Mumbai, Dec. 26: Vijay Mallya has started consolidating his position in Air Deccan.
Barely a week after Mallyas Kingfisher Airlines and Deccan Aviation decided to merge into a single entity, Kingfisher Radio Ltd, a subsidiary of Mallya-owned UB Holding, picked up another 2.95 per cent of the equity through bulk deals on the Bombay Stock Exchange and National Stock Exchange.
As a result, Mallyas stake in Deccan Aviation — the low-cost carriers holding company — will go up to around 49 per cent. Kingfisher Radio bought 16.4 lakh shares on the BSE and 23.6 lakh shares on the NSE at a price of Rs 275 per share from Deccan Aviation.
Vijay Mallya, who owns Kingfisher Airlines, had bought a strategic 26 per cent stake in Deccan Aviation in June.
Later, he raised his stake to 46 per cent following an open offer. The deal size at that time was estimated at Rs 550 crore at Rs 155 per share.
At a price of Rs 275 per share in todays bulk deals, Kingfisher has paid about Rs 110 crore to buy the additional 2.95 per cent stake from Deccan Aviation Ltd.
In another bulk deal today on the NSE, Investec Bank (UK) Ltd sold 11.5 lakh shares to Deccan Aviation Ltd at Rs 267.63 per share.
Officials were not immediately available to clarify whether these shares were also picked up by Kingfisher Radio Ltd. If they are also transferred to Mallya, the liquor and airline tycoons stake in Deccan Aviation will touch 49.8 per cent.
We have bought some additional stake in Deccan today, but our total shareholding in Deccan Aviation is still below 50 per cent, Ravi Nedungadi, president and CFO of UB Group, told The Telegraph.
At a joint board meeting on December 19, Air Deccan and Kingfisher Airlines decided to merge into a single entity. The meeting also decided to rename Deccan Aviation as Kingfisher Airlines Ltd on the exchanges during the next financial year.
Mallya took over as chairman and CEO of the merged entity while G.R. Gopinath became vice-chairman.
The charter operation of Deccan Aviation was also spun off into a separate entity to be jointly owned by Gopinath and the UB Group. Gopinath would be its chairman and CEO and Vijay Mallya would be the vice chairman of the charter business.
The two airlines have a combined loss of about Rs 2,000 crore. Kingfisher Airlines hopes to start its long-haul flights from August 2008 when Deccan Aviation completes five years of domestic operations — which will automatically make it eligible to start overseas flights.