SBI asks Kingfisher to raise equity
On whether the bank will consider making fresh advances to Kingfisher, SBI Managing Director Hemant Contractor said, "We have to be satisfied about the viability of the company. There is no point restructuring if the company`s operations are not going to be viable. "We have asked them to come up with some fresh funds if the banks are to at all consider their request for restructuring. We want to see more funds coming from the company itself…"
The amount that the carrier should raise is about Rs 800-1,000 crore, Contractor told reporters on the sidelines of the WEF-CII organised India Economic Summit here. When asked whether banks have asked the airline to sell some of its assets to reduce its debt of over Rs 7,000 crore, Contractor said, "One thing that is being discussed is selling some of its assets. If they do, it is good or they would have to find some other means."
He also informed that SBI has Rs 1,400 crore exposure to the airline and that is a standard asset as of now. He was quick to add, "If the restructuring is successful, we will be able to maintain the current status." Meanwhile, an official of the Vijay Mallya-promoted airline told PTI that the airline board is meeting in Mumbai to take stock of the situation. When asked whether bankers have set a timeframe for the airline to raise the funds, Contractor declined comment.
Meanwhile, Yes Bank Managing Director and CEO Rana Kapoor called for concerted efforts by the government to salvage the crisis-ridden airline industry, as it is critical for the economy. "This is an industry, and KF included, that needs a very strong dose of support, I think the government need to do something strategic like allowing FDI or loan restructuring, or by repricing ATF," Kapoor said.
A clutch of banks led by SBI and ICICI have lent nearly Rs 7,000 crore to the airline. Out of this, around Rs 1,500 crore was restructured last November. Started in May, 2005, the airline has never made a profit and is yet to announce its Q2 numbers.