Tuesday, April 16, 2013

Recently, lot of pessimism has been spread by a section of the media, that the chance of revival of Kingfisher Airlines Ltd remain bleak and the airlines might never fly!! This kind motivated news presented by the media, has had a toll on the share price of the company, which hit another lower circuit today. 

What is more disturbing is: when the news comes in a pathetic way like, "Kingfisher Airlines Ltd shares fell as much as 4.8% to a record low of Rs.6.9 and headed for a third consecutive losing session on fears regulators may not allow the carrier to restart operations, two dealers said". 

The question is: who are these "DEALERS" based on whom price sensitive information is presented by the  media...? 2ndly, how do these "DEALERS" know what is happening inside the company? Or it's just a wild guess? However, this is not an isolated case of the Indian media, but is a reflection of the rot in the system, world-wide. Anyway, let us explore a bit to understand the things a little better.  

To begin with, there were media reports, some weeks earlier that, the UB group’s holding company, United Breweries Holdings Ltd (UBHL), is likely to get funds from Diageo by the second week of May, 2013--we are near that time-line. The delay in getting funds from Diageo is largely because of the litigation of the UB group with Kingfisher Airlines’ banks. However, news also stated that it was not clear whether UBHL would get the entire Rs.2,400 crore as banks have started selling USL shares pledged by UBHL as collateral against Kingfisher’s debt. Even if UBHL does get the entire Rs.2,400 crore from Diageo, its shareholding in USL is likely to drop on account of the pledged shares being sold and the amount would definitely vary. Hence, in any case the funds are likely to flow in the UBHL and so, the winding up petition against United Breweries Holdings (UBHL), in the Karnataka High Court for  Rs.400-crore exposure to the Kingfisher Airlines, becomes null and void.

Earlier this month, the UBHL moved the Bombay high court for a three-week halt on banks selling shares of UB group companies that were pledged with them as collateral for loans. This means that U B Group expects the deal money to hit the shores any time from now, as we move into the third week of this month.

When  UB Group-
Diageo deal was struck, Dr.Mallya did not say whether the proceeds would be used to revive Kingfisher Airlines or not. But in mid-February, a senior UB group executives said that the conglomerate would indeed use the Diageo money to restart Kingfisher after the airline’s lenders said they had decided to recall all their loans. 

This gives us a brief picture of the things to follow in the coming days, regardless of what the media professes to grab the eye--balls. THEREFORE, WHERE IS THE QUESTION OF A "BLEAK REVIVAL PLAN"........??!!

The revival plan has been submitted to the DGCA, and it will need some time to get approval. We need to have patience if we want to make it big. If you recollect a bit: Kingfisher Airlines Ltd, already has the license (NOC) from the authorities of the airports which are privately managed--so for the time being AAI-issue does not carry much value. Some investors are selling in panic due to the media reports. CMP: Rs.6.89.