Vijay Mallya seeks interest waiver to clear Kingfisher loans
25 Nov 2015
Vijay Mallya, chairman of the grounded carrier Kingfisher Airlines, has offered banks to pay the principal amount of around Rs4,500-5,000 crore that the defunct airline has taken as loans and has approached banks for waiver of the interest component.
Amidst reports that creditor banks of KFA may resort to sale of the airlines assets to recover loans, Mallay on Tuesday said he was in talks with the banks and that a meeting may take place in the next few days.
KFA now owes consortium of 17 banks, led by State Bank of India a whopping Rs.8,700 crore loan against the Rs4,500 crore to Rs5,000 crore originally taken as loan, reports quoting banking sources said.
"I am focusing on Kingfisher affairs with banks. That is what my current focus is," Mallya told reporters on the margins of the 16th annual general meeting (AGM) of United Spirits Ltd (USL) at his posh UB City.
SBI has recently declared Mallya, who is also an independent member of the upper house of Parliament, the Rajya Sabha, a "wilful defaulter" after his grounded airline failed to repay loans raised since the 2008 launch of the carrier.
Banks, however, are unlikely to forgo the interest component, at least a significant part of it. The interest component alone is upward of Rs2,000 crore and the amount due by the troubled airline to the consortium of banks lead by SBI, stood at Rs6,963 crore, as of 31 January 2014, excluding interest rate which will be levied at 15.5 per cent per annum.
Banks had taken a beating when loans to Kingfisher Airlines were restructured in 2011 and 10 per cent of the debt was converted into equity. Banks had bought shares of Kingfisher at a 61 per cent premium.
Most of the banks have classified the loans given to Kingfisher as non-performing. Since, a large part of the loan was unsecured, banks have also to make 100 per cent provisioning for the exposure.
SBI Caps, the merchant banking arm of State Bank of India, recently issued a public notice on the issue and banks have also appraised the finance ministry on the issue, before putting KFA's asset lying in Mumbai Chhatrapati Shivaji International Airport for auctioning.
The debt-laden Kingfisher Airlines was grounded on 1 October 2012 when it cancelled all 50 flights after a section of employees working without salary went on a flash strike, leaving thousands of passengers stranded.
Kingfisher Airlines lost operator's licence on 20 October 2012.
Last month, the Central Bureau of Investigation (CBI) searched Mallya's posh houses and Kingfisher's offices in Bengaluru, Mumbai and Goa in a case related to non-payment of Rs900 crore loan from IDBI Bank.