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Tata in talks with SIA to merge their loss making Vistara airline with asset rich, debt-ridden Air India

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2 years ago

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INDIA — Earlier in January this year, it was reported that India’s national carrier, Air India, has been officially handed over to the Tata Group. Tata bought the perennial debt-ridden airline in October last year after the Modi government decided not to support Air India any longer.

Air India had been making losses for more than a decade, since 2007. It remained operational due to the continuous bailouts by the Indian government. In fact, the Modi government said that Air India was incurring losses of nearly US$2.6 million every day and that the bleeding had to stop. Air India “suffered for its inconsistent service standards, low aircraft utilisation, dismal on-time performance, antiquated productivity norms, lack of revenue generation skills and unsatisfactory public perception”, according to a former executive director of the airline.

Among the non-core assets owned by Air India include some 40,000 pieces of art and collectibles, including an ashtray designed and gifted by Spanish surrealist artist Salvador Dali in the 1960s. Tata was reported to have paid nearly US$2.4 billion to acquire and take over Air India, after the Modi government made the terms of the debt less onerous for Tata. Global airline CEOs and industry experts have said the Tata group’s takeover of Air India is the best chance Air India has to survive.

Tata Talking To SIA

Now that the Tata group has completed its acquisition of Air India from the Indian government, it is now talking to Singapore Airlines (SIA) proposing that their Tata-SIA joint venture company, the Vistara Airline, be merged with Air India.

Vistara was set up by SIA and Tata in 2013, as SIA tried to move into the Indian market. They have invested several hundred millions into the airline, although the exact figure has never been revealed. Currently, Vistara operates flights to 42 destinations — 31 domestic and 11 international. Tata owned 51 percent while SIA 49 in Vistara. In terms of domestic market share, IndiGo has 56 percent while Vistara and Air India have 10 and 7.5 percent respectively.

Since Vistara started, it has never been profitable (‘Vistara celebrates seven years but remains loss-making‘, 12 Jan 2022). It ended the financial year 2021 in March with a Rs1.612 billion (US$19.57 million) loss. In 2016, it suffered a loss of Rs400 million, with losses increasing by the year since then. Analysts said that Vistara’s cost structure is simply too high. Its shareholders SIA and Tata actually needed to pour in an additional Rs1.2 billion last year.

In a commentary piece by its Associate Editor Ven Sreenivasan (14 Oct), Straits Times said that the merger “makes sense on several fronts”. It said that the merger would combine the capabilities of Vistara with Air India’s “huge domestic and global network”.

“It would enable SIA to maintain a critical foothold in India through its Air India stake,” Mr Sreenivasan said. “SIA would bring its airline expertise, while Tata the corporate cover in India.”

Though Air India has been making losses, the deal is sweetened with the airline’s 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas. More than two-thirds of its revenues come from its international operations.

According to the aviation ministry, its fixed assets — land, buildings, planes — in March last year were worth more than 450bn rupees (US$5.46bn).

Mr Sreenivasan did note that it would “take a while” to turn Air India around “but the rewards of a successful turnaround could be huge for both SIA and Tata”. He didn’t say what would happen if Air India entities continue to bleed, dragging down everyone. “If any entity can transform Air India, it is the Tata group. And if any company has the capability to help make it happen, it is SIA,” he added.

Meanwhile, SIA confirmed that discussions with Tata are ongoing. It is unclear what stake, if any, SIA would have if Vistara merges into Air India, or whether fresh funds would be needed to save Air India through the merged entity.

Already, India mainstream media have reported that Tatas could offer SIA a stake for the Vistara-Air India merger, which means SIA would need to inject fresh funds into the merged entity in order to avoid any share dilution after the merger of Vistara and Air India.

In any case, if SIA does not have enough funds to inject, it could always launch a new rights issue to raise more funds from its shareholders. Presently, Singapore-owned Temasek Holdings is the major shareholder of SIA.

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Temasek in negotiations for over US$1 billion stake in India’s largest snack maker

Temasek Holdings is in talks to acquire a minority stake in Haldiram Snacks, India’s largest snack manufacturer. This potential transaction could value Haldiram at around US$11 billion (S$14.3 billion). Temasek is considering buying 10% to 15%, with an investment worth over US$1 billion (S$1.3 billion), possibly paving the way for an IPO.

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4 days ago

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4 October 2024

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SINGAPORE: Temasek Holdings is reportedly in discussions to acquire a minority stake in Haldiram Snacks, India’s largest snack manufacturer.

As reported by Bloomberg news, sources familiar with the matter have indicated that the transaction may value Haldiram at approximately US$11 billion (S$14.3 billion).

The Singapore’s sovereign wealth fund is contemplating purchasing between 10 per cent and 15 per cent of the company, which could equate to a stake worth over US$1 billion (S$1.3 billion).

The potential investment could serve as a stepping stone towards an initial public offering (IPO) for Haldiram, though the discussions are still at a preliminary stage and may not culminate in a deal.

The company, also known as Haldiram’s, has attracted interest from various other bidders, underscoring its significant market position.

A representative for Temasek has declined to provide any comments, and Haldiram has not responded immediately to requests for information.

Established by Ganga Bishan Agarwal in the 1930s in northern India, Haldiram’s offers an extensive range of products, including sweet and savoury snacks, frozen meals, and breads.

The company also operates 43 restaurants in and around Delhi, as detailed on its website.

The Agarwal family is reportedly considering various options, including a potential sale of the business or an IPO, as noted by Bloomberg News.

The growing interest of global investors in India has been fuelled by the nation’s rapid economic expansion, making it a prime location for significant deal-making.

Over the past two decades, Temasek has invested nearly US$37 billion in India, according to Mr Vishesh Shrivastav, the managing director for India investments at Temasek.

In July, Mohit Bhandari, Temasek’s Managing Director for India, during an interview with Reuters, indicated that Temasek Holdings plans to invest up to US$10 billion (approximately S$13.4 billion) in India over the next three years, with targeted investment areas including financial services and healthcare.

As Temasek becomes more cautious about investing in China, it is leaning towards increasing its investments in India.

India’s economy is growing rapidly, with its stock market near historical highs, and there is a boom in initial public offerings and mergers and acquisitions.

Bhandari stated that India currently accounts for 7% of Temasek’s global investments, and the company intends to increase this proportion.

Approximately 22% of Temasek’s investments are in the US, while 19% are in China. In the last fiscal year, for the first time in a decade, Temasek’s investments in the Americas surpassed those in China.

Temasek has been focusing on acquiring minority stakes in companies, assisting them in their growth, while largely avoiding the trend of securing majority holdings in Indian firms.

Its primary areas of interest include digitisation, consumer trends, and sustainable living.

Notable potential minority investments are said to include VFS Global, which is valued at about US$7 billion, including debt, according to Bloomberg News.

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WP Engine banned from WordPress.org amid escalating legal fight with Matt Mullenweg

Following Matt Mullenweg’s ban on WP Engine from accessing WordPress.org resources, many WP Engine customers are left vulnerable, as they can no longer access plugin updates or security features. Mullenweg urged users to seek alternative hosts, escalating the legal conflict between the two companies.

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2 weeks ago

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27 September 2024

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In a sharp escalation of tensions, WordPress co-founder and CEO Matt Mullenweg has publicly criticized WP Engine, a popular hosting provider, while also cutting its access to WordPress.org’s resources.

The dispute centres on legal and trademark issues, with Mullenweg accusing WP Engine of both profiteering off WordPress’s open-source platform and damaging its community.

On 25 September, Mullenweg posted a scathing blog on WordPress.org, stating that WP Engine no longer has free access to the platform’s resources and calling for customers to avoid the service.

He also detailed that WP Engine’s recent actions disrupted thousands of websites. “WP Engine broke thousands of customer sites yesterday in their haphazard attempt to block our attempts to inform the wider WordPress community,” Mullenweg claimed.

The conflict appears rooted in WP Engine’s use of WordPress’s open-source platform while allegedly not contributing to its development or upholding community standards.

At the core of the dispute is WP Engine’s practice of locking down a WordPress feature that tracks revision history for posts. According to Mullenweg, this undermines a crucial aspect of WordPress’s promise of data transparency and protection.

WP Engine, in turn, has argued that Mullenweg is trying to coerce them into paying millions to license the WordPress trademark, a claim Mullenweg denies.

The host provider WP Engine has faced harsh criticism for disabling certain features in WordPress core, which, according to Mullenweg, is central to protecting user data.

“WP Engine wants to control your WordPress experience,” Mullenweg wrote, accusing the company of exploiting WordPress’s free services while making billions of dollars in revenue.

WP Engine’s inability to provide security updates and other resources leaves customers vulnerable, Mullenweg suggested, urging users to consider alternative hosting options.

Additionally, Mullenweg argued that WP Engine would need to replicate WordPress’s security infrastructure independently.

He emphasized that WordPress.org has collaborated with hosting providers to address vulnerabilities at the network layer, a service WP Engine can no longer access freely. “Why should WordPress.org provide these services to WP Engine for free, given their attacks on us?” he asked.

The ban leaves WP Engine in a precarious position, as customers who rely on WordPress plugins and themes may face significant difficulties accessing the latest updates.

These restrictions have raised alarms in the community, as outdated plugins are often the target of cyberattacks. Hackers frequently exploit vulnerabilities in WordPress plugins, potentially compromising millions of websites globally.

The dispute between WordPress and WP Engine has been simmering for some time.

Earlier in September, Mullenweg described WP Engine as a “cancer to WordPress” during a speech at the WordCamp US Summit, accusing the company of profiting off the platform without giving back.

In response, WP Engine sent a cease-and-desist letter to Mullenweg and Automattic, claiming that Mullenweg’s comments were an attempt to extort the company into paying for a trademark license.

WP Engine’s legal team also accused Mullenweg of threatening a “scorched earth nuclear approach” if they refused to comply with his demands.

The cease-and-desist letter was swiftly countered by Automattic, WordPress’s parent company, which asserted that WP Engine had violated WordPress and WooCommerce trademark policies.

The updated trademark policy on WordPress.org explicitly cautions users against assuming WP Engine is affiliated with WordPress. “Many people think WP Engine is ‘WordPress Engine’ and officially associated with WordPress, which it’s not,” the updated guidelines explain.

The legal dispute has thrown both companies and their customers into uncertainty.

While WordPress operates under a GPL (General Public License), which makes the software free for use, hosting providers like WP Engine must offer services beyond the core platform, such as user login systems, update servers, and security monitoring.

Mullenweg’s decision to sever WP Engine’s access to WordPress.org resources has already caused disruption, with many sites reporting functionality issues and concerns about security vulnerabilities.

WP Engine has pushed back against Mullenweg’s actions.

In a public statement, the company accused Mullenweg of abusing his influence over WordPress to disrupt WP Engine customers’ access to WordPress.org, calling the move “unprecedented and unwarranted.”

The company argued that the ban affected not only its users but also developers who rely on WP Engine’s tools to build and maintain WordPress plugins.

As the dispute unfolds, the wider WordPress community is left to grapple with the implications. Developers and hosting providers have expressed concern over the trademark battle, fearing that similar restrictions could extend to them.

The WordPress Foundation, which holds the trademark, has already filed to trademark “Managed WordPress” and “Hosted WordPress,” sparking debate about how this might affect commercial users.

For now, the WordPress ecosystem is in flux as users, developers, and hosting providers wait to see how the legal battle will unfold and whether WP Engine will regain access to critical WordPress.org resources.

Until then, Mullenweg’s message is clear: if you want the true WordPress experience, WP Engine is no longer the place to find it.

Editor’s note: This publication was previously hosted on WP Engine.

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