(iv) According to the consortium of Banks, they have a residual right over securities held by SREI Infrastructure Finance, which comes to Rs.500 crore. SREI bought this from ICICI Bank in April last year. One of the SBI official said, "These are low-hanging fruits which should give us Rs.1,000 crore (but only Rs.500 Cr is coming from here). Balance is corporate guarantees, personal guarantees and properties, which ads to Rs.6,500 crore". Now we have feeble idea as what is the nature of the other collateral given--so how can we take a call on the share of U B Holdings Ltd, which has already become half from the recent high of Rs.140 plus (made in October, 2012) to the current price of Rs.63.45. When almost half the value has been eroded, is there any justification for further selling of the shares?
(v) According to a report published in Economic Times today (Did banks ignore early warning signs on Kingfisher Airlines? 15th Feb, 2013).
- The total debt on Kingfisher: Rs 7,723 crore
- KFA losses: Rs.1,090 crore
- Collateral on bank books: Rs 5,237 crore
(vi) ICICI Bank sold the entire Rs.430 Cr loan portfolio after KFA flight cuts and loan defaults but before licence cancellation. The portfolio was bought by SREI Venture Capital, an arm of SREI Infrastructure Finance, along with collateral, including shares of UB group's liquor company. But the history says, in these kinds of complex cases, the process of recovery of debt is long drawn and there is no guarantee that, the things would be settled in favour of the banks (Mardia Chemicals). Hence, the same question arises, why would bank go for these trouble when a revival plan is much easier, like it has been done in case of Suzlon Energy Ltd or Jai Balaji Industries Ltd or many such companies who are knee deep in debts?
(vii) Lastly if the Kingfisher Airlines Ltd is surely to be grounded, then why are the employees, not in arms against the management of the U B Group? Infact it seems they are simply sitting idle, waiting for the order of their boss, Dr.Vijay Mallya. We should understand that apart from being a billionaire (for him Rs.7000 Cr is nothing), Dr.Mallya is also an MP (Politician) and hence he has tremendous clouts. We can compare this case with the case of former President of India, Ms.Pratibha Patil and his involvement in Loan-fiasco. CLICK HERE.
The media report therefore, looks HOAX and is aimed at pulling the price of the stock of both KFA Ltd and U B Holdings Ltd, so that hefty gains can be made, post announcement of revival package.