Bankers cold to Kingfisher bail-out plea

Four-member committee to go through airline cash budget

A banker, who attended the meeting, told Deccan Herald on the condition of anonymity that banks have not made any commitment to lend more money to the cash-starved airlines owned by the liquor baron Vijay Mallya.

Kingfisher, which had an accumulated loss of Rs 5,348 crore at the end of 2010-11, urgently needs cash to pay for the fuel and airport fees to keep its aircraft flying.

In the meeting it was decided to form a four-member committee with representatives from State bank of India, Bank of India, Punjab National Bank and ICICI, the four large lenders.

Kingfisher has been told to submit within a week a ‘cash budget’ to this committee giving details of its complete monthly cash inflow and outflow to run its operations in full strength.

Recommendations

“We need to know what exactly is the gap between inflow and outflow to arrive at a monthly working capital requirement figure,” said the banker. After going through the cash budget, the four-member committee will give its recommendation to all the lenders who, in turn, will decide the future course of action.

Apart from working capital, Kingfisher also requested banks to infuse long term funds in the company by subscribing to the proposed Rs 2,000-crore rights issue.

As a part of a loan restructuring exercise in April this year banks had converted loan worth Rs 1,400 crore into equity and together they hold around 23 per cent of the equity.

Sources said it is highly unlikely that banks will invest more money in Kingfisher share whose price has crashed to around Rs 20 against the share allotment price of Rs 64, resulting in huge losses to the lenders.   

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