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Tuesday, September 25, 2012

UB Group can tap other business to save Kingfisher: SBI

The Vijay Mallya-promoted United Breweries (UB) Group can unlock a lot of cash from its liquor business and non-core businesses and deploy the same to revive Kingfisher Airlines (KFA), said a top State Bank of India official.

India’s biggest bank and 16 other banks have a loan exposure of about Rs 7,000 crore to the beleaguered KFA.

According to SBI Chairman Pratip Chaudhuri, from all accounts, UB Group and Vijay Mallya are very keen to retain control of KFA as his entire branding and image revolves around Kingfisher.

“Lot of his (Mallya’s) products are named after Kingfisher. So, we think they (promoter group) will do everything possible, including big sacrifices, to keep that name going and we have his personal guarantee, which shows his great commitment,” said Chaudhuri at a press meet.

The UB group, from its liquor business, and Mallya from his other unrelated business can unlock a lot of cash which, the SBI Chairman felt could be deployed into the airlines.

“In the case of some of their (UB Group’s) non-core businesses, for example Mangalore Chemicals & Fertilisers, if they think that it does not add strategic value to their business and if they can unlock some value from there that would be most welcome,” said Chaudhuri.

Referring to the stock prices of aviation companies, including KFA, going up, Chaudhuri said “This is obviously indicative of higher interest by foreign aviation companies in the Indian aviation sector. At one point what looked absolutely hopeless, looks relatively better now.”

The SBI chief emphasised that aviation is a capital intensive business and only companies with deep pockets will succeed.

According to S. Vishvanathan, Deputy Managing Director, SBI, lenders will have another round of negotiation with the KFA management, including its promoter Vijay Mallya, regarding their action plan to revive the airline in the next few days.

“We will hear them (KFA) out on what their plans are. They have not yet come out with any specific plans. What we understand is that they are talking to a lot of people (regarding Foreign Direct Investment) and we do think they are going to come up with something,” said the DMD.

The KFA stock ended 1.91 per cent up at Rs 13.37 per share on the BSE on Monday against the previous close of Rs 13.12.


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