What is at stake if Mallya fails to raise equity for KFA

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26 Aug, 2025 12:21

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Moneycontrol Bureau

There have been many media reports on Vijay Mallya, the owner of Kingfisher Airlines initiating talks with either equity firms or foreign airlines to raise cash. But to the dismay of the airline's lenders there has been no progress on this front and hence they have issued an ultimatum to Mallya to make a presentation by month-end on how soon he will raise equity or face their wrath. Banks have a total exposure of about Rs 7,000 crore to KFA, of which about Rs 4,000 crore is in the form of term loans

It has been one and a half year since KFA went in for a debt-restructuring exercise and since then there is nothing it could do to save the airline from further sinking into the red

Moneycontrol.com talked to a couple of i-bankers who gave a quick take on what is at stake if KFA is unable to raise equity soon.

*Mallya's properties in Goa and Mumbai which are pledged as collateral to a consortium of banks led by State Bank of India will fetch them roughly around Rs 2,000 crore.

*KFA has been missing out on loan repayment deadlines for quite sometime now. There are chances that its account may be termed as a non-performing asset (NPA) and it could be referred to the corporate debt restructuring cell (CDR), which will take a call on the way forward for the airline

*He can pledge shares of United Breweries, using controlling stakes as collateral to secure a loan for KFA operations.

*There have been instances where corporates have bought ailing companies like Satyam and Ispat Steel which found takers from groups like Mahindra's and JSW. Hence, Mallya can sell the airline at a 50-80% premium, if he has a buyer for the same.

*Mallya has debts in other group companies too and referral to Board for Industrial and Financial Reconstruction BIFR which  could mean the company can be given reasonable time to regain health or the Board can recommend actions including changes to management, amalgamation of the sick unit with a healthy one or to wind up operations.