Kingfisher has checkmated Indian banks, who are eagerly waiting to recover Rs 7,000 crore from Dr Vijay Mallya’s cash-strapped Kingfisher Airlines Ltd

Kingfisher Airlines Ltd  checkmates Indian banks


Kingfisher has checkmated Indian banks, who are eagerly waiting to recover Rs 7,000 crore from Dr Vijay Mallya’s cash-strapped Kingfisher Airlines Ltd   and are not sure about how to recover the value of the collateral pledged with them. The way to recover it is even more difficult.

The banks have no clue and a sub-committee of top four bankers has appointed a legal counsel to look into the recovery operation. The worst affected is SBI with exposure of Rs 1,600 crore, Punjab National Bank with Rs 800 crore, Bank of India Rs 650 crore, IDBI Bank Rs 800 crore and Bank of Baroda Rs 550 crore. The collateral valuation was done three years when KF was flying.

The consortium of banks has Mallya’s real estate in Mumbai, in Goa and two helicopters, apart from the airline brand and United Spirits shares. With the helicopter not owned by him,only landed properties remain. To go for sale of securities, banks have to approach Securitisation and Reconstruction of Financial Assets and Enforcement of Securities (Sarfaesi) Act.

Even if Sarfaesi gives clearance, the offloading USL shares is not going to be simple. Once shares are offloaded in the market, the price may crash. Not more than 30% realisation from the collateral pledged will be realised.

Those bankers having brand as a collateral is finding brand as useless. Jet Airways has more or less finalized the deal with Etihad and bought off Kingfisher slots in India and abroad. On the wings is AirAsia –Tata JV after getting clearance from FIFB and waiting for DGCA clearance.

In this scenario Tiger Airways the Singapore airlines is now scouting for an Indian partner. AirAsia has said that it would introduce Rs 2000 fare for many destinations apart from Mumbai- Delhi route. This fare would be for advance booking only. The airlines banks on the mass bookings like for corporate meetings and weddings in India.

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