Business

As Speculation Mounts Over NDTV Takeover, Here’s a Look at Top Suitor Ajay Singh

 SpiceJet boss Ajay Singh, a long-time supporter of the BJP, is a man whose industry and political connections have crisscrossed more than once.

While NDTV has officially denied speculation regarding a possible change of ownership, it has over the last few months gone head-to-head with various government agencies over alleged corporate governance issues. Credit: PTI

New Delhi: SpiceJet boss Ajay Singh, a politically-connected entrepreneur who has worked for and closely supported the Bharatiya Janata Party (BJP) over the last two decades, is reportedly considering buying a majority stake in NDTV, an Indian Express report stated on Friday.

The media report comes on the heels of week-long speculation over whether ownership of NDTV – which in the last few months has gone head-to-head with various government agencies over alleged corporate governance and tax evasion issues – was going to change hands.

The Prannoy and Radhika Roy-headed channel has officially denied claims made by the Indian Express report to the Bombay Stock Exchange, with sources telling The Wire that a formal statement is also expected to be put out this evening.

Nevertheless, what do we know of Singh, the promoter-chairman of SpiceJet who despite being in an industry known for larger-than-life personalities has remained largely low-key?

Singh’s association with the BJP came to the public’s attention in the run-up to the 2014 general elections, when he was a part of Prime Minister Narendra Modi’s “advertising and publicity war room” – a set of makeshift cabins on the back lawns of 1 Lodhi Estate where advertising strategies and poll slogans were produced by a group of foreign-educated, India-returned corporate professionals.

Singh was the one who reportedly, in a late night conference call with Arun Jaitley, Piyush Goyal and Sudhanshu Trivedi, coined the phrase ‘Abki baar, Modi sarkar’, which would go onto become the BJP’s primary campaign slogan.

However, unlike most foreign-educated, India-returned professionals who supported the BJP in 2014, Singh’s association with the right-wing political party extends back to the late 1990s. After graduating from IIT Delhi, he shipped off to Cornell University for an MBA in finance in 1990.

Upon returning to India in 1992, he sunk himself into the family business – his mother and father, like him, were born in Rajasthan and made their money in real estate and fashion accessories. His initial tryst with politics came some years later, while he was finishing his law degree, when BJP leader and the-then Delhi transport minister Rajendra Gupta tapped him for the city’s transport corporation board.

In interviews, Singh credits and traces his acumen for effecting corporate turn-arounds to his time at the Delhi Transport Corporation (DTC) where he reportedly helped DTC move “from a struggling fleet of 300 buses to a good 6,000”.

It’s unclear whether Gupta and other friends introduced him to Pramod Mahajan, who was a rising star within the BJP at the time, or whether Singh’s work at the DTC helped attract the attention of Mahajan (news stories from the time play up both versions), but this forged a friendship and working relationship that lasted until a couple of years before Mahajan’s untimely death.

“I learnt a lot from Mahajan. It was a delight to work with him. He was a great human being with unlimited dynamism,” Singh stated in 2013 interview with Business Standard.

When Mahajan became information and broadcasting minister, he brought on Singh as officer on special duty, where the latter helped in revamping Doordarshan and in the launch of channels such as DD News and DD Sports. From there, Singh followed Mahajan to the telecom ministry, where they helped lay the foundation for lower call rates.

Interestingly, Singh would unsuccessfully try his own hand in the telecom business years later.

“In 2002, there were around 2.8 million mobile phones and our concern was to increase it by 10 to 15 per cent every year. At the same time, China had 120 million mobile customers,” Singh said in 2015, while talking about his work at the telecom ministry.  “There was something we were doing terribly wrong and we realised it was higher call rates.”

SpiceJet saga

A hallmark of Singh’s career has been the strength of his connections.

When the NDA government was voted out in 2004, effectively putting an end to his political career, the London-based Kansagra family got in touch with Singh and asked him to invest and help run the-then defunct ModiLuft airline (an aviation venture that had Lufthansa as a partner.)

At a time when most Indian airlines were posting losses, Singh and ModiLuft managed to secure nearly $120 million in investments from heavyweights such as the Tata group and Goldman Sachs. Within a couple of years, Singh was able to get ModiLuft off the ground, renamed as SpiceJet.

In 2008 – during the global financial crisis and at a time when most Indian airlines were hurting – Singh was able to convince Wilbur Ross, the current United States secretary of commerce, to put $80 million into SpiceJet. This deal, multiple people with direct knowledge of the matter told The Wire, was made possible by Singh’s close friendship with one Ranjeet Nabha, Ross’s man in India.

Midas, not Midas

While Singh made good on his first tenure at SpiceJet, eventually selling to the Marans in 2010, his other businesses at the time largely burned out.

A deal over buying a closed Daewoo plant in Surajpur, facilitated by businessmen friends who Singh reportedly met through Mahajan, ended in frustrating differences and a sticky legal battle.

In 2008, Singh made news again when, along with Mumbai-based businessman Asish Deora and a few others, he set up a company called Allianz Infratech and bid for a telecom licence during the A. Raja years. After failing to win a pan-Indian licence, they sold off their business. Two years later, Singh and his firm came under investigation over whether there had been violations for the licences they did win. However, nothing incriminating came out of these investigations.

A third business, this time going back to Singh’s roots in the transport industry, came when he bought a stake in Star Bus. The firm at the time had received orders to supply over 200 buses to Delhi’s transport department. However, tensions flared up between the state and government after Star Bus didn’t deliver the buses on time, with the transport department threatening to impose a fine of Rs 1 lakh per day. Since then, Singh has reportedly increased his stake in the company.

SpiceJet, part 2: industry meets politics

When it comes to SpiceJet, however, Singh’s ability and intuition have largely paid off. When he handed over the company to Kalanithi Maran (in various interviews, he stated that he was forced), the airline was in decent shape if a bit dinged up after Kingfisher’s recent entry.

Singh’s return to SpiceJet and the aviation industry in 2015, however, is where his corporate and political backgrounds crashed into each other, with spectacular results for the man and the airline.

Shortly before Singh took over again, SpiceJet was a financial mess. It had valuable assets in the form of flight slots and a ready fleet and network. But it also had major liquidity concerns, a debt of over Rs 1,000 crore, and would eventually end up reporting a loss of Rs 687 crore in 2014-15 and had short-term liabilities of over Rs 2,000 crore.

In early December 2014, SpiceJet started unravelling as a result of its liquidity crisis.The inability to pay creditors and fuel bills translated into cancelled flights. In the first week of December, the Directorate General of Civil Aviation (DGCA) stopped the airline from selling tickets beyond December 2014. The Airports Authority of India (AAI), mindful of Kingfisher’s unpaid dues, was also unwilling to allow any SpiceJet flights until all dues had been cleared.

According to Mint, on December 15, 2014, SpiceJet senior management called the civil aviation ministry and reportedly told the joint secretary at the time (G. Ashok Kumar) that the airline might shut down.

By 4 pm on the same day, it was decided that Singh would take over. How this was exactly decided is murky at best. Multiple accounts of the series of events on that day state different things. One narrative, for instance, says that both Maran and the Indian government approached Singh and asked him whether it was possible that SpiceJet could be revived. Another account states that while the aviation and finance ministries were wondering what should be done, Singh stepped in with a turnaround plan.

What is clear, however, were two developments. One, after it was certain that Singh and his associates would take over from Maran, the Indian government moved with a great amount of speed, asking AAI and oil companies to allow credit facilities and staggered payments for SpiceJet so it could clear its dues. The ministry also asked the DGCA to lift the ban on sale of tickets. Most crucially however is that the Securities and Exchange Board of India was convinced into waiving the formal process of an open offer (that is required to be made to shareholders when a company’s ownership changes hands).

Government approval for this, often a lengthy and bureacratic process, was given within seven days.

Secondly, the details of the Maran-Singh deal (officially closed in January 2015) were not made public at the time, although SpiceJet was a listed company. Apart from the absence of an open offer, nobody knew the final deal price or the source of Singh’s funds.

It was only in June 2017 that these details became known as a result of a legal spat between Maran and Singh. A BloombergQuint story, reporting on the development, summed up the deal:

“Never before in India’s M&A history has a listed company been sold for less than Rs 5, the deal closed in 15 days and the acquirer exempted from the mandatory open offer to public shareholders. This was the luck that backed Ajay Singh’s (in pic) acquisition of then beleaguered SpiceJet.”

A former aviation ministry secretary, speaking to The Wire, stated that the deal was somewhere between being a “bailout and an acquisition”

“Look, it was obviously a stressful time. Having a failed airline doesn’t look good for ‘Make-in-India’ or the Modi government’s growth plans. But the aviation ministry should follow standard procedure. Three small airlines have closed over the last two years. Was anything done to save them,” the official, who declined to be identified, told The Wire.

In May 2015, BJP member Subramanian Swamy hurled allegations at the SpiceJet deal, claiming that there were “large-scale irregularities” and violations of the Prevention of Corruption Act and SEBI Act.

Nevertheless, the deal worked out well both for Singh and SpiceJet. The airline’s valuation has boomed from Rs 650 crore in December 2014 to Rs 7,400 crore as of June 2017. Aided by a sharp fall in global crude oil prices and low-cost execution strategy, Singh has effected quite the turnaround.

NDTV  and Singh

In its filing to the Bombay Stock Exchange, NDTV has stated its promoters have “not entered into any agreement for sale of their stake to any person” but does not mention whether it is currently looking at suitors.

The Indian Express report states that Singh will have a “controlling stake in NDTV of around 40% while promoters will hold around 20% in the company”. It also notes that the SpiceJet boss will pick up the channel’s debt of over Rs 400 crore, with the total deal being valued at around Rs 600 crore.

If true, it remains to seen whether Singh’s turnaround acumen and strong connections (industry and otherwise) will pay off at NDTV. And more importantly, whether it will pay off for NDTV as a strong, independent media organisation.
  • ashok759

    NDTV has been a pioneer and an incubator of talent. If there is a change of ownership / management, one hopes it will continue its tradition of professionalism and fairness.