97% of investors against bailing out sick companies

A recent Investor Poll by Equitymaster showed that 97% of the respondents were against bailing out of sick companies. Equitymaster to forward the Poll results to the Civil Aviation Minister for his perusal.

Mumbai (10th July 2012) - In the wake of the recent controversy surrounding Air India's Rs 30,000 crore bailout package and the subsequent losses incurred by the Airlines due to various factors; Equitymaster, India's leading Independent research initiative recently conducted a poll - 'Ban Bailouts' - in March 2012 to gauge investor opinion on this issue.

The objective of this poll was to find out if the investors were in favour of the Government bailing out sick companies with taxpayer's money.

10,325 investors participated in the poll that ran for over three months on www.equitymaster.com.

The result of the poll should send out a strong message to the Government - a significant 97% of participants voted against bailing out sick and inefficient entities like Air India.

Majority of the respondents said that the root cause of this problem was inefficiency and mismanagement of the Airlines.

A respondent said, "Most of the companies falls in bad situation due to their mismanagement and corrupt practices, so why people's money should be used to bail out such bad companies!".

Citing examples of other efficient airlines, another respondent said, "Look what Emirates, Air arabia and Itihad are doing. When all of them can make real good profit from their Indian operation, there are only three reasons why Air India cannot do. Mismanagement, Mismanagement and Mismanagement."

While a majority of investors expressed their displeasure towards bailing out sick companies, some investors also gave interesting solutions to solve this issue.

"Air India has been bailed out time and again - how long is it supposed to go? AI's continued losses proves their lot are a bunch of bad managers. And govt. bail out is like putting them on crutches. Better let them be on their own - an economically viable enterprise. Let them sell up 10-15 planes and raise their money, just as you would suggest for KF. Another good proposition will be to sell AI - dis-invest. Privatise and a few months here on you will find AI in good health and profiteering.", a respondent opined while stressing on the need for Privatising airlines.

While another respondent said that, "Instead of Bailing out, Govt.Should try to enhance productivity by appointing responsible heads, lowering interferences, taking quick decisions towards growth measures, keeping in mind country first, avoiding populist measures etc.etc."

On being asked for the reason behind starting this initiative, Rahul Goel, CEO of Equitymaster said, "Equitymaster is committed to providing a platform for investors to express their views and opinions on issues such as the Bailout of Air India and this is exactly what we have done. We plan to highlight more such issues in the coming months."

View the detailed report of the poll here.

Equitymaster is currently collating all the responses and the poll results and will be forwarding them to Honorary Civil Aviation Minister, Mr Ajit Singh.

The team believes that through this initiative, the unified voice of investors will not go unnoticed and that the government will treat this issue on priority.

About Equitymaster

Equitymaster is an independent equity research initiative aimed at empowering the investor by giving him honest, unbiased opinions on investing in share markets.

Media Contacts: Sonal Ramachandran: sonal@equitymaster.com, 022 - 61434003