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'Whatever else might be said of him, Damania knew when to get out'

Of the people who set up private airlines, says aviation consultant Rasheed Jung: ''All of them, bar none, were riff-raff." Certainly, none of those who entered the sector had either the staying power or the professional expertise to take the kind of long-term decisions the aviation industry requires. Says Jung, "All of them were financially extremely weak and almost all of them had extremely poor management."

Before it was sold out to NEPC, Damania Airways had one major asset -- an extremely high profile and a lot of customer goodwill. But Parvez Damania's talents as an aviator stopped at good public relations. He found his previous experience at running a poultry farm off Pune woefully inadequate for running an airline. And was among the first to close shop. But, says Kavin Sethi, Lufthansa's Asia-Pacific director of corporate communications, ''Whatever else might be said of him, all said and done, Damania knew when to get out."

NEPC's Khemka saw an opening in Damania's demise. In September 1995, he struck a deal with Parvez Damania for buying up his airline at a mutually agreed share price of Rs 19. His dream: While NEPC would rule the skies in the south (based as it is in Madras), the Damania fleet would rule the northern sector.

But Khemka hadn't augured for two things. One: the Securities and Exchange Board of India intervened, found that the mutually struck deal was unfair trade practice and asked Khemka to pay up Rs 35 for every Damania share. Khemka was caught off-guard. This extra financial cost (of Rs 16 per share) was unforeseen by the company and the liquidity conditions made matters worse. Nine thousand of the 20,000 shareholders who sent in their shares had to wait for months for their cheques.

In any case, they must have been glad for whatever they did get. Because Damania shares -- it was one of the first airlines to be listed on the bourses -- had hit rock bottom by then. From a high of Rs 120 in February 1994 to an abysmal Rs 12.50 a share in April 1996.

Courtesy: Sunday magazine