Date:23/02/2006 URL: http://www.thehindubusinessline.com/2006/02/23/stories/2006022303840900.htm

Back Ministry nod for Jet Airways' Sahara acquisition soon

Richa Mishra
Ashwini Phadnis

Sources said the acquisition did not come under the purview of Competition Act as the relevant provisions of the said Act were yet to be notified.

New Delhi , Feb. 22

THE acquisition of Air Sahara by Jet Airways is set to move a step forward with the Ministry of Company Affairs expected to give its nod to the deal soon.

According to senior officials of the Ministry, preliminary examination of the deal suggest that there were no technical hitch in the deal getting the necessary approval required under the Companies Act, 1956.

Jet Airways had approached the Ministry seeking approval under the provisions of the Companies Act that stipulates `restriction on acquisition of certain shares.' Section 108A of the Act provides for Union Government approval, if the nominal value of equity shares intended to be acquired exceeds 25 per cent of the paid-up equity share capital of the company to be acquired.

Further, the Ministry is also understood to be of the view that the deal did not come under the purview of the Competition Act, at present. Speculations were that as the new entity would become a dominant player in the market, it would fall under the ambit of Competition Act. Source said the acquisition did not come under the purview of Competition Act as the relevant provisions of the said Act were yet to be notified.

As regards the inspections carried out by the Ministry four years back on the books of accounts of Jet Airways, sources said the `no issue was pending before the Ministry.'

In January this year, Jet Airways acquired Air Sahara for $500 million.

The deal is to see Jet Airways acquiring the aircraft, equipment and slots at the airports that Air Sahara had.

The deal, however, has to be cleared by the authorities before it can be finally be implemented.

Speaking to newspersons the Jet Airways Chairman, Mr Naresh Goyal, had said that the all the papers connected with the transactions had already been submitted to the Registrar of Companies and other authorities.

The deal may also have to be cleared by the Aircraft Acquisition Committee of the Ministry of Civil Aviation before it is given the final nod.

The committee gives permission for import of aircraft.

The deal, however, has created concerns among sections of industry that the buy out could lead to a monopolistic situation as Jet Airways enjoys a dominant position in the domestic market.

Air Sahara enjoys a market share of about 12 per cent.