Current Affairs

Is SBI closing in on Mallya’s Goa Property?

The State Bank of India, the lead lender in the Kingfisher Airlines (KFA) saga, is moving aggressively to monetize the company’s shares and other physical assets.

Shyamal Acharya, deputy managing director (mid corporate group), SBI, stated, “In India, any recovery process is a long haul. But as the lead lender, it is incumbent on us to monetize all assets of the sick entity in lieu of the bad loans. There is no scope for dialogue anymore; we have crossed that Rubicon. We have had a long dialogue for a long period and since we were not making any headway, we decided that was the end of the matter.”

The consortium of 17 lenders has been able to raise approximately Rs.600 crore from sale of pledged shares, of which SBI will get about 25 per cent of the proceeds.

Displaying intent, last week, SBI has issued notices under the SARFESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act as part of step two of a three-phased process.
This allows the banks to move in against the stressed entity and take possession of its physical assets.

For starters, the consortium will look to take possession of KFA chairman Vijay Mallya’s pleasure pad, the Kingfisher Villa in Goa, and Kingfisher House in Andheri, Mumbai. Mallya had organsied several of his New Year bashes at the Goa Villa.

Acharya said that the two buildings have been valued at Rs.130 crore between them. SBI decided to sell the pledged Kingfisher shares in the open market as part of step one. In step three, the consortium has another tranche of shares which were given at the time of restructuring and can be monetized.

But these shares have a three-year lock-in and will become unencumbered only by the end of the year, when they can be sold.

Lenders have reportedly sold close to 7.5 lakh shares of the 26 lakh available with them. KFA owes Rs.7, 037 crore to the lenders. The Debt Recovery Tribunal and the SARFAESI Act are the two routes that lenders are now resorting to for recovering the bad loans.

Acharya also revealed that Mallya has given a “personal guarantee” to the consortium and as part of that exercise; a case will be filed by SBI and others in the Tribunal this week. Mallya’s personal guarantee covers the entire exposure of a little over Rs.7, 000-crore debt.

Acharya said that the consortium is now examining what is available on the KFA pledged collateral inventory which can be optimized for recovery purposes.

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