RARE Enterprises of Jhunjhunwala, who has long commanded a reputation in the Indian stock market of buying small stakes in companies with strong growth potential in terms of share price appreciation, purchased 75 lakh shares of SpiceJet for Rs 13.4 crore through open market route on November 28.

The shares have been purchased at a time when the no-frills carrier is facing tough business conditions and the situation has only worsened in recent days with cancellation of 70-80 flights a day and a total of over 1,800 flights having been cancelled for the current month alone.

As a result, Spicejet shares have plunged by 12.5 percent since November 28, despite a rise of 2.62 percent in today's trading session. The stock today closed at Rs 15.65, as against a price of Rs 17.88 a piece at which Jhunjhunwala had purchased shares amounting to about 1.4 per cent stake.

On the day of Jhunjhunwala's purchase, the SpiceJet shares had surged 18.36 per cent. The plunge in shares in the interim period would be much steeper after excluding the surge on the day of share purchase.

The company has said that "a few parties have approached us and evinced interest in making investments...as the company has been exploring various options for raising fresh capital".     

It had also said last month that deliberations with prospective investors were "at an exploratory and preliminary stage". But, there has been no clarity since then on the potential investors.

SpiceJet has cancelled over 1,800 flights across the country for the current month, in signs of mounting troubles for the budget airline.

The large-scale flight cancellations came at a time when the aviation regulator DGCA was considering issuing a show-cause notice to the airline for defying its directives regarding advance bookings.

Besides, the Airports Authority of India (AAI) is said to be considering putting SpiceJet on cash-and-carry mode soon if it does not furnish a bank guarantee against its dues to the airport operator, which stand at around Rs 200 crore.

Concerned over the deteriorating condition of SpiceJet and large-scale flight cancellations, DGCA had on Friday also withdrawn 186 of its slots and asked it to clear salary dues of all its employees within the coming 10 days.

Union Civil aviation minister Ashok Gajapathi Raju also last week raised serious concern over the financial health of the domestic airline.

"We are running through a lot of turbulent weather...not only the public sector, private sector is also crashing. (With) Kingfisher crashing and, right now, SpiceJet seems to be giving us heart attacks as far as airlines are concerned," Raju had said.

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