Financially-troubled Jet Airways is part of the stressed account in the books of State Bank of India (SBI) and is under watch, according to the bank’s senior official.
A day after the airline deferred its June quarter results, the country’s biggest lender said that the loan account of Jet Airways is part of its total watchlist and special mentioned category (1 and 2) loans of Rs 24,633 crore as on June end 2018.
In a post-results conference call with reporters, SBI Chairman Rajnish Kumar confirmed that his bank extended loans to the Naresh Goyal-promoted airline, but refused to give details.
When asked if SBI has loan exposure to Jet Airways and how much if at all, Kumar said, "Yes (we have exposure), we do have but you are asking me to cross the ‘lakshman rekha’ (boundary) to talk about individual accounts."
Anshula Kant, Chief Financial Officer at SBI said, "I must add that it is part of our watchlist plus SMA-1 and SMA-2 category."
Kumar quickly added: "It could be sitting in any one of the three, where it is, I am not going to say."
Special mentioned account (SMA) is a category to define defaults on loan accounts as mandated by Reserve Bank of India (RBI).
On its part, Jet denied that it has defaulted on any of its obligations.
"We are regular in all our payment obligations to all our banks and statutory dues including PF obligations. Our account with all the banks as on date is “Standard”, a Jet official told Moneycontrol over e-mail.
"In the past so many years and the Company has met its repayment obligations all the time. This is evidenced by the reduction in the overall debt of the Company by an amount of Rs.3000 Crores in the last three years."
In a circular on February 12, the banking regulator mandated that if the principal or interest on any loan is overdue for one to 30 days, the loan account is identified as Special Mention Account - 0 (SMA-0) category.
If it is overdue for 30 to 60 days, it comes under the SMA-1 category and if it is overdue for more than 60 days, till 90 days, it falls under SMA-2 category. If a loan is not repaid for more than 90 days, it is classified as non-performing asset (NPA).
Other large banks that cater to Jet Airways include HDFC Bank, ICICI Bank, Punjab National Bank, Canara Bank and IDBI Bank.
In a BSE filing late on August 9, after its annual general meeting (AGM), Jet Airways said the board of directors decided not to review the unaudited financial performance for the June quarter.
"The audit committee did not recommend financial results to the board for its approval, pending closure of certain matters," the airline said in the regulatory filing.
A day later, the airline clarified, "Since the Management and the Auditors informed the Audit committee that they needed more time to finalise the Accounts, the Audit committee on their request agreed to accord them further time to finalize the accounts and directed that the finalized accounts be placed before the Audit Committee thereafter."
Jet Airways, India's biggest full-service airline, is struggling with high cost of fuel as well as interest and employee costs at a time the airline industry is not able to increase flight ticket prices without forgoing market share due to increased competition.
The airline has a total debt of Rs 8,414 crore, of which nearly 46 percent is unsecured loans, as per its annual report for FY18. The total indebtedness of the company includes interest outstanding/accrued but not due for payment.
It incurred a net loss of Rs 1,036 crore in the March quarter due to rise in oil prices and weaker rupee.
For the full financial year ended March 31, 2018, Jet Airways reported a net loss of Rs 768 crore as against a net profit of Rs 1,482.52 crore against a net profit of Rs 1,482.52 crore.(The story has been updated with a comment from Jet Airways)