Captain G R Gopinath's Deccan 360 to lay off jobs
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Captain G R Gopinath's Deccan 360 to lay off jobs
BANGALORE: Deccan 360, the logistics firm launched by India's budget airline pioneer Captain G R Gopinath, has asked its employees to start looking for jobs elsewhere. In an email to its 600-odd staff, a copy of which was seen by ET on Friday, the HR department of Deccan 360 cited lack of funds as the reason for this restructuring.
"While we have done our best to hold the company with the minimal operations, but could not succeed due to business and funding constraints. Hence, we opted for restructuring and are in the process of discussing with investors and lenders," the email said.
In April last year Gopinath raised Rs 110 crore from Reliance, most of which is already gone, according to the company insiders. According to a May article published by Forbes Magazine , Deccan 360 had revenues of Rs 43 crore during year ending July 2010 and losses of nearly Rs 200 crore. However, according to Gopinath, the energy-to-telecom behemoth is now reluctant to up its stake in the business, largely due to the fact that it plans on focusing on core sectors such as telecom and retail, which it has identified as more critical to its growth. Further, a raise in stakes will also mean that Reliance will have to assume management control in Deccan 360, a position it does not want to be in.
Hence, the search for a third investor. However, there is no clarity yet that once additional investors are identified, Gopinath and Reliance will exit the venture. The communique also stated that the company is currently working on a deferred salary plan for remaining employees, and as and when funding becomes available, the employees choosing to leave immediately, will be paid their outstanding amounts.
"As part of this process, we are requesting some of the employees to look for alternative jobs though we would love to get them back in future. Also if someone wishes to go on "long leave without pay," and as and when the company revamps they can join back." Already, as part of this restructuring, the company has returned three Airbus-310 aircrafts leased from Mauritius-based Veling for a period of three years.
"The company was losing money as the aircraft was not able to meet the capacity. The Airbus was too big for domestic operation, while the capacity was too small for international operations," Captain GR Gopinath , chairman and managing director of Deccan 360, told ET last month. He, however, had ruled out the possibility of the airline cargo venture folding up. Captain Gopinath did not respond to emails sent by ET at the time of going to press. The growth of air cargo traffic in India has been slow compared to China.
According to industry estimates, volumes in India are not expected to cross 2.6 million tonnes, a number handled by Hong Kong and Shanghai alone. Operators have also suffered from the lack of critical infrastructure in the country, such as warehouses, a situation that has often nullified the advantages of air cargo shipping.
Captain G R Gopinath's Deccan 360 to lay off jobs - The Economic Times
"While we have done our best to hold the company with the minimal operations, but could not succeed due to business and funding constraints. Hence, we opted for restructuring and are in the process of discussing with investors and lenders," the email said.
In April last year Gopinath raised Rs 110 crore from Reliance, most of which is already gone, according to the company insiders. According to a May article published by Forbes Magazine , Deccan 360 had revenues of Rs 43 crore during year ending July 2010 and losses of nearly Rs 200 crore. However, according to Gopinath, the energy-to-telecom behemoth is now reluctant to up its stake in the business, largely due to the fact that it plans on focusing on core sectors such as telecom and retail, which it has identified as more critical to its growth. Further, a raise in stakes will also mean that Reliance will have to assume management control in Deccan 360, a position it does not want to be in.
Hence, the search for a third investor. However, there is no clarity yet that once additional investors are identified, Gopinath and Reliance will exit the venture. The communique also stated that the company is currently working on a deferred salary plan for remaining employees, and as and when funding becomes available, the employees choosing to leave immediately, will be paid their outstanding amounts.
"As part of this process, we are requesting some of the employees to look for alternative jobs though we would love to get them back in future. Also if someone wishes to go on "long leave without pay," and as and when the company revamps they can join back." Already, as part of this restructuring, the company has returned three Airbus-310 aircrafts leased from Mauritius-based Veling for a period of three years.
"The company was losing money as the aircraft was not able to meet the capacity. The Airbus was too big for domestic operation, while the capacity was too small for international operations," Captain GR Gopinath , chairman and managing director of Deccan 360, told ET last month. He, however, had ruled out the possibility of the airline cargo venture folding up. Captain Gopinath did not respond to emails sent by ET at the time of going to press. The growth of air cargo traffic in India has been slow compared to China.
According to industry estimates, volumes in India are not expected to cross 2.6 million tonnes, a number handled by Hong Kong and Shanghai alone. Operators have also suffered from the lack of critical infrastructure in the country, such as warehouses, a situation that has often nullified the advantages of air cargo shipping.
Captain G R Gopinath's Deccan 360 to lay off jobs - The Economic Times
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Here's the email sent to Deccan 360 employees ...
From: HRD . [mailto:[email protected]]
Sent: Wednesday, June 29, 2011 4:57 PM
To: Employees
Cc: Capt Gopinath;
Subject: communication to employees
Dear Colleagues,
As you are aware the Company is going through a financial and Business restructuring
exercise. This process will take at least a silent period of 2-3 months. During this
period the Company is not in a position to validate its commitments to its
stakeholders including you employees.
We sincerely feel that employees are having worries about their salary, the company
status and the business plans ahead. While we have done our best efforts to hold the
company with the minimal operations but could not succeed on account of business and
funding constraints. Hence we opted for restructuring and are in the process of
discussing with Investors and Lenders.
We are forced to reduce our manpower count and we are in the process of the same so
that we can at least keep the company alive with minimum resources. As part of this
process, we are requesting some of the employees to look for alternative jobs though
we would love to get them back in future. Also if somebody wishes to go on “long
leave without pay” and as and when the company revamps they can join back. We will
definitely give preference to all those as and when we start our full operation We
are also working on a deferred salary plan for the remaining employees. As and when
the funding is available with the company, those employees leaving us now, will be
paid their outstanding amounts.
Please feel free to revert for any queries. We sincerely appreciate your patience
and cooperation.
Best Wishes
Human Resources Department
....
Sent to me by my friend working for Deccan 360.
Very unfortunate. Moronic baldy Gopinath and his over ambitious and foolish plans is the root cause of this.
Sent: Wednesday, June 29, 2011 4:57 PM
To: Employees
Cc: Capt Gopinath;
Subject: communication to employees
Dear Colleagues,
As you are aware the Company is going through a financial and Business restructuring
exercise. This process will take at least a silent period of 2-3 months. During this
period the Company is not in a position to validate its commitments to its
stakeholders including you employees.
We sincerely feel that employees are having worries about their salary, the company
status and the business plans ahead. While we have done our best efforts to hold the
company with the minimal operations but could not succeed on account of business and
funding constraints. Hence we opted for restructuring and are in the process of
discussing with Investors and Lenders.
We are forced to reduce our manpower count and we are in the process of the same so
that we can at least keep the company alive with minimum resources. As part of this
process, we are requesting some of the employees to look for alternative jobs though
we would love to get them back in future. Also if somebody wishes to go on “long
leave without pay” and as and when the company revamps they can join back. We will
definitely give preference to all those as and when we start our full operation We
are also working on a deferred salary plan for the remaining employees. As and when
the funding is available with the company, those employees leaving us now, will be
paid their outstanding amounts.
Please feel free to revert for any queries. We sincerely appreciate your patience
and cooperation.
Best Wishes
Human Resources Department
....
Sent to me by my friend working for Deccan 360.
Very unfortunate. Moronic baldy Gopinath and his over ambitious and foolish plans is the root cause of this.
N4790P
I wonder how much debt he will leave behind this time?
KFA eventually cleared some of his debt (certainly mine) but only after a protracted battle.
This time I can't see anyone recovering anything, although one would have to be pretty naive to get bitten twice by the ships Captain.
KFA eventually cleared some of his debt (certainly mine) but only after a protracted battle.
This time I can't see anyone recovering anything, although one would have to be pretty naive to get bitten twice by the ships Captain.
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A Cargo Airlines needs to be assured of loads to be profitable........Hence the current situation.....Only Blue Dart/DHL seems to have it right with its ground network support.
