Sahara group in Rs750 crore Kingfisher bailout buzz

Vijay Mallya may have finally got a white knight for his struggling airline.

Unconfirmed reports on Friday suggested the Sahara group might have lent as much as Rs750 crore to Kingfisher Airlines already. Sahara’s Subroto Roy has reportedly extended an inter-corporate deposit (unsecured borrowing by corporates from other corporate entities) to Mallya.

The buzz comes quick on the heels of the near-bankrupt airline admitting it had to pledge assets ranging from its brand to office furniture for bank loans of as much as Rs6,420 crore. A luxury villa in Goa, two helicopters, a building in Mumbai and shares have also been used as collateral for loans by the ailing airline as of November 30.

Contacted, a Kingfisher spokesperson denied the airline has got money from Sahara.

A Sahara spokesperson denied knowledge of any such transaction.

All the same, if the reports turn out to be true, it would be much needed cash for the airline, which has now fallen to the fifth position in terms of domestic market share.

As such, another route Kingfisher could have taken out of the turbulence is still not available — getting funds from a foreign carrier, which is still not permitted.

The government has already indicated its inability to offer any bailout package to a private airline. Top government sources indicated earlier this week that any airline which needs help must first evaluate its own economic viability in terms of capacity, etc.

Kingfisher took Rs1,200 crore worth of new loans earlier this year after banks converted Rs1,300 crore of its existing debt into preferred shares. Now, the airline wants to raise about Rs1,000 crore in new loans and may also hold a rights offer before the end of March, besides selling property.