Saturday, June 1, 2013

Kingfisher losses widen as airline stays grounded


 Kingfisher Airlines posted a net loss of `4,001.12 crore for the fiscal year against a loss of `2,328.01 crore the previous year. Photo: AFP

Live Mint :P.R. Sanjai  |  Mihir Dalal :Fri, May 31 2013. 10 49 AM IST

Kingfisher posts Rs.2,141.80 crore net loss for Q4; UBHL swings to a loss of Rs.190 crore on finance costs

Mumbai/Bangalore: Vijay Mallya’s Kingfisher Airlines Ltd, which hasn’t flown since October, continued to pile up losses in the fourth quarter, dragging down the fortunes of United Breweries (Holdings) Ltd (UBHL), the holding company of the tycoon’s UB Group, as well.
Kingfisher Airlines’ net loss widened 86% to Rs.2,141.80 crore for the quarter ended March from Rs.1,151.83 crore in the year-ago period. UBHL swung to a loss of Rs.190 crore for the March quarter due to a fourfold increase in finance costs. In the year-ago quarter, UBHL had reported a profit of Rs.2.1 crore.
UBHL’s loss marks another chapter in the steady erosion of Mallya’s family fortunes, which he partly inherited from his father. Mallya’s legacy is under threat after the group’s airline dream turned sour because of costly overreach—the acquisition of Air Deccan in 2007 and the debt taken on to pay for this and other assets, which include a Formula One racing team.
With planes remaining on the ground, the airline had zero sales in the March quarter, compared withRs.782.83 crore in the year-ago period.
Unsurprisingly, the airline posted a net loss of Rs.4,001.12 crore for the fiscal year against a loss ofRs.2,328.01 crore the previous year. Kingfisher Airlines has never made profit since its inception in 2005.
The Mumbai-based airline said it has racked up accumulated losses of Rs.16,023.46 crore and that its net worth was a negative Rs.12,919.81 crore as of 31 March.
Kingfisher’s operating licence was suspended in October by regulator Directorate General of Civil Aviation (DGCA) following a strike by the airline’s employees. The licence has since expired, although it can be renewed within two years.
Last month, Kingfisher Airlines submitted a fresh revival plan to DGCA. Permission to resume flights wasn’t forthcoming as the airline didn’t have no-objection certificates from various stakeholders, including airport operators, bankers, jet fuel vendors and spare parts sellers.
“Kingfisher is almost dead now; I don’t see any way it can come back. There are just too many issues surrounding debt and viability,” said Sharan Lillaney, an analyst at Angel Broking Ltd. “The UB Group is in a big mess right now with all the court cases and lenders selling pledged shares. And UBHL has guaranteed Kingfisher’s debt, so it’s pretty likely that courts will rule in favour of lenders.”
Over at UBHL, total income from operations for the March quarter rose 3.4% to Rs.117.57 crore. Finance costs rose to Rs.238.26 crore from Rs.59.13 crore.
Lenders to Kingfisher Airlines have filed several lawsuits against UBHL, which has given guarantees for Kingfisher’s debt. UBHL has itself filed counter lawsuits in the Karnataka and Bombay high courts against the lenders seeking, among other things, damages of roughly Rs.4,500 crore.
Meanwhile, a consortium of 14 lenders led by State Bank of India is readying to move the Debt Recovery Tribunal on selling Kingfisher Airlines’ assets after having filed a claim under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act to recover dues, marking the last rounds of a bitter battle in one of corporate India’s most high-profile loan default cases.
Mallya is expected to use at least a part of the money he gets from selling a part of his majority stake in group company United Spirits Ltd (USL) to repay Kingfisher’s lenders, which are owed more than Rs.7,000 crore.
On 9 November, Diageo Plc, the world’s largest distiller by revenue, agreed to buy a majority stake in Mallya’s USL for a total consideration of Rs.11,166.5 crore, offering the liquor tycoon a way out of mounting debt woes even as it gains a strong presence in the Indian market.
The complex transaction includes the purchase of a 19.3% stake from UBHL and other promoter entities, and fresh preference shares from the company. The UK-based distiller was to buy the remaining 26% from the public shareholders of USL. But Diageo’s open offer to shareholders failed, with the firm announcing earlier this month that it bought less than 0.5% of USL shares.
UBHL is likely to complete the stake sale in USL to Diageo for about Rs.2,400 crore in June.
The company said its luxury residential building Kingfisher Towers, being built on the site on which Mallya’s Bangalore home stood, was expected to be completed in 2015.
Stocks of both UBHL and Kingfisher have taken a battering over the past few years.
UBHL was trading as high as Rs.970 in May 2006 and at Rs.880 in 2008, when Kingfisher was on a massive expansion spree. By April 2011, UBHL had plunged to Rs.220 after multiple rounds of restructuring of the airline’s debt. In January 2012, the stock fell to as low as Rs.81, as the future of Kingfisher looked increasingly bleak and banks refused to lend more money to the airline.
In October, shares of UBHL rose again to a high of Rs.145 on speculation that Mallya would sell a stake in Kingfisher after India allowed foreign airlines to invest in domestic airlines. However, after it became clear that Mallya was struggling to find an investor, the stock slumped again.
As for the Kingfisher stock, it was trading at Rs.145.15 when the airline acquired Deccan Aviation Ltd, which ran India’s first low-fare carrier Air Deccan, on 1 June 2007. By 1 June 2009, the shares had tumbled to Rs.62.50. By the time DGCA suspended its operating licence in October, the stock was atRs.15.35. From an all-time high of Rs.316.60 on 18 December 2007, it sank to a record low of Rs.5.23 on 24 May this year.
On Friday, Kingfisher dropped 4.89% to Rs.6.03 on BSE, while UBHL fell 2.61% to Rs.37.35 and USL fell 1.14% to Rs.2,415.60. India’s benchmark Sensex fell 2.25% to 19,760.30 points.

Monday, May 27, 2013

15 Indian banks may take Rs 4,000 cr hit on guarantees to Winsome





Goodreturns :Monday, May 27, 2013, 9:40 [IST]


Fifteen Indian banks may have to shell out over Rs 4,000 crore
to international bullion banks on behalf of Winsome, a Mumbai-based jeweller, and walk away without any hopes of recovery due to the absence of adequate securities against exposures to the jeweller.

 Media reports said that banks had released the corporate guarantees and mortgages of Winsome Group last year and now they have nothing left to cover their risk thanks to the "accelerated payment" provision in the gold loan agreement between Winsome and bullion banks. 

As per that agreement bullion banks can invoke LCs well before due dates if they expect Winsome Group to default any time in future. 

A report from the Economic Times said that banks like PNB, Union Bank of India, Canara Bank and Central Bank are among the 15 lenders who may take this Rs 4,000 crore hit as they had provided standby letters of credit (SBLC) facilities.

Amway India chief William Scott Pinckney, 2 directors arrested in Kerala




First post : 14 mts ago :27th May,2013
The Kerala Crime Branch has arrested Amway India Managing Director and CEO William Scott Pinckney and two other directors of the network marketing company, said a report onmathrubhumi.com.
The arrests have been made in relation to two cases of fraud registered against the Pinckney in Wayanad district of Kerala, the report said. He was in Kerala to secure anticipatory bail in these cases. He has already got a bail in another case registered against him in Kozhikode district.
Earlier, the Crime Branch had seized products worth Rs 2.5 crore from various go-downs across the state and arrested the Kerala chief of the company.
Image used for representative purpose only.
After this arrest, the crime branch had decided to probe Amway’s insurance business, an earlier Mathrubhumi reportsaid.
There were complaints that Amway had supplied new products to distributors at high price. Lakhs of rupees thus collected was invested in the insurance business, the report said.
A probe into the multilevel marketing firm found that products that were Rs 37 was sold to consumers for Rs 395 as MRP.
The investigation was conducted after Vishalakshi from Kozhikode complained that she lost Rs 3 lakh on selling Amway products.

Mallya’s move against banks to slow down recovery from KFA




Vijay Mallya. PTI
 First post :Adrija Bose May 27, 2013

It seems Vijay Mallya is trying hard to delay banks’ attempts to recover loans from his grounded  Kingfisher Airlines by engaging them in protracted legal battle.
On 26 March, UB Holdings Ltd (UBHL) and its chairman Mallya had filed a suit against the lenders of his grounded airline Kingfisher for selling a portion of the pledged shares of United Spirits (USL) worth Rs 100 crore.  
The case filed against Axis Bank and SBI, among others, had together lent about Rs 7,000 crore to Kingfisher Airlines. 
Banks had initiated a recovery process against UBHL and Mallya, the guarantors for the loans, after KFA defaulted on repayments.

But banks seems unperturbed.
 A senior SBI official told PTI that they will continue to sell USL shares despite the notice. “We have sold a part of the USL shares. We have also received a legal notice from UB Holding restraining us from doing so. But despite that, we decided to sell them and are likely to sell the remaining shares as well as we are confident of the court ruling in our favour,” he said.
According to the official, SBI sold shares worth Rs 100 crore last week, which prompted Mallya to seek legal remedy fearing the move could jeopardise his deal with British liquor major Diageo, for which he announced an open offer details with the exchanges.
Banks have already recovered Rs 800-1,000 crore from debt-ridden KFA and is in the process of recovering the remaining Rs 6,000 crore. But, with Mallya taking the lenders to court, legal experts say the entire recovery process will slow down, reported Business Standard.
Earlier, Mallya had also cancelled the power of attorney (PoA) given in favour of IDBI Trusteeship Services on United Spirits’ pledged shares. So, anyone buying UB Group’s pledged shares of USL will be facing legal action from the former. A power of attorney is issued to the trusteeship, a neutral party, to safeguard the interest of lenders in case of a default by a borrower.
Why is Mallya so worried now?
 UB Group’s four percent stake in United Spirits has been given to lenders as collateral for the KFA loans. But, UB needs this stake to close its deal with Diageo.
Last week, in a breather for Mallya, the Karnataka High court allowed UBHL to sell its shares in USL to Diageo. With this, the $2 billion takeover of USL has crossed a major hurdle. The court order will help Diageo mop-up an initial 27.4 percent stake, provided the lenders to Kingfisher Airlines create no further hiccups.
And Mallya is trying to make sure they can’t.