Centre rules out SBI bail-out for Kingfisher

The cash-strapped Kingfisher Airlines suffered a setback on Tuesday when the Centre said State Bank of India “is not planning” to extend any bail-out package to the carrier owned by Vijay Mallya.

Mallya is faced with a cash crunch as his airline venture has defaulted on service tax payments. He is also looking for assistance from banks.

The government announcement comes close on the heels of the liquor baron managing to raise £ 20 million (Rs 157 cr) for his Formula One team Sahara Force India. “Accounts filed at Companies House for Silverstone-based Force India revealed that Watson, the personal investment vehicle used by Indian tycoon Vijay Mallya, loaned the team nearly £ 7 million,” The Scotsman reported.

“Mallya’s Kingfisher Airlines and beer and spirit businesses pumped in a further £ 13 million through sponsorship of the team, which finished in sixth place in the constructors’ championship last season,” it added.

In New Delhi, Finance Minister Pranab Mukherjee in the Rajya Sabha ruled out bail package for the airline. However, he said a consortium of lending banks were meeting regularly to deliberate the course of steps to be taken.

Mallya was quick to react, saying the airlines did not need bailout but only wanted its accounts “defrozen” in order to help the carrier carry out its business.  Kingfisher is struggling to carry out its operations as a disproportionate debt, low fares and stiff competition have limited its ability to raise fund from the market.