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No second round of debt restructuring for Kingfisher by banks

SBI, the leader of the consortium, has an exposure of Rs1,457.78 crore in Kingfisher, followed by IDBI Bank (Rs727.63 crore), Punjab National Bank (Rs710.33 crore), Bank of India (Rs575.27 crore) and Bank of Baroda (Rs537.51), minister of state for finance Namo Narain Meena informed the Parliament

New Delhi: Banks have no plans to carry out a second round of debt restructuring of the ailing Kingfisher Airlines which has an outstanding loan of around Rs6,419 crore, reports PTI.

“State Bank of India, leader of the consortium (of 11 lenders to Kingfisher), has stated that at present, there is no plan,” minister of state for finance Namo Narain Meena said in a written reply in Lok Sabha.

He was replying to a question on whether lenders are planning to carry out a second round of restructuring of loans to help Kingfisher.

The minister further said the airline has a total outstanding loan liability of Rs6,419.60 crore, which include Rs9,730.37 crore provided to Kingfisher for non-fund based activities.

SBI, the minister said, has an exposure of Rs1,457.78 crore, followed by IDBI Bank (Rs727.63 crore), Punjab National Bank (Rs710.33 crore), Bank of India (Rs575.27 crore) and Bank of Baroda (Rs537.51).

The other lenders which have provided funds to the airlines include ICICI Bank, Central Bank of India, United Bank of India, UCO Bank, and Corporation Bank.

SBI has already exceeded the exposure limit of Rs1,436.1 crore in Kingfisher.

Of the total outstanding of Rs6,419.60 crore, Rs750.10 crore has been converted into cumulative redeemable preference shares and Rs553.10 crore as non-convertible cumulative redeemable preference shares to be redeemed after 12 years.

Mr Meena further said that Kingfisher is scheduled to start repaying loans to SBI from September 2012. “Servicing of interest is being done with some delay,” he added.

Giving details of the security given by Kingfisher Airlines, Mr Meena said the airlines’ chairman Vijay Mallya has given a personal guarantee of Rs248.97 crore, while United Breweries Holdings, which he heads, has provided a corporate guarantee of Rs1,601.43 crore.

In addition, Kingfisher has provided a pooled collateral security of Rs5,238.59 crore, which includes Kingfisher House in Mumbai, Kingfisher Villa (Goa), and hypothecation of helicopters.

The airline has also hypothecated the Kingfisher Brand which was valued at Rs4,111 crore by Global consultancy firm Grant Thornton.

Besides, the pledged securities include ground support and other equipment (Rs101.58 crore), computers (Rs22.43 crore), office equipment (Rs13.39 crore), furniture and fixtures (Rs33.35 crore) and an aircraft (Rs107.77 crore).

The figures were annexed with the minister’s written reply.

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RBI notifies new FDI norms for pharma sector

As per the notification, FDI, up to 100% would be permitted for brownfield investment in the pharmaceutical sector, under the government approval route while FDI up to 100%, under the automatic route, would continue to be permitted for greenfield investments

Mumbai: The Reserve Bank of India (RBI) today notified new rules doing away with automatic approval for foreign direct investment (FDI) in existing pharmaceutical companies, reports PTI.

Tightening the norms, the government had last month done away with automatic approval of FDI in the existing pharmaceutical companies.

“FDI, up to 100%, would be permitted for brownfield investment (i.e. investments in existing companies), in the pharmaceutical sector, under the government approval route,” RBI said in a notification.

Under the new rules, for any merger or acquisition, the overseas investor will have to seek permission from the Foreign Investment Promotion Board (FIPB).

After six months, it will be the monopoly watchdog Competition Commission of India (CCI) which will vet such deals.

The decision follows directions from prime minister Manmohan Singh, who along with his senior Cabinet colleagues had deliberated on 10th October over concerns arising out of several acquisitions of domestic pharmaceutical companies by overseas firms.

For the new investment, 100% FDI will be allowed under the automatic route, under which investors only inform the RBI about the inflows and no specific government nod is required.

“FDI, up to 100 per cent, under the automatic route, would continue to be permitted for greenfield investments in the pharmaceuticals sector,” RBI said.

The filter was suggested by a high-level committee, headed by Planning Commission member Arun Maira.

Concerns have been raised over the impact of a spate of acquisitions of home-grown firms by multi-national companies.

The recent acquisitions include Ranbaxy Laboratories buy out by Daiichi Sankyo of Japan, Shanta Biotech by Sanofi Aventis of France and Piramal Health Care by Abbott Laboratories of the US.

The affordability factor has so far been the hallmark of the Indian generic drugs all over the world, thanks to robust growth of the home-grown players.

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