Wednesday, February 25, 2015

Kingfisher and the Indian Banks : Much ado about nothing?

There is  such a big news at taking over a Rs 100 crore property of Kingfisher in Mumbai by an SBI led consortium,  now struggling to recover Rs. 6800 crores outstanding as non performing asset: given as loans.

 The security given to banks in lieu of NPA of King Fisher Airlines as culled  out from  reports in 2011 shows that the collaterals include an intangible asset called brand value; this is an unusual collateral: brand value is seldom used in India as security. :

Brand Value
4100.00
Personal guarantees of Vijaya Malaya
248.97
Corporate Guarantee of United Breweries
1601.43
Pooled collateral guarantee
5238.59
Ground Support Equipment
101.58
Computers
22.43
Furniture and fixtures
33.35
One aircraft
107.77
Total Security (A) 
11454.12

Since then (2011) the salvage value may be negligible for the following

Brand Value(KFA stopped flying in October 2012.)
4100.00
Personal guarantees of Vijaya Malaya
248.97
Ground Support
101.58
Computers
22.43
Furniture and fixtures
33.35
One aircraft
107.77
Value of negligible savage value (B)

4614.1

Value now outstanding possibly (A) - (B) 
6840.02



However, certain aircraft lessors and vendors of Kingfisher Airlines Limited (KFA) have invoked the corporate guarantees given by the parent company on behalf of KFA. The total amount invoked and outstanding as on March 31, 2014 was  Rs. 15,275.400 million (Pr year Rs. 9,874.600 million)  

Consortium of KFA bankers have invoked parent company’s corporate guarantee and demanded payment of Rs 64,932.900 million due from KFA.

Where do the bankers stand in regard to the NPA  with such dwindling  and negative margin assets? 

These are apprehensions in mind and bankers would have better responses!

Views expressed without any risk or responsibility 

No comments:

Post a Comment