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Kingfisher turnaround plan likely this month-end
A week after the United Spirits-Diageo deal was announced, ailing Kingfisher Airlines had a meeting with the consortium of its lenders, led by State Bank of India.
Bankers and the senior management are expected to convene another meeting later this month, where promoter Vijay Mallya is expected to come and present a revival plan.
The banks have for months been nudging the KFA management for such a plan. KFA owes about Rs 7,700 crore, a non-performing asset in most of the banks' books for a year.
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Kingfisher turnaround plan likely this month-end
Among the lenders, SBI has exposure of Rs 1,400 crore (Rs 14 billion) and IDBI Bank has Rs 727 crore (Rs 7.27 billion). Bank of India has Rs 575 crore (Rs 5.75 billion) and Bank of Baroda has Rs 537 crore (Rs 5.37 billion). ICICI Bank sold its Rs 450 crore (Rs 4.50 billion) debt to the airline to Srei Infrastructure Finance in July.
About the meeting between KFA and the lenders, a banker said: "We just heard them out. We had asked them about specific things and ideas but KFA didn't submit anything."
On November 9, Mallya's United Spirits had signed a $2-billion deal with the Diageo group, in return for a sale of 53.4 per cent in United Spirits, its flagship company. So, bankers had expected some promise of an equity infusion.
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Kingfisher turnaround plan likely this month-end
Earlier, SBI had asked for capital infusion of $1 billion till November 30. Chairman Pratip Chaudhuri said earlier this month: "The banks' consortium has done everything possible to make the company (Kingfisher) work. Only, the company is not working...The management has to get capital. We have given time till November 30 that they should get capital, otherwise the company will not fly."
Adding: "It does not matter to SBI where the capital was coming from - whether from promoter Vijay Mallya, his group company, outside Indians, overseas, airlines."
The bank was disappointed at the pace of Kingfisher's capital raising programme, he had said on the sidelines of the World Economic Forum meet.
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Kingfisher turnaround plan likely this month-end
"The Diageo deal is yet to come through, so it's early to talk about its impact on Kingfisher Airlines," said the bank official quoted earlier.
Kingfisher had shut its operations after a strike by its engineers. Later, the directorate-general of civil aviation had suspended its flying permit, while the strike was on. Though the engineers withdrew their strike, the company couldn't resume operations. The flying licence remains suspended in the absence of a turnaround plan from the company.
The DGCA says it wants to see one before allowing resumption of flying.
Meanwhile, the PTI adds, that the Revenue Department is working on a comprehensive plan to recover tax dues from Kingfisher, which owes more than Rs 200 crore (Rs 2 billion) to the exchequer, a top Finance Ministry official said.
"As a matter of fact both Central Board of Direct Taxes and Central Board of Excise and Customs have quantified the amount which Kingfisher owe to the government and we will be making out comprehensive plan to recover tax dues," CBEC Chairman Praveen Mahajan told reporters on the sidelines of an event organised by industry body CII.
Kingfisher Airlines, which has been making losses since its inception in 2005, owes more than Rs 200 crore in taxes to the government. Mahajan said: "We have already frozen KFA's accounts. Whatever is there in service tax act, we have taken all the actions because this is in our interest also."
When asked whether the CBEC is contemplating prosecuting KFA, Mahajan said:"Prosecution also might happen...But everything takes time. There are different steps you have to take before you prosecute some body."
