out because of some fatal policy missteps in the past.
SpiceJet stock price
On December 17, 2014, at 11:13 hrs SpiceJet was quoting at Rs 13.70, down Rs 0.2, or 1.44 percent. The 52-week high of the share was Rs 22.20 and the 52-week low was Rs 11.10.
The latest book value of the company is Rs -16.49 per share. At current value, the price-to-book value of the company was -0.83.
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