SBICAP seizes Kingfisher Airline brand as part of loan recovery

UB Ltd has the sole right to the Kingfisher mark in the beer category and no other entity has any lien on it: Shekhar Ramamurthy

One more chapter was added on Thursday to the unfolding story regarding defunct Kingfisher Airlines, once owned by businessman Vijay Mallya, and its lenders.

The airline brand has been seized by SBICAP Trustee Company, acting on behalf of the consortium of lenders to the airline, as part of loan recovery. In a notice issued on Thursday, SBICAP said it had seized all elements of the brand — flying models, Fly the Good Times word mark, funliner and flying bird device, effective Tuesday.

For, it said, dues worth Rs 6,963 crore were not paid by the airline or its guarantors, United Breweries Holdings and Mallya.

While the Kingfisher label mark is part of the seizure list mentioned in the notice, executives from SBICAP have clarified that it does not pertain to the Kingfisher trademark in the beer category. An executive in the know said, “Our charge is restricted to the activities of the airline and its brand. We have taken possession of the intangible assets (trademark) for auctioning in the future.”

In the past, the consortium of lenders had seized tangible assets such as the headquarters of the airline, 'Kingfisher House', as part of loan recovery. The building has been valued at Rs 150 crore and put for sale. The price tag to be attached to the airline trademark is not clear though.

Shekhar Ramamurthy, managing director, United Breweries, said: “UB Ltd has the sole right to the Kingfisher mark in the beer category and no other entity has any lien on it.”

What prevents seizure of the beer trademark, which contains the critical bird logo, similar to the one in the airline trademark, is that it was registered separately. Also, the beer trademark was never pledged to get loans; it was the airline brand that was pledged, prompting its seizure now.

“I am not sure how fruitful the auction process will be post the seizure,” says Harish Bijoor, brand expert & chief executive officer (CEO), Harish Bijoor Consults. “Who will want to buy a brand that carries such a heavy baggage of the past? A defunct airline, debt pile, dues, I don't think anybody would want to associate with it in any way, leave aside buy it.”

N Chandramouli, CEO, TRA, a city-based firm that releases the annual Brand Trust Report, says, “The airline brand has negative value today because of all that it has been through. Though successful earlier, all of that has been wiped off its slate because of its travails in the recent past. It is unlikely to find takers.”

The seizure, comes nearly two years after SBICAP Trustee Company had first invited Expressions of Interest from external parties keen to acquire the trademark.

This did not meet with success, as the value of the airline brand had become zero after it was grounded in 2012. Prior to that, the lenders had valued the Kingfisher airline brand at more than Rs  4,000 crore.