The Calcutta High Court’s decision to dismiss United Bank of India’s case to declare Kingfisher Airlines as a wilful defaulter was done on technical grounds, says executive director Deepak Narang.
In an interview to CNBC-TV18, Narang says the bank may reconstitute a committee and expects 15-20 days before the beleaguered airline company is declared a defaulter.
Furthermore, he says the bank as also identified United Breweries Holdings as a wilful defaulter.
“The company had surplus cash even after siphoning off funds that they could have used to repay the bank, but they didn’t,” he adds.
Additionally, Narang says Jaiprakash Associates owes the bank Rs 100 crore, that is up for payment very soon.
Below is the verbatim transcript of Deepak Narang’s interview with Anuj Singhal and Ekta Batra on CNBC-TV18.
Anuj: That is quite a setback to you, what is going to be your next step now?
A: It is not a setback. All the evidence what we had produced and the basis on which we declared Kingfisher as willful defaulter was fully trusted by the court and there wasn’t anything for them to find any flaw in the evidence which we produced. On a very technical ground they have said that, instead of three there were four members but then it was done to have a broad based committee and it was a very technical issue. I think that would delay the process, we can go for appeal or we can again reconstitute a committee and on the same evidence declare a willful default again; it may take us about 15-20 days more, that is all.
Ekta: What will be the process now on for you to restart the process to declare Kingfisher as a willful defaulter, will it be the reconstitution of the committee or will it just be a straight appeal, what is United Bank thinking of in the way forward?
A: We need to discuss with our lawyer, we need to take a call on that but we would definitely prefer an appeal before division branch. Having four members in my view has not caused any prejudice and when the borrower Kingfisher did not come, when one of their Director was based in Kolkata they didn’t come, they decided to prefer an appeal. When they preferred an appeal before High Court they could have raised this issue that time also but they never raised that issue. They raised it only when everything was done.
Let us take a call and if that be so we can reconstitute our committee on the basis of same evidence he can be declared willful defaulter after giving 15 days time; we have both the options are open. Let us take a call on that, let the High Court open after vacation we will see what to do; both the options are open with us.
Ekta: We do understand that United Bank was looking to identify United Breweries (UB) Holdings as a willful defaulter as well. What would be the progress on that or the process involved on that?
A: We have already identified UB Holdings as willful default. I have been heading that committee and we have sent them the notice and they replied to it. In my view they have no cogent reasons for why we should not declare because the balance sheet shows that they have a surplus cash about Rs 173 crore after they resorted to various ways of siphoning of the funds from that company and they could have used that money to pay my dues which they didn’t do and cash on the balance sheets was sitting as of March 31 2014.
Anuj: What is the next step, how much is your total exposure to Kingfisher and are you hopeful of making any kind of recovery?
A: Yes because in another PDB finance which we have filed in Bangalore High Court restrained order against UB Holding has been made permanent. We must appreciate the court rightly said that Kingfisher gave money to Airbus, Airbus did take money, Airbus didn’t deliver aircraft so balance of convenience is in favour of banks. So, they have put a restraint order on Airbus Industries as well that they cannot deal with Rs 193 crore which they have received from three banks for PDB finance. Our legal processes take time but we are hopeful of recovery nevertheless.
Ekta: Would United Bank have any exposure to the Dabhol project?
A: No, we don’t have any exposure to Dabhol.
Ekta: Do you have any exposure to JP Associates?
A: We do have exposure to that; we have recalled a part of that loan.
Ekta: Could you give us more details in terms of the total exposure that you have to JP Associates and when you mean recall of loan, more colour on that?
A: It is about Rs 250 crore and Rs 100 crore of that we have recalled because there were certain issues in that. Rs 150 crore they have promised to pay when they get the money from the sale of their assets which everyone knows they are resorting to. Rs 100 crore they need to pay us very quickly. We have fixed a timeframe for them to pay us in four or five months.
Ekta: Are they functioning as a standard asset right now for you?
A: It is a standard asset.
Ekta: This Rs 100 crore payment which is due by JP Associates what is the timeline, you said a few months but anything specific?
A: We have given them five to six months time to repay Rs 100 crore in installment. Earlier we had demanded that money in one shot, then they came back to us that it will not be possible to pay in one installment. So, we have given them some time, few months to pay us in installments.
Ekta: Would you incrementally look to lend to JP Associates if that be the case?
A: These companies are highly leveraged companies. We are not looking for such sort of big finance. It has already dented our balance sheet. I think we need to be very careful in picking up such loans. I would straight away say no to such companies.
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