The shares frozen by ED are valued at around Rs 2,400 crore.
Banks can recover around Rs 3,150 crore from its exposure to Kingfisher Airlines if the Enforcement Directorate (ED) frees up fugitive baron Vijay Mallya’s shares in various companies, which he had pledged with the banks. Another Rs 650 crore is deposited in the Karnataka High Court that India Global Competitive Fund of Srei Venture Capital deposited in 2014. The shares frozen by ED are valued at around Rs 2,400 crore.
As part of the investigations into the Kingfisher loans, of which the principal amount was Rs 5,400 crore, the ED had attached all the shares that Mallya had in other companies. Banks had also conducted a forensic audit to find out if Mallya had diverted money.
“With Indian investigating agencies fighting for the extradition of Vijay Mallya from London, the banks have not been able to encash the securities they have in hand due to the litigations and the investigations,” said a banker, who is one of the lenders to the airline.
The trouble for Kingfisher Airlines began from 2012, when the carrier was struggling to find a financier and banks were initiating recovery efforts. Around this time, ICICI Bank, which had 49 lakh United Spirits Ltd (USL) shares as collateral sold off its Rs 450 crore worth shares to Srei’s India Global Competitive fund.
The price of these shares moved from Rs 800 to Rs 2,400 a share from 2012 to 2014, feeding on the news that the international liquor company Diageo may acquire USL. India Global fund took the opportunity to sell all the USL shares, which it had held as a collateral. It received Rs 1,250 crore, of which it deposited Rs 650 crore in the court after recovering the principal and interest on its loans.
Banks have been making recoveries. The consortium of banks received Rs 650 crore when it sold off shares of USL, which were held as collateral. It also sold of Mallya’s plush Goa villa for Rs 71 crore. It has also attached the Kingfisher Airlines’s erstwhile headquarters near the domestic terminal at Santa Cruz in Mumbai. Some of his private jets were also sold off.
In January 2014, the high court admitted a winding-up petition filed by the SBI-led consortium of lenders, which claimed dues of Rs 6,200 crore. The petition had sought liquidation of the airline. Its debt had touched Rs 7,500 crore by 2012. Now it has ballooned to Rs 9,900 crore, following interest additions.
“The big mistake Vijay Mallya made was to buy the debt-laden Air Deccan. Deccan Carriers had become a wilful defaulter,” said a banker who had extended loans to the airline.
It became difficult for Mallya to run the airline and the operations came to a halt in October 2012. Top airline lenders are State Bank of India with an exposure of Rs 1,400 crore, Punjab National Bank (Rs 700 crore).
THE SOURCE
- ED had attached all the shares Vijay Mallya had in other companies
- Srei Venture Capital had deposited Rs 650 crore in HC it got after selling collateral shares
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