No takers for brand Kingfisher, trademarks

Auction of brands and trademarks of Kingfisher Airlines turned out to be a damp squib today as lenders failed to attract a single bidder for sale of these pledged assets at a reserve price of Rs. 366.70 crore in their efforts to recover unpaid loans from beleaguered Vijay Mallya.

This is the second failed attempt by the 17-bank consortium led by state-run behemoth SBI to recover some money from Mr. Mallya, after an earlier auction of Kingfisher House — the erstwhile headquarters of the long-defunct airline — met with a similar fate, with no bidder coming forward.

The items on sale during today’s e-auction included the Kingfisher logo as also the once-famous tagline ‘Fly the Good Times’ The other trademarks on sale included Flying Models, Funliner, Fly Kingfisher and Flying Bird Device.

Reserve price

The reserve price for the trademarks was kept at Rs. 366.70 crore, which is not even one-tenth of the price at which it was pledged as a collateral for the loan. Sources, however, said the reserve price was “too high” for any bidder to come in.

“There were no bids, possibly because the reserve price was considered very high. Though the reserve price was set much lower than its original valuation at the time of taking the brand as collateral, people still found it to be high,” a banking source said.

The online auction began at 11:30 a.m. and lasted for an hour without any success. It was conducted by SBICAP Trustee Company on behalf of lenders under the Sarfaesi Act.

The Kingfisher brand itself was valued at over Rs. 4,000 crore by Grant Thornton when the airline was at its peak.

In its annual report for 2012-13, KFA said that at its peak, it was the largest airline in India, with a five-star rating from Skytrax. The airline’s brand had been registered separately from the Kingfisher beer trademarks.

"Better to start a new airline company"

A senior banker said, “The interest for this auction could have been from existing airline operators, but no one will come. It is better to start a new airline company than to buy this brand and revive it.”

In a previous attempt at recovery of dues, which have ballooned to over Rs. 9,000 crore after taking into account the interest component, the banks had conducted an auction of Kingfisher House last month, but did not find any takers at a reserve price of Rs. 150 crore.

Sources said the lenders might now try to lower the reserve price in both the cases in their future efforts to sell these pledged assets.

The Kingfisher House property has a built-up area of over 17,000 square feet in posh Vile Parle near domestic airport here.

Mallya in London

Mr. Mallya, who left India on March 2 and is currently in London, has a non-bailable warrant against him in a money-laundering investigation. His passport has also been revoked. Earlier this week, the government said it has written to the British government seeking Mr. Mallya’s deportation.

In an interview to the Financial Times, the liquor baron, however, said he is in a “forced exile” and has no plans at the moment to return to India where things are flying at him “fast and furious”.

“I definitely would like to return to India. Right now, things are flying at me fast and furious. My passport has been revoked. I don’t know what the government is going to do next,” he said.

Mr. Mallya said he wanted a “reasonable” settlement with creditor banks for his defunct airline, but they “are not getting any money” by taking his passport or arresting him.

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Vijay Mallya offers to repay Rs. 4,000 crore to banks by September

Businessman Vijay Mallya on Wednesday offered his debtor banks Rs. 4000 crore as partial settlement of his dues, even as he confirmed in the Supreme Court that he does not want to come home yet due to "surcharged atmosphere" against him fuelled by media reports.

In a proposal handed over to a Bench of Justices Kurian Joseph and Rohinton Nariman, Mr. Mallya and Kingfisher Airlines said they would part with Rs. 4,000 crore by September 2016 as an initial offer to a consortium of banks led by State Bank of India. Mr. Mallya owes over Rs. 9000 crore to the consortium.

The proposal, Mr. Mallya's lawyers led by senior advocate C.S. Vaidyanathan told the court, was a result of negotiations held through video conferences with the businessman, who is now abroad, as late as yesterday.

According to the consortium's lawyers, the proposal also mentions a payment of over Rs. 2000 crore on the basis of a pending suit filed by Mr. Mallya's businesses. Taking the proposal on record, the Bench gave the consortium a week's time to respond. "It is for you to tell us whether you reject this or not," Justice Nariman told the banks. Justice Kurian then asked whether Mr. Mallya is back in India or not. "Where are you? Are you back in India?" Justice Kurian asked.

"No. Media has vitiated the atmosphere. The atmosphere is so surcharged against me... There are cases in which media created such a surcharged atmosphere that even beatings have taken place... the less said the better," Mr. Vaidyanathan responded.

"Media ultimately stands for the public interest. They just want the money taken from the banks to be brought back..." Justice Kurian shot back.

Banks had approached the apex court earlier this month seeking to impound Mr. Mallya's passport and restrain him from the leaving the country.

But on the first day of hearing, Attorney-General Mukul Rohatgi informed the court that Mr. Mallya had left the country. The apex court posted the matter for hearing on April 7.

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Vijay Mallya ready to pay principal amount Kingfisher owes to banks

Vijay Mallya, the chairman of grounded carrier Kingfisher Airlines, has offered banks to pay the principal amount that he owes but not the interest component and he has approached the bankers seeking a meeting, which may take place during the next few days.

The principal amount that KFA owes to the banks is between Rs 4,500 crore to Rs 5,000 crore, a banker, who is familiar with the deal said on condition of anonymity.

However, bankers are in no mood to settle for less and they may ask for the interest component also, at least a significant a part of it. The interest component is upward of Rs 2,000 crore and public sector banks have kept the Finance Ministry in the loop regarding the issue.

A Kingfisher Airlines spokesperson declined comment.

According to a public notice issued by SBI Caps recently, the amount due by the troubled airline to the consortium of banks lead by SBI, is about Rs 6,963 crore, as on 31 January, 2014, excluding interest rate which will be levied at 15.5 per cent per annum. SBI Caps – the merchant banking arm of State Bank of India – the country’s largest lender – has put KFA’s asset that are in Mumbai Chhatrapati Shivaji International Airport, for auctioning.

“I am focussing on settling Kingfisher affairs with banks. That's what my current focus is on,” Mr Mallya said at the USL annual general meeting today, news agency PTI reported from Bangalore.

A few banks like State Bank of India and United Bank of India have identified Mr Mallya as wilful defaulter which will mean he or the company where he is a board member cannot access funds from banks. Kingfisher Airline stopped flying since October 2012, and the airline's permit was suspended by the Directorate General of Civil Aviation in the same month.

United Breweries (Holdings) and Mr. Mallya are the guarantors to the loans taken by Kingfisher Airlines, according to the SBI Caps notice.

The loans to Kingfisher Airlines were restructured in 2011 and banks had taken a beating after a 10 per cent of the debt was converted into equity. Banks had bought shares of Kingfisher at a 61 per cent premium. Despite the restructuring, the airline company failed to pay its dues. Most of the banks have classified the loans given to Kingfisher as non-performing. Since, a large part of the loan was unsecured, so banks have to make 100 per cent provisioning for the exposure.

In October, the Central Bureau of Investigation had raided the UB group's office and Mallya's residence in Goa and Bengaluru, after the agency filed a first information report against Mr Mallya, and some bank officials.

The banking regulators have tightened norms to tackle wilful default while the government is formulating a bankruptcy code to expedite recovery. A draft bankruptcy code was recently put out in public domain. The government has said it aim to table the Bankruptcy Bill in the winter session of the parliament

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