Kingfisher House auction turns out to be a 'no-show'

Lenders fail to get any bids for the base price of Rs 150 cr

In a blow to lenders’ recovery efforts, the auction for Kingfisher House — once headquarters of Vijay Mallya’s long-grounded airline — turned out to be a damp squib with no bidders coming forward due to litigation fears and a high reserve price of Rs 150 crore.

The 17-member consortium, led by State Bank of India, will now meet on March 19 to discuss the future course of action to review the reasons including the reserve price for the failure of Thursday’s auction.

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Even before the auction started, bankers and experts were sceptical as no bidder had approached SBICAP Trustee, which conducted the e-auction, till March 14 – the last day to register and deposit the earnest money.

The lenders had put the property, with a built-up area of 17,000 sq ft, on the block as part of their efforts to recovery dues from Mallya. The dues to lenders stood at Rs 6,963 crore at the end of December 2014, according to the auction notice. The base price for the property, located near domestic airport in Mumbai, has been set at Rs 150 crore.

At Rs 88,235 per sq ft, the property is priced nearly three times higher than ongoing rates in the area, real estate experts said. Ashok Kumar, MD of Cresa Partners, a realty consultancy said, the base price was too high given that rates in Andheri are between Rs 20,000 and Rs 30,000 per sq ft. “Since the property is disputed, not many people would have liked to take part in the bidding,” he said.

The auction was conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Sanjay Dutt, MD, Cushman & Wakefield said there was very short time for bidders to respond. “It is not very easy to sell properties today as markets are poor. Property selling and buying take deliberations. The property is best suited for end-users and not for developers. End-users study these properties differently,” Dutt said.

Meanwhile, an SBI executive said termed the “no-show” as a “hiccup but not a dampner.” Lenders’ consortium will take up the issue soon to decide next round for bidding. He, however, declined to talk about specific dates. Banks would also finalise dates for auction of KFA trademark soon. The process of taking possession of Kingfisher Villa, Mallya’s property in Goa, is still not over.