Air Deccan founder to pare holding

Gopinath to follow the Infosys example, reduce stake to below 10% in seven years.

G R Gopinath, the founder and managing director of India's first low-cost carrier, Air Deccan, is all set to follow the Infosys business model.

Over the next seven years, Gopinath will bring down his holding in Deccan Aviation, which runs Air Deccan, to below ten per cent from 26 per cent now.

"I will reduce my holding in the company to less than ten per cent in the next seven years, something similar to what Narayana Murthy did with Infosys. This will allow professional management to take over," said Gopinath.

Other investors in Deccan Aviation are ICICI Ventures and Capital One, who together have about 26 per cent stake in the carrier, S N Ladhani with about 20 per cent equity and Golden Ventures with about 18 per cent equity. The remaining ten per cent is with other investors.

According to Gopinath, he had two models to follow. He could either keep Decan Aviation as a privately held company or reduce his holding in order to allow professional management to take over.

"I prefer the second option as it will allow me to generate wealth. In this process my colleagues will also be a part of this wealth creation," he said, adding, "Though there is nothing wrong with family run business model, I do not want the company to be one."

Deccan Aviation is planing an initial public offer (IPO) in the next 12 to 18 months as a part of this exercise. "We have been reducing the promoter equity in the company. Through IPO the public will also become part of this wealth creation," he further added.

Deccan Aviation is in the process of becoming the fastest Indian carrier to record $1 billion in sales. According to Gopinath, Air Deccan is expected to become a $1 billion airline in the next seven years. The company is expected to close the current fiscal with $90 million, which is expected to grow to $200 million in the next year.

Launch of a number of low-cost carriers does not seem to impact the projections of Deccan. "We are offering one of the lowest fares and our occupancy rate is 90 per cent. The aviation market is huge. Out of the over a billion Indians, only about 15.7 million flew last year," Gopinath pointed out.

Air Deccan in readily expanding the fleet to meet the growing demand in traffic. The airline has recently signed a deal to acquire 30 Airbus A 320, with an option to acquire another 25, with Airbus Industries.

"Once large aircraft come into the fleet we will be able to offer more services and will be able to connect more centres," he said.