Kingfisher finally says “you matter”

After much public criticism, Kingfisher Airlines tells passengers that cancellation of flights is for reconfiguration of aircraft, not due to financial difficulty

A little late in the day and after its abrupt cancellation of flights over the past three days caused distress and anguish to passengers, Kingfisher  had suddenly remembered its key asset – loyal passengers.

In a email shot at 9.29 pm – well after television debates had castigated the airline for leaving passengers in the lurch an email with the subject line “you matter” hit the mailboxes of all of us who are on Kingfisher’s frequent flyer programme.  The King of Good Times had finally remembered his “guests”.

 Vijay Mallya, who set a trend with his personalised video saying he had instructed his staff to treat all passengers like “guest in his own house” still wasn’t addressing them personally. The email is signed by Anshu Sarin, Vice President, Guest Loyalty and Kingfisher Holidays. This is a departure because Dr Mallya had won passengers hearts and their loyalty by sending out responses to complaints and comments in his own name.

The mailer from Kingfisher says,

On behalf of Kingfisher Airlines, I am grateful to you for your support and patronage of our services. I would like to take this opportunity to update you on recent developments at Kingfisher Airlines vis-a-vis media reports on our performance.

As you are aware, the Indian Aviation Industry has been faced with the difficult task of coping with high costs and lower yields. Post considerable thought and deliberation, Kingfisher Airlines has rolled out initiatives that aim to drive the long-term profitability in our efforts to meet these challenges.

As announced earlier, we have decided to focus on the full-service market; to this end Kingfisher Airlines has initiated reconfiguration of its aircraft. This exercise will require few of our aircraft to be out of service for the next few weeks. Ergo and in line with maximizing productivity we have rationalized our network, resulting in a temporary discontinuation of approximately 50 flights out of our current operating schedule of approximately 350 departures per day. Once the reconfiguration is complete, these aircraft will be pressed back into service immediately. Clearly the report about our flights being cancelled owing to the supposed exodus of pilots appears to be falsified.

Our service commitment to you remains sacrosanct, and we have taken every measure to reduce any inconvenience caused due to the temporary changes in schedule. Please accept my sincere apologies in case you have been inconvenienced on this account; I truly appreciate your support, and thank you for your understanding.

I look forward to your continued patronage and remain,

Yours Sincerely,

Anshu Sarin

Vice President

Guest Loyalty and Kingfisher Holidays



Sahara group moves SC against SAT order

SAT had on 18th October asked the group’s two companies—Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation) and Sahara Housing Investment Corporation—to return the money

New Delhi: The Sahara group today moved the Supreme Court challenging Securities Appellate Tribunal (SAT) order asking the company to refund the money raised through Optionally Fully Convertible Debentures (OFCD) to investors within six weeks, reports PTI.

SAT had on 18th October asked the group’s two companies—Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation) and Sahara Housing Investment Corporation—to return the money.

Sahara, which has challenged the SAT order, has also sought an interim stay on it.

SAT had passed the order on an appeal filed by the group challenging the order of the Securities and Exchange Board of India (SEBI) which had in June asked the two entities to return the money collected from investors through financial instrument OFCD citing violation of regulatory norms.

Besides, the stock market regulator had also restrained the entities from accessing the securities market for raising funds till the time payments are made to the satisfaction of the SEBI.

The two companies and its promoter Subrata Roy Sahara, and the directors—Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary—jointly and severally were told to refund the money collected.

The company had then approached the Supreme Court which asked it to approach the tribunal.

While dismissing the appeal, the SAT had held that the market regulator has jurisdiction over such fund raising schemes.

“...we may mention that in view of our findings that OFCDs issued by the company are securities and that the issue was a public issue requiring mandatory listing and that SEBI has the jurisdiction under the SEBI Act to deal with all kinds of securities and companies, whether listed or not...”, the order had said.

Sahara had contended that SEBI has no jurisdiction over the issue as the companies involved were not listed. It maintained that entities involved were privately-held companies and were under the jurisdiction of the ministry of corporate affairs (MCA).

But the tribunal did not agree with its contention and dismissed the appeal saying “this argument has no merit... A plain reading of regulation... leaves no room for doubt that the regulations apply to all public issues”.


UB group hugely leveraged; Kingfisher is only one of the problems

Dr Vijay Mallya is seeking a bailout for the nearly bankrupt-Kingfisher. But he has leveraged the group to the hilt, according to our sources

Even as Dr Vijay Mallya, the promoter of United Breweries (UB) group is looking for a bailout for the debt-ridden Kingfisher Airlines, Moneylife learns that he has leveraged the group to the hilt.

According to reliable sources, Dr Mallya and other promoters of the UB Group have pledged over 90% of their shares in Kingfisher and United Spirits to raise Rs592 crore and Rs3,600 crore respectively from lenders.

Dr Mallya and other promoters hold around 59% stake in Kingfisher Airlines and have pledged 90% shares out of this shareholding to raise Rs592 crore. Similarly, Dr Mallya and other promoters have a 29% stake in United Spirits and have pledged 93% of these shares to raise Rs3,600 crore.

Even in the group’s flagship company United Breweries, the promoters’ have pledged 13% out of their total holdings of 75% to raise Rs1,400 crore. UB Holdings Ltd, another company belonging to Dr Mallya is in the same situation. The promoters have pledged 17% shares out of their 53% shareholding in the company to raise Rs72 crore.

As far as Kingfisher Airlines is concerned, it has already been rescued once after some prodding by Dr Mallya's political friends. However, its large debt remains a huge drag on the airline.  "Kingfisher implemented a debt-recast package during the year under review, pursuant to which loans from bankers in excess of Rs1,300 crore and funds from promoters of approximately Rs745 crore were converted into share capital," said Dr Mallya while speaking at the annual general meeting (AGM) of the company.

Following the debt restructuring, State Bank of India (SBI) now owns 6% stake in Kingfisher, while ICICI Bank and IDBI hold 5.5% and 3.8%, respectively. Other banks like Bank of India, Punjab National Bank and UCO Bank hold less than 2% stake in the debt-ridden Airlines.

Lenders, including state-run banks had to convert the debt of Rs1,400 crore into equities at a premium of 60% at Rs64.48 per share to Kingfisher's market price of Rs39.9 a share in April 2011. Considering Kingfisher's closing price of Rs19.85 per share on Friday the lenders already have lost Rs44.63 per share in the company. indeed, it was clear to everybody even when the conversion was done, that this is a black hole. And yet, the politically well-connected owner of the company is seeking government bailout all over again.



Naveen Sehgal

5 years ago

The basic problem of Kingfisher is that it is owned by a person who does what he thinks goods, even by ignoring the facts. While deterioration of rupee and escalating aviation fuel prices in some months of 2011 were two of the major reasons, the acquisition of the Air Deccan in the quest to take up big market share and not learning fast from mistakes is what have been the chief reasons for its problems.

Krishnaraj Rao

5 years ago

Good report! Thanks.

arun adalja

5 years ago

how goverment comes in picture?private firms do their own business and it is not managed efficiently they will make loss and why goverment paid for their lapses?they are charging high fare and everytime they want to increase fares and still losses it is a mismanagement,


5 years ago

Please read the article written by Cuckoo Paul in 18th May 2009

Vijay Mallya's Double Life
Beneath the cheerful opulence is a seasoned warrior battling to save his debt-ridden empire


5 years ago

Vijay Mallya thinks he is Richard Branson of India and behaves like one. But Branson uses brains also. Mallya doesnt! he abuses money, power, name, fame - all at the cost of borrowed money!


5 years ago

10 Lessons derived from KF's chaos:
1. avoid investing in companies whose bosses are lured by Page 3 pics & gimmicks. They lose focus due to the moneybags-prone bees around them!
2. invest in HDFC Bank for the long-term. Why? Simply because it is the only reputed Bnak whose name does NOT appear in the coveted list of 17 (in)famous banks published on the front-page of ET's issue dtd 12/11/11.
3. trade vigorously but do not invest in the high-glamour/globally-loss making aviation sector called aviation;
4. invest in the IPO (whenever it comes) of Indigo Airlines, because it is the only Indian air carrier which is in the green despite all the excuses of all other Indian aviation companies applying to it in the same measure;
5. think ten times before you invest in debt-loving companies, because the Banks/FIs/Government will bail out the too-big-to-fail debt-drunk promoter, but, there is just nobody who will rescue you from the losses you suffer by investing in such debt-crazy companies;
6. prefer mass-consumption stories (like consumables/lingerie/luggage/jewellery & the like) over class-targetting companies like aviation/realty etc;
7. keep off companies where global commodity prices (like crude/ATF prices) have a major say in profitability as do currency movements. They bear the brunt of punitive import costs;
8. avoid investing in companies that have to incur huge capital outflows at regular intervals, like buying latest aeroplanes. Low capital costs & steady demand bring sustainable profits to companies with these characteristics;
9. beware of promoters (with the rare exceptions of proven groups like Tatas,Mahindras,HDFC) who have multiple listed companies under one group: United (Mallya), Essar (who collected public money from frequent IPOs/FPOs in their early days & then 'bought-back' their shares when the fruition of public-money just started). IT is this very egoistic deception of their invincibility that brings down such their day-in-the-sun promoters;
10. invest in cash-rich, zero-debt, fair-promoters, focussed companies which appeal to one's economic common-sense & keep safe distance from India-growth-story based affluence-anticipating companies, because, in India, there are many hurdles before anything & everything takes off!!


nagesh kini

In Reply to pinakin 5 years ago

Thanks Pinakin for the New Ten Commandments.
Apparently all of them rightly apply to KF - Keep away from KF.

I'd add a 11th
Go for companies with steady dividend and bonus; stay invested, do not be carried away by the market ups and downs.

Nagesh Kini FCA

5 years ago

Perhaps for the first time the qualification in the Auditors Report on the erosion in Net worth raised eyebrows. In stead of acting on this promptly, SBI,ICICI,IDBI, PNB and UCO have huge exposures with equity acquisitions at inflated premium. Now the lenders are being arms twisted into increasing their already strained exposure. The equity plus loans have the bankers stakes exceeding the promoters who have already pledged 90% of their equity.
The promoters with minimal stakes of their own are enjoying by bleeding red the other shareholders, lenders, vendors and leaving passengers high and dry.
It is time that the so called "King of Good Times" lets a good Minister/Mantri like Tenali Ramakrishna manage like the Vijaynagar or Birbal with the Mogul empires. Mallaya needs to be delinked from the business that his late father Dr. Vittal Mallaya built it up so well.


5 years ago


Govind Shanbhag

5 years ago

MDT - They say industry i mean company is sick but industrialist is never sick. VM has extracted to full extent using his position, he continues to lead his life who cares if company is bleeding?


5 years ago

he is ruining SBI also , he compelled them to buy shares at premium at rs 180 where as it share price was only Rs 19.89 but why due to the the influence , and pressure of Vijay as he is MP too , loans were converted into share of rs 190 each where as share price was only 19 , most of intrest was waived, and % was lowered much , why such prev ledges to king fisher that too from common man banks and bailout from common man tax money , so that Vijay mallya could spend for night parties , yacht ,women , calenders , for his extravagant luxury from common man money and bank which he common man from village to cities depend upon , We again will pay prices for Vijays luxury , We can Bailout for Vijay mallyas Luxury ,parties and dont want to ruin our bank let vijay mallya use his own billion dollars to save it why he is asking our tax money , SBI has suffered loss of 143 crores because of mallya why r they spending on him so much And no bailout for common people they r left on their own , increase in fuel prices first bailout common people Pranab told while increasing oil price that hard steps r to be taken then why not for kingfisher ,let them face on there own ,if Govt gives bailout it means the Govt is only for corporate s not for common people He is building 30 floor opulant high rise in bangalore, wants to buy Brindavan hotel, raze it and build ultra luxury house, his son can f*** around girls, he can own expensive horses, has time to go to parties



In Reply to SANJAY 5 years ago

he ruined chasteness and simplicity of temples also.

Some years ago Mallya has gold-plated the roof of the sanctum sanctorum of Sabarimala Hill Temple, Kerala. This offering attracted criticism, but the Kerala High Court allowed him to donate 32kg of gold and 1,900kg of copper to gold-plate the temple roof. It reportedly cost him Rs 18 crore.

I am a religious Hindu. However, I think it is a sin to do such things in a temple. God doesnt need gold especially from a person who earns money by selling liquor.


In Reply to Govindan 5 years ago

he is biggest sinner , he thinks he can buy god also , but god knows every thing he will punish


5 years ago

Just the value of the real estate in Sausalito and elsewhere in Europe and Umrika, the yatchs and boats, the paintings, th private planes and most of all the vintage car collection, would be more than enough to pay off quite a few IOUs. The rest with help from the Lord, especially of the Seven Hills. Thing is, will this happen,especially with the NRI status?


5 years ago

Soon, Mallya (Dr. is Hon. which means it's bogus) will be on a lecture circuit dishing out lessons on how to run a perfectly good cash rich business (UB) to the ground while enjoying the good times ... buying up ego-boosting big brands at inflated prices, IPL, F-1, Calendars, Horse racing, Yachts, women, etc.

IT /ED should perhaps look into the acquisitions to figure if the money paid out ended up into his pockets in one of the havens. I personally don't think he's that smart, just a bad businessman with an inflated idea of himself.

Interesting nevertheless.


5 years ago

You can fool some people at all times
You can fool all people at sometime
But you cannot fool all at all times.
Sadly, Here is one gentleman who has managed even that !!! And will continue to do so...

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