Interview / Venugopal Dhoot

'Whatever happens, we promise no one will lose their job'

The latest to throw their hat into the ring for Indian Airlines are the Dhoots of Videocon who have readied a war chest of Rs 15 billion for the 26 per cent acquisition.

Venugopal Dhoot, the chairman of the Aurangabad-based Rs 40-billion group best known for its branded home electronics and white goods, explains -- in a tête-à-tête with Pritish Nandy -- why he believes Videocon can succeed where the government has failed and others are cautiously optimistic.

Why did you suddenly decide to make a bid for Indian Airlines?

It is not sudden. We have spent a lot of time and attention studying the opportunity and we are now convinced that we can add value here as a strategic partner.

Unlike the others, we are not bidding for both the airlines. We are only interested in Indian Airlines because we believe it is a relationship business, much like what we are best at.

That is precisely where our expertise lies. In building relationships with our customers. That is how we have succeeded in building the Videocon brand.

We know what the customer wants. We know how to give him that. That is why we are so confident that we can succeed in turning Indian Airlines around and making it a shining example of what Indian private enterprise is capable of achieving.

What is your specific plan of action?

It is difficult to be specific or very precise at this stage, but we intend to slash the fares by about 30 per cent and make them just about slightly more than first class train travel.

This move will treble air traffic and to meet this huge increase in demand we could add around 45 more planes to the fleet. Our conviction is that there is a large demand for local air travel, but Indian Airlines is unable to meet this demand, trapped as it is in a vicious circle of high fares and low utilisation of aircraft.

We are not worried about the number of employees. Videocon has over 15,000 employees and we have never had a single day's manpower loss during the past 15 years.

We know how to manage people. We know how to manage customers. We know how to manage large numbers of employees. That is our core skill, our strength.

Have you ever turned around an ailing company?

Maybe not. But we have turned around the Philips factory in West Bengal without the slightest labour trouble. There has not been a single hour's loss in productivity out there. In fact, output has grown.

The labour has actually contributed to the turnaround. This is because we know how to build relationships. And, what is most important, we are ready to offer the Indian people the best services at the best price.

Who are your financial backers?

We have our own resources ready. Plus, there are many banks ready to support us. Chase, First Equity of the US. They have promised us all support.

What about technical support? Handling the fleet?

We are talking to two South-East Asian airlines for a technical tie-up. But our first preference is Cathay Pacific. They are one of the best airlines in the world and they can provide us all the technical expertise we require.

Chase has promised us a revival package that will make it feasible to turn the airline around. But whatever happens, we promise one thing: There will be no retrenchment. Not a single person will lose his or her job. Labour relations is our trump card.

But everyone in the aviation sector is finding it tough? Jet Airways has increased its fares again by 10 per cent.

Jet Airways is thriving only because Indian Airlines is being run inefficiently. Believe me, there is no reason for them to increase their fares again and again.

In the highly competitive business of consumer electronics, white goods, air-conditioning we in Videocon have always tried to be cost-efficient. To bring down prices for consumers, not drive them up at every opportunity. That is why we have built such a fine reputation with our customers.

We will do the same in Indian Airlines. We will improve services, cut fares, add value at every stage. We will optimise benefits for all users of Indian Airlines. Those who are currently trying to exploit the market by arbitrarily raising fares without offering any value additions will be left behind.

To answer your specific question, no, we do not see Jet Airways as any competition. The market is wide open today and growth opportunities are phenomenal.

Do you realise, Pritishji, that less than one per cent of one billion Indians fly by air today? The moment we make fares more reasonable, the moment we stop making air travel such a high cost elitist option, thousands and thousands of middle class Indians will begin to fly.

How much do you think the turnaround will cost?

It is difficult to forecast this at this stage, but we are ready with about Rs 15 billion. If the assets are valued higher, we can raise more money. That is not a problem. We have Rs 8 billion as assets on our balance sheet and we are tying up the rest as debt.

Indian Airlines should be listed on the New York Stock Exchange. That will give it international exposure, global stature. It will be among the best airlines of the world instead of languishing as it is today.

We have all the plans in place, but these need to be refined as we go along. We are the only group capable of achieving this turnaround, not because we are bigger than the Tatas or the Hindujas, but because we know consumer behaviour better, we know how to handle such a huge labour force and make it deliver at an optimal level, we are not anxious to simply raise fares and make money.

We want to produce a world class airline that can compete with any airline anywhere. That is our ambition. Give us a chance and we will make it happen.

But what is your hands-on experience in running an airline?

None. I concede that. But what experience do the others have? Nothing that counts for much. This is a fast changing business and yesterday's expertise is of no value today.

The skill does not lie in experience. It lies in learning. We are swift to learn as a company. Look at our success in the oil and infrastructures business. Did we have any experience? No. But we made a very good effort and it has paid off handsomely.

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