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Jun 23, 2012, 12.00 PM IST
The 18-bank consortium of lenders to Kingfisher Airlines is likely to meet next week to take a call on the debt-ridden carrier's call for additional funds, so that it could standardise its debts which are now bad assets.
"I think there would be one (meeting), next week," State Bank of India chairman Pratip Chaudhuri told reporters here after the bank's annual general meeting today. SBI is the leader of the lenders' consortium which has 18 banks out which 14 are state-owned.
The Bangalore-based carrier, which has not been paying salaries to employees for the past four months besides defaulting on tax payments as well as bills to its vendors, has been seeking fresh bank funding since last December apart from raising overseas funds.
The banks are yet to take a call on the viability report worked out by SBI Capital Markets. "Let us not forget that airline chairman Vijaya Mallya runs a very successful alcohol business, so his ability to fund this business is significant," Chaudhuri said.
Bankers have been resisting the demand saying the promoters, including Mallya, have to bring in at least Rs 2,000 crore as fresh capital to consider the demand. "Kingfisher has not been able to get equity so it (the financial crisis) still persists and so it's going from bad to worse," he added.
When asked whether banks are planning recovery process from KFA, Chaudhuri said it is difficult to set a timeline to initiate the debt recovery process. Chaudhuri said the airline has never said so, adding that "They have said we have temporary difficulties".
The airline in which some of these lenders together hold 23.4% stake, after the last CDR in November 2010, had made a loss of Rs 1,151.5 crore in the March quarter and has debt of over Rs 7,500 crore and an equal amount of accumulated losses. SBI holds 5.67% stake in the airline now.
The airline has not made any profit since its launch in May, 2005. Out of this total debt, Rs 6,500 crore are banks loans with State Bank alone has an exposure of Rs 1,400 crore, followed by PNB (Rs 700 crore), Bank of Baroda (around Rs 500 crore) and the private lender ICICI Bank has around Rs 450 crore.
All these accounts are non-performing since January. Kingfisher, which was the No. 2 airline until a year ago, and now the smallest carrier with its market share nose diving to 5.2% as of May. For the full fiscal 2012, KFA saw its net loss more than doubling to Rs 2,330 crore.
Kingfisher had pledged assets ranging from its brand to office furniture for Rs 6,400 crore bank loans, according to the Finance Ministry. This includes a luxury villa in Goa, two helicopters, a building in Mumbai and shares have also been used as collateral for loans as on November 30, 2011, Minister of State for Finance Namo Narain Meena told Parliament last December.
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