When time flies, kingfisher airline stops flying. Investors of the company are in deep trouble and endlessly worrying about the future of the business and investments already made to the business. Majority of the investors already lost huge part of their investments made in the business. Raising eyebrows from investors, companies and the government itself, leading the company to a very dangerous zone that would decide whether the company can be exist or not after time runs.There were number of negative news’s already came out about the company and lots of others seems to be in the queue for coming days. Frequent cancellations of flights, banks refuses to lend more money, aviation directorate probe against frequent cancellations of flights, foreign lenders threatened to seize and auction plains are some of them. To add spice to all, their staff also contributing their parts by mercilessly denied a child with serious illness from entering aboard to fly to Bangalore for expert treatment, last week, which raises a lot of anger from public and organizations against such stupid action.
In the above scenario, there are lot for the investors to think before investing in such companies. There are some commonsense investment rules and lessons, to consider with high priority before making any investments. Ignoring them would pay back the investors in the forms of capital erosion and endless worry.
1. Organized sector
Investing in organized sector always dangerous. Airlines operates in such space were the business depends on highly organized workforce, they are able determine the future of such businesses to a great extend. This is the reason any of the famous investors never invested in airline kind organized sector businesses. Strike by the pilots of a leading engorgement managed airline is a golden example to show how the organized sector workforce can trash the business.
2. Managerial Inefficiency
Managerial efficiency needs to be considered with high priority when making investment decisions. Real visionaries, able to lead the business to the next level should be their in the management with required power. Investors should invest on companies were the management should have vision, rationality and able to identify future potentials, risks. They should tap the business potentials to the maximum and avoid possible risks through intelligent and prudent actions. Does any of these happened to the subject airline?
Another major points to considered by investors is the level of extravaganza from promoters, management etc. Any company, which is highly extravagant by utilizing investors money to do so and later trash the investors. Certainly, buying cruise ships, islands, unnecessary auctions, fleet of vehicles, residential complexes, unnecessary promotional methods by making calender items with the participation of models, all cannot be considered as required actions to drive the business. In stead, these are visible actions to show how waste investors money through unnecessary actions.
What would be the best way in front of Kingfisher now?
Add true visionaries to their management at the earliest. Identify and sell out parts of its business is presently a burden for the company and off debt. They should work rigorously to get the confidence from lenders as well as investors confidence. Learn from lessons and take necessary remediation to not happen such error again. A new goal focused start up required and would help to build the business to a great extend. Stop extravagance and focus on core business. It is not so easy as the head is already touch in the ground and difficult to rise it again. However, a part of well known business house, if they want, they can do that.
Another questions in our mind is, what should an investor do if he/she trapped with such companies were investments already made?
The answer should be, leave the company. Sell the stocks with the price whatever available. Such business proven that it would be a failure and gives no hope for investors. Waiting to come the stock price little up is foolishness.Identify good companies where right business, rational and visionary management available to lead the business to the upper level each time by having enough foresight. Once invested on such companies in right time, any lost investment can re-capture easily with time.