Mallya, UB Holdings lose Rs 225-cr KFA commission

Vijay Mallya and his UB group firm UB Holdings have failed to get commissions worth about Rs 225 crore for providing guarantees to the lenders of Kingfisher Airlines, as its lenders asked the carrier not to make any such payments.

These commissions pertain to the aggregate payments for a period from January 1, 2011 to March 31, 2013, and include an amount of little over Rs 100 crore for 2012-13, the grounded airline has said.

The disclosure has been made by the grounded airline itself as part of the ‘notes to the accounts’ of the company’s fourth quarter financial results for the period ended March 2013.

“The consortium bankers pursuant to the RBI’s guidelines directed the company (Kingfisher) not to make payment of commission and reverse all entries relating to commission to the guarantors for issuing guarantees at the request of the company to its bankers with effect from January 1, 2011,” Kingfisher said.

Three senior Kingfisher executives quit

Troubles mounted for Kingfisher with three more senior executives, including its chief information officer, quitting even as a section of its pilots threatened to restart their agitation over non-payment of salaries for the past 10 months. “The airlines’ chief information officer Saurav Sinha, flight operations head Capt Ronald Nagar and cabin crew head Ajit Bhagchandani have put in their papers recently,” airlines sources said..

 

"The company communicated the matter to the concerned guarantors, United Breweries Holdings Ltd (UBHL) and Vijay Mallya respectively, who have together with Kingfisher Finvest India Ltd filed a suit in the Bombay High Court, against the consortium of bankers..." it added.

 

The relief sought by the company from the courts include declaring as void the corporate guarantees given by UBHL and the personal guarantee of Mallya. Besides, they have also claimed damages worth about Rs 3,200 crore.

 

"The Suit is pending in the Bombay High Court. In view of the aforesaid facts, no provision for the period from January 1, 2011 to March 31, 2013 to the extent indicated earlier has been made in the books of account of the Company for commission in respect of the guarantees, which are sought to be declared void ab-initio and non-est in the Suit.

 

"Commission for the period from January 1, 2011 to March 31, 2013 would have aggregated to Rs 22,4.83 crore," Kingfisher has said, while pegging the commission for the quarter ended March 31, 2013 at Rs 24.8 crore and for the year ended March 31, 2013 at Rs 1,000.7 crore.

 

Earlier in the financial year 2010-11, Kingfisher had paid its chairman and key promoter, Vijay Mallya, little over Rs 50 crore as commission for providing guarantees worth more than Rs 6,100 crore for the airline's loans and other liabilities during the fiscal. 

 

Mallya had also furnished guarantees totalling Rs 2,799.56 crore in the previous fiscal 2009-10 on behalf of the company for its loans and other liabilities, but did not get any commission that year.

 

Besides Mallya's guarantees, Kingfisher Airlines also got guarantees worth Rs 16,853 crore during 2010-11 from its holding company United Breweries Holdings Ltd (UBHL), which was paid commission of about Rs 58 crore.

 

UBHL had also got commission worth Rs 49.5 crore in the previous fiscal 2009-10, during which it had given guarantees of about Rs 6,985.5 crore.

 

While the airline have not made profits for any single year so far, its financial troubles begun to worsen in 2011 and it had to finally ground its operations in late 2012, followed by suspension of its licence.

 

Its air operations permit or the flying licence lapsed on December 31 last year, although it can be renewed within two years.

 

It had accumulated losses of more than Rs 16,000 crore as on March 31, 2013, while its net worth has also plunged into negative at minus Rs 12,920 crore. For the previous fiscal alone, the company suffered a net loss of over Rs 4,000 crore.

 

At the end of last fiscal, its long-term borrowings and other liabilities stood at close to Rs 7,000 crore, while it also had short-term borrowings and other liabilities worth over Rs 8,800 crore.

 

The airline said that the consortium of its lenders have recalled their entire debt in April 2013, but it would be disputing such actions before an appropriate forum.