Facing all-round attack from political parties which are opposing any bailout for his airline, Kingfisher Airlines chairman Vijay Mallya said, “We have not asked for any bailout from government. Our demands with the banks are mainly two-fold. One is to meet short-term capital needs which have gone up and concession on interest
Mumbai: Battling financial crisis, Kingfisher Airlines chairman Vijay Mallya Tuesday said he has not asked for a bailout from the government but wants the lenders to help with Rs700-Rs800 crore working capital as short-term need and interest concessions, reports PTI.
Facing all-round attack from political parties which are opposing any bailout for his airline, Mr Mallya said, “We have not asked for any bailout from government. We have not asked the government to dip into the taxpayers’ money. We have never done it, we will never do it.”
After announcing the second quarter results, which showed a loss of Rs468.66 crore, he told a press conference that “we are in dialogue with banks to open Letters of Credit which can help us recover debt and repay our high cost rupee loans.”
“We have not asked for a concession. We have not asked for a hair-cut. Our demands with the banks are mainly two-fold. One is to meet short-term capital needs which have gone up and concession on interest,” he said.
The banks have not told him formally that “we should infuse capital. If there is requirement of recapitalisation or infusion of additional equity, we will consider it.”
Mr Mallya also said he has not sought any restructuring of the loan.
Kingfisher has suffered a loss of Rs1,027 crore in 2010-11 and has a mounting debt of Rs7,057.08 crore.
Together, the 13-bank consortium now holds 23.4% stake in the airline and has an exposure of over Rs7,700 crore.
Asked how much working capital would the airline need, Mr Mallya said, “We require Rs700-Rs800 crore, which includes both fund and non-fund based. ...
We have pursued every opportunity to raise capital.”
Welcoming prime minister Manmohan Singh’s recent statement that the government would find ways to solve the aviation industry’s financial troubles, he said, “The prime minister is an economist who understands the importance of connectivity.”
About the dues to oil companies, he said the airline has paid two state-owned oil companies—Indian Oil and Bharat Petroleum —in full. “We don't owe them a single paise.”
On the Rs600 crore worth of unsecured dues to HPCL, Mr Mallya said the oil firm has been given bank guarantees “and our unsecured credit has now come down to Rs40 crore only.”
The chief of the UB Group, which runs Kingfisher, also announced that the company has applied to Directorate General of Foreign Trade (DGFT) for direct import of jet fuel, which would reduce fuel costs drastically. Jet fuel costs are almost 50% of the total operating costs of the airline.
Mr Mallya also said there were varied credit lines with various suppliers and vendors of the airline and refuted reports that certain lessors wanted to take back some of the leased aircraft in the Kingfisher fleet.
Referring to cancellation of more than 200 flights over the past week, he justified the move saying it was a “commercially prudent” decision.
“We cancelled flights not because we could not afford to. Even today Kingfisher is operating the rest of its schedule... We could have handled the situation better. But it (flight cancellations) was a commercially prudent decision,” he said.
Mr Mallya announced the airline has filed a Rs2,000 crore rights issue with market regulator Securities and Exchange Board of India (SEBI) to raise capital.
The series of initiatives by Kingfisher to raise equity come against the backdrop of SBI managing director Hemant Contractor saying, “We have to be satisfied about the viability of the company. There is no point restructuring if the company’s operations are not going to be viable.”
He said Monday, “We have asked them to come up with some fresh funds if the banks are to at all consider their request for restructuring. We want to see more funds coming from the company itself.” SBI has the largest exposure of Rs1,400 crore to the airline.
Kingfisher CEO Sanjay Agarwal and UB Group CFO Ravi Nedungadi, who accompanied Mr Mallya, said the exposure of the promoters was Rs3,593 crore, of which Rs780 crore was infused this year. If need be, the promoters would infuse more funds, Mr Mallya said.
On the workforce, he said, “We will not resort to any large-scale layoff. We value our employees. They are our assets.”
To questions on allowing foreign airlines to pick up stake in Indian carriers, Mr Mallya said, “I am an avid supporter of FDI (foreign direct investment). I don’t see any reason why FDI from strategic partners like an airline should be banned or not permitted. Who would understand an airline better than another airline? I hope government will consider it seriously.
“We need equity to improve the position of balance sheets, not just Kingfisher but the entire industry.”
Regarding phasing out of the no-frill brand Kingfisher Red, Mr Mallya said the airline found that the yield on the full-service carrier was better than the low-cost one.
“We therefore decided to reconfigure our aircraft which, we think, will give us incremental revenue generation opportunities. We want to focus on the top of the pyramid. The competition is less fierce in the upper end than that in the bottom end.”
The affidavit filed in the apex court says that Pranab Mukherjee tried to put in place a statutory search mechanism for the post of SEBI chairman and the whole time directors
In a hard-hitting affidavit, the Finance Ministry (FinMin) has challenged the assumptions and motivations of a group of the eminent citizens who have filed a writ petition in the Supreme Court over the appointment of the chairman of the Securities & Exchange Board of India (SEBI) and the whole time directors.
The affidavit filed by Amit Bansal, an under secretary in the Finance Ministry refutes two assumptions on the basis of which the ‘eminent citizens’ have sought to quash the appointment of UK Sinha as chairman and to extend the term of two whole time directors MS Sahoo and KM Abraham from three to five years (they have already quit SEBI ).
The petition makes two allegations. First, that the rules have "been altered and it is now possible for people with no expertise in the area to be handpicked at the whims and fancies of those empowered to do so under the amendment and this will impair the working of SEBI."
As has already been reported by various newspapers, the affidavit points out that the search committee in 2009 had mentioned four names. First M Damodaran who was already the SEBI chairman, UK Sinha and Jaimini Bhagwati (both former joint secretaries in charge of the capital markets portfolio at the Finance Ministry) and it mentioned that CB Bhave had mentioned that he was disinclined to accept the post. Yet, strangely enough, Mr Bhave was selected, when (as Moneylife has frequently reported) the Prime Minister was all set to grant an extension to Mr Damodaran.
The affidavit says that Finance Minister Pranab Mukherjee tried to put in place a statutory search mechanism for the post of SEBI chairman and the whole time directors.
The full affidavit of the finance ministry is as below:
The market regulator is considering expediting the clearance of IPO offer documents. It is also in the process of implementing regulation for centralised KYC for making the process easy
New Delhi: Market regulator Securities and Exchange Board of India (SEBI) today said it is looking at revamping the initial public offering (IPO) norms and putting in place a common KYC (know your customer) regulation for financial sector intermediaries, reports PTI.
“Whenever we find instances of violation (IPO norms), we will take deterrent action. It also calls for a relook at our entire IPO process. So we are doing that as well,” SEBI chairman UK Sinha told reporters on the sidelines of an ANMI event here.
He said very soon a regulation for centralised KYC would be put into place for making the process easy. “We have decided to have a thorough review of our risk management system as the current system is more than 10 years old,” Mr Sinha said.
Earlier this year, SEBI had decided to introduce a new short and simple form for IPO investors for increasing retail participation in the stock markets.
In the first half of the current fiscal, 30 companies have raised funds totalling over Rs5,000 crore through IPOs.
Sources in the know of the move say that the market regulator is considering expediting the clearance of IPO offer documents. Companies have a one-year time to come out with public offers from the date of SEBI clearance.
Mr Sinha further said that SEBI takes quick, effective and non-discriminatory action in case of market manipulation.
Speaking on the occasion, NSE chairman and managing director Ravi Narain said, “We want to have more products. But we are not interested in speculative products. However, any product which manage volatility and eliminate systems risk are welcome.”
Mr Sinha said the cost of trading has gone up in the country and that SEBI has taken up the issue with the government.
“It is now time for having a re-look at the Securities Transaction Tax (STT). SEBI has taken it up with government,” he said.
The government had introduced STT in 2004 on transactions in different types of securities. The rate presently varies from 0.025% to 0.25% depending upon the type of security traded and transaction—whether sale or purchase.
Mr Sinha further supported the call for bringing the investments of EPFO (Employees Provident Fund Organisation) and retirement fund to the stock market.
“I would recommend that we engage the labour leader and the trustees of such fund to tell them how the market functions,” he said.
Echoing similar view, Mr Narain said, “We should look at the New Pension Scheme (NPS) and Employee Provident Fund to increase participation in the markets.”