UB Group Chief Financial Officer Ravi Nedungadi lists some of the issues facing the aviation sector. Edited excerpts:
On ATF duty, if the sales tax is reduced, how much would be the benefit?
The sales tax issue is a critical matter. The industry has been talking to the government for more than a year. Today, we are paying different sales tax in each state, averaging to nearly 26 per cent. It is double the price in India. We have asked that it get declared goods’ status, under which it would only attract 4 per cent ST across the board.
How hopeful are you on ATF (aviation turbine fuel)?
The industry has been speaking with a united voice on the issue. Flying is something which rich people do. So, it has not caught the level of attention it deserves. There is an urgent need for connectivity, especially between smaller towns and between state capitals.
What is your overall equity requirement at this point?
The nature of the debt we have is for a fairly long term. So, there is not so much of pressure on meeting repayment obligations. Civil aviation in India is highly under-penetrated.
We are still probably among the four to five least penetrated in the world. In an era when you talk about having fast economic growth, we think civil aviation really needs to take off.
We will look at alternatives where we will do a small rights issue for as much as $100 million and a GDR. If the government changes regulations and permit investments by international airline companies, we will take a different view, which could be based on strategic tie-ups.
