Vijay Mallya may submit turnaround plan for KFA later this month

The banks are nudging KFA management to submit a revival plan for last few months

A week after the United Spirits (USL) -Diageo deal was announced, ailing Kingfisher Airlines (KFA) had a meeting with the consortium of lenders lead by the State Bank of India. Bankers and the senior management are expected to convene another meeting later this month where promoter Vijay Mallya is expected to participate to submit a revival plan.

KFA is yet to submit any proposal on its revival plan. The banks are nudging KFA management to submit a revival plan for the past few months. The KFA has a debt of about Rs 7,700 crore, which has been a non-performing asset (NPA) for most of the banks around last one year.

Among lenders, SBI has an exposure of around Rs 1,400 crore to Kingfisher Airlines and IDBI Bank Rs 727 crore. Bank of India has extended a loan of Rs 575 crore, while Bank of Baroda has an exposure of Rs 537 crore. Largest private sector lender ICICI Bank sold off its Rs 450 crore debt to the airline to Srei Infrastructure Finance in July earlier this year.

The meeting came a week after the Vijay Mallya-owned United Spirits had signed a $2 billion deal with Diageo group and sold controlling stake of 53.4 per cent in United Spirits (USL) on November 9, the bankers had expected some promise of an equity infusion.
 
“We just heard them out and we had asked them about specific things and ideas but KFA didn’t submit anything to this regard,” this banker said.

Earlier SBI had asked capital infusion $ 1 billion till November 30.

"Banks' consortium has done everything possible to make the company (Kingfisher) work. Only the company is not working... The management has to get capital. We have given time till November 30 that they should get capital otherwise the company will not fly.. SBI chairman Pratip Chaudhuri had said earlier this month. “It did not matter to SBI where the capital was coming from—whether it is coming from promoter Vijay Mallya, his group company, outside Indians, overseas, airlines, Chaudhuri had then said.  

The bank was disappointed at the pace at which Kingfisher’s capital raising programme was going on, he had said on the sidelines of world economic forum (WEF).

The Diageo deal is yet to come through so currently it’s early to talk about its impact on the Kingfisher Airlines, the bank official said.

Company has currently shut down its operation following the strike by its engineers. Later DGCA suspended its flying permit while the strike was on. Though engineers later withdrew their strike company couldn’t resume the operations at the flying license stands suspended in the absence of a turnaround plan by the company which has been made a prerequisite by DGCA to allow airline to fly.   

Government had allowed foreign carriers to invest 49 per cent in the airlines sector earlier this year.