Bankers and aircraft lessors to Kingfisher Airlines have invoked about Rs 835 crore (Rs 8.35 billion) of corporate guarantees by the airline's primary promoter-vehicle UB Holdings, owned by liquor baron Vijay Mallya.
While announcing its results on Wednesday for the quarter ended June, UB Holdings said about a tenth of the corporate guarantees for Kingfisher Airlines were being invoked.
The company's exposure to the airline, as on June 30, "include investment in equity of Rs 2,114.28 crore (Rs 21.14 billion), corporate guarantees to banks/aircraft lessors of Rs 8,919.86 crore (Rs 89.19 billion), loans and advances of Rs 1,814.14 crore (Rs 18.14 billion) and other receivables of Rs 165.62 crore (Rs 1.65 billion).
Certain corporate guarantees have been invoked and Kingfisher Airlines is under negotiations in this regard with the beneficiaries," UB Holdings said in a statement.
Promoters hold about 36 per cent stake in Kingfisher Airlines, and 90 per cent of that has been pledged.
UB Holdings' net profit for the quarter fell 29.8 per cent to Rs 1.32 crore (Rs 13.2 million), compared with Rs 1.88 crore (Rs 18.8 million) during the corresponding period last year.
Net sales, however, rose to Rs 98.64 crore (Rs 986.4 million), compared with Rs 70.03 crore (Rs 700.3 million) during the year-ago period, the company stated in a filing to the BSE.
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HOW UB HOLDINGS HAS SUPPORTED KINGFISHER AIRLINES |
- Rs 2,114.3-crore (Rs 21.14-billion) investment in equity
- Rs 6,732.6-crore (Rs 67.32-billion) guarantees
given to banks
- Rs 2,187.3 crore (Rs 21.87 billion) worth of guarantees to aircraft lessors /others
- Rs 1,814.4-crore (Rs 18.14-billion) advances given
- Rs 165.6 crore (Rs 1.65 billion) interest/commission/logo fees receivable
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Despite Kingfisher Airlines being restricted by its bankers not to pay commissions for guarantees given on its behalf, UB Holdings has accrued Rs 13.48 crore (Rs 134.8 million)
for the quarter ended June.
This follows total inflows of Rs 64.68 crore (Rs 646.8 million) up to March 31.
UB Holdings has said the guarantee commission of Rs 13.48 crore (Rs 134.8 million) accrued during the quarter was based on contractual obligation, though the recovery could take longer than anticipated, since the associate company for which these guarantees were given was precluded by a bankers' consortium to honour the obligation.
UB Holdings maintains the investment in subsidiaries, including step-down subsidiaries, is considered long-term investment and diminution in their market value and net work, though significant, is considered temporary.
UB Holdings has also been trying to raise resources by offloading a part of its real estate holdings.
During the quarter ended June, UB Holdings sold about 2,300 sq feet of prime retail property.
It also sold office space in UB City, a one million sq ft commercial development in which UB Holdings holds 55 per cent stake, at Rs 20,000 per sq ft.