No plans for additional funding for Kingfisher: SBI chief
22 November 2012
Lenders including several top Indian banks, who have a Rs7,000 crore exposure to troubled Kingfisher Airlines (KFA), have no plans to infuse additional funds into the company, said Pratip Chaudhuri, chairman, State Bank of India, on Thursday.
''No further funding looks feasible,'' Chaudhuri told CNBC-TV 18 when asked whether the consortium of lenders, led by SBI, had any plan B, if KFA failed to come out with a proposal.
Hopes soared earlier this month after Vijay Mallya, chairman of the debt-ridden airline, signed a $2-billion multi-structured deal with the world's largest spirit maker, Diageo Plc, relating to the acquisition of a 53.4 per cent stake in his United Spirits.
But Mallya had clearly indicated that the funds raised from the deal would not be used to help rescue the cash-strapped airline, whose licence has also been suspended by the Director-General of Civil Aviation (DGCA).
''We have multiple businesses and each business operates independent of each other,'' Mallya told reporters after signing the deal with Diageo. ''There is no cross contamination. There never has been, there never will be. I have now done what I think is best for my spirits business and of course we will also address the needs of Kingfisher Airlines, but these will be done separately for the good of the company and its stakeholders.''
A week after the deal with Diageo was signed top KFA executives had a meeting with the consortium of 17 lenders led by SBI. They had insisted that the promoters inject additional capital of about $1 billion into the airline by 30 November.
''We have always mentioned that KFA needs capital,'' Chaudhuri had told reporters after the Diageo announcement. ''Where does the capital come from, we are absolutely agnostic about it. It (the deal) augurs well so long as the group has reserve money.''
Mallya is expected to come out with a revival plan at his meeting with the lenders later this month. SBI has the largest exposure of Rs1,400 crore to the airline, followed by IDBI Bank (Rs727 crore), Bank of India (Rs575 crore) and Bank of Baroda (Rs537 crore). ICICI Bank, which had an exposure of Rs450 crore, sold the debt to Srei Infrastructure Finance in July.
KFA stopped its operations after a strike by its engineers, who were protesting against the delay in the payment of salaries. The DGCA also suspended KFA's licence and has asked for a turnaround plan by the airline before it is allowed to operate.