Flying high

Mumbai, Jan. 9: The initial public offering of Jet Airways (India) Ltd is one of the most keenly awaited public offers in recent times, as hardly any civil aviation company of repute is listed on bourses.

With the filing of its prospectus with Sebi, Jet Airways will become the second aviation firm to be listed. Royal Airways (formerly ModiLuft) trades on BSE, but does not have any aircraft or services to boast of. The stock is traded at a premium of Rs 40.

?Our promoters, Tail Winds and Naresh Goyal, will control approximately 80 per cent of equity after the offer. Tail Winds Ltd, an Isle of Man company, holds 99.99 per cent in Jet and is wholly owned by Naresh Goyal,? says the prospectus.

Of the 1.72 crore shares on offer, the Jet flotation comprises 1.42 crore shares as a fresh issue with 30 lakh being put on the block by existing shareholders. Jet Airways is the largest domestic airline with a 42.3 per cent market share.

For the promoter, the average cost of acquisition of equity was Rs 8.70 apiece. It recently sold each share to senior executives like Saroj K. Datta and Carl Saldanha for Rs 800. Marketmen say this is an indication of, perhaps, how the airways values its shares in the flotation.

While Goyal is the face of the airline, the articles of association have ensured that he holds the reins by redefining his powers. The articles have conferred rights on Goyal, the NG group (which include Tail Winds) and certain companies controlled by Goyal related to the governance of the company.

Goyal is the permanent chairman and will be entitled to preside over all meetings of shareholders or directors as long as he is willing. Prominent personalities are the company?s board. In March 2004, P. R. S. Oberoi was inducted, followed by Aman Mehta, former CEO of HSBC, in September. Jet also roped in Vijay Kelkar, former adviser to the Union finance minister, and Sam Pitroda, founder chairman of Telecom Commission.

Attrition rates

Jet Airways is facing the brunt of a high rate of attrition. The attrition rates are not only comparable but higher than those in the infotech industry.

The attrition rates for Jet Airways? employees in fiscal 2002, 2003 and 2004 was 8.9 per cent, 13.2 per cent and 14.1 per cent respectively and 11 per cent on an annualised basis for the six months ended September.