Kingfisher shares has become penny stocks

Debt-laden Kingfisher Airlines' shares fell to Rs9.62, an all-time low, making them penny stocks after LKP Finance disclosed it had sold shares of the carrier in the open market.

On Tuesday, the carrier's share price – which was at a 52-week high of Rs40.60 on 18 July 2012 - closed at Rs9.66, a tad higher compared with its close of Rs9.95 a day ago on the BSE. This is much below the face value of Rs10 per share, while the carrier's market cap as on Tuesday stands at Rs781 crore.

The stock has plunged from about Rs41 to new lows within a year. The airline, founded in 2005, has never posted a profit and has been struggling to survive. The carrier has also been impacted by the recent rise in fuel and interest costs.

LKP Finance, in its disclosure to the exchanges, said if has further offloaded its stake and pared its holding to below 10 per cent. As of 30 June, the non-banking finance company had a 16.48 per cent stake in the carrier that was mostly raised via the conversion of warrants.
The carrier owes a whopping Rs7,500 crore to a consortium of lenders led by State Bank of India. The chunk of Rs1,400 crore has been borrowed from SBI.

Kingfisher Airlines, which had never posted a profit since inception, is under immense pressure from lenders to work out a turnaround plan. The carrier, which had reported a loss of Rs1,153 crore and revenue of Rs741.28 crore for FY12, has defaulted on employees salaries for the past many months.

Once the second-rung carrier (among major carriers), it now ranks last after it was forced to ground most of its fleet.

The promoters' holding has also fallen to 35.86 per cent, while they have pledged over 90 per cent of their shares with various lenders. Individual shareholders currently own 9.56 per cent stake, while high networth individual holdings stand at 4.21 per cent.

On Saturday, Kingfisher Airlines said it would operate all its scheduled flights ''normally'' with immediate effect. The carrier had to cancel 41 flights on Saturday, after some staff did not report for work in response to the company's failure to pay their salaries.