Banks take over Kingfisher House in Mumbai

Kingfisher House in suburban Mumbai is to be taken over by the lenders of Kingfisher Airlines (KFA) as part of their plan to recover their dues.

In April, the Vijay Mallya-owned carrier was issued a notice by the lenders under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfesai) that gave them powers to attach the airline's physical assets.

The lenders are bringing corporate as well as personal guarantees provided by Vijay Mallya into play as part of their efforts to recover their drowned money while the banks have already recovered some money selling shares. They are also looking into the possibilities of attaching other physical assets of Mallya, including the Kingfisher Villa in Goa.

Mallya in June said he has decided to seek damages of close to Rs4,500 crore from lenders on the ground that they have sold pledged assets.(See: Mallya to sue Kingfisher lenders for Rs4,500 crore damages).

In a report earlier Centre for Asia Pacific Aviation (CAPA) has estimated Kingfisher's debt at around $2.5 billion (Rs13,460 crore).State Bank of India has the largest exposure of over Rs1,600 crore in KFA followed by Punjab National Bank and IDBI Bank.

About three months back, SBI Caps invoked the Sarfesai Act on behalf of lenders. If the borrower fails to repay in 60 days, under this act lenders can take full possession of the assets and dispose them as they want.

The lenders' conglomerate is now likely to meet this week again, against the backdrop of the license suspension, to discuss the way forward and Mallya is likely to be also asked to attend the meeting, sources said.

KFA reported a loss of Rs.2142 crore during the January-March quarter of 2013.(See: Gounded Kingfisher's Q4 loss jumps 81 per cent to Rs2142 crore).

Early this year, shares of United Spirits and Mangalore Chemicals & Fertilizers, kept as collateral, were sold as part of the recovery process.

In February this year, the company's bankers, led by State Bank of India finally decided to recall all the loans, amounting to Rs7,500 crore.

A recall meant the borrower had to repay  immediately, but the recovery process involving steps such as sale of pledged assets and invoking promoter Vijay Mallya's personal guarantees turned out to be been long-drawn.

The Kingfisher Airlines account had been treated as a non-performing asset from the third quarter of FY12 by most lenders.

SBI Caps took physical possession of the 25,850-sq ft plot, including the office premises of over 17,072 sq ft, situated on the Western Express Highway. A notification to the effect was pasted on the building's doors.

SBI Caps' notice of 3 May was a precursor to acquiring a defaulter's property under the Act. The Times of India quoted a bank official as saying, under the act, if the borrower failed to repay within 60 days of the notice, lenders could take possession of assets and dispose of them.

Banks are reported to already recovered part of the money by attaching other physical assets, including Kingfisher Villa in Goa.

State Bank of India, has the highest exposure of over Rs1,600 crore while Punjab National Bank and IDBI Bank each have an exposure of Rs 800 crore. Bank of India's dues stand at Rs650 crore.