Kingfisher Airlines' lenders have decided to start the process of recovering Rs 7,500 crore outstanding loans from the grounded carrier, saying the company has failed to come up with any specific revival plan.
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"We have decided to recall (initiating the recovery process) the loans given to Kingfisher Airlines. However, each bank board will decide the future course of action," Shymal Acharya, the Deputy Managing Director (Mid-Corporates) of State Bank of India (SBI), which is leader of consortium of lenders, told reporters after a two-hour meeting of bankers with company representatives on Tuesday.
"The airline made no perceptible progress since we met last time in December in terms of an action plan they were supposed to submit. We had given them many chances to come back with a specific positive action plan about their restart plans. But they could not come up with any concrete action plan so far," Acharya said.
"So the consortium today felt that having waited so long, there is no reason for us to give further time to the company," he added. "Once a bank decides to recall advances, obviously it needs to take legal advice for realisation of securities."
He admitted that banks will have to take a "hair cut" in realisation of securities.
"Normally, whenever a loan is called off, there is definitely a haircut (the difference between the present market value of collateral and value assessed by the lender). But how much is the haircut, is difficult to quantify,"
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Besides the five bankers led by SBI, the meeting was attended by the airline's management, including CEO Sanjay Agarwal and UB Group President and CFO Ravi Nedungadi, who did not address the waiting reporters.
But Nedungadi later told PTI: "We will wait for an official communication from the consortium of lenders before offering any comment."
The decision comes even as Kingfisher Airlines Chairman Vijay Mallya has promised to airline employees about clearing their salaries for 11 months and has assured of restarting operations with the forthcoming summer schedule.