Corporate Sep 24, 2012
Lead lender to Kingfisher Airlines, State Bank, today expressed the hope that its Chairman Vijay Mallya will come up with "something tangible" for its revival in the wake of liberalisation in FDI in the sector.
"We are quite hopeful ... we are waiting for a mutually convenient date and I think to my mind he (Mallya) will come up only when there is something tangible," SBI Chairman Pratip Chaudhury told reporters.
The negotiations have to be conducted in greater confidentiality and with some patience as it is not an investment alone, it is the valuation in the price, he said. "But if you see the stock prices of aviation companies, including Kingfisher, going up, which obviously is indicative of higher interest from the foreign aviation companies," he said.
SBI, the leader of the 17-member consortium, has an exposure of Rs 1,500 crore to Kingfisher Airlines. Earlier it had termed this as an NPA. Banks together have an exposure of nearly Rs 7,000 crore in the airline which have all become non-performing assets since January.
"At one point it (Kingfisher) looked absolutely hopeless. It looks relatively better (now). But still we do not have definite pointers to that. But it is a very good name, from all accounts.
In UB Group, Mallya is very keen to retain control because his entire branding, entire image revolves around Kingfisher, lot of his products are named around Kingfisher," Chaudhury said.
Earlier, the lenders consortium had asked Mallya to personally make a presentation on turnaround plan. They had also asked HDFC Securities to do a valuation of property belonging to the promoters in Mumbai.
"We think they will do everything possible, including big sacrifices, to keep that name going. And we have his personal guarantee which shows his commitment and the UB group, in itself, from its liquor business, from its other unrelated business, can unlock a lot of cash which we think would be deployed.
And aviation is a high capital business so only companies with deep pockets can sustain," he added. Speaking at the same press conference, SBI Deputy Managing Director S Vishvanathan, said that lenders are likely to have discussions on revival of the debt-ridden airline with its management in a couple of days.
"We have had one round of conversations with the promoters and we are going to have another round in a couple of days," Vishvanathan said. Chaudhuri, however, said that the meeting may take place in the first half of October. This will be the first meeting after the government allowed 49 percent FDI in domestic airlines on September 14.
"They have not yet come out with anything specific. But from what we hear from the newspaper reports, they are talking to a lot of people, and we do think they are going to come up with something," Chaudhuri said.
He further said the bank hopes that the seriousness about clinging on to the all important 'Kingfisher' brand will drive Mallya to sell his non-core assets like the stake in Mangalore Fertilisers which are not important from the strategic perspective for the UB Group.
On non-core assets sale, Vishwanathan said valuations are taking place and the lenders want at least two valuations done. Once the numbers are available, we will take it up from there. The airline, which has not reported a single quarter of profit since its launch in May 2005, is sitting on a debt pile of around 15,000 crore which includes accumulated losses of over Rs 8,000 crore. It is operating a skeletal fleet of under 10 aircraft.
From being the No. 2 airline till a year ago, its market share plummeted to a paltry 3.2 percent in August, the lowest among all the seven airlines.
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