NSE Asks Jet Airways to Clarify Fund-raising News; Jet Calls It Speculative

Moneylife Digital Team 14 August 2018

The National Stock Exchange has asked Jet Airways to clarify whether an article in The Economic Times that claimed that Jet was planning a $400-million stake sale to private equity (PS) players was correct. According to the article, Jet has initiated a formal stake-sale process to raise $350-400 million from global private equity firms. Approaches have been made to bulge-bracket funds including Blackstone, TPG, and Indigo Capital Partners, said the piece. A global investment bank has already been roped in to help Jet’s founding chairman Naresh Goyal raise funds, mentioned the article.

Often such articles are planted in media to buy time and assuage angry stakeholders. NSE asked if any such negotiations were taking place. The airline responded by saying that the article was purely speculative in nature. On the same day this article appeared, The Economic Times had also carried a piece saying that Jet’s auditor BSR & Co. may quit if issues are not resolved. NSE had asked for a clarification for this too. Jet replied that the article was factually incorrect.

At the meeting held on 9th August 2018, the board of directors of the second largest airline carrier, Jet Airways, deferred the matter of consideration of the unaudited financial results for the quarter ended 30th June 2018. The National Stock Exchange (NSE) had then asked Jet on 10th August 2018 the reasons for which Audit committee has not approved the financial result.

Jet had then informed that the management and auditors needed more time to finalize the accounts, which the audit committee agreed to and directed them to place the finalized accounts before them thereafter.

According to a news article dated 10th August 2018 the decision to defer the results was taken an hour after the meeting ended 9th August 2018 and most of the executives and board members had already left the venue. Under the said circumstances the airline was asked to confirm who had taken the decision to defer the financial results. Jet replied that the decision to defer the financial results was taken by the board of directors on the recommendation of the audit committee.

According to the article, the results were delayed pending closure of certain matters and Srinivasan Vishvanathan, chairman of audit committee and Jet board member, quit earlier in the day adding to the confusion and raising questions about the reasons behind the deferment. When the exchange asked for more details, Jet said that Mr Srinivasan Vishvanathan’s term had expired at the conclusion of the Annual General Meeting (AGM) held on 9th August, resulting in the cessation of his directorship, and hence, it is wrong to say he quit.

A separate media report had also mentioned that BSR & Co, an affiliate of KPMG India refused to sign the first quarter results of Jet Airways due to differing views over interpretations of some accounting rules. The auditor questioned the company’s ability to function on a going concern basis. NSE had asked Jet to clarify whether the management sought extension from audit committee or the audit committee did not recommend the said financial result to the board. Jet replied that the management sought more time from the audit committee to finalize the accounts, to which the committee agreed and directed that the results be placed before them thereafter.

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