Air Deccan reduces IPO size to Rs 400 crore

Price band set at Rs 150-175; issue opens on May 18.

Low-cost airline Air Deccan has reduced the size of its initial public offer to Rs 400 crore from the initially planned Rs 700 crore.

The price band has been set at Rs 150-175 per share and the issue will remain open from May 18 to May 22. Post issue, the promoters' stake will reduce by 25 per cent.

Air Deccan Chairman and Managing Director GR Gopinath said the airline did not want to price the issue too high.

"We had to consider several aspects, and the investors' interest in particular, before finalising the issue."

As per the earlier plan, the price band was supposed to be set at Rs 300-350 a share.

The IPO proceeds would be used for funding the airline's $1.5 billion aircraft acquisition plans as well as for setting up an engineering facility and also for developing new routes, creating infrastructure, including a hangar facility, a maintenance facility at Chennai and setting up of a simulator centre, Gopinath said.

"We had earlier postponed the IPO announcement as the company had acquired 30 Airbus aircraft during the process of finalising the IPO," he said.

Air Deccan had also approved a plan to offer 10 per cent of the equity to its employees. The airline hopes to carry 4 million passengers during the current year and report revenue of Rs 1,000 crore.

"At the moment we are not sure on how much profit the airline will report during the year. We are, however, definitely on course to declare a marginal profit during the year," Gopinath said.