HYDERABAD: Shares of crisis-hit Jet Airways Ltd are on a freefall Wednesday as the company announced a temporary shutdown citing lack of funds.
On BSE, the scrip tanked as much as 28 per cent and was trading at Rs 175.66 during morning trade, a notch below its 52-week below of Rs 163 seen last October. On NSE, it tanked 34 per cent to Rs 159 -- hitting a 10-year low -- as traders dumped shares in truckloads.
Curiously, foreign portfolio investors, who are extremely sensitive to uncertainties, increased their exposure to Jet Airways in the just-concluded March 2019 quarter. As per the company's latest shareholding pattern, FPI's stake rose from a negligible 1.47 per cent to 3.10 per cent. With the airline grounding operations, until it finds a new investor, it remains to be seen if there will be a flight of FPI capital this quarter.
"Jet's failure follows a raft of other failures in the sector like Kingfisher, Deccan, Sahara...It's a wake-up call for the aviation authorities to seriously ponder as to why India is emerging as a treacherous graveyard for Indian carriers," said Ajay Bodke, CEO, PMS Prabhudas Lilladher.
Meanwhile, the SBI-led banking consortium, which made no bones about their unwillingness to extend emergency capital, Wednesday said they were hopeful the bid process will be successful 'in determining the fair value of the enterprise in a transparent manner.'
The binding bids from prospective investors are expected to come in by April, 30.
The shutdown comes after a series of failed save-the-airline talks between banks and the management. As on Tuesday, Jet flew a mere 6 aircraft out of its 120 fleets that the airline managed around this time last year.
Banks' reluctance to extend fresh capital isn't without reason. Lenders are already staring at higher provisions and will be compelled to mark down Jet's exposure as NPAs. SBI and PNB together lent about Rs 4,000 crore, while several other state-run and private banks too have given secured credit.
In case Jet fails to get attractive bids, banks will take the company to bankruptcy court, which will being the liquidation process.