Trouble mounts for Vijay Mallya: Now SBI slaps wilful defaulter notice on KFA

PTI  Sep 10,2014

Mumbai - Days after United Bank of India declared Kingfisher Airlines, promoter Vijay Mallya and three other directors wilful defaulters, the country's largest bank State Bank of India (SBI) today said it has also sent a notice to tag them as "wilful defaulters".

"We have already sent a notice to KFA (to declare it as wilful defaulter). There is a mandatory time that needs to be given to them to respond and that time is currently on," said Arundhati Bhattacharya, Chairperson of SBI.

SBI, which is the lead bank of a lender consortium to the crippled carrier, has an exposure of over Rs 1,600 crore.

The airline owes Rs 7,600 crore to 17 banks. In February 2012, the banks had formally declared loan recall on KFA and began recovery process.

So far, they have recovered around Rs 2,000 crore by selling pledged shares. They are now working on selling two other pledged properties - Kingfisher Villa in Goa and Kingfisher House in Mumbai.

Already, United Bank of India has won a legal backing on its decision to declare Mallya and other top executives of the airline as wilful defaulters. State-run PNB and IDBI Bank, and private lenders Federal Bank and Axis Bank are also in the process of doing the same.

PNB, which has around Rs 800 crore to recover from the airline, and wants to tag the company as a wilful defaulter, has approached a Division Bench of Delhi High Court to stay a single Judge order that has allowed Mallya to send his lawyers to present his case.

According to banking norms, a defaulting borrower has to be personally present in the bank that seeks to declare him /her as wilful defaulter and can't be represented through lawyers. Citing the same, the Calcutta High Court upheld United Bank's decision on Mallya.

Asked about why SBI, the consortium leader that has the largest exposure to the airline, has been silent on the issue, she said, "Whatever is required to be done is being done. The process is already on but we don't want to talk about any particular account in public as we would prefer working silently."

Meanwhile, debt-ridden Kingfisher Airlines yesterday contested UBI's decision to declare it as a wilful defaulter, saying that RBI guidelines in this regard do not apply to the company.

"Where they need to be stopped, we have done everything. If a regulator, whether Sebi or RBI, needs to know they all know everything," Bhattacharya told PTI in an interview here.

She said banks have to follow processes to defend themselves in case Kingfisher goes to court. "We have to be very sure ourselves that we can stand in a court of law in case he goes to court, and defend our action."

Calling for better recovery mechanism backed by law and not just by RBI norms, Bhattacharya said India needs a bankruptcy law.

"I personally believe we need much stronger laws for recovery and much better bankruptcy laws. The laws which we have at present are falling short of the requirement.

"The wilful defaulter tag is in RBI regulation but the force of law is not with it. So, you need a legal mandate there," Bhattacharya, who is completing her first year as the 208-year-old bank's first woman chief, said.

Asked why don't banks bunch all cases against KFA into a superior court, she said "It is being bundled as single case on behalf of the consortium. But declaring a borrower as a wilful defaulter can be done only by individual banks and not the consortium. This is legal requirement."

Kingfisher, which stopped flying since October 2012, owes as much as Rs 7,600 crore in principal and interest accrued since January 2012 to 17 banks. Among them, Punjab National Bank and IDBI Bank have Rs 800 crore exposure each.

Besides, Bank of India has Rs 650 crore lent to the airline, followed by Bank of Baroda Rs 550 crore, United Bank of India (Rs 430 crore), Central Bank of India (Rs 410 crore), Uco Bank (Rs 320 crore), Corporation Bank (Rs 310 crore), State Bank of Mysore, (Rs 150 crore), Indian Overseas Bank (Rs 140 crore), Federal Bank (Rs 90 crore), Punjab & Sind Bank (Rs 60 crore) and Axis Bank (Rs 50 crore).

According to RBI norms, a wilful defaulter is a person/company who deliberately doesn't honour debt commitments to lenders. Once branded a wilful defaulter, a person or entity cannot access institutional credit. Such a person cannot hold office of director.

PTI

Kingfisher results not to acceptable standards: auditors

With planes remaining on the ground, the airline had nil sales in the reporting quarter,
 similar to zero sales a year ago. File photo. 

PTI 12 Feb 14

Auditors of grounded Kingfisher Airlines on Wednesday said the company’s financial results for the quarter ended December 31, 2013, are not in accordance with the “generally accepted accounting standards”.

Kingfisher Airlines reported a net loss of Rs. 822.42 crore for the third quarter ended December 31, 2013.

The airline which has not flown for more than a year, had reported a loss of Rs. 755.17 crore a year earlier.

With planes remaining on the ground, the airline had nil sales in the reporting quarter, similar to zero sales a year ago.

The auditors, B.K. Ramadhyani & Co., said the accounting method used by the airline to calculate costs incurred on maintenance and repairs of aircraft was “not in accordance with generally accepted accounting standards prevalent in India.”

For the nine-month period ended December 31, 2013, losses would have been lower at Rs. 2,636 crore, the report stated.

Kingfisher during this period reported a net loss of Rs. 2,694.89 crore.

Besides, the company’s reserves as on March 31, 2013, would have been debit of Rs. 14,340 crore as against the reported figure of debit of Rs. 14,281 crore, it said.

The auditors have drawn the attention to Kingfisher’s financial results being prepared on a going concern basis, notwithstanding the fact that the company’s net worth is eroded, the scheduled air operator’s permit issued by the DGCA has lapsed, the Karnataka High Court having admitted petitions by the consortium of bankers and one unsecured creditor for winding up of the company and several other winding up petitions pending before the court.

“These events cast significant doubt on the ability of the company to continue as a going concern,” the report noted.

“The appropriateness of the said basis is inter-alia dependent on the company’s ability to obtain renewal of the permit, infuse requisite funds for meeting its obligations, withdrawal of winding up petitions, rescheduling of debt, other liabilities and resuming normal operations,” they said.

“Estimates of number of unflown tickets and their average value, based on which management has reportedly estimated the amount of unearned revenue, not being drawn from accounting records, could not be reviewed by us,” the review report said.

“The company did not have any operations during the period under review in view of the expiry of its Scheduled Air Operator’s Permit. The company has filed necessary application to the DGCA to renew the permit and has been exploring various options to recapitalise and resume operations,” Kingfisher said in a stock exchange filing.

HC admits 2nd winding-up petition against KFA

 B S Antonita Madonna  |  Bangalore  January 18, 2014 Last Updated at 00:46 IST

At Rs 1,600 crore, SBI has the largest exposure to the grounded carrier among banks


After United Breweries Holdings Limited (UBHL), a second winding-up petition has been admitted in the high court here against Vijay Mallya’s grounded carrier Kingfisher Airlines Limited (KFA).

Ananda Byrareddy admitted the petition by a consortium of banks, led by the State Bank of India (SBI) on Friday, a  month after a similar petition was admitted from the UK-based engine service provider, Aerotron.

The news comes a day after Mallya had been summoned by the Delhi high court to appear on February 14 in a case by Delhi International Airport Ltd (DIAL) on bounced cheques of Rs 1 crore from Kingfisher. The company said, "We always comply with the law and judicial orders."

Mallya was summoned by the Karnataka high court in September last year on non-payment of dues to creditors, but failed to make an appearance.

Besides DIAL and Bangalore International Airport, Kingfisher has defaulted on loans to the income-tax department, vendors and lessors and several public sector banks. At Rs 1,600 crore, SBI has the largest exposure to the carrier among banks. Aerotron has sued the airline for $6-million (Rs 35 crore) dues.

Noting the airlines had not opposed or responded to valid notices from the creditors claiming the company was commercially insolvent and, hence, unable to pay its dues, the judge on Friday determined the claim of the consortium of banks "bona fide" and prima facie admitted the petition. Kingfisher has total dues of Rs 7,400 crore to its creditors.

Mallya said the company was in talks with an unidentified investor to revive the airline and has repeatedly requested the courts for more time to pay its creditors and employees.  On Friday, the counsel for the airline again requested for additional time to provide details on the progress on the claimed investment into the airline, despite the due-diligence process being completed.

“The entire process has been under cover and nobody knows what is going on. The investor may or may not take this up,” the judge said.

The court has directed the company to provide an update on the matter by March 7, failing which an advertisement would be published in newspapers detailing the admittance of the wind-up petition. Following the publication, other creditors to the airline can approach the court staking their claims to dues from the airline.


Two similar petitions have been admitted by the court against UBHL, filed by BNP Paribas and Avions de Transport Regional, part of a group of five lenders fighting for dues of Rs 600 crore.

Auctioning Kingfisher House next week

by FP Staff Dec 13, 2013

Lenders to debt-ridden Kingfisher Airlines will take a call on auctioning the company’s headquarters, Kingfisher House, in Mumbai, next week.

The 14 banks, led by State Bank of India (SBI), which lent Rs 6,500 crore to the airline, have valued the property at little over Rs 90 crore.

On Wednesday, the Karnataka High Court rejected Kingfisher Airlines' plea to restrain bankers from taking over the Kingfisher House in Mumbai.

State Bank of India had initiated the procedure for taking over the Mumbai-based property earlier this year under the Sarfeasi Act. However, the United Breweries (UB) Group had sought intervention by the Karnataka High Court, questioning the consortium's move to take over Kingfisher properties, while filing a winding up petition against the company at the same time.

Meanwhile, last month, a Goa court directed the consortium to maintain status quo on an injunction on the Kingfisher villa in Goa after they made an attempt to take possession of the property. Bankers toldCNBC-TV18 that no further progress has been made in the case of the Goa property.

Kingfisher Airlines has been grounded for more than 15 months and Mallya had stated in September that the airlines was in talks with a foreign investor for potential stake sale but refused to divulge the investor's name.

Lenders have already  sold hundreds of crores worth of pledged shares of UB Group companies to recover their borrowings but are yet to recover nearly Rs 6203 crore from the airline, CNBC-TV18 reported.

Banks have also filed petitions to wind up UBHL and moved the Debt Recovery Tribunal against Kingfisher. Last month the Karnataka high court admitted a winding-up petition filed by BNP Paribas against UBHL.

Lenders may put Kingfisher property in Mumbai on the block

M C Dec 13, 2013, 01.00 PM IST

This comes a day after the Karnataka High Court rejected a plea by the company restraining its bankers from taking possession of the prime property, whose sale could fetch about Rs 90 crore.

Kritika Saxena, Reporter ,CNBC-TV18

Source: CNBC-TV18

According to sources, lenders of debt-laden aviation firm Kingfisher Airlines are considering whether to proceed with the auction of Kingfisher House in Mumbai, reports CNBC-TV18’s Kritika Saxena.

This comes a day after the Karnataka High Court rejected a plea by the company restraining bankers from taking possession of the prime property, whose sale could fetch about Rs 90 crore.

State-run lender State Bank of India , which is the lead banker in the consortium of Kingfisher lenders, recently initiated a procedure to take over the KFA House, under the Sarfaesi Act, which facilities recoveries for loans gone bad.

Also read: PSU banks' NPA menace: Union lists top defaulters

Kingfisher has been in the news since last year for its troubles over a whopping Rs 7,000-crore debt burden. Failure to make payments over its dues led to the government cancelling its aviation license.

The fate of the airline has taken a toll on the fortunes of other firms in the UB Group stable, with chairman Vijay Mallya having to resort to stake sales in firms such as United Breweries and United Spirts .

There is no progress on the possession of KFA Villa in Goa after the Goa court recently directed the lenders’ consortium to “maintain status quo”, in effect disallowing any sale for now.

Kingfisher Air stock price

On December 13, 2013, at 15:32 hrs Kingfisher Airlines was quoting at Rs 4.25, down Rs 0.04, or 0.93 percent. The 52-week high of the share was Rs 18.09 and the 52-week low was Rs 3.17.

The latest book value of the company is Rs -166.59 per share. At current value, the price-to-book value of the company was -0.03.

Banks get Karnataka HC nod to take possession of Kingfisher House

FP Staff Dec 12, 2013

The Karnataka High Court on Wednesday dismissed a plea byKingfisher Airlines seeking to restrain the SBI-led lenders’ consortium from taking possession of the company’s headquarters, Kingfisher House, in Mumbai.

The high court has refused to  interfere with the action initiated by the consortium.

The airline, which is fighting winding-up petitions by various creditors, had filed its application on November 14 seeking a stay on the banks’ move to recover their debt.

“No inference can be granted by any court or other authority in respect of any action taken or to be taken pursuant to the aforesaid Act (SARFAESI Act). It is clear that this court would not have jurisdiction to interfere in the present circumstance of the case.The company would have to take recourse to appeal under SARFAESI Act,” the court said.

The 14 banks, led by State Bank of India (SBI), which lent Rs 6,500 crore to the airline, are now involved in litigation over the money, as Mallya has sued them in multiple courts.

Collaterals against the loan included pledged shares, real estate assets including its office in Mumbai and a villa in Goa, guarantees provided by the airline's chairman Vijay Mallya and other group companies as well as vehicles used to ferry passengers to planes.

The banks and Mallya have been at loggerheads over the possession of Kingfisher House and Mallya’s villa in Goa for the last eight months.

Both these properties were given as security against the loan to Kingfisher. And while Kingfisher has valued these two marquee properties at Rs 200 crore at the time of the lain in 2010, a report inEconomic Times earlier this year said lenders have discovered that the collateral is worth way less at Rs 128 crore.

While SBI valued Kingfisher House at Rs 93 crore, Mallya's Goa villa has been estimated at Rs 35 crore.

On 6 December, the Karnataka High Court admitted a petition filed by the consortium to wind up the airline.

The court, however, deferred the hearing as well as the process of issuing public notice about the winding-up process till the second week of January in order to hear arguments from both sides.

Court allows banks to take possession of ‘Kingfisher House’

KRISHNAPRASAD BL 12 DEC 2013

In a setback to Kingfisher Airlines (KFA), the Karnataka High Court on Wednesday refused to interfere with the action initiated by a consortium of banks to take possession of Kingfisher House, a prime property housing the airline’s offices in Mumbai. The multi-storeyed structure has a built-up area of around 17,000 sq.ft.

Justice Anand Byrareddy passed the order, rejecting KFA’s plea challenging the application filed by SBICAP Trustee Company Ltd on behalf of the consortium.

KFA contended that by filing a winding-up petition before the High Court, the banks had relinquished all security interests on the assets pledged by the company and, hence, could not invoke the provisions of the Sarfaesi Act to realise their outstanding dues.

Rejecting the grounded airline’s contention, Justice Byrareddy said that Sections 34 and 35 of the Sarfaesi Act bar the company court from exercising its powers when banks invoke this Act to take possession of pledged assets.

The judge also ruled that the banks could stand outside the winding-up process in seeking to enforce their secured interests, and simultaneously seek winding up of the company in respect of the balance of the debt that was not secured.

The court upheld the contention of the banks that attachment of Kingfisher House by the service tax authorities in July 2012 and the Income Tax Department in August 2013 would not come in the way as this property was pledged with the banks much earlier.

While refusing to stay the operation of this order, Justice Byrareddy said that the consortium of banks could take over the property according to the law, while also providing the company an opportunity to withdraw from the property.

(This article was published in the Business Line print edition dated December 12, 2013)

Rising Defaults II: Kingfisher on ground, banks' money up in the air

Aneesh Phadnis  |  BS  :Mumbai  

December 7, 2013 Last Updated at 00:42 IST

Mallya, who sold off his United Spirits to Diageo for $1 billion
 early this year, has not used this money to repay bank loans

About a year after Kingfisher Airlines shut shop, the only 
one still confident of a revival of the airline is Chairman 
Vijay Mallya. Just two months ago, the flamboyant promoter 
of Kingfisher Airlines and the UB group announced he was
 in talks with an investor to sell the airline. He had given a 
deadline of 90 days for the sale.

But as days pass, few share Mallya’s optimism. Slowly, 
Indian banks are realising they aren’t left with much, in terms
 of their loans to the airline. Mallya, who sold 25 per cent in
 his United Spirits to Diageo for $1 billion early this year, 
didn’t use this money to repay the loans. The 14 banks,
 led by State Bank of India (SBI), which lent Rs 6,500 crore
 to the airline, are now involved in litigation over the money
, as Mallya has sued them in multiple courts. Bankers say 
they started the recovery process in March 2013, as the
 company’s dues had exceeded Rs 2,400 crore.

Not just banks, investors and employees of Kingfisher
 Airlines are also going home empty-handed. The airline’s 
stock has seen a steady decline — from its peak market
 value of Rs 3,888 crore in 2007, the company’s value has 
fallen to Rs 407 crore. The stock is being quoted at about
 Rs 5. The airline’s employees haven’t received salaries for
 the last year-and-a-half.

Kingfisher Airlines took off well in 2005, even carving a
 niche for itself. But a Rs 550-crore deal in 2007 to buy 
out Gopinath’s Deccan Airways, along with other sundry
 mistakes, pulled it down. Today, Mallya owes money to
 banks, employees, tax officials, caterers, aircraft leasing 
companies, fuel supplier Hindustan Petroleum Corporation
 and to taxi operators, too.

Kingfisher Airlines did not respond to an email query 
seeking comment.

The entire aviation industry has seen difficult times. “The reason
 for airlines making losses has been a high increase in fuel cost
 through the last couple of years, coupled with weakening of
 the rupee. Further, interest costs have also increased due to
 the purchase of new aircraft. The increased costs due to all
 these factors cannot be directly passed on to customers in
 view of the price war among airlines,” says M P Chhajed, 
a city-based auditor.

Banks, meanwhile, started selling shares of United Spirits and
 Mangalore Chemicals and Fertilisers, given as collateral
 against the loan, and netted about Rs 600 crore. That is
 all banks have secured so far; their recovery drive has been 
stymied by the airline challenging all claims against it. In March 
this year, UB group moved the Bombay High Court against the 
sale of shares, but secured no interim relief. In May, the
 lenders recalled the entire loan of about Rs 6,000 crore, 
asking Mallya to return the entire amount at once.

Through the last eight months, UB group and the lenders have 
been at loggerheads over the possession of Kingfisher House,
 the airline’s office here, and Mallya’s villa in Goa. Both properties
 were given as security against the loan. To recover the dues, 
the lenders have also filed applications in the Debt Recovery 
Tribunal (DRT) Bangalore. “The presiding officer of DRT 
Bangalore has heard the banks, but Kingfisher's defence 
against the interim applications is yet to be heard. In the 
interim application, banks have sought a declaration of 
assets, injunction against delineation of properties, attachment
 of properties and such other relief,” said a banker privy
 to the development.

“We will not be able to generate more than Rs 1,000 crore through
 the sale of shares and from the Mumbai and Goa properties,”
 the banker said. Therefore, the case before DRT is crucial, 
as an order will allow lenders to lay claim even on Mallya’s 
and UB group’s personal and non-pledged assets. However,
 the tribunal was overburdened and a final recovery order in
 the Kingfisher case might take years, lawyers say.

The Karnataka HC, while hearing a winding-up petition against the
 airline, asked banks to maintain status quo, with regard to the 
company’s Mumbai office, till December 6, as the airline said 
it was in talks with investors for a revival. A local court in Goa
, too, stayed banks’ attempts to take possession of Mallya’s 
villa in Goa. Two days ago, banks secured a restraint order 
from DRT against UB group company Kingfisher Finvest, 
restraining it from transferring any property or dealing with 
the proceeds from the sale of its shares.

If this year has been marked by acrimony, 2010 was a period 
of bonhomie between the airline and its lenders. In a controversial 
decision in November 2010, public sector banks, failing to read
 the signs of a financially sick airline, restructured Rs 7,650 crore 
of debt, converting a portion of it into preferential shares. 
The banks announced a two-year moratorium on the repayment,
 reduced interest and additional funding. After the restructuring,
 the airline’s total debt fell to Rs 6,300 crore.

To worsen matters, in March 2011, Rs 750 crore of preferential 
shares issued to banks was converted into equity shares at Rs 64.48
 a share, a premium of 61 per cent. During that quarter, banks and
 other financial institutions held 23 per cent stake in the airline
. A year later, when the lock-in period for shareholding ended, 
banks started selling shares at a loss, reducing their holding 
to 13 per cent.

The banks had hoped the debt restructuring would provide a 
breather to the airline and allow it to restructure its operations.
 On its part, the airline announced plans to reduce debt and make
 changes in its business model. Till then, the airline ran two
 service models (the full-service brand and the no-frills service
, introduced after the airline bought Air Deccan).

The airline estimated the reduction in finance costs and tweaking
 the business model would lead to gains of Rs 2,190 crore.
 It firmed up plans to hive off its ATR operations, loyalty programme
 and engineering unit into separate companies, none of which 
materialised. Despite a generous debt recast, the airline was
 unable to generate profits. In fact, it didn’t record profits in its 
seven years of operations. 
By March-end 2013, the airline’s accumulated losses stood
 at a staggering Rs 16,000 crore.

By December 2011, about a year after the debt restructuring, 
SBI said Kingfisher loans had turned bad. The bank had
 exposure of Rs 1,500 crore to the airline. Soon, other 
banks declared Kingfisher loans non-performing assets (NPAs).
 Following this, the airline made a pitch for additional loans
, but these were denied. Then, the airline approached smaller 
banks in the consortium, banks that hadn’t categorised the
 loans as NPAs. A series of meetings between banks and 
Kingfisher Airline executives followed. Mallya then made a
 few presentations, outlining revival plans for the airline.
 In October 2012, the airline stopped operations, after 
engineers stopped work due to non-payment of salaries.
 The Directorate General of Civil Aviation suspended the airline
’s operating permit. As for the sale of the airline, Mallya remains optimistic.

GROUNDED

* Nov 2010: Banks restructure Rs 7,500 crore loan. 
A portion of the loan was converted into equity, fresh funding 
granted and repayment term extended

* January-March 2012: Banks begin to declare KFA loan
s as NPA after the airline fails to service interest

* October 2012: Kingfisher shuts operations

* March 2013: Lenders sell pledged shares of United Spirits
 and Mangalore Chemicals and Fertilisers Ltd

* April 2013: Kingfisher moves Bombay High Court against 
sale of shares, does not secure relief

* May 2013: Lenders recall Kingfisher's entire
 Rs 6,000-crore loan

With Rs 2,673 cr dues, Kingfisher is top defaulter

Kingfisher Airlines tops a list of 50 top loan defaulters drawn up by public sector banks. The list, released by the All-India Bank Employees Association, says Vijay Mallya’s now-defunct airline owed Rs 2,673 crore to public sector banks. The list was released by the trade union ahead of its December 5 ‘All-India Demands Day’ against what it calls the corporate loot of public money and to press for stringent measures to recover bad loans from corporate borrowers.

According to the union, Winsome Diamond and Jewellery Company, with dues of Rs 2,660 crore, is the second highest defaulter, followed by Electrotherm India Ltd at Rs 2,211 crore.

Some of the other big-ticket defaulters are: Zoom Developers (Rs 1,810 crore), Sterling BioTech (Rs 1,732 crore), S. Kumars Nationwide (Rs 1,692 crore), Surya Vinayak Industries (Rs 1,446 crore), Corporate Ispat Alloys (Rs 1,360 crore), Forever Precious Jewellery and Diamonds (Rs 1,254 crore), and Sterling Oil Resources (Rs 1,197 crore).

The union, in a statement, pointed out that bad loans in public sector banks had crossed Rs 1,64,000 crore. “In the name of reforms and liberalisation, banking regulations are being de-regulated; one of the adverse effects of this is the increase in bad loans in the banks where big borrowers take loans (which) they do not repay,” the union said.

‘Kick out bad loans before they kill the banks’ is the slogan the union will highlight during the December 5 demands-day observance.

(This article was published in the Business Line print edition dated December 5, 2013)

SBI shoots wilful default notice to Kingfisher Airlines

Vishwanath Nair | Mumbai | Updated: Sep 20 2013, 08:43 IST 

 SUMMARY
KFA owes a consortium of 14 banks, led by SBI, nearly Rs 7,000 crore. 

India’s largest lender State Bank of India has sent a ‘wilful default’ notice to Kingfisher Airlines (KFA) after attempts at recovering dues from the airline did not yield results. KFA owes a consortium of 14 banks, led by SBI, nearly R7,000 crore.

"We have sent a wilful default notice to Kingfisher Airlines and currently they are in the 60-day period where they can respond to the notice," Pratip Chaudhuri, chairman, SBI, told FE in an interview.

The company has 60 days to respond and convince the bank as to why it should not be labelled a wilful defaulter, after which the bank will take a final decision. If it’s categorised as a wilful defaulter, the bank will not lend to any company where Vijay Mallya is a promoter, Chaudhuri confirmed.

A detailed questionnaire sent to the company remained unanswered till the time of going to press.

While SBI has an exposure of about R1,600 crore, other lenders in the consortium include Punjab National Bank (R800 crore), IDBI Bank (R800 crore), Bank of India (R600 crore), Bank of Baroda (R550 crore) and United Bank of India (R 430 crore).

Earlier, in May, the lenders had served KFA with a Sarfaesi notice, after which the company was given a 60-day repayment period. However, due to its failure to repay, lenders have taken charge of the 25,850-sq ft Kingfisher House, which they are yet to auction.

The consortium of lenders has earned nearly R680 crore so far from the sale of pledged shares of United Spirits, Mangalore Chemicals & Fertilisers and KFA.

The defunct airline a reported a loss of R1,156.91 crore for the quarter ended June 30 as against a loss of R650.78 crore in the corresponding period last year.

Bankers are getting increasingly tough on erring promoters, issuing wilful defaulter notices to companies. 

Recently, Central Bank of India said it had issued a similar notice to Bombay Rayon and Deccan Chronicle Holdings.

In a recent address to the Parliamentary Consultative Committee, finance minister P Chidambaram had asserted that public sector banks should be strict with errant borrowers.

Caught in debt, Mallya hopes for out-of-court-settlements

UB Group chairman Vijay Mallya. Reuters


FP : PTI ;Sep 12, 2013



Bangalore: UB Group chairman Vijay Mallya today expressed hope that out-of-court settlements could be reached in some of the winding up petitions filed by creditors of United Breweries Holding Limited (UBHL). 

“There are five winding up petitions that have been filed before the court in Bangalore, and out of these five, we have serious counter claims against three of the petitioners, which basically leaves two petitioners with whom we are in dialogue for an out of court settlement,” he told reporters in Bangalore after UBHL’s Annual General Meeting.

Certain companies, including BNP Paribas, which are creditors to UBHL, had filed company petitions in Karnataka High Court seeking winding up of UBHL as the holding company was unable to pay its debts. UBHL, holding company of the UB Group, is contesting in the Karnataka High Court admission of six winding-up petitions filed by aircraft lessors and financiers of the crisis-hit Kingfisher Airlines last year.

 On changes to Mangalore Chemical and Fertilisers Ltd (MCFL) shareholding, Mallya said UBHL was in full control of the company. 

“I cannot stop people from buying shares. Neither can I stop people from making claims, but how successful those claims will be only time will tell. As far as I am concerned, we are firmly in control of MCF and intend to remain so,” he said.



Deepak Fertilisers holds 24.5 percent in MCFL, while Poddar’s Zuari Agro has around 16 percent. All the three companies compete with each other in the fertiliser business, but huge debt load of Vijay Mallya-led group has led to speculations about MCFL being an apparent takeover target for rivals. 

Regarding Kingfisher Airlines (KFA)’s revival, Mallya without naming any investors or companies said, “We are in talks with potential investors and it will take some time to convince investors to invest and then revive the company.” 

Grounded carrier Kingfisher Airlines had accumulated losses of over Rs 16,000 crore as on 31 March 2013, while it had a negative net worth of close to Rs 13,000 crore. Its long-term borrowings stood at about Rs 6,900 crore, while short-term borrowings were Rs 1,750 crore at the end of last financial year.