Subroto Roy: Loser or gainer?

It doesn't happen frequently that a deal that has fallen apart gets resurrected. Subroto Roy managed to do just that with Jet Airways agreeing to acquire his airline, Air Sahara, on Thursday, after having walked out of the deal last year.

At that point Naresh Goyal of Jet Airways had cited the lack of government approvals as a reason for the fallout. Though, sources in the know of the developments had said the fall in Jet Airways' share price had crimped Goyal's plans to raise funds from the market. Whatever, the reason, the Rs 2,300-crore (Rs 23 billion) deal had suddenly turned sour and Roy was left in the lurch.

But he fought back in the courts, which directed the two parties to go for arbitration, even while negotiations for an out-of-court settlement continued. This week, the deal was revived with Goyal agreeing to pay Rs 1,450 crore (Rs 14.5 billion) to buy the airline.

But hasn't Roy lost Rs 850 crore (Rs 8.5 billion) in the bargain? The actual loss is less, say Sahara insiders. As Jet Airways has already invested Rs 600 crore (Rs 6 billion) in running Air Sahara, the current offer is only Rs 250 crore (Rs 2.5 billion) less than the last offer.

Experts say Roy has got a great price for Air Sahara, which was steadily losing market share. The company was also burning a lot of cash to keep the airline afloat.

Apart from persistence, Roy is known for standing by his friends -- ranging from politicians to Bollywood stars, fellow industrialists and sportsmen -- through thick and thin. So, when Greg Chapell eased out Sourav Ganguly from the Indian cricket team, it was Roy who shot off a protest letter to BCCI honcho Sharad Pawar to say that it was unfair.

Jet needs Rs 400 cr to turn around Sahara

He is a key member of the 'power club' which includes superstar Amitabh Bachchan, Uttar Pradesh Chief Minister Mulayam Singh Yadav, Amar Singh of the Samajwadi Party and Reliance boss Anil Ambani.

Still, he has had his share of trouble. The Reserve Bank of India has been tightening the screws on his para-banking business. The central bank had directed the company not to put depositors' money in other group companies and dry out this source of funding within a stipulated timeframe.

And it has also reduced the discretionary power in investing depositor's money from 10 per cent to zero -- a move that would make such deposits much more unattractive. His detractors say that he has been under financial strain, which was the key reason for selling his airline business -- a charge he denies vehemently.

Roy plans to use the cash from selling his airline to boost his grandiose (and much-delayed) real estate plans of building housing projects in 217 cities. And he also wants to aggressively move his new businesses -- tourism, mutual funds, insurance and, of course, television. His detractors, however, scoff that this would make his empire much smaller as the bulk of the turnover came from the airline business.

But does he have the management bandwidth to give effect to his plans? Roy, in an interview a year ago, had said: "I don't understand the definition of professionalism. For me, emotionalism is more important. We run the most democratic organisation and it is like a family where I am the guardian."

Photo: Raveendran/AFP/Getty Images