16-months battle is over in 16-hour hard bargain

MUMBAI: For 16 months, Jet Airways fought a pitched battle over a commercial agreement it had signed with the Sahara group to take over their bleeding airline business. In a change of heart, they concluded their tussle in a little over 16 hours at Oberoi Towers, Room No 1067, in Mumbai.
The final negotiations began on April 9, at 10 am, the date which the courts had set for a three-week arbitration process to begin between the warring parties.The sequence of events, which included a phone call from Jet's chairman Naresh Goyal to Sahara's Subroto Roy, hastened the final course. When Goyal called him in the second week of March, Roy did not mince words. He is said to have told Goyal that discussing the deal further was a waste of time and that he would much rather meet him next week in the court room.
Even 24 hours before the arbitration was to began, when Jet representatives said they were willing to come to the negotiating table rather than go to the courts, Roy initially brushed aside the offer and told his people: "Let's not get into this pointless exercise again. They must just be trying to delay the arbitration process."
However, Sahara's representative Pallav Agarwal who was overseeing the negotiations convinced Roy, setting a day's deadline to break the gridlock. "We were clear that if no agreement was reached by 10 am on Tuesday, we would walk out of the negotiation process," says a source who was closely involved with the deal.
At the appointed time on Monday, six people met in Room 1067. Sahara was represented by Pallav Agarwal, Ernst & Young's national director Jayesh Desai (advisor to Sahara on the deal) and lawyer Satish Kishanchandani. Rakesh Chaturvedi of accountancy firm Chaturvedi & Co, lawyer Rustom Gagrat and consultant TNV Iyer batted for Jet. For the next 12 hours, there was hard bargaining.
Sahara wanted to stick to their original valuation of Rs 2,250 crore. Jet said they wanted a discount as their stock prices had fallen during the last one year. There was a problem though. Unlike Sahara whose representative Agarwal could negotiate directly, Jet's team had to call Goyal for any critical decision.
Says a source who assisted the Sahara team in the negotiations: "Since Jet had fielded only external advisors and not their business managers, it was tough to keep the negotiations structured. Only Naresh Goyal had the power to take the final call and he was not present in the room."
Just as much as Sahara needed the money from the sale, Jet had strong legal opinion that they could be penalised if they reneged on the contract they had signed with Sahara. After paying an initial Rs 500 crore, they had committed to pay the balance if the terms of the contract were met by June 21, 2005.
Jet backtracked as competition from the new low cost airlines sapped Goyal of his cash and Jet was heading towards a loss. It citied anamolies in the earlier contract, thereby buying more time to put the deal through.
The two teams wrestled on Monday, each making some comprises. Since Sahara had slipped into further losses, their negotiators were willing to come down from the earlier price. But, not without a barter. Earlier, Jet could come back to Sahara if it found anything wrong with its assets.
By Tuesday morning 10 am, the broad contours of the deal were ready, much to the surprise of Subroto Roy. As against the Rs 2,250 crore initially set, the negiotiators settled at Rs 1,950 crore. Jet had already spent Rs 180 between January and June last year and were also taking an additional liability of 150 crore (on account of new aircraft ordered earlier by Sahara).