Kingfisher Airline (KFA) will face dissolution if banks remain firm on their decision to recover the loans given to the grounded carrier. "With the lenders planning to recover loans and revoke the collaterals available to them, the airline is bound to be dissolved," said an expert who did not wish to be named.
The lenders collectively have an exposure of about Rs 8,000 cr in KFA and intend to recover Rs 1,000 cr by selling its assets and Mallya's pledged shares in his other companies by March end.
"These shares and assets are low-hanging fruits which should give us Rs 1,000 cr. The balance consists of corporate guarantees, personal guarantees and properties attached to the airline," said Shyamal Acharya, deputy managing director of State Bank of India. The country's largest public sector bank has a total exposure of Rs 1,961 cr in KFA, the highest in the consortium. The bank had reduced the rating of the airline from being an average risk to becoming a defaulter in its 2011 report.
The second biggest lenders of the airline is the Punjab National Bank and IDBI bank with a collective exposure of Rs 1,600 cr, followed by Bank of India and Bank of Baroda with Rs 650 cr and Rs 550 cr respectively.
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| A Kingfisher Airlines flight lands; Source: PunterCalls |
It is important to note that KFA, in the third quarter report of 2012-13, has said that it is in constant dialgoue with the DGCA and is confident of meeting its requirements for renewal of the permit and re-starting its operations.
The company had requested bankers for further credit facilities for planned reconfiguration of aircrafts and the revival plan submitted to the DGCA for renewal of the scheduled operators permit which was duly rejected.
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