In Rare Case, Jhunjhunwala-Invested Stock in Free Fall

Mumbai: In a rare case of a Rakesh Jhunjhunwala-invested stock going on a free fall, his investment in SpiceJet has depreciated by over 12 per cent within 12 days amid mounting troubles for the cash-strapped budget carrier.

RARE Enterprises of ace investor Mr Jhunjhunwala, who has long commanded a reputation in the Indian stock market of buying small stakes in companies with strong growth potential in terms of share price appreciation, purchased 75 lakh shares in SpiceJet for Rs 13.4 crore through open market route on November 28.

The shares have been purchased at a time when the no-frills carrier is facing tough business conditions and the situation has only worsened in recent days with cancellation of 70-80 flights a day and a total of over 1,800 flights having been cancelled for the current month alone.

As a result, SpiceJet shares have plunged by 12.5 per cent since November 28, despite a rise of 2.62 per cent in Tuesday's trading session.

SpiceJet stocks, on Tuesday, ended at Rs 15.65, as against a price of Rs 17.88 a piece at which Mr Jhunjhunwala had purchased shares amounting to an about 1.4 per cent stake.

On the day of Mr Jhunjhunwala's purchase, SpiceJet shares had surged 18.36 per cent. The plunge in shares in the interim period would be much steeper after excluding the surge on the day of share purchase.

The company has said, "A few parties have approached us and evinced interest in making investments...as the company has been exploring various options for raising fresh capital."

It had also said last month that deliberations with prospective investors were "at an exploratory and preliminary stage". But, there has been no clarity since then on the potential investors.

SpiceJet has cancelled over 1,800 flights across the country for the current month, in signs of mounting troubles for the budget airline.

The large-scale flight cancellations came at a time when the Directorate General of Civil Aviation (DGCA) was considering issuing a show cause notice to the airline for defying its directives regarding advance bookings.

Besides, the Airports Authority of India (AAI) is said to be considering putting SpiceJet on cash-and-carry mode soon if it does not furnish a bank guarantee against its dues to the airport operator, which stand at around Rs 200 crore.

Concerned over the deteriorating condition of SpiceJet and large-scale flight cancellations, aviation regulator DGCA had on Friday also withdrawn 186 of its slots and asked it to clear salary dues of all its employees within the coming 10 days.

Union Civil Aviation Minister Ashok Gajapathi Raju also last week raised serious concerns over the financial health of the domestic airline.

"We are running through a lot of turbulent weather...not only the public sector, private sector is also crashing. (With) Kingfisher crashing and, right now, SpiceJet seems to be giving us heart attacks as far as airlines are concerned," the minister had said.