Qatar Air Eyes Indigo, Another Blow for Sahara and Other Top Indian News

Qatar Air is in talks with Indigo Airlines for a 49 percent stake as it intensifies its hunt for an local partner to get a piece of the growing Indian market. While Indigo maintained a “no comment,” Qatar Air has confirmed talks, interestingly in the middle of denying speculation of a conversation with Spicejet. It will be interesting to see how this ties into Indigo’s IPO plans.

SpiceJet, on the other hand, continues its winning streak. The airline, which came to the brink of disaster last year, has just reported a second quarter of profits. This is quite a turnaround. Spicejet customers will remember the phase in December when it cancelled almost all its flights for a day as government oil companies refused to supply it with aviation fuel. After six straight losing quarters, this is its second winning quarter, and the stock market continues to reward it for its efforts.

Sahara’s woes seem to be never ending. The stock market regulator has now cancelled the license of its mutual fund and has ordered it to refund the money to investors and cease operations. Sahara’s founder Subroto Roy was arrested a year ago after raising money from millions of small investors by selling them bonds, which were later deemed illegal. He now has to refund nearly $6 billion and the lawsuit continues.

Investors in startups are offering incentives to founders in the form of stock options to enable them to benefit from the valuation gain. With the funding overdrive, personal stakes of founders of companies such as Flipkart, Snapdeal and Ola have dipped considerably, and investors are now worried it might lead to a drop in motivation among the founders. They may have also taken a cue from Housing.com, where the drama with CEO Rahul Yadav was in part attributed to the fact that the founders had very little at stake after Softbank came in with $90 million.

The government may forego its dividend from state banks this year as they reel under losses from bad loans and struggle to shore up their capital base. Other steps being considered by the finance ministry are selling real estate assets and other businesses. That could be yet another reason for the finance ministry to lean heavily on the central bank to cut rates – bond profits will also help banks manage their balance sheets better.

Punjab National Bank, one of the 27 government owned banks, has taken the bull by the horns in its fight against bad loans. It plans to take control of some steel companies, who are its biggest defaulters, and sell them as part of the restructuring strategy backed by the government. It has $4 billion of loans to steelmakers on its books, a quarter of which have gone bad.

The murmurs around the huge forex debt held by Indian companies has just gotten louder. The IMF has said that Indian companies fared the worst in a stress test of higher borrowing costs and declining earnings as the dollar continues its steady climb. A recent study showed that Indian companies have $70 billion of outstanding debt, much of which is unhedged, putting them in a precarious situation that can tip over any time.

As consultants are bitten by the startup bug, McKinsey has lost 40 consultants in the past 18 months, 14 of which were from the India leadership team. Read more about them here.

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