AirAsia India's promoters are set to infuse additional capital in the airline even as losses have eroded its equity capital.
According to filings with the Registrar of Companies, the airline's board has approved the issue of equity shares on a rights basis and an increase in authorised share capital from Rs 195 crore (Rs 1.95 billion) to Rs 3,300 crore (Rs 33 billion).
Authorised share capital indicates the maximum amount a company can raise through issue of shares.
The board approval, secured two months ago, indicates fund infusion is round the corner.
But, the investment is yet to take place and differences among shareholders are believed to be the reason for the delay. The proposed investment sum could not be immediately ascertained.
Along with additional infusion, changes in shareholding structure is also likely.
AirAsia India is a tripartite joint venture of AirAsia Malaysia (49 per cent), Tata Sons (41 per cent) and Arun Bhatia-owned Telestra Tradeplace (10 per cent).
So far, the promoters have invested $30 million in accordance with the original investment plan.
Bhatia, who did not participate in the previous round of fund raising last August, has publicly accused the Malaysian partner of controlling the operations. Bhatia is expected to exit the airline and there have been discussions between Bhatia and Tata Sons over a stake sale.
However, no deal has been materialised yet.
During a recent interaction with reporters in Mumbai, the airline's group CEO Tony Fernandes had said they had great partners in Tatas but avoided any reference to Bhatia.
AirAsia India did not respond to an email query on the topic.
AirAsia India, which began operations in June 2014, has been dogged by issues of intense competition, slow growth, continuous losses, senior level exits and disputes among promoters.
Before it commenced operations, Fernandes had said the airline would break even in a year.
However, so far, it has not been able to report a quarterly profit.
It made a loss of Rs 32.7 crore (Rs 327 million) in the December 2015 quarter, despite revenue growth and low fuel cost.
However, the loss was lower on a year-on-year basis.
“I am a new boy and I have the entire airline industry against us.
We have fantastic partners in Tata. . . We haven’t rushed. We have worked with our partners. We are very comfortable about going to the stage two now. So let’s see,” Fernandes told reporters.
EYEING NEW SKIES
- AirAsia India begins operations in June 2014.
- Current fleet size -- 6 Airbus A320 aircraft. Serves ten destinations
- December-end quarter loss -- Rs 32.7 crore
- Total investment by promoters till date $ 30 mn
- Tata Sons & AirAsia infused capital last August. Arun Bhatia did not invest fresh sum. He has accused AirAsia Malaysia of taking control of the airline