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Jan 05, 2013, 04.34 PM IST | Source: Moneycontrol.com

Banks reject NOC, talks remain inconclusive with Kingfisher

Vijay Mallya owned Kingfisher Airlines (KFA) is yet to get a clean sky free from clouds to start flying. The meeting between the core group of bankers and the debt ridden airline company held on Friday late evening remained inconclusive. The next meeting is scheduled on January 18 to get more clarify from the management.

Saikat Das
moneycontrol.com

Vijay Mallya owned Kingfisher Airlines (KFA) is yet to get a clean sky free from clouds to start flying. The meeting between the core group of bankers and the debt ridden airline company held on Friday late evening remained inconclusive. The next meeting is scheduled on January 18 to get more clarify from the management.

"Nothing is concluded yet. We are meeting again. Kingfisher was not able to clarify bankers' queries pertaining to fund flows and future revival plan. It has to bring something concrete to the satisfaction of the lenders. Unless it does it, there will not be any final decision," a general manager from a large public sector bank dealing with the debt recast case told moneycontrol.com.

However, banks are hopeful that Mallya is closely working on a scheme of revival wherein he may sell stakes to any foreign airline. The company has already submitted a presentation of short revival plan to the Directorate General of Civil Aviation (DGCA) and a copy of which was also sent to lenders.

"Things may be at the advance stage but not yet sealed. Hence, he is not disclosing anything now. Otherwise, he would not have dragged this issue meetings after meetings," said the banker.

State Bank of India ( SBI ) is already treating its KFA account as doubtful asset, the second level of non-performing asset wherein provisioning requirement is 30% and above. When a borrower fails to repay its loans for more than one, it slips from sub-standard to doubtful category. For other lenders, the status is likely to slip to doubtful category soon.

"Neither we are giving any fresh funds nor is he asking any fresh funds from us.  However, we need to see how good his revival plan is. That will decide the next course of action from bankers. From provision standpoint, SBI does not have any issue. We have provided as per RBI rules of provisions," said Shyamal Acharya, deputy managing director, SBI.

Meanwhile, banks have rejected to issue any NOC (no objection certificate), a kind of assurance from lenders, in favour of KFA. Earlier, DGCA, the regulator for the aviation industry asked for NOC from the company to renew its airline operating license, which the former had cancelled. Some bankers feel, NOC is nothing but an indirect form of assurance of extending fresh funds to the company.

The consortium of lenders included around 17 banks. SBI alone has an exposure of Rs 1,500 crore to KFA. IDBI Bank has one of Rs 727 crore, Bank of India has Rs 575 crore and Bank of Baroda has Rs 537 crore. Last year, ICICI Bank had sold its entire KFA exposure of Rs 430 crore to Kolkata-based Srei Infrastructure Finance.

saikat.das@network18online.com


 

Kingfisher Air stock price

On September 02, 2014, Kingfisher Airlines closed at Rs 2.59, down Rs 0.09, or 3.36 percent. The 52-week high of the share was Rs 6.84 and the 52-week low was Rs 2.06.


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 -0.02.

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