Despite crisis, Kingfisher CEO gets hefty hike

Air carriers may be flying through rough weathers, but their top executives have got handsome pay hikes, while CEO of crisis-ridden Kingfisher has emerged as the second-highest paid among all his peers at Vijay Mallya-led UB Group.

Among the country's three listed airlines also, Kingfisher chief executive officer Sanjay Agarwal's pay package was the second highest in the last fiscal ended March 31, 2012, as per the remuneration details provided in their annual reports.

Recently, Kingfisher had to announce a temporary lockout due to employee unrest, triggered by non-payment of salaries to the staff.

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While Agarwal has said that he has also not been paid any salary since April as there were no funds, his remuneration in the fiscal year 2011-12 rose nearly to Rs 4.01 crore (Rs 40.1 million), from Rs 2.12 crore (Rs 21.2 million) in 2010-11.

As per the annual reports of seven listed companies of the UB group, its Chairman and main promoter Vijay Mallya was paid a total amount of about Rs 1.43 crore or Rs 14.3 million (mostly in sitting fees) from various group companies.

While Mallya was not paid anything at Kingfisher and another group firm UB Engineering, he got sitting fees of Rs 120,000 from United Spirits, Rs 100,000 each at United Breweries Ltd and Mangalore Chemicals and Fertilizers, Rs 34,550 at McDowell Holdings and Rs 140,000 at United Breweries (Holdings) Ltd.

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Besides, Mallya received remuneration from two overseas subsidiaries, amounting to $120,000 (nearly Rs 63 lakh) and 89,600 (about Rs 76 lakh) British Pound during the year 2011-12.

Two of the seven listed companies -- McDowell Holdings and UB Holdings Ltd -- did not pay any remuneration to their managing director Harish Bhat, Mangalore Chemicals and Fertilisers' MD Deepak Anand took a token salary of Re 1 per month.

However, Harish Bhat received remuneration of Rs 1.31 crore (Rs 13.1 million) as an executive of an associate company of UB Holdings Ltd.

Among other group firms, UB Engineering paid its MD J K Sardana a remuneration of Rs 65.5 lakh (Rs 6.55 million), up from Rs 39.1 lakh (Rs 3.91 million) in the previous year.

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This included salary, perquisites, allowances and companies contribution to Provident Fund.

At United Spirits Ltd, Managing Director Ashok Capoor was paid total remuneration of Rs 3.41 crore or Rs 34.1 million, while United Breweries Ltd MD Kalyan Ganguly was the highest paid among his peers at the group.

Ganguly's remuneration rose from Rs 4.51 crore (Rs 45.1 million) in 2010-11 to Rs 6.7 crore (Rs 67 million) in the last fiscal 2011-12, but his pay increase in percentage terms at about 60 per cent was lower than that of Kingfisher CEO at about 90 per cent.

Kingfisher said in its annual report that Agarwal's stated remuneration 'excludes accrued leave encashment and gratuity since the same have been recognised for the Company as a whole and cannot be determined at an employee level.'

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Among Kingfisher's peers in the Indian airline industry, the pay package of Kalanithi Maran-led group's Spicejet chief Neil Raymond Mills rose even more sharply from Rs 1.75 crore (Rs 17.5 million) to Rs 4.98 crore (Rs 49.8 million).

Agarwal has previously served as Spicejet chief as well.

At the third listed Indian airline Jet Airways, Saroj Datta, who stepped down as the company's executive director in September 2011, was paid Rs 2.11 crore (Rs 21.1 million) in just six months of the last fiscal 2011-12 -- representing an increase of about 25 per cent from his remuneration of Rs 1.69 crore (Rs 16.9 million) in the entire 2010-11.

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Jet's annual report for 2011-12 did not disclose any remuneration paid to its CEO Nikos Kardassis, while only Datta's pay package was mentioned among the executive directors.

Its chairman and key promoter Naresh Goyal was paid sitting fees of Rs 60,000 as a non-executive director.

Jet has a provision for non-executive directors being paid commission based on the company's profits, but due to the losses made for the year ended March 31, 2012, no commission was paid for 2011-12.

Jet Airways also posted a net loss of Rs 1,236 crore (Rs 12.36 billion) in the last fiscal, as against a marginal profit of about Rs 10 crore (Rs 100 million) in 2010-11.

Prior to that, Jet had suffered losses for three consecutive years.

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Spicejet posted a net loss of Rs 606 crore (Rs 6.06 billion) in 2011-12, as against a net profit of Rs 101 crore (Rs 1.01 billion) in the previous fiscal.

However, the worst-hit among the Indian carriers has been Kingfisher, which suffered a net loss of Rs 2,328 crore (Rs 23.28 billion) in the last fiscal 2011-12, on top of a loss of Rs 1,027 crore (Rs 10.27 billion) in the previous financial year.

The airline has suffered net losses for at least five fiscal years now.

As per IATA (International Air Transport Association) estimates, the global airline industry is expected to post a net loss of $5.3 billion in 2012, as against IATA's original outlook for 2012 at the beginning of the year which had forecast a net profit for the industry at $3 billion.

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As per Kingfisher Airlines' Annual Report, the Indian airline industry is exposed to one of the toughest operating environments globally and is expected to struggle with significant profitability pressures, more so with one of the highest prices for Jet Fuel across the world, high tax structure, recent depreciation of the rupee, and the high cost of borrowing.

Kingfisher annual report does not mention any remuneration paid to its chairman Vijay Mallya, who gave guarantees worth Rs 5,904 crore (Rs 59.04 billion) for the carrier's loans and other liabilities in 2011-12, but did not get any commission for the same because of lenders' opposition.

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Mallya had got a commission of Rs 51 crore (Rs 510 million) for such guarantees in 2010-11, but the payment of such commissions has been withdrawn after directions from the consortium of its lenders.

Its total long-term borrowings stood at Rs 5,695 crore (Rs 56.95 billion) as on March 31, 2012, while it also had short-term borrowings of Rs 2,335 crore (Rs 23.35 billion) at the end of 2011-12.

For these loans, the airline has used as security all its movable assets, trademarks, 'goodwill' of the company, credit card and other receivables and a mortgage on Kingfisher House.